PG&E CORPORATION AND

PACIFIC GAS AND ELECTRIC COMPANY, DEBTORS-IN-POSSESSION

FORM10-Q

FOR THE QUARTERLY PERIOD ENDEDJUNE 30, ~~2018~~2019

TABLEOF CONTENTS



GLOSSARY
PART I. FINANCIAL INFORMATION
	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	PG&E CORPORATION
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	~~PACIFIC GAS AND ELECTRIC COMPANY~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
	~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME~~PACIFIC GAS AND ELECTRIC COMPANY
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	CONDENSED CONSOLIDATED BALANCE SHEETS
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
	NOTE 2: ~~SIGNIFICANT ACCOUNTING POLICIES~~BANKRUPTCY FILING
	NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
	NOTE 4: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS
	NOTE 4:5: DEBT
	NOTE 5:6: EQUITY
	NOTE 6:7: EARNINGS PER SHARE
	NOTE 7:8: DERIVATIVES
	NOTE 8:9: FAIR VALUE MEASUREMENTS
	NOTE 9:10: WILDFIRE-RELATED CONTINGENCIES ~~AND COMMITMENTS~~
	NOTE 11: OTHER CONTINGENCIES AND COMMITMENTS
	NOTE 12: SUBSEQUENT EVENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	OVERVIEW
	RESULTS OF OPERATIONS
	LIQUIDITY AND FINANCIAL RESOURCES
	ENFORCEMENT AND LITIGATION MATTERS
	REGULATORY MATTERS
	LEGISLATIVE AND REGULATORY INITIATIVES
	ENVIRONMENTAL MATTERS
	CONTRACTUAL COMMITMENTS
	RISK MANAGEMENT ACTIVITIES
	~~CRITICAL ACCOUNTING POLICIES~~RECENT DEVELOPMENTS
	CRITICAL ACCOUNTING POLICIES
	ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
	FORWARD-LOOKING STATEMENTS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 1A. RISK FACTORS
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



	ITEM 6. EXHIBITS
	~~ITEM 5. OTHER INFORMATION~~
	~~ITEM 6. EXHIBITS~~
	SIGNATURES

GLOSSARY

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.



~~2017~~2018 Form 10-K	PG&E Corporation and Pacific Gas and Electric ~~Company's~~Company’s combined Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018
2019 Wildfire Safety Plan	the wildfire mitigation plan for 2019 submitted by the Utility to the CPUC pursuant to SB 901
AB	Assembly Bill
ALJ	administrative law judge
ARO	asset retirement obligation
ASU	accounting standard update issued by the FASB (see below)
Bankruptcy Code	the United States Bankruptcy Code
Bankruptcy Court	the U.S. Bankruptcy Court for the Northern District of California
CAISO	California Independent System Operator
Cal Fire	California Department of Forestry and Fire Protection
CCA	Community Choice Aggregator
CCPA	California Consumer Privacy Act of 2018
CEC	California Energy Resources Conservation and Development Commission
CEMA	Catastrophic Event Memorandum Account
Chapter 11	chapter 11 of title 11 of the U.S. Code
Chapter 11 Cases	the voluntary cases commenced by each of PG&E Corporation and the Utility under Chapter 11 on January 29, 2019
CPUC	California Public Utilities Commission
CRRs	congestion revenue rights
CWSP	Community Wildfire Safety Program
DA	Direct Access
DER	distributed energy resources
Diablo Canyon	Diablo Canyon nuclear power plant
DIP Credit Agreement	Senior Secured Superpriority Debtor in Possession Credit, Guaranty and Security Agreement, dated as of February 1, 2019, among the Utility, as borrower, PG&E Corporation, as guarantor, JPMorgan Chase Bank, N.A., as administrative agent, and Citibank, N.A., as collateral agent
DOGGR	Division of Oil, Gas, and Geothermal Resources of the California Department of Conservation
DRP	Distribution Resource Plan
DTSC	Department of Toxic Substances Control
EPS	earnings per common share
EV	electric vehicle
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FHPMA	fire hazard prevention memorandum account
FRMMA	fire risk mitigation memorandum account
GAAP	U.S. Generally Accepted Accounting Principles
GHG	greenhouse gas
GRC	general rate case
GT&S	gas transmission and storage
HSM	hazardous substance memorandum account
IOU(s)	investor-owned utility(ies)
LIBOR	London Interbank Offered Rate
LSTC	liabilities subject to compromise



MD&A	Management’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
the Monitor	third-party monitor retained as part of its compliance with the sentencing terms of the Utility’s January 27, 2017 federal criminal conviction
NAV	net asset value
NDCTP	Nuclear Decommissioning Cost Triennial Proceedings
NEIL	Nuclear Electric Insurance Limited
NRC	Nuclear Regulatory Commission
OES	State of California Office of Emergency Services
OII	order instituting investigation
OIR	order instituting rulemaking
~~ORA~~PAO	Public Advocates Office of the California Public Utilities Commission (formerly known as Office of Ratepayer Advocates or ORA)
PCIA	Power Charge Indifference Adjustment
PD	proposed decision
Petition Date	January 29, 2019
PFM	petition for modification
~~RAMP~~PSA	~~Risk Assessment Mitigation Phase~~plan support agreement
ROE	return on equity
ROU asset	right-of-use asset
SB	Senate Bill
SEC	U.S. Securities and Exchange Commission
SED	Safety and Enforcement Division of the CPUC
Tax Act	Tax Cuts and Jobs Act of 2017


TCC	Official Committee of Tort Claimants
TE	transportation electrification
TO	transmission owner
TURN	The Utility Reform Network
UCC	Official Committee of Unsecured Creditors
USAO	United States Attorney’s Office for the Northern District of California
Utility	Pacific Gas and Electric Company
VIE(s)	variable interest entity(ies)
WEMA	Wildfire Expense Memorandum Account
~~Westinghouse~~Wildfire Assistance Fund	~~Westinghouse Electric Company, LLC~~program designed to assist those displaced by the 2018 Camp fire and 2017 Northern California wildfires with the costs of temporary housing and other urgent needs
Wildfire Fund	statewide 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
WPMA	wildfire plan memorandum account

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PG&E CORPORATION

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	(Unaudited)												(Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2018			2017			2018			2017			2019			2018			2019			2018
Operating Revenues
Electric	$	3,312		$	3,323		$	6,263		$	6,388		$	2,946		$	3,312		$	5,738		$	6,263
Natural gas	922			927			2,027			2,130			997			922			2,216			2,027
Total operating revenues	4,234			4,250			8,290			8,518			3,943			4,234			7,954			8,290
Operating Expenses
Cost of electricity	963			1,123			1,782			1,970			837			963			1,436			1,782
Cost of natural gas	79			121			368			446			108			79			447			368
Operating and maintenance	1,786			1,605			3,390			3,129			1,942			1,786			4,029			3,390
Wildfire-related claims, net of insurance recoveries	2,125			(46		)	2,118			(53		)	3,900			2,125			3,900			2,118
Depreciation, amortization, and decommissioning	746			712			1,498			1,424			796			746			1,593			1,498
Total operating expenses	5,699			3,515			9,156			6,916			7,583			5,699			11,405			9,156
Operating Income (Loss)	(1,465		)	735			(866		)	1,602
Operating Loss													(3,640		)	(1,465		)	(3,451		)	(866		)
Interest income	12			8			21			13			22			12			44			21
Interest expense	(226		)	(225		)	(446		)	(443		)	(60		)	(226		)	(163		)	(446		)
Other income, net	106			26			214			60			66			106			137			214
Income (Loss) Before Income Taxes	(1,573		)	544			(1,077		)	1,232
Income tax provision (benefit)	(593		)	134			(542		)	243
Net Income (Loss)	(980		)	410			(535		)	989
Reorganization items, net													(56		)	—			(183		)	—
Loss Before Income Taxes													(3,668		)	(1,573		)	(3,616		)	(1,077		)
Income tax benefit													(1,119		)	(593		)	(1,203		)	(542		)
Net Loss													(2,549		)	(980		)	(2,413		)	(535		)
Preferred stock dividend requirement of subsidiary	4			4			7			7			4			4			7			7
Income (Loss) Available for Common Shareholders	$	(984	)	$	406		$	(542	)	$	982
Loss Attributable to Common Shareholders													$	(2,553	)	$	(984	)	$	(2,420	)	$	(542	)
Weighted Average Common Shares Outstanding, Basic	516			511			516			510			529			516			528			516
Weighted Average Common Shares Outstanding, Diluted	516			513			517			512			529			516			528			517
Net Earnings (Loss) Per Common Share, Basic	$	(1.91	)	$	0.79		$	(1.05	)	$	1.93
Net Earnings (Loss) Per Common Share, Diluted	$	(1.91	)	$	0.79		$	(1.05	)	$	1.92
Dividends Declared Per Common Share	$	—		$	0.53		$	—		$	1.02
Net Loss Per Common Share, Basic													$	(4.83	)	$	(1.91	)	$	(4.58	)	$	(1.05	)
Net Loss Per Common Share, Diluted													$	(4.83	)	$	(1.91	)	$	(4.58	)	$	(1.05	)

See accompanying Notes to the Condensed Consolidated Financial Statements.	See accompanying Notes to the Condensed Consolidated Financial Statements.												See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	(Unaudited)										(Unaudited)
	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2018			2017		2018			2017		2019			2018			2019			2018
Net Income (Loss)	$	(980	)	$	410	$	(535	)	$	989
Net Loss											$	(2,549	)	$	(980	)	$	(2,413	)	$	(535	)
Other Comprehensive Income
Pension and other post-retirement benefit plans obligations (net of taxes of $0, $0, $0, and $0, at respective dates)	—			1		—			1		—			—			—			—
Total other comprehensive income (loss)	—			1		—			1
Comprehensive Income (Loss)	(980		)	411		(535		)	990
Total other comprehensive income											—			—			—			—
Comprehensive Loss											(2,549		)	(980		)	(2,413		)	(535		)
Preferred stock dividend requirement of subsidiary	4			4		7			7		4			4			7			7
Comprehensive Income (Loss) Attributable to Common Shareholders	$	(984	)	$	407	$	(542	)	$	983
Comprehensive Loss Attributable to Common Shareholders											$	(2,553	)	$	(984	)	$	(2,420	)	$	(542	)

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)						(Unaudited)
	Balance At						Balance At
(in millions)	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	517		$	449		$	3,459		$	1,668
Accounts receivable:
Customers (net of allowance for doubtful accounts of $58 and $64 at respective dates)	1,169			1,243
Customers (net of allowance for doubtful accounts of $39 and $56 at respective dates)							1,260			1,148
Accrued unbilled revenue	995			946			991			1,000
Regulatory balancing accounts	1,563			1,222			1,884			1,435
Other	1,027			861			2,610			2,686
Regulatory assets	194			615			212			233
Inventories:
Gas stored underground and fuel oil	107			115			99			111
Materials and supplies	380			366			509			443
Income taxes receivable							18			23
Other	415			464			535			448
Total current assets	6,367			6,281			11,577			9,195
Property, Plant, and Equipment
Electric	56,410			55,133			60,967			59,150
Gas	20,387			19,641			22,428			21,556
Construction work in progress	2,643			2,471			2,563			2,564
Other	2			3			20			2
Total property, plant, and equipment	79,442			77,248			85,978			83,272
Accumulated depreciation	(24,288		)	(23,459		)	(25,727		)	(24,715		)
Net property, plant, and equipment	55,154			53,789			60,251			58,557
Other Noncurrent Assets
Regulatory assets	4,121			3,793			5,349			4,964
Nuclear decommissioning trusts	2,828			2,863			3,016			2,730
Operating lease right of use asset							2,662			—
Income taxes receivable	66			65			67			69
Other	1,353			1,221			1,465			1,480
Total other noncurrent assets	8,368			7,942			12,559			9,243
TOTAL ASSETS	$	69,889		$	68,012		$	84,387		$	76,995

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)						(Unaudited)
	Balance At						Balance At
(in millions, except share amounts)	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings	$	1,450		$	931		$	—		$	3,435
Long-term debt, classified as current	193			445			—			18,559
Accounts payable:
Trade creditors	1,477			1,646			1,679			1,975
Regulatory balancing accounts	1,303			1,120			1,370			1,076
Other	541			517			593			464
Operating lease liabilities							546			—
Disputed claims and customer refunds	215			243			—			220
Interest payable	209			217			5			228
Wildfire-related claims	2,860			561			100			14,226
Other	1,538			1,449			1,418			1,512
Total current liabilities	9,786			7,129			5,711			41,695
Noncurrent Liabilities
Long-term debt	17,612			17,753
Debtor-in-possession financing							1,500			—
Regulatory liabilities	8,498			8,679			9,038			8,539
Pension and other post-retirement benefits	2,054			2,128			1,996			2,119
Asset retirement obligations	4,964			4,899			6,111			5,994
Deferred income taxes	5,667			5,822			2,354			3,281
Operating lease liabilities							2,116			—
Other	2,247			2,130			2,357			2,464
Total noncurrent liabilities	41,042			41,411			25,472			22,397
Contingencies and Commitments (Note 9)
Liabilities Subject to Compromise							42,610			—
Equity
Shareholders' Equity
Common stock, no par value, authorized 800,000,000 shares; 517,102,983 and 514,755,845 shares outstanding at respective dates	12,765			12,632
Shareholders’ Equity
Common stock, no par value, authorized 800,000,000 shares; 529,223,793 and 520,338,710 shares outstanding at respective dates							13,014			12,910
Reinvested earnings	6,057			6,596			(2,663		)	(250		)
Accumulated other comprehensive loss	(13		)	(8		)	(9		)	(9		)
Total shareholders' equity	18,809			19,220
Total shareholders’ equity							10,342			12,651
Noncontrolling Interest - Preferred Stock of Subsidiary	252			252			252			252
Total equity	19,061			19,472			10,594			12,903
TOTAL LIABILITIES AND EQUITY	$	69,889		$	68,012		$	84,387		$	76,995

See accompanying Notes to the Condensed Consolidated Financial Statements.

