- Recorded GAAP losses were $1.05 per share for the year and GAAP
earnings were $0.09 per share for the fourth-quarter of 2020,
compared to losses of $14.50 and $6.84, respectively, per share for
the same periods in 2019.
- Non-GAAP core earnings were consistent with guidance at $1.61
per share for the year and $0.21 per share for the fourth quarter
of 2020, compared to $3.93 and $0.68 per share for the same period
in 2019.
- 2021 EPS guidance for GAAP losses was adjusted to the range of
$0.52 to $0.38 and non-GAAP core earnings of $0.95 to $1.05 per
share were reaffirmed.
- Introduced Non-GAAP core earnings per share growth guidance of
10 percent over its five-year plan
PG&E Corporation (NYSE: PCG) recorded full-year losses of
$1.3 billion, or $1.05 per share and fourth-quarter 2020 income
available for common shareholders of $200 million, or $0.09 per
share, as reported in accordance with generally accepted accounting
principles (GAAP). This compares with losses attributable to common
shareholders of $7.7 billion, or $14.50 per share, for the full
year of 2019 and $3.6 billion, or $6.84 per share, for the fourth
quarter of 2019.
GAAP results include non-core items that management does not
consider representative of ongoing earnings, which totaled $3.3
billion after-tax, or $2.66 per share, for the year. These results
were primarily driven by costs related to PG&E Corporation’s
and Pacific Gas and Electric Company’s (Utility) reorganization
cases under Chapter 11 of the U.S. Bankruptcy Code (Chapter 11).
Other non-core items include the amortization of wildfire insurance
fund contributions under Assembly Bill (AB) 1054, investigation
remedies, 2019-2020 wildfire-related costs, and prior period net
regulatory recoveries.
PG&E Corporation and the Utility emerged from Chapter 11 on
July 1, 2020 after successfully completing the restructuring
process and achieving approval for their Plan of Reorganization
confirmed by the United States Bankruptcy Court.
“Our multi-year financial plan is based on strong, organic
growth,” said Patti Poppe, CEO of PG&E Corporation. “In my many
conversations with customers, policymakers, our own frontline
teams, and other key stakeholders, the clearest theme is the
opportunity PG&E has to help build a better future for everyone
who relies on us. I am embracing that challenge with a focus on the
power of the Triple Bottom Line – results that create benefits for
people, the planet, and our shared prosperity. The key will be
earning back trust by keeping our promises and delivering
consistent, stable performance of which we can all be proud.”
2021 Priorities
In addition to continuing the 100-day listening tour she
launched upon her January 4 arrival, Poppe outlined four initial
priorities for 2021:
- Implementing a lean operating system to better serve
customers;
- Assembling a team of senior leaders able to drive this
organizational agenda;
- Implementing an improved action plan to further reduce wildfire
risk; and
- Delivering on PG&E’s financial commitment of 10 percent EPS
growth.
Bolstering the Senior Leadership Team
Accordingly, the Utility appointed Adam Wright as Executive Vice
President of Operations and Chief Operating Officer, where he is
now responsible for all of the Utility’s operations, including Gas,
Electric and Generation. He will focus on safety, seek to increase
connectivity among operational groups, standardize practices, and
promote excellent execution across the board. Further, Julius Cox
was appointed Executive Vice President of People, Shared Services,
and Supply Chain, and is responsible for ensuring the Utility has
the people, skills, resources and tools to meet customers’
expectations. Marlene Santos will also join the Utility as
Executive Vice President and Chief Customer Officer, responsible
for the Utility’s customer contact centers; programs supporting
energy efficiency, electric vehicles, rooftop solar, demand
response and low-income customers; billing, metering and account
services; marketing and communications; and regional
leadership.
