Release and Selected Exhibits
Presentation and Complete Earnings Exhibits
SAN FRANCISCO — PG&E Corporation's (NYSE: PCG) first-quarter 2019 net income available for common shareholders was $136 million, or $0.25 per share, as reported in accordance with generally accepted accounting principles (GAAP). This compares with net income available for common shareholders of $442 million, or $0.86 per share, for the first quarter of 2018.
GAAP results include items that management does not consider part of normal, ongoing operations (items impacting comparability), which totaled $410 million after-tax, or $0.79 per share, for the quarter. This was primarily driven by enhanced and accelerated electric asset inspection costs, clean-up and repair costs related to the 2018 Camp Fire, legal and other costs related to the 2017 Northern California wildfires and the 2018 Camp Fire, and financing, legal, and other 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).
"The people of California look to PG&E to provide safe electric and natural gas service, and this remains our most important responsibility. Over the last several months, the company has heard the calls for change, and has executed a number of actions that position PG&E to be able to address the evolving needs of California. As we position PG&E for the long-term, we are continuing to implement programs that will make the communities we serve safer in the face of extreme weather and wildfire risk, while also recognizing that significant work remains to be done as our state collectively confronts the coming wildfire season and the challenges of climate change," said PG&E Corporation Chief Executive Officer (CEO) and President Bill Johnson.
Mr. Johnson, who recently concluded a more than six-year tenure as President and CEO of the Tennessee Valley Authority, began his role at PG&E today.
In April, PG&E Corporation and the Utility named refreshed Boards of Directors that include 13 highly accomplished individuals committed to further enhancing PG&E's safety culture, to understanding and properly responding to customer concerns, and to fairly treating wildfire victims, employees, retirees and other interested parties. Former state and federal regulator Nora Mead Brownell was named as Chair of the Board of PG&E Corporation, and former U.S. Ambassador Jeffrey Bleich was named as Chair of the Board of the Utility. PG&E Corporation also engaged former National Transportation Safety Board Chairman Chris Hart to be a special independent safety advisor to PG&E Corporation's CEO and President. Mr. Johnson was separately named to the Board of the Utility, effective today.
PG&E Corporation will also propose to increase the maximum size of its Board to 15 directors, to be voted on at the Annual Shareholders Meeting. In connection with that proposal, Mr. Johnson will stand for election to the PG&E Corporation Board for one of the two new seats, and the Nominating and Governance Committee will begin the search process for the fifteenth director position, focusing on candidates with strong clean energy/clean technology experience, a background in network and customer technology, strong ties to California, and expertise in California's clean energy goals.
In the months ahead, PG&E Corporation and the Utility remain committed to delivering safe and reliable electric and natural gas service to customers, and to continuing to make critical investments in system safety and maintenance. This includes the Utility's work to further reduce the risk of wildfire in the communities it serves, and to rebuild infrastructure in areas impacted by wildfires.
PG&E is taking action by:
- Further enhancing vegetation management efforts across high and extreme fire-threat areas to address vegetation that poses higher potential for wildfire risk, including removing or trimming particular tree species that have exhibited a higher pattern of failing;
- Conducting enhanced safety inspections of electric infrastructure in high fire-threat areas, including approximately 735,000 electric towers and poles across approximately 5,700 transmission line miles and 25,200 distribution line miles; and
- Expanding procedures for turning off power for safety during wildfire season to include all transmission and distribution lines in high and extreme fire-threat areas.
These wildfire safety actions and programs are part of PG&E's 2019 Wildfire Safety Plan that the Utility filed with the California Public Utilities Commission (CPUC) in February. The plan addresses the Utility's unique and diverse service area and is subject to public review and annual approval by the CPUC.
Non-GAAP Earnings from Operations
PG&E Corporation's non-GAAP earnings from operations, which exclude items impacting comparability (IIC), were $546 million, or $1.04 per share, in the first quarter of 2019, compared with $468 million, or $0.91 per share, during the same period in 2018.
The increase in quarter-over-quarter non-GAAP earnings from operations was primarily driven by growth in rate base earnings, timing of insurance premiums and timing of taxes.
PG&E Corporation discloses "non-GAAP earnings from operations," 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 items impacting comparability. See the accompanying tables for a reconciliation of non-GAAP earnings from operations to consolidated income available for common shareholders.
At this time, PG&E Corporation is not providing guidance for 2019 GAAP earnings and non-GAAP earnings from operations due to the continuing uncertainty related to the 2018 Camp Fire, the 2017 Northern California wildfires, the Chapter 11 proceedings, and legislative and regulatory reforms. PG&E Corporation is providing 2019 IIC guidance of $1.0 billion to $1.4 billion after-tax for costs related to enhanced and accelerated electric asset inspections, the 2018 Camp Fire, 2017 Northern California wildfires, and Chapter 11-related matters. See the accompanying tables for additional information.
IIC guidance is based on various assumptions and forecasts related to future expenses 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.
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 "Wildfire Updates" and "News & Events: Events & Presentations" tabs, respectively, in order to publicly disseminate such information. It is possible that any of these filings or information included therein could be deemed to be material information.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. Each of PG&E Corporation and the Utility is a separate entity, with distinct creditors and claimants, and is subject to separate laws, rules and regulations. For more information, visit http://www.pgecorp.com. In this press release, they are together referred to as "PG&E."
This press release contains forward-looking statements that are not historical facts, including statements about the beliefs, expectations, estimates, future plans and strategies of PG&E Corporation and the Utility, as well as forecasts and estimates regarding potential liability in connection with the 2018 Camp Fire and 2017 Northern California wildfires, the Utility's 2019 Wildfire Safety Plan, and PG&E Corporation's 2019 IIC guidance. 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 annual report on Form 10-K for the year ended December 31, 2018, their joint quarterly report on Form 10-Q for the quarter ended March 31, 2019, and other reports filed with the SEC, which are available on PG&E Corporation's website at www.pgecorp.com and on the SEC website at www.sec.gov. Additional factors include, but are not limited to, those associated with the Chapter 11 cases of PG&E Corporation and the Utility that commenced on January 29, 2019. 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.