PG&E CORPORATION

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	(Unaudited)						(Unaudited)
	Six Months Ended June 30,						Six Months Ended June 30,
(in millions)	2018			2017			2019			2018
Cash Flows from Operating Activities
Net income (loss)	$	(535	)	$	989
Net loss							$	(2,413	)	$	(535	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and decommissioning	1,498			1,424			1,593			1,498
Allowance for equity funds used during construction	(63		)	(34		)	(45		)	(63		)
Deferred income taxes and tax credits, net	(145		)	516			(915		)	(145		)
Disallowed capital expenditures	—			47
Reorganization items, net (Note 2)							90			—
Other	104			121			53			104
Effect of changes in operating assets and liabilities:
Accounts receivable	(11		)	111			(54		)	(11		)
Wildfire-related insurance receivable	(144		)	54			35			(144		)
Inventories	(6		)	(38		)	(41		)	(6		)
Accounts payable	39			19			159			39
Wildfire-related claims	2,299			(116		)	(14		)	2,299
Income taxes receivable/payable	—			67			5			—
Other current assets and liabilities	(103		)	(92		)	(15		)	(103		)
Regulatory assets, liabilities, and balancing accounts, net	(12		)	(353		)	(34		)	(12		)
Liabilities subject to compromise							4,221			—
Other noncurrent assets and liabilities	(168		)	41			132			(168		)
Net cash provided by operating activities	2,753			2,756			2,757			2,753
Cash Flows from Investing Activities
Capital expenditures	(2,897		)	(2,474		)	(2,410		)	(2,897		)
Proceeds from sales and maturities of nuclear decommissioning trust investments	802			794			517			802
Purchases of nuclear decommissioning trust investments	(815		)	(817		)	(547		)	(815		)
Other	15			8			6			15
Net cash used in investing activities	(2,895		)	(2,489		)	(2,434		)	(2,895		)
Cash Flows from Financing Activities
Proceeds from debtor-in-possession credit facility							1,850			—
Repayments of debtor-in-possession credit facility							(350		)	—
Debtor-in-possession credit facility debt issuance costs							(111		)	—
Borrowings under revolving credit facilities	700			—			—			700
Net issuances (repayments) of commercial paper, net of discount of $1 and $3 at respective dates	(182		)	(339		)
Net repayments of commercial paper, net of discount of $1							—			(182		)
Short-term debt financing	250			250			—			250
Short-term debt matured	(250		)	(250		)	—			(250		)
Proceeds from issuance of long-term debt, net of discount and issuance costs of $0 and $11 at respective dates	350			734
Proceeds from issuance of long-term debt, net of discount and issuance costs							—			350
Long-term debt matured or repurchased	(750		)	(345		)	—			(750		)
Common stock issued	82			247			85			82
Common stock dividends paid	—			(488		)
Other	10			(75		)	(6		)	10
Net cash provided by (used in) financing activities	210			(266		)
Net change in cash and cash equivalents	68			1
Cash and cash equivalents at January 1	449			177
Net cash provided by financing activities							1,468			210
Net change in cash, cash equivalents, and restricted cash							1,791			68
Cash, cash equivalents, and restricted cash at January 1							1,675			456
Cash, cash equivalents, and restricted cash at June 30							$	3,466		$	524
Less: Restricted cash and restricted cash equivalents included in other current assets							(7		)	$	(7	)
Cash and cash equivalents at June 30	$	517		$	178		$	3,459		$	517


Supplemental disclosures of cash flow information
Cash received (paid) for:
Cash paid for:
Interest, net of amounts capitalized	$	(394	)	$	(395	)	$	(21	)	$	(394	)
Income taxes, net	—			68
Supplemental disclosures of noncash operating activities
Operating lease liabilities arising from obtaining ROU assets							$	2,816		$	—
Supplemental disclosures of noncash investing and financing activities
Common stock dividends declared but not yet paid	$	—		$	271
Capital expenditures financed through accounts payable	317			268			$	836		$	317
Noncash common stock issuances	—			10
Terminated capital leases	137			—

See accompanying Notes to the Condensed Consolidated Financial Statements.

PACIFIC GAS AND ELECTRIC COMPANY

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER’S 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, 2018	$	258	$	1,322	$	8,550	$	2,826		$	(1	)	$	12,955
Net income	—		—		—		133			—			133
Other comprehensive loss	—		—		—		—			—			—
Equity contribution	—		—		—		—			—			—
Balance at March 31, 2019	$	258	$	1,322	$	8,550	$	2,959		$	(1	)	$	13,088
Net loss	—		—		—		(2,550		)	—			(2,550		)
Other comprehensive loss	—		—		—		—			—			—
Equity contribution	—		—		—		—			—			—
Balance at June 30, 2019	$	258	$	1,322	$	8,550	$	409		$	(1	)	$	10,538



(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, 2017	$	258	$	1,322	$	8,505	$	9,656		$	6		$	19,747
Net income	—		—		—		452			—			452
Other comprehensive income (loss)	—		—		—		2			(2		)	—
Equity contribution	—		—		—		—			—			—
Preferred stock dividend	—		—		—		(3		)	—			(3		)
Balance at March 31, 2018	$	258	$	1,322	$	8,505	$	10,107		$	4		$	20,196
Net loss	—		—		—		(976		)	—			(976		)
Other comprehensive income	—		—		—		—			1			1
Equity contribution	—		—		—		—			—			—
Preferred stock dividend	—		—		—		(4		)	—			(4		)
Balance at June 30, 2018	$	258	$	1,322	$	8,505	$	9,127		$	5		$	19,217

See accompanying Notes to the Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1: 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 inas 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 (consisting only of normal recurring 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, ~~2017~~2018 in the Condensed Consolidated Balance Sheets included in this quarterly report was derived from the audited Consolidated Balance Sheets in Item 8 of the ~~2017~~2018 Form 10-K. This quarterly report should be read in conjunction with the ~~2017~~2018 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, legal and regulatory contingencies, insurance recoveries, environmental remediation liabilities, AROs, ~~and~~ pension and other post-retirement benefit ~~plans obligations.~~plan obligations, and the valuation of pre-petition liabilities. 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 and results of operations during the period in which such change occurred.

~~Beginning~~Chapter 11 Filing and Going Concern

The accompanying Condensed Consolidated Financial Statements have been prepared on ~~October 8, 2017, multiple~~a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. However, as a result of the challenges that are further described below, such realization of assets and satisfaction of liabilities are subject to uncertainty. PG&E Corporation and the Utility are facing extraordinary challenges relating to a series of catastrophic wildfires ~~spread through~~that occurred in Northern California ~~including Napa, Sonoma, Butte, Humboldt, Mendocino, Del Norte, Lake, Nevada,~~in 2017 and ~~Yuba Counties,~~2018. See Note 10 below. Uncertainty regarding these matters raises substantial doubt about PG&E Corporation’s and the Utility’s abilities to continue as going concerns. PG&E Corporation and the Utility determined that commencing reorganization cases under Chapter 11 was necessary to restore PG&E Corporation’s and the Utility’s financial stability to fund ongoing operations and provide safe service to customers. However, there can be no assurance that such proceedings will restore PG&E Corporation’s and the Utility’s financial stability.

On the Petition Date, PG&E Corporation and the Utility filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary should PG&E Corporation and the Utility be unable to continue as going concerns.

Pursuant to Chapter 11, PG&E Corporation and the Utility retain control of their assets and are authorized to operate their business as debtors-in-possession while being subject to the jurisdiction of the Bankruptcy Court. While operating as debtors-in-possession under Chapter 11, PG&E Corporation and the Utility may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business and subject to restrictions in PG&E Corporation’s and the Utility’s DIP Credit Agreement (see Note 5 below) and applicable orders of the Bankruptcy Court, for amounts other than those reflected in the accompanying Condensed Consolidated Financial Statements. Any such actions occurring during the Chapter 11 Cases authorized by the Bankruptcy Court could materially impact the amounts and classifications of assets and liabilities reported in PG&E Corporation’s and the Utility’s Condensed Consolidated Financial Statements. (For more information regarding the Chapter 11 Cases, see Note 2 below.)

NOTE 2: BANKRUPTCY FILING

Chapter 11 Proceedings

On January 29, 2019, PG&E Corporation and the Utility filed the Chapter 11 Cases with the Bankruptcy Court. PG&E Corporation and the Utility continue 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.

Under the Bankruptcy Code, third-party actions to collect pre-petition indebtedness owed by PG&E Corporation or the Utility, as well as most litigation pending against PG&E Corporation and the Utility (including the third-party matters described in Note 10 below) as of the Petition Date, are subject to an automatic stay. Absent an order of the Bankruptcy Court providing otherwise, substantially all pre-petition liabilities will be administered under a Chapter 11 plan of reorganization to be voted upon by creditors and other stakeholders, and approved by the Bankruptcy Court. However, under the Bankruptcy Code, regulatory or criminal proceedings are generally not subject to an automatic stay, and PG&E Corporation and the Utility expect these proceedings to continue during the pendency of the Chapter 11 Cases.

Under the priority scheme established by the Bankruptcy Code, certain post-petition and secured or “priority” pre-petition liabilities need to be satisfied before general unsecured creditors and holders of PG&E Corporation's and the Utility’s equity are entitled to receive any distribution. No assurance can be given as to what values, if any, will be ascribed in the ~~area surrounding Yuba City (the “Northern California wildfires”). According~~Chapter 11 Cases to the ~~Cal Fire California Statewide Fire Summary dated~~claims and interests of each of these constituencies. Additionally, no assurance can be given as to whether, when or in what form unsecured creditors and holders of PG&E Corporation’s or the Utility’s equity may receive a distribution on such claims or interests.

Under the Bankruptcy Code, PG&E Corporation and the Utility may assume, assume and assign, or reject certain executory contracts and unexpired leases, including, without limitation, leases of real property and equipment, subject to the approval of the Bankruptcy Court and to certain other conditions. Any description of an executory contract or unexpired lease in this quarterly report on Form 10-Q, or in the 2018 Form 10-K, including, where applicable, the express termination rights thereunder or a quantification of their obligations, must be read in conjunction with, and is qualified by, any overriding rejection rights PG&E Corporation and the Utility have under the Bankruptcy Code.

Significant Bankruptcy Court Actions

On January 31, 2019, the Bankruptcy Court approved, on an interim basis, certain motions (the “First Day Motions”) authorizing, but not directing, PG&E Corporation and the Utility to, among other things, (a) secure $5.5 billion of debtor-in-possession financing; (b) continue to use PG&E Corporation’s and the Utility’s cash management system; and (c) pay certain pre-petition claims relating to (i) certain safety, reliability, outage, and nuclear facility suppliers; (ii) shippers, warehousemen, and other lien claimants; (iii) taxes; (iv) employee wages, salaries, and other compensation and benefits; and (v) customer programs, including public purpose programs. The First Day Motions were subsequently approved by the Bankruptcy Court on a final basis at hearings on February 27, 2019, March 12, 2019, March 13, 2019, and March 27, 2019.

On May 23, 2019, the Bankruptcy Court entered an order (the “Exclusivity Order”) pursuant to section 1121(d) of the Bankruptcy Code, extending PG&E Corporation’s and the Utility’s exclusive periods in which to file a Chapter 11 plan of reorganization (the “Exclusive Filing Period”) and solicit acceptances thereof (the “Exclusive Solicitation Period”). Pursuant to the Exclusivity Order, PG&E Corporation’s and the Utility’s Exclusive Filing Period is extended to, and including, September 26, 2019, and PG&E Corporation’s and the Utility’s Exclusive Solicitation Period is extended to, and including, November 26, 2019.

On June 25, 2019, the Ad Hoc Committee of Senior Unsecured Noteholders of the Utility (the “Ad Hoc Noteholder Committee”) submitted a motion, pursuant to section 1121(d)(1) of the Bankruptcy Code, for the entry of an order terminating the Exclusive Filing Period and the Exclusive Solicitation Period. The Ad Hoc Noteholder Committee annexed to its motion a “Term Sheet for Plan of Reorganization.” On July 17, 2019, the Ad Hoc Noteholder Committee filed with the Bankruptcy Court an amended version of the term sheet, along with a commitment letter with respect to certain financings described therein. Certain third parties have filed joinders and statements in support with the Bankruptcy Court with respect to the Ad Hoc Noteholder Committee’s motion, but such parties have not taken any position on the plan construct described by the term sheet. These third parties include TURN, two collective bargaining units representing the Utility’s employees, and the UCC. On July 18, 2019, PG&E Corporation and the Utility filed an objection to the Ad Hoc Noteholder Committee’s motion with the Bankruptcy Court, requesting that the motion be denied. Also on July 18, 2019, the Ad Hoc Group of Subrogation Claim Holders (the “Ad Hoc Subrogation Group”), the TCC, and certain owners of common stock of PG&E Corporation (the “Shareholder Group”) filed objections to the Ad Hoc Noteholder Committee’s motion with the Bankruptcy Court. At a hearing on July 24, 2019, the Bankruptcy Court granted an oral motion of the CPUC and the Governor’s office to adjourn the hearing on the Ad Hoc Noteholder Committee’s motion from July 24, 2019 to August 13, 2019, to allow PG&E Corporation and the Utility, the CPUC, the Governor’s office, and other parties in interest time to engage in discussions regarding the formulation of a potential protocol for the efficient submission and consideration of Chapter 11 plan proposals. The parties are due to provide a status update on these discussions to the Bankruptcy Court on August 9, 2019. On August 7, 2019, the Ad Hoc Noteholder Committee submitted a statement with the Bankruptcy Court, criticizing the protocol proposed by the CPUC and including as an exhibit its own proposed “Alternative Protocol” to govern a competitive plan process. In addition, the Ad Hoc Noteholder Committee annexed to its statement a second amended version of the term sheet and a revised version of the commitment letter.

On July 23, 2019, the Ad Hoc Subrogation Group submitted its own motion, pursuant to section 1121(d)(1) of the Bankruptcy Code, to terminate the Exclusive Filing Period and the Exclusive Solicitation Period, which included as an exhibit a “Restructuring Term Sheet.” The hearing before the Bankruptcy Court on the Ad Hoc Subrogation Group’s motion is scheduled for August 13, 2019. On August 6, 2019, PG&E Corporation and the Utility filed an objection to the Ad Hoc Subrogation Group’s motion with the Bankruptcy Court, requesting that the motion be denied. Also on August 6, 2019, the UCC filed a statement in opposition with respect to the Ad Hoc Subrogation Group’s motion, and the Shareholder Group filed an objection to the Ad Hoc Subrogation Group’s motion, both requesting that the motion be denied.

On July 1, 2019, the Bankruptcy Court entered an order approving a deadline of October ~~30, 2017,~~21, 2019, at 5:00 p.m. (Pacific Time) (the “Bar Date”) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019. The Bankruptcy Court also approved PG&E Corporation’s and the Utility’s plan to provide notice of the Bar Date to parties-in-interest, including potential wildfire-related claimants and other potential creditors.

Debtor-In-Possession Financing

See Note 5 for further discussion of the DIP Facilities, which provide up to $5.5 billion in financing.

Financial Reporting in Reorganization

Effective on the Petition Date, PG&E Corporation and the Utility began to apply accounting standards applicable to reorganizations, which are applicable to companies under Chapter 11 bankruptcy protection. These accounting standards require the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Expenses, realized gains and losses, and provisions for losses that are directly associated with reorganization proceedings must be reported separately as reorganization items, net in the Condensed Consolidated Statements of Income. In addition, the balance sheet must distinguish pre-petition LSTC of PG&E Corporation and the Utility from pre-petition liabilities that are not subject to compromise, post-petition liabilities, and liabilities of the subsidiaries of PG&E Corporation that are not debtors in the Chapter 11 Cases in the Condensed Consolidated Balance Sheets. LSTC are pre-petition obligations that are not fully secured and have at least a possibility of not being repaid at the ~~peak~~full claim amount. Where there is uncertainty about whether a secured claim will be paid or impaired pursuant to the Chapter 11 Cases, PG&E Corporation and the Utility have classified the entire amount of the wildfires, there were 21 major wildfires in Northern California that, in total, burned over 245,000 acres and destroyed an estimated 8,900 structures. The wildfires also resulted in 44 fatalities. The Northern California wildfires are under investigation by Cal Fireclaim as LSTC.

Furthermore, the realization of assets and the ~~CPUC's SED. Cal Fire issued~~satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession, actions to enforce or otherwise effect the payment of certain claims against PG&E Corporation and the Utility in existence before the Petition Date are stayed while PG&E Corporation and the Utility continue business operations as debtors-in-possession. These claims are reflected as LSTC in the Condensed Consolidated Balance Sheets at June 30, 2019. Additional claims (which could be LSTC) may arise after the Petition Date resulting from the rejection of executory contracts, including leases, and from the determination by the Bankruptcy Court (or agreement by parties-in-interest) of allowed claims for contingencies and other disputed amounts.

PG&E Corporation’s Condensed Consolidated Financial Statements are presented on a consolidated basis and include the accounts of PG&E Corporation and the Utility and other subsidiaries of PG&E Corporation and the Utility that individually and in aggregate are immaterial. Such other subsidiaries did not file for bankruptcy.