Wildfire Mitigation Update
In its February 5, 2021 Wildfire Mitigation Plan (WMP), the
Utility detailed its ongoing strategy to further reduce wildfire
risk, increase situational awareness, deploy new technology and
models to help keep customers and communities safe, and continue to
reduce the effects of Public Safety Power Shutoffs (PSPS). The WMP
enhances the company’s ongoing, comprehensive Community Wildfire
Safety Program designed to address the growing threat of severe
weather and wildfires across its service area. Specifically, it
focuses on reducing wildfire potential by inspecting and repairing
equipment, conducting enhanced vegetation management, and investing
in grid technology and system hardening; installing more weather
stations and high-definition cameras throughout the Utility service
area, investing in the Utility’s Wildfire Safety Operations Center
that monitors high-fire threat areas in real time; investing in
meteorology to monitor weather conditions; and reducing the impacts
of PSPS as a tool of last resort by upgrading the electric system
and improving support for affected customers and communities.
Non-Core Asset Sale
The Utility granted a wholly owned subsidiary of SBA
Communications Corporation (SBA) an exclusive license to sublicense
and market wireless communications equipment attachment locations
on certain electric transmission towers and other utility
structures to wireless telecommunication carriers for attachment of
wireless communications equipment. The arrangement also allows the
SBA subsidiary to continue to market and sublicense access to the
towers and structures to additional wireless providers with the
Utility receiving a portion of that future revenue. SBA agreed to
pay the Utility a purchase price of $973 million, of which $954
million was paid at closing. The Utility may also assign additional
attachment locations upon the satisfaction of certain terms and
conditions, for which SBA will make additional purchase price
payments to the Utility. Cash proceeds received at closing were
$945 million and 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 Utility did not sell any electric transmission towers as part
of this transaction.
The Utility also entered into a strategic relationship with SBA,
through SBA’s wholly owned subsidiary, to sublicense and market
equipment at additional attachment locations; as many as 28,000
electric transmission towers across the Utility’s extensive
network. Through this arrangement, the Utility will receive a
portion of future revenues from these sublicensed equipment
attachment locations.
Overall, PG&E expects the proceeds from this agreement to
help further reduce its financing needs and strengthen its
financial position while also benefiting customers, who will
receive a significant portion of the sale proceeds in the form of
lower monthly bills as well as a portion of any future revenues
from additional attachment locations.
Non-GAAP Core Earnings
PG&E Corporation’s non-GAAP core earnings, which exclude
non-core items, were $2,020 million, or $1.61 per share, for the
full year 2020, compared with $2,074 million, or $3.93 per share,
during the same period in 2019. For the fourth-quarter, non-GAAP
core earnings were $441 million, or $0.21 per share, compared with
$360 million, or $0.68 per share, during the same period in
2019.
The decrease in quarter-over-quarter non-GAAP core earnings per
share was primarily driven by the increase in shares outstanding,
unrecoverable interest expense, timing of nuclear refueling
outages, and inspection costs, partially offset by the growth in
rate base earnings, interest accrued on pre-petition payables and
short-term debt, and the timing of 2020 General Rate Case cost
recovery.
PG&E Corporation uses “non-GAAP core earnings,” which is a
non-GAAP financial measure, in order to provide a measure that
allows investors to compare the underlying financial performance of
the business from one period to another, exclusive of non-core
items. See the accompanying tables for a reconciliation of non-GAAP
core earnings to consolidated earnings (loss) attributable to
common shareholders.
Guidance
PG&E Corporation is adjusting 2021 GAAP loss guidance in the
range of $0.52 to $0.38 per share, which includes non-core items.
PG&E is adjusting 2021 non-core items guidance to approximately
$3.1 billion after-tax. Non-core items reflect a net securitization
inception charge, amortization of wildfire insurance fund
contributions, bankruptcy and legal costs, investigation remedies,
and 2019 Kincade fire-related costs, partially offset by prior
period net regulatory recoveries.
On a non-GAAP basis, the guidance range for projected 2021
non-GAAP core earnings is $0.95 to $1.05 per share. Factors
affecting non-GAAP core earnings include net below-the-line and
spend above authorized of up to $100 million after-tax and
unrecoverable interest expense of $300 million to $325 million
after-tax.
PG&E is also rolling forward its five-year plan and
introducing non-GAAP core earnings per share growth guidance of 10
percent.
Guidance is based on various assumptions and forecasts,
including those relating to authorized revenues, future expenses,
capital expenditures, rate base, equity issuances, the potential
securitization of certain wildfire-related costs for the 2017
Northern California wildfires, and certain other factors.
Supplemental Financial Information
In addition to the financial information accompanying this
release, presentation slides have been furnished to the Securities
and Exchange Commission (SEC) and are available on PG&E
Corporation’s website at:
http://investor.pgecorp.com/financials/quarterly-earnings-reports/default.aspx.
Earnings Conference Call
PG&E Corporation will also hold a conference call on
February 25, 2021, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific
Time) to discuss its full year and fourth quarter 2020 results. The
public can access the conference call through a simultaneous
webcast. The link is provided below and will also be available from
the PG&E Corporation website.
What: Fourth Quarter 2020 Earnings
Call
When: Thursday, February 25, 2021
at 11:00 a.m. Eastern Time
Where:
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx
A replay of the conference call will be archived through April
3, 2021 at
http://investor.pgecorp.com/news-events/events-and-presentations/default.aspx.
Alternatively, a toll-free replay of the conference call may be
accessed shortly after the live call through April 3, 2021, by
dialing (800) 585-8367. International callers may dial (416)
621-4642. For both domestic and international callers, the
confirmation code 2695505 will be required to access the
replay.
Public Dissemination of Certain Information
PG&E Corporation and the Utility routinely provide links to
the Utility’s principal regulatory proceedings with the CPUC and
the Federal Energy Regulatory Commission (FERC) at
http://investor.pgecorp.com, under the “Regulatory Filings” tab, so
that such filings are available to investors upon filing with the
relevant agency. PG&E Corporation and the Utility also
routinely post, or provide direct links to, presentations,
documents, and other information that may be of interest to
investors at http://investor.pgecorp.com, under the “Chapter 11,”
“Wildfire Updates” and “News & Events: Events &
Presentations” tabs, respectively, in order to publicly disseminate
such information. It is possible that any of these filings or
information included therein could be deemed to be material
information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company
headquartered in San Francisco. It is the parent company of Pacific
Gas and Electric Company, an energy company that serves 16 million
Californians across a 70,000-square-mile service area in Northern
and Central California. For more information, visit
http://www.pgecorp.com. In this press release, they are together
referred to as “PG&E.”
Forward-Looking Statements
This press release contains forward-looking statements that are
not historical facts, including statements about the beliefs,
expectations, estimates, future plans and strategies of PG&E
Corporation and the Utility, as well as forecasts and estimates
regarding PG&E Corporation’s earnings guidance for 2021 and the
2021 Wildfire Mitigation Plan. These statements are based on
current expectations and assumptions, which management believes are
reasonable, and on information currently available to management,
but are necessarily subject to various risks and uncertainties. In
addition to the risk that these assumptions prove to be inaccurate,
factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements include
factors disclosed in PG&E Corporation’s and the Utility’s joint
annual report on Form 10-K for the year ended December 31, 2019,
their subsequent quarterly reports on Form 10-Q, their joint annual
reports on Form 10-K for the year ended December 31, 2020 and other
reports filed with the SEC, which are available on PG&E
Corporation’s website at www.pgecorp.com and on the SEC website at
www.sec.gov. PG&E Corporation and the Utility undertake no
obligation to publicly update or revise any forward-looking
statements, whether due to new information, future events or
otherwise, except to the extent required by law.