The Utility’s Condensed Consolidated Financial Statements are presented on a consolidated basis and include the accounts of the Utility and other subsidiaries of the Utility that individually and in aggregate are immaterial. Such other subsidiaries did not file for bankruptcy.

Liabilities Subject to Compromise

As a result of the commencement of the Chapter 11 Cases, the payment of pre-petition liabilities is subject to compromise or other treatment pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-petition liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted PG&E Corporation and the Utility authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of PG&E Corporation’s and the Utility’s business and assets. As described above, among other things, the Bankruptcy Court authorized, but did not require, PG&E Corporation and the Utility to pay certain pre-petition claims relating to employee wages and benefits, taxes, and certain vendors.

The determination of how liabilities will ultimately be settled or treated cannot be made until the Bankruptcy Court confirms a Chapter 11 plan of reorganization and such plan becomes effective. Accordingly, the ultimate amount of such liabilities is not determinable at this time. GAAP requires pre-petition liabilities that are subject to compromise to be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for different amounts. The amounts currently classified as LSTC are preliminary and may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, rejection of executory contracts, continued reconciliation or other events.

The following table presents LSTC as reported in the Condensed Consolidated Balance Sheets at June 30, 2019:



(in millions)	Utility		PG&E Corporation⁽¹⁾		PG&E Corporation Consolidated
Financing debt⁽²⁾	$	21,811	$	650	$	22,461
Wildfire-related claims⁽³⁾	18,012		—		18,012
Trade creditors	1,325		4		1,329
Non-qualified benefit plan	18		125		143
2001 bankruptcy disputed claims	221		—		221
Customer deposits & advances	278		—		278
Other	164		2		166
Total Liabilities Subject to Compromise	$	41,829	$	781	$	42,610

⁽¹⁾PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility.

⁽²⁾At June 30, 2019, PG&E Corporation and the Utility had $650 million and $21,526 million in aggregate principal amount of pre-petition indebtedness, respectively. Utility pre-petition financing debt also includes $285 million of accrued contractual interest to the Petition Date. See Note 5 for details of pre-petition debt reported as LSTC.

⁽³⁾See Note 10 for information regarding pre-petition wildfire-related claims reported as LSTC. As described in Note 10 under the heading “Plan Support Agreements with Public Entities,” on June 18, 2019, PG&E Corporation and the Utility entered into agreements with certain local public entities to potentially resolve their wildfire-related claims through the Chapter 11 process.

Potential Claims

PG&E Corporation and the Utility have filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of PG&E Corporation and the Utility, subject to the assumptions filed in connection therewith. On July 1, 2019, the Bankruptcy Court entered an order approving the Bar Date of October 21, 2019, at 5:00 p.m. (Pacific Time) for filing claims against PG&E Corporation and the Utility relating to the period prior to the Petition Date. The Bar Date is subject to certain exceptions, including for claims arising under section 503(b)(9) of the Bankruptcy Code, the bar date for which occurred on April 22, 2019.

Numerous claims have been filed with the Bankruptcy Court against PG&E Corporation and the Utility relating to the period prior to the Petition Date and it is expected that new and amended claims will continue to be filed until the Bar Date, including claims amended to assign value to claims originally filed with no designated value. Through the claims resolution process, differences in amounts scheduled by PG&E Corporation and the Utility and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court where appropriate. In light of the substantial number and amount of claims filed, the claims resolution process may take considerable time to complete and will likely continue after PG&E Corporation and the Utility emerge from bankruptcy. The ultimate number and amount of allowed claims is not determinable at this time.

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. Reorganization items also include adjustments to reflect the carrying value of LSTC at their estimated allowed claim amounts, as such adjustments are approved by the Bankruptcy Court. Cash paid for reorganization items, net was $15 million and $78 million for PG&E Corporation and the Utility, respectively, during the six months ended June 30, 2019. Reorganization items, net for the three months ended June 30, 2019 and from the Petition Date through June 30, 2019 include the following:



	Three Months Ended June 30, 2019
(in millions)	Utility			PG&E Corporation⁽¹⁾			PG&E Corporation Consolidated
Debtor-in-possession financing costs	$	—		$	—		$	—
Legal and other	75			1			76
Interest income	(18		)	(3		)	(21		)
Adjustments to LSTC	—			—			—
Trustee fees⁽²⁾	—			1			1
Total reorganization items, net	$	57		$	(1	)	$	56

⁽¹⁾PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility.

⁽²⁾ PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee in the three months ended June 30, 2019.



	Petition Date Through June 30, 2019
(in millions)	Utility			PG&E Corporation⁽¹⁾			PG&E Corporation Consolidated
Debtor-in-possession financing costs	$	97		$	17		$	114
Legal and other	98			2			100
Interest income	(27		)	(5		)	(32		)
Adjustments to LSTC	—			—			—
Trustee fees⁽²⁾	—			1			1
Total reorganization items, net	$	168		$	15		$	183

⁽¹⁾PG&E Corporation amounts reflected under the column “PG&E Corporation” exclude the accounts of the Utility.

⁽²⁾ PG&E Corporation and the Utility incurred $416,667 and $250,000, respectively, in fees to the U.S. Trustee through June 30, 2019.

Contractual Interest on Debt Subject to Compromise

Effective as of the Petition Date, PG&E Corporation and the Utility ceased recording interest expense on outstanding pre-petition debt. Contractual interest expense represents amounts due under the contractual terms of outstanding pre-petition debt. From the Petition Date through June 30, 2019, contractual interest expense of $405 million related to LSTC has not been recorded in the financial statements. The portion of authorized revenues from the Petition Date through June 30, 2019 related to interest expense on pre-petition debt has been deferred as a non-current regulatory liability.

The Bankruptcy Court’s Decision on its Authority over PG&E Corporation’s and the Utility’s Rejection of Power Purchase Agreements

On June 7, 2019, the Bankruptcy Court granted PG&E Corporation’s and the Utility’s motion for declaratory judgment in an adversary proceeding entitled Pacific Gas & Electric Company v. FERC. In its amended declaratory judgment, the Bankruptcy Court found that FERC had no “concurrent jurisdiction, or any jurisdiction, over the determination of whether any rejections of power purchase contracts by either Debtor should be authorized” pursuant to section 365 of the Bankruptcy Code. The Bankruptcy Court also found that the “Debtors do not need approval from the Federal Energy Regulatory Commission to reject any of their power purchase contracts” and that “[a]ny determinations of the Federal Energy Regulatory Commission” that were contrary to these findings “are void, of no force and effect and not binding on this court or either Debtor.” The Bankruptcy Court further stated that such determinations include, but are not limited to, those previously made in certain FERC proceedings initiated before the Chapter 11 Cases were filed in connection with power purchase contracts with the Utility.

On June 12, 2019, the Bankruptcy Court certified its amended declaratory judgment for direct appeal to the United States Court of Appeals for the Ninth Circuit. On July 15, 2019, FERC and certain counterparties to the Utility’s power purchase agreements filed requests for the Ninth Circuit to permit such direct appeal. In addition, on June 26, 2019, the Utility filed a petition for review of those earlier FERC orders also in the Ninth Circuit.

Resolution of Remaining 2001 Chapter 11 Disputed Claims

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 ~~causes of 16~~outcome of the ~~Northern California wildfires~~various refund offset and interest issues being considered by the ~~remaining wildfires remain under Cal Fire’s investigation, including~~FERC. Generally, any net refunds, claim offsets, or other credits that the ~~possible role~~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.

The Utility’s obligations with respect to such claims (all of which arose prior to the initiation of the Utility’s ~~power lines and other facilities. See “Northern California Wildfires” in Note 9 below.~~pending Chapter 11 Case on January 29, 2019), including pursuant to any prior settlements relating thereto, are expected to be determined through the proceedings of the Chapter 11 Cases.

NOTE 2:3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For a summary of the significant accounting policies used by PG&E Corporation and the Utility, see Note 2 of the Condensed Consolidated Financial Statements above for bankruptcy-related policies and Note 2 of the Notes to the Consolidated Financial Statements in Item 8 of the ~~2017~~2018 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.

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 has a controlling interest or was the primary beneficiary of any of these VIEs at June 30, ~~2018,~~2019, the Utility 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 June 30, ~~2018,~~2019, 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 and six months ended June 30, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	Three Months Ended June 30,												Three Months Ended June 30,
(in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Service cost for benefits earned(1)	$	129		$	118		$	17		$	15		$	111		$	129		$	14		$	17
Interest cost	172			178			18			19			190			172			19			18
Expected return on plan assets	(256		)	(192		)	(32		)	(25		)	(226		)	(256		)	(30		)	(32		)
Amortization of prior service cost	(2		)	(2		)	3			4			(2		)	(2		)	3			3
Amortization of net actuarial loss	2			5			(2		)	1			—			2			(1		)	(2		)
Net periodic benefit cost	45			107			4			14			73			45			5			4
Regulatory account transfer⁽¹⁾⁽²⁾	39			(23		)	—			—			10			39			—			—
Total	$	84		$	84		$	4		$	14		$	83		$	84		$	5		$	4

CONTRACTUAL COMMITMENTS

PG&E Corporation and the Utility enter into contractual commitments in connection with future obligations that relate to purchases of electricity and natural gas for customers, purchases of transportation capacity, purchases of renewable energy, and purchases of fuel and transportation to support the Utility’s generation activities. (See “Purchase Commitments” in Note 911 of the Notes to the Condensed Consolidated Financial Statements in Item 1). Contractual commitments that relate to financing arrangements include long-term debt, preferred stock, and certain forms of regulatory financing. For more in-depth discussion about PG&E Corporation’s and the Utility’s contractual commitments, see “Liquidity and Financial Resources” above and MD&A ~~"Contractual Commitments"~~“Contractual Commitments” in Item 7 of the ~~2017~~2018 Form 10-K.

Off-Balance Sheet Arrangements

PG&E Corporation and the Utility do not have any off-balance sheet arrangements that have had, or are reasonably likely to have, a current or future material effect on their financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, other than those discussed in Note 1314 of the Notes to the Consolidated Financial Statements in Item 8 of the ~~2017~~2018 Form 10-K (the Utility’s commodity purchase agreements).

RISK MANAGEMENT ACTIVITIES

PG&E Corporation, mainly through its ownership of the Utility, and the Utility are exposed to risks associated with adverse changes in commodity prices, interest rates, and counterparty credit.

The Utility actively manages market risk through risk management programs designed to support business objectives, discourage unauthorized risk-taking, reduce commodity cost volatility, and manage cash flows. The Utility uses derivative instruments only for risk mitigation purposes and not for speculative purposes. The Utility’s risk management activities include the use of physical and financial instruments such as forward contracts, futures, swaps, options, and other instruments and agreements, most of which are accounted for as derivative instruments. Some contracts are accounted for as leases. The Utility manages credit risk associated with its counterparties by assigning credit limits based on evaluations of their financial conditions, net worth, credit ratings, and other credit criteria as deemed appropriate. Credit limits and credit quality are monitored periodically. These activities are discussed in detail in the ~~2017~~2018 Form 10-K. There were no significant developments to the Utility’s and PG&E Corporation’s risk management activities during the six months ended June 30, ~~2018.~~2019.

RECENT DEVELOPMENTS

New Chief Executive Officer and Board Members

On April 3, 2019, PG&E Corporation announced the appointment of 10 new directors to the Board of Directors of PG&E Corporation, with seven of the 10 then-incumbent directors stepping down, to be effective later that month. On April 22, 2019, Richard C. Kelly resigned from the Boards of PG&E Corporation and the Utility. Also, PG&E Corporation entered into a Settlement Agreement (the “Settlement Agreement”) with Blue Mountain Credit Alternatives Master Fund L.P. (together with its affiliates, “BlueMountain”), who had previously nominated candidates for election to PG&E Corporation’s Board of Directors. In connection with the execution and delivery of the Settlement Agreement, among other things, Frederick W. Buckman was appointed to the Boards of Directors of PG&E Corporation and the Utility and BlueMountain withdrew its nominations. The full text of the Settlement Agreement with BlueMountain is attached as an exhibit to PG&E Corporation’s Current Report on Form 8-K filed with the SEC on April 23, 2019. As of May 2, 2019, the Boards of Directors of PG&E Corporation and the Utility were each constituted with the following individuals: Richard R. Barrera, Jeffrey L. Bleich, Nora Mead Brownell, Frederick W. Buckman, Cheryl F. Campbell, Fred J. Fowler, William D. Johnson (Utility Board only), Michael J. Leffell, Kenneth Liang, Dominique Mielle, Meridee A. Moore, Eric D. Mullins, Kristine M. Schmidt and Alejandro D. Wolff.

In addition, William D. Johnson joined PG&E Corporation as its new Chief Executive Officer and President, effective May 2, 2019. In connection with the Settlement Agreement, PG&E Corporation agreed to engage Christopher A. Hart, a former chairman of the National Transportation Safety Board, to provide consulting services to Mr. Johnson regarding matters of safety.

PG&E Corporation and the Utility expect that these leadership changes will have a significant impact on their operations and financial performance in the future.

CRITICAL ACCOUNTING POLICIES

The preparation of the Condensed Consolidated Financial Statements in accordance with GAAP involves the use of estimates and assumptions that affect the recorded amounts of assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. In addition to those items listed below, PG&E Corporation and the Utility consider their accounting policies for regulatory assets and liabilities, loss contingencies associated with environmental remediation liabilities and legal and regulatory matters, AROs, and pension and other post-retirement benefits plans to be critical accounting policies. These policies are considered critical accounting policies due, in part, to their complexity and because their application is relevant and material to the financial position and results of operations of PG&E Corporation and the Utility, and because these policies require the use of material judgments and estimates. Actual results may differ materially from these estimates. These accounting policies and their key characteristics are discussed in detail in the ~~2017~~2018 Form 10-K.

Liabilities Subject to Compromise

As a result of the Chapter 11 Cases, the payment of pre-petition indebtedness is subject to compromise or other treatment under a plan of reorganization. The determination of how liabilities will ultimately be settled or treated cannot be made until the Bankruptcy Court confirms a Chapter 11 plan of reorganization and such plan becomes effective. Accordingly, the ultimate amount of such liabilities is not determinable at this time. ASC 852 requires pre-petition liabilities that are subject to compromise to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. The amounts currently classified as liabilities subject to compromise are preliminary and may be subject to future adjustments depending on the Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, rejection of executory contracts, continued reconciliation or other events.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

See the discussion above in Note 23 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

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~~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 pipeline-related expenses that the Utility will not recover through rates; forecasts of capital expenditures; estimates and assumptions used in critical accounting policies, including those relating to regulatory assets and liabilities, environmental remediation, litigation, third-party claims, 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:

the risks and uncertainties associated with the Chapter 11 Cases, including, but not limited to, the ability to develop, consummate, and implement a plan of reorganization with respect to PG&E Corporation and the Utility, which could be adversely affected if the Exclusive Filing Period or the Exclusive Solicitation Period is terminated; the ability to develop and obtain applicable Bankruptcy Court, creditor or regulatory approvals; the effect of any alternative proposals, views or objections related to the plan of reorganization; potential complexities that may arise in connection with concurrent proceedings involving the Bankruptcy Court, the U.S. District Court, the CPUC, and the FERC; increased costs related to the Chapter 11 Cases; the ability to obtain sufficient financing sources for ongoing and future operations; disruptions to PG&E Corporation’s and the Utility’s business and operations and the potential impact on regulatory compliance;

whether, in light of the CPUC July 8, 2019 final decision in the Customer Harm Threshold OIR that excludes companies in Chapter 11 from accessing the Customer Harm Threshold, the Utility will be able to obtain a substantial recovery of costs related to the 2017 Northern California wildfires;

restrictions on PG&E Corporation’s and the Utility’s ability to pursue strategic and operational initiatives for the duration of the Chapter 11 Cases;

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;

the potential delay in emergence from bankruptcy if PG&E Corporation and the Utility are not able to develop and consummate a consensual plan of reorganization and are forced to engage in a contested proceeding;

the possibility that the DIP Credit Agreement is not sufficient to fund PG&E Corporation’s and the Utility’s cash requirements through their emergence from bankruptcy;

the possibility that PG&E Corporation and the Utility may not be able to obtain exit financing on favorable terms or at all;

the impact of AB 1054 on potential losses in connection with future wildfires;

the outcome of the U.S. District Court matters and probation;

the impact of the 2018 Camp fire and the 2017 Northern California wildfires, including whether the Utility will be able to timely recover ~~any~~ costs ~~for clean-up and repair~~incurred in connection with the wildfires in excess of the ~~Utility's facilities through CEMA;~~Utility’s currently authorized revenue requirements; the timing and outcome of the remaining wildfire investigations ~~including into the causes of the wildfires~~ and the extent to which the Utility will have liability associated with these fires; the timing and amount of insurance recoveries; ~~whether the Utility will be able to recover costs in excess of insurance through regulatory mechanisms and~~ the timing and outcome of ~~such recovery;~~the 2017 Northern California Wildfires OII and potential liabilities in connection with fines or penalties that could be imposed on the Utility if the CPUC or any other law enforcement agency were to bring an enforcement action, including a criminal proceeding, and determined that the Utility failed to comply with applicable laws and regulations;

the timing and outcome of any potential settlement with holders of wildfire-related claims;

the ability of PG&E Corporation and the Utility to finance costs, expenses and other possible losses in respect of claims related to the 2018 Camp fire and the 2017 Northern California wildfires, through securitization mechanisms or otherwise, which potential financings are not addressed by AB 1054 as it only applies to future wildfires;

the timing and outcome of claims arising from the 2015 Butte fire, ~~litigation,~~including claims by the OES; the timing and outcome of any proceeding to recover related costs in excess of insurance through rates; ~~the effect, if~~and whether any ~~that the SED’s $8.3 million citations issued~~regulatory enforcement proceedings in connection with the ~~Butte fire may have on the Butte fire litigation; and whether additional investigations and proceedings in connection with the~~2015 Butte fire will be opened and any additional fines or penalties imposed on the Utility;

whether PG&E Corporation and the Utility are able to successfully challenge the application of the doctrine of inverse condemnation to the 2018 Camp fire, the 2017 Northern California wildfires and the 2015 Butte ~~fire, and the timing and outcome of pending wildfire legislation;~~fire;

the timing and outcome of ~~pending~~future regulatory and legislative developments in connection with SB 901, including future wildfire ~~legislation;~~reforms, inverse condemnation reform, and other wildfire mitigation measures or other reforms targeted at the Utility;

the outcome of the ~~Utility's community wildfire safety program~~Utility’s CWSP that the Utility has developed in coordination with first responders, civic and community leaders, and customers, to help reduce wildfire threats and improve safety as a result of climate-driven wildfires and extreme ~~weather;~~weather, including the Utility’s ability to comply with the targets and metrics set forth in the 2019 Wildfire Safety Plan; and the cost of the program, and the timing and outcome of any proceeding to recover such cost through rates;

the amount and timing of additional common stock and debt issuances by PG&E Corporation, including the dilutive impact of common stock issuances to fund PG&E Corporation's equity contributions to the Utility as the Utility incurs charges and costs, including fines, that it cannot recover through rates;

the timing and outcome of CPUC decision(s) related to the Utility’s March 2018 submissions to the CPUC and May 2018 submission to the FERC in connection with the impact of the Tax Act on the Utility’s rate cases and its implementation plan;

~~the timing and outcomes of the 2019 GT&S rate case, 2020 GRC, FERC TO18 and TO19 rate cases, 2018 CEMA, and other ratemaking and regulatory proceedings;~~

~~the costs of the Utility's insurance, and~~ 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 filing of the Chapter 11 Cases;

the timing and outcomes of the 2019 GT&S rate case, 2020 GRC, FERC TO18, TO19, and TO20 rate cases, 2018 CEMA, future applications for WEMA, FHPMA and FRMMA, future cost of capital proceeding, and other ratemaking and regulatory proceedings;

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, the SED’s unresolved enforcement matters relating to the Utility’s compliance with natural gas-related laws and regulations, and other investigations that have been or may be commenced relating to the Utility’s compliance with natural gas- and electric- related laws and regulations, ex parte communications, and the ultimate amount of fines, penalties, and remedial costs that the Utility may incur in connection with the outcomes;

the effects on PG&E ~~Corporation~~Corporation’s and the Utility’s reputations caused by items such as the ~~Utility’s conviction in the federal criminal trial in 2017, the CPUC's~~CPUC’s investigations of natural gas and electric incidents, the 2018 Camp fire and ~~the~~2017 Northern California wildfires, locate and mark, improper communications between the CPUC and the Utility, and the Utility’s ongoing ~~work to remove encroachments from~~enhanced and accelerated inspection of its electric transmission ~~pipeline rights-of-way;~~and distribution assets;

the implementation of the Safety Culture OII decision approved on November 29, 2018, and the outcome of the ~~safety culture OII, including its phase two~~ proceeding, ~~opened on May 8, 2017,~~ and future legislative or regulatory actions that may be taken, such as requiring the Utility to separate its electric and natural gas businesses, or restructure into separate entities, or undertake some other corporate restructuring, or implement corporate governance changes;

whether the Utility can control its 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 of the October 1, 2018 request for rehearing of FERC’s denial of the complaint filed by the CPUC and certain other parties ~~with the FERC on February 2, 2017, that requests~~ that the Utility provide an open and transparent planning process for its capital transmission projects that do not go through the CAISO’s Transmission Planning Process to allow for greater participation and input from interested parties; and the timing and ultimate outcome of the Ninth Circuit Court of Appeals decision on January 8, 2018, to reverse FERC’s decision granting ~~PG&E~~the Utility a 50 basis point ROE incentive adder for continued participation in the CAISO and remanding the case to FERC for further proceedings;

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, 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~~timing and outcome of ~~comments and~~any CPUC action in connection with the Utility’s SmartMeter™ Upgrade cost-benefit analysis;

the impact of 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 environmental costs in rates or from other sources;

the impact of SB 100, which was signed into law on September 10, 2018, that increases 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 ~~Governor Jerry Brown's~~Air Resources Board implement state environmental laws relating to GHG, renewable energy targets, energy efficiency standards, DERs, EVs, 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;

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~~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; ~~and whether the Utility will be able to successfully implement its retention and retraining and development programs for Diablo Canyon employees as a result of its planned retirement by 2024 and 2025;~~

the impact of wildfires, droughts, floods, 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 outcome of state initiatives and numerous bills introduced by state legislators to address climate resilience and augment disaster planning in response to the wildfires in California, that if passed, could affect the Utility’s cost recovery mechanisms, operational requirements, and resiliency plans for certain catastrophic events;

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

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;

how the CPUC and the California Air Resources Board implement state environmental laws relating to GHG, renewable energy targets, energy efficiency standards, DERs, EVs, 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 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, changing customer demand for its natural gas and electric ~~services, and an increasing number of customers departing the Utility’s procurement service for CCAs;~~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;

whether, as a result of Westinghouse’s Chapter 11 proceeding and its bankruptcy court approved plan of reorganization, the Utility will experience issues with nuclear fuel supply, nuclear fuel inventory, and related services and products that Westinghouse supplies, and whether the implementation of the plan or reorganization will affect the Utility’s contracts with Westinghouse;

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 ability of PG&E Corporation and the Utility to access capital markets and other sources of debt and equity financing in a timely manner and on acceptable terms;

changes in credit ratings which could, among other things, result in cash collateral postings, higher borrowing costs and fewer financing options, especially if PG&E Corporation or the Utility were to lose their investment grade credit ratings;

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 2018 Camp fire and the 2017 Northern California wildfires, the ultimate outcomes of the CPUC’s pending investigations, and other enforcement matters will impact the Utility’s ability to make distributions to PG&E ~~Corporation, and whether they will continue impacting PG&E Corporation's and the Utility's ability to pay dividends;~~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;

changes in the regulatory and economic environment, including potential changes affecting renewable energy sources and associated tax credits, as a result of the current federal administration; 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.

~~Additional~~For more information about the significant risks that could affect the outcome of the forward-looking statements and ~~uncertainties, including more detail about~~PG&E Corporation’s and the ~~factors described in this report, is included throughout MD&A, in “Item~~Utility’s future financial condition, results of operations, liquidity, and cash flows, see Item 1A. Risk ~~Factors”~~Factors below and a detailed discussion of these matters contained elsewhere in ~~the 2017 Form 10-K, including the “Risk Factors” section. Forward-looking statements speak only as of the date they are made.~~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.

Additionally, 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 “News & Events: Events & Presentations” tab and links to certain documents and information related to the 2018 Camp fire, the 2017 Northern California wildfires, ~~and~~ the 2015 Butte fire, and other updates which may be of interest to investors, at http://investor.pgecorp.com, under the “Wildfire Updates” tab, 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 this 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PG&E Corporation’s and the Utility’s primary market risk results from changes in energy commodity prices. PG&E Corporation and the Utility engage in price risk management activities for non-trading purposes only. Both PG&E Corporation and the Utility may engage in these price risk management activities using forward contracts, futures, options, and swaps to hedge the impact of market fluctuations on energy commodity prices and interest rates. (See the section above entitled “Risk Management Activities” in MD&A and in Note ~~7: Derivatives~~8 and Note ~~8: Fair Value Measurements~~9 of the Notes to the Condensed Consolidated Financial Statements in Item 1.)

ITEM 4. CONTROLS AND PROCEDURES

Based on an evaluation of PG&E Corporation’s and the Utility’s disclosure controls and procedures as of June 30, ~~2018,~~2019, PG&E Corporation’s and the Utility’s respective principal executive officers and principal financial officers have concluded that such controls and procedures are effective to ensure that information required to be disclosed by PG&E Corporation and the Utility in reports that the companies file or submit under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (ii) accumulated and communicated to PG&E Corporation’s and the Utility’s management, including PG&E Corporation’s and the Utility’s respective principal executive officers and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in internal control over financial reporting that occurred during the quarter ended June 30, ~~2018,~~2019, that have materially affected, or are reasonably likely to materially affect, PG&E Corporation’s or the Utility’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In addition to the following proceedings, PG&E Corporation and the Utility are parties to various lawsuits and regulatory proceedings in the ordinary course of their business. For more information regarding PG&E Corporation’s and the Utility’s contingencies, see ~~Note 9~~Notes 10 and 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1 and Part I, MD&A: “Enforcement and Litigation Matters.”

U.S. District Court Matters and Probation

On August 9, 2016, the jury in the federal criminal trial against the Utility in the United States District Court for the Northern District of California, in San Francisco, found the Utility guilty on one count of obstructing a federal agency proceeding and five counts of violations of pipeline integrity management regulations of the Natural Gas Pipeline Safety Act. On January 26, 2017, the court imposed a sentence on the Utility in connection with the conviction. The court sentenced the Utility to a five-year corporate probation period, oversight by the Monitor for a period of five years, with the ability to apply for early termination after three years, a fine of $3 million to be paid to the federal government, certain advertising requirements, and community service.

The probation includes a requirement that the Utility not commit any local, state, or federal crimes during the probation period. As part of the probation, the Utility has retained the Monitor at the Utility’s expense. The goal of the Monitor is to help ensure that the Utility takes reasonable and appropriate steps to maintain the safety of its gas and electric operations, and to maintain effective ethics, compliance and safety related incentive programs on a Utility-wide basis.

On November 27, 2018, the court overseeing the Utility’s probation issued an order requiring that the Utility, the United States Attorney’s Office for the Northern District of California (the “USAO”) and the Monitor provide written answers to a series of questions regarding the Utility’s compliance with the terms of its probation, including what requirements of the Utility’s probation “might be implicated were any wildfire started by reckless operation or maintenance of PG&E power lines” or “might be implicated by any inaccurate, slow, or failed reporting of information about any wildfire by PG&E.” The court also ordered the Utility to provide “an accurate and complete statement of the role, if any, of PG&E in causing and reporting the recent 2018 Camp fire in Butte County and all other wildfires in California” since January 2017 (“Question 4 of the November 27 Order”). On December 5, 2018, the court issued an order requesting that the Office of the California Attorney General advise the court of its view on “the extent to which, if at all, the reckless operation or maintenance of PG&E power lines would constitute a crime under California law.” The responses of the Attorney General were submitted on December 28, 2018, and the responses of the Utility, the USAO and the Monitor were submitted on December 31, 2018.

On January 3, 2019, the court issued a new order requiring that the Utility provide further information regarding the Atlas fire. The court noted that “[t]his order postpones the question of the adequacy of PG&E’s response” to Question 4 of the November 27 Order. On January 4, 2019, the court issued another order requiring that the Utility provide “with respect to each of the eighteen October 2017 Northern California wildfires that [Cal Fire] has attributed to [the Utility’s] facilities,” information regarding the wind conditions in the vicinity of each fire’s origin and information about the equipment allegedly involved in each fire’s ignition. The responses of the Utility were submitted on January 10, 2019.

On January 9, 2019, the court ordered the Utility to appear in court on January 30, 2019, as a result of the court’s finding that “there is probable cause to believe there has been a violation of the conditions of supervision” with respect to reporting requirements related to the 2017 Honey fire. In addition, on January 9, 2019, the court issued an order (the “January 9 Order”) proposing to add new conditions of probation that would require the Utility, among other things, to:

prior to June 21, 2019, “re-inspect all of its electrical grid and remove or trim all trees that could fall onto its power lines, poles or equipment in high-wind conditions, . . . identify and fix all conductors that might swing together and arc due to slack and/or other circumstances under high-wind conditions[,] identify and fix damaged or weakened poles, transformers, fuses and other connectors [and] identify and fix any other condition anywhere in its grid similar to any condition that contributed to any previous wildfires;”

“document the foregoing inspections and the work done and . . . rate each segment’s safety under various wind conditions;” and

at all times from and after June 21, 2019, “supply electricity only through those parts of its electrical grid it has determined to be safe under the wind conditions then prevailing.”

The Utility was ordered to show cause by January 23, 2019 as to why the Utility’s conditions of probation should not be modified as proposed. The Utility’s response was submitted on January 23, 2019. The court requested that Cal Fire file a public statement, and invited the CPUC to comment, by January 25, 2019. On January 30, 2019, the court found that the Utility had violated a condition of its probation with respect to reporting requirements related to the 2017 Honey fire. The court issued an order stating that a sentencing hearing on the probation violation will be set at a later date. Also, on January 30, 2019, the court ordered the Utility to submit to the court on February 6, 2019 the 2019 Wildfire Safety Plan that the Utility was required to submit to the CPUC by February 6, 2019 in accordance with SB 901, and invited interested parties to comment on such plan by February 20, 2019. In addition, on February 14, 2019, the court ordered the Utility to provide additional information, including on its vegetation clearance requirements. The Utility submitted its response to the court on February 22, 2019. As of April 30, 2019, to the Utility’s knowledge, no parties have submitted comments to the court on the 2019 Wildfire Safety Plan.