PG&E CORPORATION
CONSOLIDATED STATEMENTS OF
INCOME
(in millions, except per share
amounts)
Year ended December
31,
2020
2019
2018
Operating Revenues
Electric
$
13,858
$
12,740
$
12,713
Natural gas
4,611
4,389
4,046
Total operating revenues
18,469
17,129
16,759
Operating Expenses
Cost of electricity
3,116
3,095
3,828
Cost of natural gas
782
734
671
Operating and maintenance
8,684
8,725
7,153
Wildfire-related claims, net of insurance
recoveries
251
11,435
11,771
Wildfire fund expense
413
—
—
Depreciation, amortization, and
decommissioning
3,468
3,234
3,036
Total operating expenses
16,714
27,223
26,459
Operating Income (Loss)
1,755
(10,094
)
(9,700
)
Interest income
39
82
76
Interest expense
(1,260
)
(934
)
(929
)
Other income, net
483
250
424
Reorganization items, net
(1,959
)
(346
)
—
Loss Before Income Taxes
(942
)
(11,042
)
(10,129
)
Income tax provision (benefit)
362
(3,400
)
(3,292
)
Net Loss
(1,304
)
(7,642
)
(6,837
)
Preferred stock dividend requirement of
subsidiary
14
14
14
Loss Attributable to Common
Shareholders
$
(1,318
)
$
(7,656
)
$
(6,851
)
Weighted Average Common Shares
Outstanding, Basic
1,257
528
517
Weighted Average Common Shares
Outstanding, Diluted
1,257
528
517
Net Loss Per Common Share,
Basic
$
(1.05
)
$
(14.50
)
$
(13.25
)
Net Loss Per Common Share,
Diluted
$
(1.05
)
$
(14.50
)
$
(13.25
)
Reconciliation of PG&E Corporation’s
Consolidated Earnings (Loss) Attributable to Common Shareholders in
Accordance with Generally Accepted Accounting Principles (“GAAP”)
to Non-GAAP Core Earnings
Full Year and Fourth Quarter, 2020 vs.
2019
(in millions, except per share
amounts)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
Earnings
Earnings per Common Share
(Diluted)
Earnings
Earnings per Common Share
(Diluted)
(in millions, except per share
amounts)
2020
2019
2020
2019
2020
2019
2020
2019
PG&E Corporation's Earnings (Loss)
on a GAAP basis
$
200
$
(3,617
)
$
0.09
$
(6.84
)
$
(1,318
)
$
(7,656
)
$
(1.05
)
$
(14.50
)
Non-core items: (1)
Amortization of wildfire fund contribution
(2)
86
—
0.04
—
297
—
0.24
—
Investigation remedies (3)
71
—
0.03
—
223
—
0.18
—
Bankruptcy and legal costs (4)
59
(30
)
0.03
(0.06
)
2,651
180
2.11
0.34
2019-2020 Wildfire-related costs, net of
insurance (5)
45
—
0.02
—
213
—
0.17
—
Prior period net regulatory recoveries
(6)
(21
)
—
(0.01
)
—
(46
)
—
(0.04
)
—
2017-2018 Wildfire-related costs (7)
—
3,847
—
7.27
—
8,761
—
16.59
Electric asset inspection costs (8)
—
120
—
0.23
—
557
—
1.05
Locate and mark penalty (9)
—
39
—
0.07
—
39
—
0.07
2019 GT&S capital disallowance
(10)
—
—
—
—
—
193
—
0.37
PG&E Corporation’s Non-GAAP Core
Earnings (11)
$
441
$
360
$
0.21
$
0.68
$
2,020
$
2,074
$
1.61
$
3.93
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods,
consisting of the items listed in the table above. See Exhibit H:
Use of Non-GAAP Financial Measures.
All amounts presented in the table above
are tax adjusted at PG&E Corporation’s statutory tax rate of
27.98% for 2019 and 2020, except for certain costs that are not tax
deductible, as identified in the following footnotes. Amounts may
not sum due to rounding.
(2)
The Utility recorded costs of $120 million
(before the tax impact of $34 million) and $413 million (before the
tax impact of $116 million) during the three and twelve months
ended December 31, 2020, respectively, associated with the
amortization of wildfire fund contributions related to Assembly
Bill ("AB") 1054.