On March 5, 2019, the court issued an order proposing to add new conditions of probation that would require the Utility, among other things, to:

“fully comply with all applicable laws concerning vegetation management and clearance requirements;”

“fully comply with the specific targets and metrics set forth in its wildfire mitigation plan, including with respect to enhanced vegetation management;”

submit to “regular, unannounced inspections” by the Monitor “of PG&E’s vegetation management efforts and equipment inspection, enhancement, and repair efforts” in connection with a requirement that the Monitor “assess PG&E’s wildfire mitigation and wildfire safety work;”

“maintain traceable, verifiable, accurate, and complete records of its vegetation management efforts” and report to the Monitor monthly on its vegetation management status and progress; and

“ensure that sufficient resources, financial and personnel, including contractors and employees, are allocated to achieve the foregoing” and to forgo issuing “any dividends until [the Utility] is in compliance with all applicable vegetation management requirements as set forth above.”

The court ordered all parties to show cause by March 22, 2019, as to why the Utility’s conditions of probation should not be modified as proposed. The responses of the Utility, the USAO, Cal Fire, the CPUC, and non-party victims were filed on March 22, 2019. At a hearing on April 2, 2019, the court indicated it would impose the new conditions of probation proposed on March 5, 2019, on the Utility, and on April 3, 2019, the Court issued an order imposing the new terms though amended the second condition to clarify that “[f]or purposes of this condition, the operative wildfire mitigation plan will be the plan ultimately approved by the CPUC.”

Also, on April 2, 2019, the court directed the parties to submit briefing by April 16, 2019, regarding whether the court can extend the term of probation beyond 5 years in light of the violation that has been adjudicated and whether the third-party Monitor reports should be made public. The responses of the Utility, the USAO, and the Monitor were filed on April 16, 2019. The Utility’s response contended that the term of probation may not be extended beyond five years and the USAO’s response contended that whether the term of probation could be extended beyond five years was an open legal issue.

The court held a sentencing hearing on the probation violation related to reporting requirements in connection with the 2017 Honey fire on May 7, 2019. After that hearing, the court imposed two additional conditions of probation by order dated May 14, 2019: (1) requiring that PG&E’s Board of Directors, Chief Executive Officer, senior executives, the Monitor and U.S. Probation Officer visit the towns of Paradise and San Bruno “to gain a firsthand understanding of the harm inflicted on those communities;” and (2) requiring that a committee of PG&E’s Board of Directors assume responsibility for tracking progress of the 2019 Wildfire Safety Plan and the additional terms of probation regarding wildfire safety, reporting in writing to the full Board at least quarterly. The court also stated that it was not going to rule at this time on whether the court has authority to extend probation and would leave that question “in abeyance.” The court did not discuss whether the Monitor reports should be made public. Members of PG&E Corporation’s Board of Directors and senior management attended site visits to the Town of Paradise on June 7, 2019 and the City of San Bruno on July 16, 2019, which were coordinated by the U.S. Probation Officer overseeing the Utility’s probation. In addition, the Compliance and Public Policy Committee, a committee of PG&E Corporation’s Board of Directors, will be responsible for tracking the Utility’s progress against the Utility’s wildfire mitigation plan, as approved by the CPUC, and compliance with the terms of the Utility’s probation regarding wildfire safety.

On July 10, 2019, the court ordered the Utility to respond to a Wall Street Journal article titled “PG&E Knew for Years Its Lines Could Spark Wildfires, and Didn’t Fix Them” on a paragraph-by-paragraph basis, stating the extent to which each paragraph in the article is accurate. The court also ordered the Utility to disclose all political contributions made by the Utility since January 1, 2017, and provide additional explanations regarding those contributions and dividends distributed prior to filing the Chapter 11 Cases. The Utility filed its response with the court on July 31, 2019. In the response, the Utility disagreed with the Wall Street Journal article’s suggestion that the Utility knew of the specific maintenance conditions that caused the 2018 Camp fire and nonetheless deferred work that would have addressed those conditions.

Order Instituting an Investigation into PG&E Corporation’s and the Utility’s Safety Culture

On August 27, 2015, the CPUC began a formal investigation into whether the organizational culture and governance of PG&E Corporation and the Utility prioritize safety and adequately direct resources to promote accountability and achieve safety goals and ~~standards.~~standards (the “Safety Culture OII”). The CPUC directed the SED to evaluate the Utility’s and PG&E Corporation’s organizational culture, governance, policies, practices, and accountability metrics in relation to the Utility’s record of operations, including its record of safety incidents. The ~~CPUC authorized the~~ SED ~~to engage~~engaged a consultant to assist in the SED’s investigation and the preparation of a report containing the SED’s ~~assessment.~~assessment, and subsequently, to report on the implementation by the Utility of the consultant’s recommendations.

On May 8, 2017, the CPUC released the consultant’s report, accompanied by a scoping memo and ~~ruling. The scoping memo establishes a second phase in this OII in which~~ruling that directed the CPUC ~~will~~to evaluate the safety recommendations of the consultant ~~that may lead~~and to ~~the CPUC’s adoption of the recommendations in the report, in whole or in part. This phase of the proceeding will also~~ consider all necessary measures, including, but not limited to, a potential reduction of the Utility’s return on ~~equity until any recommendations adopted by the CPUC are implemented.~~

equity. On November 17, 2017, the CPUC issued a ~~phase two~~further scoping memo and procedural ~~schedule. The scoping memo~~schedule that directed the Utility to file testimony addressing a number of issues including: adoption of the safety recommendations from the consultant, the Utility’s implementation process for the safety recommendations of the consultant, the Utility’s Board of Director’s actions and initiatives related to safety culture and the consultant’s recommendations, the Utility’s corrective action program, and the Utility’s response to certain specified safety incidents that occurred in 2013 through 2015.

The ~~Utility~~Utility’s testimony was submitted ~~its testimony~~ to the CPUC on January 8, 2018 ~~indicating~~and stated that itthe Utility agrees with all of the recommendations ~~from~~of the consultant and supports their adoption by the CPUC. ~~The parties~~Other parties’ responsive testimony was submitted ~~their reply testimonies~~ on February 16, 2018, ~~and~~followed by the Utility’s rebuttal testimony on ~~March 9,~~February 23, 2018.

On November 29, 2018, the ~~parties submitted joint comments~~CPUC issued a decision that directed the Utility to implement the recommendations set forth in the May 2017 consultant report no later than July 1, 2019, and to submit quarterly reports on the Utility’s implementation status beginning in the fourth quarter of 2018.

On December 21, 2018, the CPUC issued another scoping memo and ruling expanding the proceeding and directing that the CPUC “will examine [PG&E’s] current corporate governance, structure, and operations to determine if the utility is positioned to provide safe electrical and gas service, and will review alternatives to the ~~CPUC.~~ current management and operational structures of providing electric and gas service in Northern California.”

The ~~parties were not able to reach a settlement,~~CPUC alleged that the Utility has had “serious safety problems with both its gas and ~~the proceeding continues following its procedural schedule.~~

~~Evidentiary hearings took place on April 11, 2018,~~electric operations for many years” and ~~addressed the CPUC's questions on a variety of topics including the consultant's report, safety (public, employee,~~that despite penalties and contractor), cyber security, wildfires, compensation, safety metrics, the Utility's Board of Directors, performance-based ratemaking, safety management systems, the Utility's safety and health plan, and the Utility's implementation plan. Opening and reply briefs were filed May 9, 2018 and May 23, 2018, respectively.

other remedial measures in connection with these problems, PG&E Corporation and the Utility ~~are unable~~have failed to ~~predict~~develop “a comprehensive enterprise-wide approach to addressing safety.” The scoping memo outlined a number of proposals to address the ~~timing~~CPUC’s concerns regarding PG&E Corporation’s and ~~outcome~~the Utility’s safety culture, including, but not limited to, (i) replacement of ~~this proceeding, including whether additional fines, penalties,~~all or part of PG&E Corporation’s and the Utility’s existing boards of directors and corporate management, (ii) separating the Utility’s gas and electric distribution and transmission businesses into separate companies, (iii) reorganizing the Utility into regional subsidiaries based on regional distinctions, (iv) reconstituting the Utility as a publicly owned utility or utilities, (v) providing for entities other ~~ratemaking tools will ultimately be adopted by~~than the ~~CPUC,~~Utility to provide generation services, and ~~whether~~(vi) conditioning the ~~CPUC will require that a portion of~~Utility’s return on equity ~~for~~on safety performance. The scoping memo did not propose penalties and stated that this phase “is not a punitive phase.” The Utility submitted its background filing to the CPUC on January 16, 2019 and opening comments were filed on February 13, 2019. The Utility and other parties filed reply comments on February 28, 2019. Subsequently, the CPUC held workshops on some of the topics raised in the scoping memo on April 15, 2019 and April 26, 2019.

On June 13, 2019, the CPUC issued a decision that directed PG&E Corporation and the Utility ~~be dependent~~to provide information about the safety experience and qualifications of each of the directors on ~~making safety progress as~~their boards. PG&E Corporation and the Utility provided such information on July 3, 2019. The decision also established a Commission Advisory Panel on Corporate Governance.

On June 18, 2019, the CPUC issued a ruling requesting comments from parties on four proposals that it stated may ~~define in this proceeding.~~improve the safety culture of PG&E Corporation and the Utility. The four proposals are: separating PG&E into gas and electric utilities (including, as one possibility, sale of the gas assets to a third party); establishing periodic review of PG&E’s certificate of convenience and necessity; modifying or eliminating PG&E Corporation’s holding company structure; and linking PG&E’s rate of return or return on equity to safety performance metrics.

Opening comments on the ruling were filed on July 19, 2019 and reply comments were filed on August 2, 2019.

Diablo Canyon ~~Nuclear~~ Power Plant

For more information regarding the status of the 2003 settlement agreement between the Central Coast Regional Water Quality Control Board, the Utility, and the California Attorney General’s Office, see Part I, Item 3. ~~"Legal~~“Legal Proceedings” in the ~~2017~~2018 Form 10-K.

ITEM 1A. RISK FACTORS

For information about the significant risks that could affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows, see the section of the ~~2017~~2018 Form 10-K and PG&E Corporation’s and the Utility’s combined Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 entitled “Risk Factors,” as supplemented below, and the section of this quarterly report entitled “Forward-Looking Statements.”

PG&E Corporation’s and the Utility’s financial ~~condition,~~ results ~~of operations, liquidity, and cash flows~~ could be materially affected as a result of legislative and regulatory developments.

The Utility’s financial results could be materially affected as a result of SB 901 adopted in 2018 by ~~potential losses resulting from~~ the ~~impact~~California legislature. In December 2018, the CPUC opened an OIR in connection with SB 901 that will adopt criteria and a methodology for use by the CPUC in future applications for cost recovery of wildfire costs. On July 8, 2019, the CPUC issued a decision in the Customer Harm Threshold proceeding. The CPUC decision provides that “[a]n electrical corporation that has filed for relief under chapter 11 of the ~~Northern California wildfires.~~Bankruptcy Code may not access the Stress Test to recover costs in an application under Section 451.2(b), because the Commission cannot determine the corporation’s ‘financial status,’ which includes, among other considerations, its capital structure, liquidity needs, and liabilities, as required by Section 451.2(b).” This determination effectively bars PG&E Corporation and the Utility ~~also expect~~from access to berelief under the ~~subject of additional lawsuits and could be~~Customer Harm Threshold during the ~~subject of additional investigations, citations, fines or enforcement actions.~~

~~PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected by potential losses resulting from the impact~~pendency of the ~~multiple wildfires that spread through Northern California, including Napa, Sonoma, Butte, Humboldt, Mendocino, Del Norte, Lake, Nevada, and Yuba Counties, as well as in~~Chapter 11 Cases. On August 7, 2019, the ~~area surrounding Yuba City, beginning on October 8, 2017 (the “Northern California wildfires”). According~~Utility submitted to the ~~Cal Fire California Statewide Fire Summary dated October 30, 2017, at the peak~~CPUC an application for rehearing of the ~~wildfires, there were 21 major wildfires in Northern California that, in total, burned over 245,000 acres and destroyed an estimated 8,900 structures. The wildfires also resulted in 44 fatalities.~~

The Northern California wildfires are under investigation by Cal Fire and the CPUC's SED. Cal Fire issued its determination on the causes of 16 of the Northern California wildfires and the remaining wildfires remain under Cal Fire's investigation, including the possible role of the Utility's power lines and other facilities. It is uncertain when the remaining investigations will be complete.

In connection with the Northern California wildfires, if the doctrine of inverse condemnation applies, the Utility could be liable for property damage, interest, and attorneys’ fees without having been found negligent, which liability, in the aggregate, could bedecision. Failure to obtain a substantial ~~and have a material adverse effect on PG&E Corporation and the Utility. (See “The doctrine of inverse condemnation, if applied by courts in litigation to which PG&E Corporation~~ or the Utility are subject, could significantly expand the potential liabilities from such litigation and materially negatively affect PG&E Corporation’s and the Utility’s financial condition, results of operations, and cash flows” in PG&E Corporation and the Utility’s 2017 Form 10-K, Item 1A, Risk Factors.) In addition to such claims for property damage, interest, and attorneys’ fees, the Utility could be liable for fire suppression costs, evacuation costs, medical expenses, personal injury damages, and other damages under other theories of liability, including if the Utility were found to have been negligent, which liability, in the aggregate, could be substantial and have a material adverse effect on PG&E Corporation and the Utility. Further, the Utility could be subject to material fines or penalties if the CPUC or any other law enforcement agency brought an enforcement action, including as a result of the referral by Cal Fire of certain investigation reports to the appropriate county District Attorney's offices, and determined that the Utility failed to comply with applicable laws and regulations.

On January 31, 2018, the California Department of Insurance issued a news release announcing an update on property losses in connection with the October and December 2017 wildfires in California, stating that, as of such date, “insurers have received nearly 45,000 insurance claims totaling more than $11.79 billion in losses,” of which approximately $10 billion relates to statewide claims from the Northern California wildfires. The balance relates to claims from the Southern California December 2017 wildfires. That news release reflected insured property losses only and did not account for uninsured losses, interest, attorneys’ fees, fire suppression and clean-up costs, personal injury and wrongful death damages or other costs. If PG&E Corporation and the Utility were to be found liable for certain or all of such other costs and expenses, including the potential liabilities outlined above, the amount of the liability could significantly exceed the approximately $10 billion in estimated insured property losses with respect to the Northern California wildfires. As a result, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected.

PG&E Corporation and the Utility also are the subject of a still increasing number of lawsuits that have been filed against PG&E Corporation and the Utility in Sonoma, Napa and San Francisco Counties’ Superior Courts, several of which seek to be certified as class actions, asserting damages that include wrongful death, personal injury, property damage, evacuation costs, medical expenses, punitive damages, attorneys’ fees, and other damages. In addition, two derivative lawsuits alleging claims for breach of fiduciary duties and unjust enrichment were filed in the San Francisco County Superior Court in November 2017, naming as defendants current and certain former members of the Board of Directors, and certain current and former officers, of PG&E Corporation and the Utility, and naming PG&E Corporation and the Utility as nominal defendants. In June 2018, two purported securities class actions were filed in the United States District Court for the Northern District of California naming as defendants PG&E Corporation and certain current and former officers, and alleging material misrepresentations and omissions related to, among other things, vegetation management and transmission line safety information in various PG&E Corporation public disclosures, respectively. PG&E Corporation and the Utility expect to be the subject of additional lawsuits in connection with the Northern California wildfires. The wildfire litigation could take a number of years to be resolved because of the complexity of the matters, including the ongoing investigation into the causes of the fires and the growing number of parties and claims involved.

PG&E Corporation and the Utility have liability insurance from various insurers, which provides coverage for third-party liability attributable to the Northern California wildfires in an aggregate amount of approximately $840 million, subject to an initial self-insured retention of $10 million per occurrence and further retentions of approximately $40 million per occurrence. In addition, coverage limits within these wildfire insurance policies could result in further material self-insured costs in the event each fire were deemed to be a separate occurrence under the terms of the insurance policies. Further, the $2.5 billion charge recorded by PG&E Corporation and the Utility for the quarter ended June 30, 2018 exceeds the amount of their insurance coverage.

~~In addition, it could take a number of years before the Utility’s final liability is known and the Utility could apply for~~full recovery of costs ~~in excess of insurance. While the CPUC has authorized the Utility~~related to track certain wildfire costs in its WEMA, the Utility will be required to submit a separate request with the CPUC in the future for recovery of those costs. The Utility may be unable to fully recover costs in excess of insurance through regulatory mechanisms and, even if such recovery is possible, it could take a number of years to resolve and a number of years to collect. Further, SB 819, introduced in the California Senate in January 2018, if it becomes law, would prohibit utilities from recovering costs in excess of insurance resulting from damages caused by such utilities’ facilities, if the CPUC determines that the utility did not reasonably construct, maintain, manage, control, or operate the facilities.

PG&E Corporation and the Utility have considered certain actions that might be taken to attempt to address liquidity needs of the business in such circumstances, but the inability to recover costs in excess of insurance through increases in rates and by collecting such rates in a timely manner, or any negative assessment by the Utility of the likelihood or timeliness of such recovery and collection, could have a material adverse effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. (See “If the Utility is unable to recover all or a significant portion of its excess costs in connection with the Northern California wildfires ~~and the Butte fire through ratemaking mechanisms, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected” below.)~~

Losses in connection with the wildfires would likely require PG&E Corporation and the Utility to seek financing, which may not be available on terms acceptable to PG&E Corporation or the Utility, or at all, when required. (See “Risks Related to Liquidity and Capital Requirements” in Item 1A Risk Factors in 2017 Form 10-K.)

Uncertainties relating to and market perception of these matters and the disclosure of findings regarding these matters over time, also could continue or increase volatility in the market for PG&E Corporation’s common stock and other securities, and for the securities of the Utility, and materially affect the price of such securities.

~~For more information about the Northern California wildfires, see Note 9 of the Notes to Condensed Consolidated Financial Statements in Item 1.~~

If the Utility is unable to recover all or a significant portion of its excess costs in connection with the Northern California wildfires and the Butte Fire through ratemaking mechanisms, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected.

Through December 31, 2017, the amounts accrued in connection with claims relating to the Butte fire have exceeded the Utility’s liability insurance coverage. On June 21, 2018, the CPUC approved the Utility’s application to establish a WEMA to track wildfire expenses and to preserve the opportunity for the Utility to request recovery of wildfire costs that have not otherwise been recovered through insurance or other mechanisms. (See “Regulatory Matters - Application to Establish a Wildfire Expense Memorandum Account” in Item 7. MD&A.)

There can be no assurance that the Utility will be allowed to recover costs recorded in WEMA in the future. While the CPUC previously approved WEMA tracking accounts for San Diego Gas & Electric Company in 2010, in December 2017, the CPUC denied recovery of costs that San Diego Gas & Electric Company stated it incurred as a result of the doctrine of inverse condemnation, holding that the inverse condemnation principles of strict liability are not relevant to the CPUC’s prudent manager standard. San Diego Gas & Electric, the Utility, and Southern California Edison filed requests for rehearing of that decision. On July 12, 2018, the CPUC voted out a decision denying the requests for rehearing.

Further, SB 819 introduced in the California Senate in January 2018, if it becomes law, would prohibit utilities’ recovery of costs in excess of insurance resulting from damages caused by such utilities’ facilities, if the CPUC determines that the Utility did not reasonably construct, maintain, manage, control, or operate the facilities.

PG&E Corporation and the Utility have considered certain actions that might be taken to attempt to address liquidity needs of the business in such circumstances, but the inability to recover all or a significant portion of costs in excess of insurance through increases in rates and by collecting such rates in a timely manner, or any negative assessment by the Utility of the likelihood or timeliness of such recovery and collection, could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows. (See “Regulatory Matters - Other Regulatory Proceedings” in Item 2. MD&A.)

~~PG&E Corporation’s and the Utility’s financial results will be affected by their ability~~In addition, SB 901 requires utilities to ~~continue accessing the capital markets and~~submit annual wildfire mitigation plans for approval by the ~~terms~~CPUC on a schedule to be established by the CPUC. SB 901 establishes factors to be considered by the CPUC when setting penalties for failure to substantially comply with the plan. The Utility is unable to predict the timing or outcome of ~~debt~~the CPUC’s review of the wildfire mitigation plan, the results of the CPUC compliance review of wildfire mitigation plan implementation, or the timing or extent of cost recovery for wildfire mitigation plan activities. Failure to substantially comply with the plan could result in fines and ~~equity financings.~~other penalties imposed on the Utility that could be material. (See “Regulatory Matters - Other Regulatory Proceedings” in Item 2. MD&A.)

On July 12, 2019, the California Governor signed into law AB 1054, a bill which, among other policy reforms, provides for the establishment of a statewide fund that would 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. Although PG&E Corporation and the Utility ~~will continue~~have delivered notice to ~~seek funds~~the CPUC electing to participate in the ~~capital~~Wildfire Fund, the impact of AB 1054 on PG&E Corporation and ~~credit markets to enable~~ the Utility is subject to ~~make capital investments, and~~numerous uncertainties, including the Utility’s eligibility to ~~pay fines that may be imposed in~~access relief under the ~~future, as well as legal and regulatory costs.~~Wildfire Fund (which is dependent on, among other things, PG&E ~~Corporation’s~~Corporation and the Utility emerging from Chapter 11 by June 30, 2020 and making its initial contribution thereto) and the Utility’s ability to access the capital and credit markets and the costs and terms of available financing depend primarily on PG&E Corporation’s and the Utility’s credit ratings and outlook. Their credit ratings and outlook can be affected by many factors, including pending or anticipated litigation, the pending Cal Fire and CPUC investigations and CPUC ratemaking proceedings, substantial legislative or judicial changesdemonstrate to the ~~application of inverse condemnation,~~CPUC that wildfire-related costs paid from the Wildfire Fund are just and reasonable, subject to a disallowance cap. Failure to meet the eligibility conditions to access relief under the Wildfire Fund, including emerging from Chapter 11 by June 30, 2020 and making the ~~December 20, 2017 decision of the Boards of Directors of~~initial contribution thereto, would preclude PG&E Corporation and the Utility from accessing the Wildfire Fund for future wildfire-related claims and any related benefits, including the disallowance cap.

The costs of participating in the Wildfire Fund (should the Utility be eligible to ~~suspend dividends, as well as~~do so) are expected to exceed $6.7 billion. The Utility is currently evaluating the ~~perceived impact~~accounting and tax treatment of ~~all such matters~~the required initial and annual contributions. The timing and amount of any potential charges associated with shareholder contributions would also depend on ~~PG&E Corporation’s~~various factors, including the final determination of an allocation of contributions among the Utility and California’s other large electric utility companies (San Diego Gas & Electric Company and Southern California Edison Company) and the ~~Utility’s financial condition, whether or not such perception is accurate.~~

~~During~~timing of resolution of the first quarter of 2018, Fitch Ratings, S&P Global Ratings, and Moody’s Investors Service, Inc. downgraded PG&E Corporation’s and the Utility’s credit ratings, and S&P Global Ratings further lowered PG&E Corporation's and the Utility's credit ratings during the second quarter of 2018. If PG&E Corporation’s or the Utility’s credit ratings were to be further downgraded, in particular to below investment grade, their ability to access the capital and credit markets would be negatively affected and could result in higher borrowing costs, fewer financing options, including reduced, or lack of, access to the commercial paper market and additional collateral posting requirements, which in turn could affect liquidity and lead to an increased financing need. Other factors can affect the availability and terms of debt and equity financing, including changesChapter 11 Cases. Participation in the federal or state regulatory environment affecting energy companies generally or PG&E Corporation and the Utility in particular, the overall health of the energy industry, an increase in interest rates by the Federal Reserve Bank, and general economic and financial market conditions.

~~The reputations of PG&E Corporation and the Utility continue~~Wildfire Fund is expected to suffer from the negative publicity about matters discussed under “Enforcement and Litigation Matters” in Part II, Item 1. Legal Proceedings and Note 9 of the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1. The negative publicity and the uncertainty about the outcomes of these matters may undermine confidence in management’s ability to execute its business strategy and restore a constructive regulatory environment, which could adversely impact PG&E Corporation’s stock price. Further, the market price of PG&E Corporation common stock could decline materially depending on the outcome of these matters. The amount and timing of future share issuances also could affect the stock price.

Severe weather conditions, extended drought and shifting climate patterns could materially affect PG&E Corporation’s and the Utility’s business, financial condition, results of operations, liquidity, and cash flows.

Extreme weather, extended drought and shifting climate patterns have intensified the challenges associated with wildfire management in California. Environmental extremes, such as drought conditions followed by periods of wet weather, can drive additional vegetation growth (which then fuel any fires) and influence both the likelihood and severity of extraordinary wildfire events. In California, over the past five years, inconsistent and extreme precipitation, coupled with more hot summer days, have increased the wildfire risk and made wildfire outbreaks increasingly difficult to manage. In particular, the risk posed by wildfires has increased in the Utility’s service area (the Utility has approximately 82,000 distribution overhead circuit miles and 18,000 transmission overhead circuit miles) as a result of an extended period of drought, bark beetle infestations in the California forest and wildfire fuel increases due to record rainfall following the drought, among other environmental factors. Other contributing factors include local land use policies and historical forestry management practices. The combined effects of extreme weather and climate change also impact this risk.

Severe weather events and other natural disasters, including wildfires and other fires, storms, tornadoes, floods, heat waves, drought, earthquakes, tsunamis, rising see levels, pandemics, solar events, electromagnetic events, or other natural disasters such as wildfires, could result in severe business disruptions, prolonged power outages, property damage, injuries or loss of life, significant decreases in revenues and earnings, and/or significant additional costs to PG&E Corporation and the Utility. Any such event could have a material effect on PG&E Corporation’s and the Utility’s business, financial condition, results of operations, liquidity, and cash flows. Any of such events also could lead to significant claims against the Utility. Further, these events could result in regulatory penalties and disallowances, particularly if the Utility encounters difficulties in restoring power to its customers on a timely basis or if the related losses are found to be the result of the Utility’s practices and/or the failure of electric and other equipment of the Utility.

Further, the Utility has been studying the potential effects of climate change (increased temperatures, changing precipitation patterns, rising sea levels) on the Utility’s operations and is developing contingency plans to adapt to those events and conditions that the Utility believes are most significant. Scientists project that climate change will increase electricity demand due to more extreme, persistent and hot weather. As a result, the Utility’s hydroelectric generation could change and the Utility would need to consider managing or acquiring additional generation. If the Utility increases its reliance on conventional generation resources to replace hydroelectric generation and to meet increased customer demand, it may become more costly for the Utility to comply with GHG emissions limits. In addition, flooding caused by rising sea levels could damage the Utility’s facilities, including generation and electric transmission and distribution assets. The Utility could incur substantial costs to repair or replace facilities, restore service, or compensate customers and other third parties for damages or injuries. The Utility anticipates that the increased costs would be recovered through rates, but as rate pressures increase, the likelihood of disallowance or non-recovery may increase.

~~Events or conditions caused by climate change could have a greater~~ impact on the Utility’s operations than the Utility’s studies suggest and could result in lower revenues or increased expenses, or both. If the CPUC fails to adjust the Utility’s rates to reflect the impact of events or conditions caused by climate change, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows, ~~could~~and there can be no assurance that the benefits of participating in the Wildfire Fund ultimately outweigh these substantial costs.

Finally, AB 1054 does not apply to wildfires with an ignition date prior to the effective date of AB 1054. PG&E Corporation and the Utility may be dependent on additional legislative measures in order to facilitate the financing of costs, expenses and other possible losses in respect of claims related to the 2018 Camp fire and the 2017 Northern California wildfires. There can be no assurance that any such legislative measures will be enacted or enacted in a form that would materially ~~affected.~~

~~The Utility’s electricity and natural gas operations are inherently hazardous and involve significant risks which, if they materialize, can adversely affect~~address PG&E Corporation’s and the Utility’s financing needs.

Also, in June 2018, the State of California enacted the CCPA, which will come into effect on January 1, 2020, with a 12-month look-back period requiring compliance by January 1, 2019. The CCPA requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new cause of action for data breaches. The CCPA provides for financial ~~condition, results~~penalties in the event of ~~operations, liquidity,~~non-compliance and ~~cash flows.~~

~~The Utility owns~~statutory damages in the event of a data security breach. However, California legislators have stated that they intend to propose amendments to the CCPA, and ~~operates extensive electricity~~it remains unclear what, if any, modifications will be made to the CCPA or how it will be interpreted. Failure to comply with the CCPA could result in fines imposed on PG&E Corporation and ~~natural gas facilities, including two nuclear generation units and an extensive~~hydroelectric generating system. (See “Electric Utility Operations” and “Natural Gas Utility Operations” in Item 1. Business of the Form 10-K.) The Utility’s ability to earn its authorized ROE depends on its ability to efficiently maintain, operate, and protect its facilities, and provide electricity and natural gas services safely and reliably. The Utility undertakes substantial capital investment projects to construct, replace, and improve its electricity and natural gas facilities. In addition, the Utility ~~is obligated to decommission its electricity generation facilities at the end of their useful operating lives, and the CPUC approved retirement of Diablo Canyon by 2024 and 2025.~~ that could be material.

The Utility’s ability to safely and reliably operate, maintain, construct and decommission its facilities is subject to numerous risks, many of which are beyond the Utility’s control, including those that arise from:

the breakdown or failure of equipment, electric transmission or distribution lines, or natural gas transmission and distribution pipelines, that can cause explosions, fires, or other catastrophic events;

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 results in the failure of downstream transmission pipelines or distribution assets and uncontained natural gas flow;

the failure to maintain adequate capacity to meet customer demand on the gas system that results in customer curtailments, controlled/uncontrolled gas outages, gas surges back into homes, serious personal injury or loss of life;

~~a prolonged statewide electrical black-out that results in damage to the Utility’s equipment or damage to property owned by customers or other third parties;~~

~~the failure to fully identify, evaluate, and control workplace hazards that result in serious injury or loss of life for employees or the public, environmental damage, or reputational damage;~~

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

~~the failure of a large dam or other major hydroelectric facility, or the failure of one or more levees that protect land on which the Utility’s assets are built;~~

the failure to take expeditious or sufficient action to mitigate operating conditions, facilities, or equipment, that the Utility has identified, or reasonably should have identified, as unsafe, which failure then leads to a catastrophic event (such as a wild land fire or natural gas explosion);

~~inadequate emergency preparedness plans and the failure to respond effectively to a catastrophic event that can lead to public or employee harm or extended outages;~~

~~operator or other human error;~~

~~an ineffective records management program that results in the failure to construct, operate and maintain~~

~~a utility system safely and prudently;~~

construction performed by third parties that damages the Utility’s underground or overhead facilities, including, for example, ground excavations or “dig-ins” that damage the Utility’s underground pipelines;

the release of hazardous or toxic substances into the air, water, or soil, including, for example, gas leaks from natural gas storage facilities; releases of greenhouse gases; flaking lead-based paint from the Utility’s facilities, and leaking or spilled insulating fluid from electrical equipment; and

~~attacks by third parties, including cyber-attacks, acts of terrorism, vandalism, or war.~~

The occurrence of any of these events could interrupt fuel supplies; affect demand for electricity or natural gas; cause unplanned outages or reduce generating output; damage the Utility’s assets or operations; damage the assets or operations of third parties on which the Utility relies; damage property owned by customers or others; and cause personal injury or death. As a result, the Utility could incur costs to purchase replacement power, to repair assets and restore service, and to compensate third parties. Any of such incidents also could lead to significant claims against the Utility.