(3)
The Utility recorded costs of $96 million
(before the tax impact of $24 million) and $296 million (before the
tax impact of $73 million) during the three and twelve months ended
December 31, 2020, respectively, associated with investigation
remedies. This includes $81 million (before the tax impact of $22
million) and $231 million (before the tax impact of $62 million)
during the three and twelve months ended December 31, 2020,
respectively, related to the Order Instituting Investigation into
the 2017 Northern California Wildfires and the 2018 Camp Fire
("Wildfire OII") settlement, as modified by the Decision Different
dated April 20, 2020 ($1 million and $10 million of Wildfire OII
system enhancement costs during the three and twelve months ended
December 31, 2020, respectively, are not tax deductible). The
Utility also incurred restoration and rebuild costs of $8 million
(before the tax impact of $2 million) and $36 million (before the
tax impact of $10 million) during the three and twelve months ended
December 31, 2020, respectively, associated with the town of
Paradise (2018 Camp fire). The Utility also recorded costs of $7
million and $29 million (before the tax impact of $1 million)
during the three and twelve months ended December 31, 2020,
respectively, for system enhancements related to the Locate and
Mark OII ($7 million and $25 million of Locate and Mark OII system
enhancement costs during the three and twelve months ended December
31, 2020, respectively, are not tax deductible).
(in millions, pre-tax)
Three Months Ended December
31, 2020
Twelve Months Ended December
31, 2020
Wildfire OII disallowance and system
enhancements
$
81
$
231
Paradise restoration and rebuild
8
36
Locate and Mark OII system
enhancements
7
29
Investigation remedies
$
96
$
296
(4)
PG&E Corporation and the Utility
recorded costs of $66 million (before the tax impact of $7 million)
and $2.8 billion (before the tax impact of $125 million) during the
three and twelve months ended December 31, 2020, respectively,
associated with bankruptcy and legal costs. This includes $38
million (before the tax impact of $11 million) and $1.7 billion
(before the tax impact of $41 million) during the three and twelve
months ended December 31, 2020, respectively, related to exit
financing costs ($1.5 billion of exit financing costs during the
twelve months ended December 31, 2020, are not tax deductible).
Also during the twelve months ended December 31, 2020, the Utility
recorded a $619 million reduction to the deferred tax asset related
to the value of PG&E Corporation's common stock transferred to
the Fire Victim Trust. PG&E Corporation and the Utility also
incurred legal and other costs of $28 million (before the tax
detriment of $4 million) and $486 million (before the tax impact of
$84 million) during the three and twelve months ended December 31,
2020, respectively ($42 million and $184 million of legal and other
costs during the three and twelve months ended December 31, 2020,
respectively, were treated as not tax deductible).
(in millions, pre-tax)
Three Months Ended December
31, 2020
Twelve Months Ended December
31, 2020
Exit financing
$
38
$
1,672
Fire Victim Trust tax valuation
—
619
Legal and other costs
28
486
Bankruptcy and legal costs
$
66
$
2,776
(5)
The Utility incurred costs, net of
probable insurance recoveries, of $63 million (before the tax
impact of $18 million) and $296 million (before the tax impact of
$84 million) during the three and twelve months ended December 31,
2020, respectively, associated with 2019-2020 wildfires. This
includes accrued charges for third-party claims of $625 million
(before the tax impact of $175 million) during the twelve months
ended December 31, 2020 related to Kincade fire, and $275 million
(before the tax impact of $77 million) during the three and twelve
months ended December 31, 2020 related to Zogg fire. The Utility
also incurred costs of $1 million and $35 million (before the tax
impact of $10 million) during the three and twelve months ended
December 31, 2020, respectively, for clean-up and repair costs
related to Kincade fire. In addition, the Utility incurred legal
and other costs of $2 million (before the tax impact of $1 million)
and $6 million (before the tax impact of $2 million) during the
three and twelve months ended December 31, 2020, respectively,
related to Kincade fire, as well as $4 million (before the tax
impact of $1 million) during the three and twelve months ended
December 31, 2020 related to Zogg fire. These costs were partially
offset by probable insurance recoveries of $430 million (before the
tax impact of $120 million) recorded during the twelve months ended
December 31, 2020 related to Kincade fire, as well as $219 million
(before the tax impact of $61 million) recorded during the three
and twelve months ended December 31, 2020 related to Zogg fire.