Further, although the Utility often enters into agreements for third-party contractors to perform work, such as patrolling and inspection of facilities or the construction or demolition or facilities, the Utility may retain liability for the quality and completion of the contractor’s work and can be subject to penalties or other enforcement action if the contractor violates applicable laws, rules, regulations, or orders. The Utility may also be subject to liability, penalties or other enforcement action as a result of personal injury or death caused by third-party contractor actions.

Insurance, equipment warranties, or other contractual indemnification requirements may not be sufficient or effective to provide full or even partial recovery under all circumstances or against all hazards or liabilities to which the Utility may become subject. An uninsured loss could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

The Utility’s insurance coverage may not be sufficient to cover losses caused by an operating failure or catastrophic events, including severe weather events, or may not be available at a reasonable cost, or available at all.

The Utility has experienced increased costs and difficulties in obtaining insurance coverage for wildfires and other risks that could arise from the Utility’s ordinary operations. PG&E Corporation, the Utility or its contractors and customers could continue to experience coverage reductions and/or increased ~~wildfire~~ insurance costs in future years. No assurance can be given that future losses will not exceed the limits of the Utility’s insurance coverage. Uninsured losses and increases in the cost of insurance may not be recoverable in customer rates. A loss ~~which~~that is not fully insured or cannot be recovered in customer rates could materially affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

As a result of the potential application to investor-owned utilities of a strict liability standard under the doctrine of inverse condemnation, recent losses recorded by insurance companies, the risk of ~~increase of~~increased wildfires including as a result of climate change, the ~~ongoing drought,~~2018 Camp fire, the 2017 Northern California wildfires, and the 2015 Butte fire, the Utility may not be able to obtain sufficient insurance coverage in the future at a reasonable cost, or at all. In addition, the Utility is unable to predict whether it would be allowed to recover in rates the increased costs of insurance or the costs of any uninsured losses.

If the amount of insurance is insufficient or otherwise unavailable, or if the Utility is unable to obtain insurance at a reasonable cost or recover in rates the costs of any uninsured losses, PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows could be materially affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PR~~OCEEDS~~PROCEEDS

During the quarter ended June 30, ~~2018,~~2019, PG&E Corporation did not make any equity contributions to the Utility. Also during the quarter ended June 30, 2019, PG&E Corporation did not make any sales of unregistered equity securities in reliance on an exemption from registration under the Securities Act of 1933, as amended.

Issuer Purchasesof Equity Securities

During the quarter ended June 30, ~~2018,~~2019, PG&E Corporation did not redeem or repurchase any shares of common stock outstanding. PG&E Corporation does not have any preferred stock outstanding. During the quarter ended June 30, ~~2018,~~2019, the Utility did not redeem or repurchase any shares of its various series of preferred stock outstanding.

~~ITEM 5. OTHER INFORMATION~~

~~Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends~~

The Utility’s earnings to fixed charges ratio for the six months ended June 30, 2018 was (0.41). The Utility’s earnings to combined fixed charges and preferred stock dividends ratio for the six months ended June 30, 2018 was (0.40). The statement of the foregoing ratios, together with the statements of the computation of the foregoing ratios filed as Exhibits 12.1 and 12.2 hereto, are included herein for the purpose of incorporating such information and Exhibits into the Utility’s Registration Statement No. 333-215427.

PG&E Corporation’s earnings to fixed charges ratio for the six months ended June 30, 2018 was (0.40). The statement of the foregoing ratio, together with the statement of the computation of the foregoing ratio filed as Exhibit 12.3 hereto, is included herein for the purpose of incorporating such information and Exhibit into PG&E Corporation’s Registration Statement No. 333-215425.

ITEM 6. EXHIBITS

EXHIBIT INDEX



3.1	Restated Articles of Incorporation of PG&E Corporation effective as of May 29, 2002, as amended by the Amendment dated June 21, 2019 [Conformed Copy]

10.1	~~Term Loan~~Settlement Agreement, dated April 22, 2019, by and between PG&E Corporation and BlueMountain Capital Management, LLC (incorporated by reference to PG&E Corporation’s Form 8-K dated April 22, 2019 (File No. 1-12609), Exhibit 10.1)

10.2	Plan Support Agreement as to Plan Treatment of Public Entities’ Wildfire Claims dated as of ~~April 16, 2018,~~June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric Company, the ~~several banks~~City of Clearlake, the City of Napa, the City of Santa Rosa, the County of Lake, the Lake County Sanitation District, the County of Mendocino, Napa County, the County of Nevada, the County of Sonoma, the Sonoma County Agricultural Preservation and ~~other financial institutions or entities from time to time parties thereto, Mizuho Bank, Ltd., Royal Bank~~Open Space District, the Sonoma County Community Development Commission, the Sonoma County Water Agency, the Sonoma Valley County Sanitation District and the County of ~~Canada and Sumitomo Mitsui Banking Corporation, as joint lead arrangers and joint bookrunners and Mizuho Bank, Ltd, as administrative agent~~Yuba (incorporated by reference to PG&E Corporation’s Form 8-K dated June 18, 2019 (File No. 1-12609), Exhibit 10.1)

10.3	Plan Support Agreement as to Plan Treatment of Public Entity’s Wildfire Claims dated as of June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric ~~Company’s~~Company and the Town of Paradise (incorporated by reference to PG&E Corporation’s Form 8-K dated ~~April 16, 2018~~June 18, 2019 (File No. ~~001-02348)~~1-12609), Exhibit ~~10.1)~~10.2)

10.4	Plan Support Agreement as to Plan Treatment of Public Entity’s Wildfire Claims dated as of June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric Company and the County of Butte (incorporated by reference to PG&E Corporation’s Form 8-K dated June 18, 2019 (File No. 1-12609), Exhibit 10.3)

10.5	Plan Support Agreement as to Plan Treatment of Public Entity’s Wildfire Claims dated as of June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric Company and the Paradise Recreation & Park District (incorporated by reference to PG&E Corporation’s Form 8-K dated June 18, 2019 (File No. 1-12609), Exhibit 10.4)

10.6	Plan Support Agreement as to Plan Treatment of Public Entity’s Wildfire Claims dated as of June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric Company and the County of Yuba (incorporated by reference to PG&E Corporation’s Form 8-K dated June 18, 2019 (File No. 1-12609), Exhibit 10.5)

10.7	Plan Support Agreement as to Plan Treatment of Public Entity’s Wildfire Claims dated as of June 18, 2019, by and among PG&E Corporation, Pacific Gas and Electric Company and the Calaveras County Water District (incorporated by reference to PG&E Corporation’s Form 8-K dated June 18, 2019 (File No. 1-12609), Exhibit 10.6)

*~~10.2~~10.8	~~Non-Annual Restricted Stock Unit Award~~Form of Director and Officer Indemnification Agreement ~~between PG&E Corporation and Laurie M. Giammona dated June 27, 2018~~

*~~10.3~~10.9	~~Non-Annual Restricted Stock Unit Award Agreement between~~ PG&E Corporation ~~and Jesus Soto dated~~Supplemental Executive Retirement Plan, as amended effective as of June ~~27, 2018~~3, 2019

*~~10.4~~10.10	~~Form of Restricted Stock Unit Agreement for 2018 grants to non-employee directors under the~~ PG&E Corporation ~~2014 Long-Term Inventive~~Defined Contribution Executive Supplemental Retirement Plan, as amended effective as of June 3, 2019

~~12.1~~*10.11	~~Computation of Ratios of Earnings to Fixed Charges for~~Separation Agreement between Pacific Gas and Electric Company

~~12.2~~	~~Computation~~ and Jesus Soto, Jr. dated June 3, 2019, revised as of ~~Ratios of Earnings to Combined Fixed Charges~~June 5, 2019 and ~~Preferred Stock Dividends for Pacific Gas and Electric Company~~

~~12.3~~	~~Computation of Ratios of Earnings to Fixed Charges for PG&E Corporation~~June 24, 2019

31.1	Certifications of ~~the Chief~~Principal Executive Officer and ~~the Chief~~Principal Financial Officer of PG&E Corporation required by Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certifications of ~~the Chief~~Principal Executive ~~Officer~~Officers and ~~the Chief~~Principal Financial Officer of Pacific Gas and Electric Company required by Section 302 of the Sarbanes-Oxley Act of 2002

**32.1	Certifications of ~~the Chief~~Principal Executive Officer and ~~the Chief~~Principal Financial Officer of PG&E Corporation required by Section 906 of the Sarbanes-Oxley Act of 2002

**32.2	Certifications of ~~the Chief~~Principal Executive ~~Officer~~Officers and ~~the Chief~~Principal Financial Officer of Pacific Gas and Electric Company required by Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB	XBRL Taxonomy Extension Labels Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document



101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

*Management contract or compensatory agreement.

**Pursuant to Item 601(b)(32) of SEC Regulation S-K, these exhibits are furnished rather than filed with this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this Quarterly Report on Form 10-Q to be signed on their behalf by the undersigned thereunto duly authorized.

PG&E CORPORATION

/s/ JASON P. WELLS

Jason P. Wells

~~Senior~~Executive Vice President and Chief Financial Officer

(duly authorized officer and principal financial officer)

PACIFIC GAS AND ELECTRIC COMPANY

/s/ DAVID S. THOMASON

David S. Thomason

Vice President, Chief Financial Officer and Controller

(duly authorized officer and principal financial officer)

Dated: ~~July 26, 2018~~August 9, 2019

87118



Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	PCG	The New York Stock Exchange
First preferred stock, cumulative, par value $25 per share, 5% series A redeemable	PCG-PE	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5% redeemable	PCG-PD	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.80% redeemable	PCG-PG	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.50% redeemable	PCG-PH	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 4.36% series A redeemable	PCG-PI	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 6% nonredeemable	PCG-PA	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5.50% nonredeemable	PCG-PB	NYSE American LLC
First preferred stock, cumulative, par value $25 per share, 5% nonredeemable	PCG-PC	NYSE American LLC



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, oran emerging growth company. See the definitions of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
PG&E Corporation:	~~[X]~~ ☒	Large accelerated filer	~~[ ]~~ ☐	Accelerated filer
	~~[ ]~~ ☐	Non-accelerated filer
	~~[ ]~~ ☐	Smaller reporting company	~~[ ]~~ ☐	Emerging growth company
Pacific Gas and Electric Company:	~~[ ]~~ ☐	Large accelerated filer	~~[ ]~~ ☐	Accelerated filer
	~~[X]~~ ☒	Non-accelerated filer
	~~[ ]~~ ☐	Smaller reporting company	~~[ ]~~ ☐	Emerging 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:			~~[ ]~~☐
PacificGas 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 ~~[X]~~	☒	No
Pacific Gas and Electric Company:			~~[ ]~~ ☐	Yes ~~[X]~~	☒	No



Indicate the numberof shares outstanding of each of the ~~issuer's~~issuer’s classes of common stock, as of the latest practicable date.
Common stock outstanding as of ~~July 20, 2018:~~August 2, 2019:
PG&E Corporation:								~~517,151,337~~529,223,793
PacificGas and Electric Company:								264,374,809


							Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018			2019			2018			2019			2018
Electric
Revenue from contracts with customers
Residential	$	1,039		$	2,375		$	994		$	1,039		$	2,282		$	2,375
Commercial	1,234			2,307			1,135			1,234			2,088			2,307
Industrial	354			678			326			354			619			678
Agricultural	318			443			261			318			347			443
Public street and highway lighting	18			38			16			18			33			38
Other ⁽¹⁾	84			(118		)	—			84			(309		)	(118		)
Total revenue from contracts with customers - electric	3,047			5,723			2,732			3,047			5,060			5,723
Regulatory balancing accounts ⁽²⁾	265			540			214			265			678			540
Total electric operating revenue	$	3,312		$	6,263		$	2,946		$	3,312		$	5,738		$	6,263

Natural gas
Revenue from contracts with customers
Residential	$	452		$	1,410		$	343		$	452		$	1,515		$	1,410
Commercial	119			315			129			119			369			315
Transportation service only	264			560			304			264			686			560
Other ⁽¹⁾	(128		)	(179		)	(129		)	(128		)	(205		)	(179		)
Total revenue from contracts with customers - gas	707			2,106			647			707			2,365			2,106
Regulatory balancing accounts ⁽²⁾	215			(79		)	350			215			(149		)	(79		)
Total natural gas operating revenue	922			2,027			997			922			2,216			2,027
Total operating revenues	$	4,234		$	8,290		$	3,943		$	4,234		$	7,954		$	8,290



(in millions)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease fixed cost	$	114	$	236
Operating lease variable cost	490		799
Total operating lease costs	$	604	$	1,035



(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, 2018	520,338,710	$	12,910	$	(250	)	$	(9	)	$	12,651		$	252	$	12,903
Net income	—	—		136			—			136			—		136
Other comprehensive loss	—	—		—			—			—			—		—
Common stock issued, net	8,871,568	85		—			—			85			—		85
Stock-based compensation amortization	—	5		—			—			5			—		5
Balance at March 31, 2019	529,210,278	$	13,000	$	(114	)	$	(9	)	$	12,877		$	252	$	13,129
Net loss	—	—		(2,549		)	—			(2,549		)	—		(2,549		)
Other comprehensive loss	—	—		—			—			—			—		—
Common stock issued, net	13,515	—		—			—			—			—		—
Stock-based compensation amortization	—	14		—			—			14			—		14
Balance at June 30, 2019	529,223,793	$	13,014	$	(2,663	)	$	(9	)	$	10,342		$	252	$	10,594


	Pension Benefits			Other Benefits			Total			Pension Benefits			Other Benefits			Total
(in millions, net of income tax)	Three Months Ended June 30, 2018									Three Months Ended June 30, 2019
Beginning balance	$	(30	)	$	17		$	(13	)	$	(21	)	$	17		$	(4	)
Amounts reclassified from other comprehensive income:
Amortization of prior service cost (net of taxes of $1 and $1, respectively)⁽¹⁾	(1		)	2			1			(1		)	2			1
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively)⁽¹⁾	1			(1		)	—
Regulatory account transfer (net of taxes of $0 and $0, respectively)⁽¹⁾	—			(1		)	(1		)
Reclassification of stranded income tax to retained earnings (net of taxes of $0 and $0, respectively)	—			—			—
Amortization of net actuarial loss (net of taxes of $0 and $1, respectively)⁽¹⁾										—			—			—
Regulatory account transfer (net of taxes of $1 and $0, respectively)⁽¹⁾										1			(2		)	(1		)
Net current period other comprehensive gain (loss)	—			—			—			—			—			—
Ending balance	$	(30	)	$	17		$	(13	)	$	(21	)	$	17		$	(4	)



(in millions)	June 30, 2019
2019⁽¹⁾	$	450
2020	679
2021	623
2022	548
2023	255
Thereafter	692
Total lease payments	3,247
Less imputed interest	(594		)
Total	$	2,653



(in millions)	December 31, 2018
2019	$	684
2020	677
2021	621
2022	546
2023	252
Thereafter	581
Total lease commitments	$	3,361