(in millions, pre-tax)
Three Months Ended December
31, 2020
Twelve Months Ended December
31, 2020
2019 Kincade fire-related costs, net of
insurance:
Third-party claims
—
625
Utility clean-up and repairs
1
35
Legal and other costs
2
6
Insurance recoveries
—
(430
)
2020 Zogg fire-related costs, net of
insurance:
Third-party claims
275
275
Legal and other costs
4
4
Insurance recoveries
(219
)
(219
)
Total 2019-2020 Wildfire-related costs,
net of insurance
$
63
$
296
(6)
The Utility recorded net revenue of $29
million (before the tax impact of $8 million) and $64 million
(before the tax impact of $18 million) during the three and twelve
months ended December 31, 2020, respectively, associated with prior
period net regulatory recoveries. This includes $31 million (before
the tax impact of $9 million) during the three and twelve months
ended December 31, 2020 for allowance for funds used during
construction ("AFUDC") capital structure impact on 2019 revenues.
The Utility also incurred $2 million (before the tax impact of $1
million) and $70 million (before the tax impact of $20 million)
during the three and twelve months ended December 31, 2020,
respectively, for the impact of the Transmission Owner ("TO") 20
settlement on 2019 revenues and the TO18 FERC order on 2017, 2018,
and 2019 revenues. Also, as a result of the 2011 Gas Transmission
and Storage ("GT&S") capital audit, the Utility recorded
revenues of $103 million (before the tax impact of $29 million)
during the twelve months ended December 31, 2020, related to the
recovery of capital expenditures from 2011 through 2014 above
amounts adopted in the 2011 GT&S rate case.
(in millions, pre-tax)
Three Months Ended December
31, 2020
Twelve Months Ended December
31, 2020
AFUDC capital structure impact
$
(31
)
$
(31
)
TO proceedings impact
2
70
2011 GT&S capital audit
—
(103
)
Prior period net regulatory
recoveries
$
(29
)
$
(64
)
(7)
The Utility incurred costs of $5.3 billion
(before the tax impact of $1.5 billion) and $12.2 billion (before
the tax impact of $3.4 billion) during the three and twelve months
ended December 31, 2019, respectively, associated with 2017-2018
wildfire-related costs. This includes accrued charges of $5.0
billion (before the tax impact of $1.4 billion) and $11.4 billion
(before the tax impact of $3.2 billion) during the three and twelve
months ended December 31, 2019, respectively, related to increases
in the recorded liability for third-party claims related to the
2018 Camp Fire, the 2017 Northern California wildfires, and the
2015 Butte fire. The Utility incurred costs of $13 million (before
the tax impact of $4 million) and $278 million (before the tax
impact of $78 million) during the three and twelve months ended
December 31, 2019, respectively, for clean-up and repair costs. The
Utility also incurred costs of $42 million (before the tax impact
of $12 million) and $152 million (before the tax impact of $43
million) during the three and twelve months ended December 31,
2019, respectively, for legal and other costs. In addition, the
Utility incurred costs of $398 million (before the tax impact of
$108 million) during the three and twelve months ended December 31,
2019 related to the Wildfire Order Instituting Investigation
("OII") settlement. The Utility also recorded a charge of $86
million (before the tax impact of $24 million) during the three and
twelve months ended December 31, 2019 related to a one-time bill
credit for customers impacted by the October 9, 2019 Public Safety
Power Shutoff (PSPS) event. These costs were partially offset by
$189 million (before the tax impact of $53 million) recorded during
the three and twelve months ended December 31, 2019 for probable
cost recoveries of insurance premiums incurred in 2018 above
amounts included in authorized revenue requirements.
(in millions, pre-tax)
Three Months Ended December
31, 2019
Year Ended December 31,
2019
Camp, Northern California, and Butte
fire-related costs, net of insurance:
Third-party claims
4,988
11,435
Utility clean-up and repair costs
13
278
Legal and other costs
42
152
Subtotal Camp, Northern California, and
Butte fire-related costs, net of insurance
5,043
11,865
Wildfire OII settlement
398
398
PSPS customer bill credit
86
86
2018 Insurance premium cost recovery
(189
)
(189
)
Total 2017-2018 wildfire-related
costs
$
5,338
$
12,161
(8)
The Utility incurred costs of $167 million
(before the tax impact of $47 million) and $773 million (before the
tax impact of $216 million) during the three and twelve months
ended December 31, 2019, respectively, for incremental operating
expenses related to enhanced and accelerated inspections of
electric transmission and distribution assets, and resulting
repairs that are not probable of recovery.
(9)
The Utility recorded costs of $39 million
(not tax deductible) during the three and twelve months ended
December 31, 2019 associated with an incremental fine payable to
the State General Fund resulting from a presiding officer's
decision in the Locate and Mark OII.
(10)
The Utility recorded costs of $237 million
(before the tax impact of $44 million) during the twelve months
ended December 31, 2019 for pipeline-replacement costs disallowed
in the 2019 GT&S rate case as a result of spending above
amounts authorized in the 2015-2018 rate case period. Due to
flow-through treatment related to deductible repairs, $80 million
of the loss does not generate a net tax benefit.
(11)
“Non-GAAP core earnings” is a non-GAAP
financial measure. See Exhibit H: Use of Non-GAAP Financial
Measures.
PG&E Corporation's 2021 Earnings
Guidance
2021
EPS Guidance
Low
High
Estimated Loss on a GAAP basis
$
(0.52
)
$
(0.38
)
Estimated Non-Core Items: (1)
Bankruptcy and legal costs (2)
~
0.68
~
0.65
Investigation remedies (3)
~
0.05
~
0.05
Amortization of wildfire fund contribution
(4)
~
0.16
~
0.16
2019 Kincade fire-related costs (5)
0.01
0.00
Net securitization inception charge
(6)
~
0.64
~
0.64
Prior period net regulatory recoveries
(7)
~
(0.07
)
~
(0.07
)
Estimated EPS on a non-GAAP Core
Earnings basis
$
0.95
$
1.05
All amounts presented in the table above
are tax adjusted at PG&E Corporation’s statutory tax rate of
27.98% for 2021, except for certain costs that are not tax
deductible, as identified in the following footnotes. Amounts may
not sum due to rounding.
(1)
“Non-core items” include items that
management does not consider representative of ongoing earnings and
affect comparability of financial results between periods. See
Exhibit H: Use of Non-GAAP Financial Measures.