	Asset Balance at				Asset Balance at
(in millions)	June 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Pension benefits(1)	$	1,877	$	1,954	$	1,928	$	1,947
Environmental compliance costs	784		837		997		1,013
Utility retained generation(2)	297		319		251		274
Price risk management	63		65		67		90
Unamortized loss, net of gain, on reacquired debt(3)	84		79		230		76
Catastrophic event memorandum account ⁽¹⁾⁽⁴⁾	654		274		918		790
Wildfire expense memorandum account ⁽²⁾⁽⁵⁾	69		—		127		94
Fire hazard prevention memorandum account ⁽⁶⁾					291		263
Fire risk mitigation memorandum account⁽⁷⁾					154		—
Other	293		265		386		417
Total long-term regulatory assets	$	4,121	$	3,793	$	5,349	$	4,964



	Liability Balance at
(in millions)	June 30, 2019		December 31, 2018
Cost of removal obligations⁽¹⁾	$	6,233	$	5,981
Deferred income taxes⁽²⁾	4		283
Recoveries in excess of AROs⁽³⁾	472		356
Public purpose programs⁽⁴⁾	785		674
Employee benefit plans⁽⁵⁾	423		421
Other	1,121		824
Total long-term regulatory liabilities	$	9,038	$	8,539



	Receivable Balance at
(in millions)	June 30, 2019		December 31, 2018
Electric distribution	$	465	$	160
Electric transmission	91		128
Utility generation	92		79
Gas distribution and transmission	173		462
Energy procurement	654		168
Public purpose programs	97		111
Other	312		327
Total regulatory balancing accounts receivable	$	1,884	$	1,435



	Payable Balance at
(in millions)	June 30, 2019		December 31, 2018
Electric transmission	135		134
Gas distribution and transmission	6		9
Energy procurement	308		59
Public purpose programs	610		587
Other	311		287
Total regulatory balancing accounts payable	$	1,370	$	1,076



(in millions)	Termination Date		Aggregate Limit		Term Loan Borrowings		Revolver Borrowings		Letters of Credit Outstanding		Aggregate Availability
DIP Facilities	December 2020	(1)	$	5,500	$	1,500	$	—	$	521	$	3,479



		Balance at,
(in millions)	Contractual Interest Rates	June 30, 2019		December 31, 2018
Debt Subject to Compromise⁽¹⁾
PG&E Corporation
Borrowings under Pre-Petition Credit Facilities
PG&E Corporation Revolving Credit Facilities - Stated Maturity: 2022	variable rate⁽²⁾	$	300	$	300
Other borrowings:
Term Loan - Stated Maturity: 2020	variable rate⁽³⁾	350		350
Total PG&E Corporation Debt Subject to Compromise		650		650

Utility
Senior Notes - Stated Maturity:
2020	3.50%	800		800
2021	3.25% to 4.25%	550		550
2022	2.45%	400		400
2023	3.25% to 4.25%	1,175		1,175
2024 through 2047	2.95% to 6.35%	14,600		14,600
Unamortized discount, net of premium and debt issuance costs		—		(178		)
Total Senior notes, net of premium and debt issuance costs		17,525		17,347
Pollution Control Bonds - Stated Maturity:
Series 2008 F and 2010 E, due 2026⁽⁴⁾	1.75%	100		100
Series 2009 A-B, due 2026⁽⁵⁾	variable rate ⁽⁶⁾	149		149
Series 1996 C, E, F, 1997 B due 2026⁽⁵⁾	variable rate ⁽⁷⁾	614		614
Total pollution control bonds		863		863
Borrowings under Pre-Petition Credit Facilities
Utility Revolving Credit Facilities - Stated Maturity: 2022 ⁽⁸⁾	variable rate⁽⁹⁾	2,965		2,965
Other borrowings:
Term Loan - Stated Maturity: 2019	variable rate⁽¹⁰⁾	250		250
Total Borrowings under Pre-Petition Credit Facility Subject to Compromise		3,215		3,215
Total Utility Debt Subject to Compromise		21,603		21,425
Total PG&E Corporation Consolidated Debt Subject to Compromise		$	22,253	$	22,075



(in millions)	Termination Date	Facility Limit			Letters of Credit Outstanding		Borrowings		Facility Availability
PG&E Corporation	April 2022	$	300	⁽¹⁾	$	—	$	50	$	250
Utility	April 2022	3,000		⁽²⁾	48		650		2,302
Total revolving credit facilities		$	3,300		$	48	$	700	$	2,552


		Contract Volume at			Contract Volume at
Underlying Product	Instruments	June 30, 2018	December 31, 2017	Instruments	June 30, 2019	December 31, 2018
Natural Gas ⁽¹⁾ (MMBtus ⁽²⁾)	Forwards, Futures and Swaps	268,296,840	228,768,745	Forwards, Futures and Swaps	174,575,917	177,750,349
	Options	36,205,752	60,736,806	Options	16,455,000	13,735,405
Electricity (Megawatt-hours)	Forwards, Futures and Swaps	2,570,861	2,872,013	Forwards, Futures and Swaps	2,999,616	3,833,490
	Congestion Revenue Rights ⁽³⁾	304,977,376	312,272,177	Options	912,033	—
				Congestion Revenue Rights ⁽³⁾	329,571,344	340,783,089



	Commodity Risk
(in millions)	Gross Derivative Balance			Netting			Cash Collateral		Total Derivative Balance
Current assets – other	$	47		$	(4	)	$	48	$	91
Other noncurrent assets – other	161			—			—		161
Current liabilities – other	(25		)	4			3		(18		)
Noncurrent liabilities – other	(67		)	—			—		(67		)
Total commodity risk	$	116		$	—		$	51	$	167


•	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.


	Fair Value Measurements											Fair Value Measurements
	June 30, 2018											June 30, 2019
(in millions)	Level 1		Level 2		Level 3		Netting ⁽¹⁾			Total		Level 1		Level 2		Level 3		Netting ⁽¹⁾			Total
Assets:
Short-term investments	$	473	—		—		—			$	473	$	3,402	$	—	$	—	$	—		$	3,402
Nuclear decommissioning trusts
Short-term investments	22		—		—		—			22		16		—		—		—			16
Global equity securities	1,873		—		—		—			1,873		1,959		—		—		—			1,959
Fixed-income securities	767		584		—		—			1,351		815		698		—		—			1,513
Assets measured at NAV	—		—		—		—			18		—		—		—		—			19
Total nuclear decommissioning trusts ⁽²⁾	2,662		584		—		—			3,264		2,790		698		—		—			3,507
Price risk management instruments (Note 7)
Price risk management instruments (Note 8)
Electricity	1		2		113		1			117		—		13		192		20			225
Gas	—		3		—		1			4		—		3		—		24			27
Total price risk management instruments	1		5		113		2			121		—		16		192		44			252
Rabbi trusts
Fixed-income securities	—		74		—		—			74		—		98		—		—			98
Life insurance contracts	—		68		—		—			68		—		71		—		—			71
Total rabbi trusts	—		142		—		—			142		—		169		—		—			169
Long-term disability trust
Short-term investments	4		—		—		—			4		5		—		—		—			5
Assets measured at NAV	—		—		—		—			155		—		—		—		—			142
Total long-term disability trust	4		—		—		—			159		5		—		—		—			147
TOTAL ASSETS	$	3,140	$	731	$	113	$	2		$	4,159	$	6,197	$	883	$	192	$	44		$	7,477
Liabilities:
Price risk management instruments (Note 7)
Price risk management instruments (Note 8)
Electricity	$	6	$	20	$	79	$	(26	)	$	79	$	—	$	4	$	83	$	(4	)	$	83
Gas	—		1		—		—			1		2		3		—		(3		)	2
TOTAL LIABILITIES	$	6	$	21	$	79	$	(26	)	$	80	$	2	$	7	$	83	$	(7	)	$	85


	Fair Value at							Fair Value at
(in millions)	June 30, 2018							June 30, 2019
Fair Value Measurement	Assets		Liabilities		Valuation Technique	Unobservable Input	Range ⁽¹⁾	Assets		Liabilities		Valuation Technique	Unobservable Input	Range ⁽¹⁾
Congestion revenue rights	$	113	$	32	Market approach	CRR auction prices	$ (18.61) - 32.26	$	191	$	64	Market approach	CRR auction prices	$(13.11) - 22.76
Power purchase agreements	$	—	$	47	Discounted cash flow	Forward prices	$ 18.81 - 38.80	$	1	$	19	Discounted cash flow	Forward prices	$ 19.68 - 38.80


	Price Risk Management Instruments						Price Risk Management Instruments
(in millions)	2018			2017			2019			2018
Asset (liability) balance as of April 1	$	40		$	49		$	129		$	40
Net realized and unrealized gains:
Included in regulatory assets and liabilities or balancing accounts ⁽¹⁾	(6		)	(1		)	(20		)	(6		)
Asset (liability) balance as of June 30	$	34		$	48		$	109		$	34


	At June 30, 2018				At December 31, 2017				At June 30, 2019				At December 31, 2018
(in millions)	Carrying Amount		Level 2 Fair Value		Carrying Amount		Level 2 Fair Value		Carrying Amount		Level 2 Fair Value		Carrying Amount		Level 2 Fair Value
PG&E Corporation⁽¹⁾	$	350	$	350	$	350	$	350	$	—	$	—	$	350	$	350
Utility(2)	16,696		16,413		17,090		19,128		1,500		1,500		17,450		14,747


(in millions)
As of June 30, 2018	Amortized Cost		Total Unrealized Gains		Total Unrealized Losses			Total Fair Value
As of June 30, 2019										Amortized Cost		Total Unrealized Gains		Total Unrealized Losses			Total Fair Value
Nuclear decommissioning trusts
Short-term investments	$	22	$	—	$	—		$	22	$	16	$	—	$	—		$	16
Global equity securities	482		1,412		(3		)	1,891		496		1,486		(4		)	1,978
Fixed-income securities	1,338		36		(23		)	1,351		1,431		84		(2		)	1,513
Total⁽¹⁾	$	1,842	$	1,448	$	(26	)	$	3,264	$	1,943	$	1,570	$	(6	)	$	3,507
As of December 31, 2017
As of December 31, 2018
Nuclear decommissioning trusts
Short-term investments	$	23	$	—	$	—		$	23	$	29	$	—	$	—		$	29
Global equity securities	524		1,463		(2		)	1,985		568		1,246		(5		)	1,809
Fixed-income securities	1,252		51		(8		)	1,295		1,288		30		(18		)	1,300
Total⁽¹⁾	$	1,799	$	1,514	$	(10	)	$	3,303	$	1,885	$	1,276	$	(23	)	$	3,138


	As of		As of
(in millions)	June 30, 2018		June 30, 2019
Less than 1 year	$	66	$	26
1–5 years	405		541
5–10 years	360		340
More than 10 years	520		606
Total maturities of fixed-income securities	$	1,351	$	1,513



(in millions)	Insurance Receivable
2018 Camp fire
Balance at December 31, 2018	$	1,380
Accrued insurance recoveries	—
Reimbursements	—
Balance at June 30, 2019	$	1,380

2017 Northern California wildfires
Balance at December 31, 2018	$	829
Accrued insurance recoveries	—
Reimbursements	—
Balance at June 30, 2019	$	829



Loss Accrual (in millions)
Balance at December 31, 2015	$	—
Accrued losses	750
Payments ⁽¹⁾	(60)
Balance at December 31, 2016	690
Accrued losses	350
Payments ⁽¹⁾	(479)
Balance at December 31, 2017	561
Accrued losses	—
Payments ⁽¹⁾	(201		)
Balance at June 30, 2018	$	360



Insurance Receivable (in millions)
Balance at December 31, 2015	$	—
Accrued insurance recoveries	625
Reimbursements	(50)
Balance at December 31, 2016	575
Accrued insurance recoveries	297
Reimbursements	(276)
Balance at December 31, 2017	596
Accrued insurance recoveries	—
Reimbursements	(231		)
Balance at June 30, 2018	$	365


	Balance at
	June 30,		December 31,		Balance at
(in millions)	2018		2017		June 30, 2019		December 31, 2018
Topock natural gas compressor station	$	339	$	334	$	346	$	369
Hinkley natural gas compressor station	153		147		142		146
Former manufactured gas plant sites owned by the Utility or third parties ⁽¹⁾	350		320		580		520
Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites ⁽²⁾	112		115		112		111
Fossil fuel-fired generation facilities and sites ⁽³⁾	142		123		125		137
Total environmental remediation liability	$	1,096	$	1,039	$	1,305	$	1,283



	Three Months Ended June 30,												Six Months Ended June 30,
	Earnings						Earnings per Common Share (Diluted)						Earnings						Earnings per Common Share (Diluted)
(in millions, except per share amounts)	2018			2017			2018			2017			2018			2017			2018			2017
PG&E Corporation’s Earnings (Loss) on a GAAP basis	$	(984	)	$	406		$	(1.91	)	$	0.79		$	(542	)	$	982		$	(1.05	)	$	1.92
Items Impacting Comparability:⁽¹⁾
Northern California wildfire-related costs, net of insurance⁽²⁾	1,592			—			3.08			—			1,608			—			3.11			—
Pipeline-related expenses⁽³⁾	9			17			0.02			0.03			16			33			0.03			0.06
Butte fire-related costs, net of insurance⁽⁴⁾	7			(17		)	0.01			(0.03		)	11			(15		)	0.02			(0.03		)
2017 insurance premiums cost recoveries⁽⁵⁾	(23		)	—			(0.04		)	—			(23		)	—			(0.04		)	—
Diablo Canyon settlement-related disallowance⁽⁶⁾	—			32			—			0.06			—			32			—			0.06
Legal and regulatory-related expenses⁽⁷⁾	—			2			—			0.01			—			4			—			0.01
Fines and penalties⁽⁸⁾	—			—			—			—			—			36			—			0.07
GT&S revenue timing impact⁽⁹⁾	—			—			—			—			—			(88		)	—			(0.17		)
PG&E Corporation’s Non- GAAP Earnings from Operations⁽¹⁰⁾	$	601		$	440		$	1.16		$	0.86		$	1,070		$	984		$	2.07		$	1.92



	Second Quarter 2018 vs. 2017						Year to Date 2018 vs. 2017
(in millions, except per share amounts)	Earnings			Earnings per Common Share (Diluted)			Earnings			Earnings per Common Share (Diluted)
2017 Non- GAAP Earnings from Operations⁽¹⁾	$	440		$	0.86		$	984		$	1.92
Timing and duration of nuclear refueling outages	43			0.08			12			0.02
Resolution of regulatory items ⁽²⁾	29			0.06			29			0.06
Insurance premium cost recoveries ⁽³⁾	27			0.05			27			0.05
Timing of taxes⁽⁴⁾	26			0.05			1			—
Growth in rate base earnings⁽⁵⁾	23			0.04			65			0.12
Miscellaneous	38			0.07			10			0.02
Timing of 2017 GRC cost recovery⁽⁶⁾	(18		)	(0.03		)	—			—
Decrease in authorized return on equity⁽⁷⁾	(7		)	(0.01		)	(14		)	(0.02		)
Increase in shares outstanding	—			(0.01		)	—			(0.02		)
Tax impact of stock compensation⁽⁸⁾	—			—			(44		)	(0.08		)
2018 Non-GAAP Earnings from Operations⁽¹⁾	$	601		$	1.16		$	1,070		$	2.07


◦	the impact of investigations, including criminal, regulatory, and SEC investigations;


◦	the outcome of the 2017 Northern California Wildfires OII, and any fines or penalties that could result therefrom;