(2)
“Bankruptcy and legal costs" consists of
exit financing costs including interest on temporary Utility debt
and write-off of unamortized fees related to the retirement of
PG&E Corporation debt, reversal of the tax benefit recorded for
shares transferred to the Fire Victim Trust, and legal and other
costs associated with PG&E Corporation and the Utility's
Chapter 11 filing. The total offsetting tax impact for the low and
high non-core guidance range is $58 million and $33 million for
2021.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Exit financing
~
$
135
~
$
95
Fire Victim Trust grantor trust
benefit
~
1,300
~
1,300
Legal and other costs
~
75
~
25
Bankruptcy and legal costs
~
$
1,510
~
$
1,420
(3)
“Investigation remedies" includes costs
related to the Wildfire OII Decision Different, Paradise
restoration and rebuild, and Locate and Mark OII system
enhancements. The total offsetting tax impact for the low and high
non-core guidance range is $18 million for 2021.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Wildfire OII disallowance and system
enhancements
~
$
80
~
$
80
Paradise restoration and rebuild
~
25
~
25
Locate and Mark OII system
enhancements
~
25
~
25
Investigation remedies
~
$
130
~
$
130
(4)
"Amortization of wildfire fund
contribution” represents the amortization of wildfire fund
contributions related to AB 1054. The total offsetting tax impact
for the low and high non-core guidance range is $130 million for
2021.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Amortization of wildfire fund
contribution
~
$
465
~
$
465
(5)
"2019 Kincade fire-related costs" includes
estimated legal and other costs associated with the 2019 Kincade
fire. The total offsetting tax impact for the low and high non-core
guidance range is $8 million and $3 for 2021, respectively.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Legal and other costs
30
10
2019 Kincade fire-related costs
$
30
$
10
(6)
“Net securitization inception charge"
represents a charge upon inception of securitization and is the
result of an undiscounted regulatory liability associated with the
revenue credits funded by the Net Operating Loss monetization. This
reflects the assumption that the CPUC will authorize the
securitization of $7.5 billion of wildfire-related claims by March
31, 2021 that is designed to be rate-neutral to customers. The
total offsetting tax impact for the low and high non-core guidance
range is $529 million for 2021.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
Net securitization inception charge
~
$
1,890
~
$
1,890
(7)
“Prior period net regulatory recoveries"
represents the recovery of capital expenditures from 2011 through
2014 above amounts adopted in the 2011 GT&S rate case. The
total offsetting tax impact for the low and high non-core guidance
range is $56 million for 2021.
2021
(in millions, pre-tax)
Low guidance range
High guidance range
2011 GT&S capital audit
~
(200
)
~
(200
)
Prior period net regulatory
recoveries
~
$
(200
)
~
$
(200
)
Use of Non-GAAP Financial Measures
PG&E Corporation and Pacific Gas and
Electric Company
PG&E Corporation discloses historical financial results and
provides guidance based on “non-GAAP core earnings” and “non-GAAP
core EPS” in order to provide a measure that allows investors to
compare the underlying financial performance of the business from
one period to another, exclusive of non-core items.
Beginning with the quarter and full year periods ended December
31, 2019, PG&E Corporation and the Utility changed the name of
their principal non-GAAP earnings metric from "non-GAAP earnings
from operations" to "non-GAAP core earnings" in order to align more
closely with the terminology used by their industry peers.
Likewise, PG&E Corporation and the Utility will now refer to
adjustments as "non-core items" rather than "items impacting
comparability."
“Non-GAAP core earnings” is a non-GAAP financial measure and is
calculated as income available for common shareholders less
non-core items. “Non-core items” include items that management does
not consider representative of ongoing earnings and affect
comparability of financial results between periods, consisting of
the items listed in "Reconciliation of PG&E Corporation’s
Consolidated Earnings (Loss) Attributable to Common Shareholders in
Accordance with Generally Accepted Accounting Principles (“GAAP”)
to Non-GAAP Earnings from Operations." “Non-GAAP core EPS” also
referred to as “non-GAAP core earnings per share” is a non-GAAP
financial measure and is calculated as non-GAAP core earnings
divided by common shares outstanding (diluted). PG&E
Corporation uses non-GAAP core earnings and non-GAAP core EPS to
understand and compare operating results across reporting periods
for various purposes including internal budgeting and forecasting,
short- and long-term operating planning, and employee incentive
compensation. PG&E Corporation believes that non-GAAP core
earnings and non-GAAP core EPS provide additional insight into the
underlying trends of the business, allowing for a better comparison
against historical results and expectations for future
performance.
Non-GAAP core earnings and non-GAAP core EPS are not substitutes
or alternatives for GAAP measures such as consolidated income
available for common shareholders and may not be comparable to
similarly titled measures used by other companies.
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