The extent of PG&E Corporation’s and the Utility’s recovery of the directors’ and officers’ insurance proceeds could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

District Attorneys’ Offices Investigations

Following the 2018 Camp fire, the Butte County District Attorney’s Office and the California Attorney General’s Office opened a criminal investigation of the 2018 Camp fire. PG&E Corporation and the Utility were informed by the Butte County District Attorney’s Office and the California Attorney General’s Office that a grand jury had been empaneled in Butte County.

On March 17, 2020, the Utility entered into the Plea Agreement and Settlement (the “Plea Agreement”) with the People of the State of California, by and through the Butte County District Attorney’s office (the “People” and the “Butte DA,” respectively) to resolve the criminal prosecution of the Utility in connection with the 2018 Camp fire. Subject to the terms and conditions of the Plea Agreement, the Utility agreed to plead guilty to 84 counts of involuntary manslaughter in violation of Penal Code section 192(b) and ~~one~~1 count of unlawfully causing a fire in violation of Penal Code section 452, and to admit special allegations pursuant to Penal Code sections 452.1(a)(2), 452.1(a)(3) and 452.1(a)(4). Upon approval and acceptance of the Plea Agreement by the Butte County Superior Court and the Bankruptcy Court, the People agreed not to prosecute any other criminal charges related to or arising out of the 2018 Camp fire against the Utility, PG&E Corporation or any of their subsidiaries, including PG&E Corporation and the Utility as reorganized pursuant to the Chapter 11 Cases.

Per the Plea Agreement, the Utility was sentenced to pay the maximum total fine and penalty of approximately $3.5 million. This $3.5 million fine and penalty will not be paid from the amounts to be distributed by the Utility to the Fire Victim Trust. The Plea Agreement provides that no other or additional sentence will be imposed on the Utility in the criminal action in connection with the 2018 Camp fire. The Utility also agreed to pay $500,000 to the Butte County District Attorney Environmental and Consumer Protection Fund to reimburse costs spent on the investigation of the 2018 Camp fire.

Simultaneous with entry into the Plea Agreement, the Utility has committed to spend up to $15 million over five years to provide water to Butte County residents impacted by damage to the Utility’s Miocene Canal caused by the 2018 Camp fire. In addition, the Utility has consented to the Butte DA consulting, sharing information with and receiving information from the Monitor overseeing the Utility’s probation related to the San Bruno explosion through the expiration of the Utility’s term of probation and in no event until later than January 31, 2022. This consent is subject to the approval of the federal court overseeing the Utility’s probation and the Monitor.

On March 23, 2020, PG&E Corporation and the Utility filed a motion with the Bankruptcy Court seeking authority to enter into the Plea Agreement. On April 16, 2020, the Bankruptcy Court approved PG&E Corporation’s and the Utility’s Plea Agreement.

~~On June 16, 2020 through June 18, 2020,~~January 15, 2021, the Butte County Superior Court held ~~proceedings at~~a brief hearing on the status of restitution, which involves distribution of funds from the ~~Utility pled guilty and~~Fire Victim Trust, which was ~~sentenced according to~~established under the ~~terms~~Company’s Plan of ~~the Plea Agreement. On July 21, 2020, the Utility paid the $3.5 million fine and penalty to the Butte County Superior~~Reorganization in Bankruptcy Court and ~~$500,000~~is managed by a trustee and a claims administrator. The Court continued the hearing to ~~the Butte County District Attorney Environmental and Consumer Protection Fund.~~August 20, 2021 for a further update.

Following the 2019 Kincade fire, the Sonoma County District Attorney’s Office opened a criminal investigation of the 2019 Kincade fire. On April 6, 2021, the Sonoma County District Attorney’s office filed a criminal complaint (the “Complaint”) against the Utility related to the 2019 Kincade fire. For more information see “2019 Kincade Fire” above.

On March 22, 2021, Cal Fire ~~announced~~issued a press release with its determination that ~~it had determined that “the Kincade Fire~~the 2020 Zogg fire was caused by a pine tree contacting electrical ~~transmission lines~~facilities owned and operated by ~~Pacific Gas and Electric (PG&E)~~the Utility located ~~northeast~~north of ~~Geyserville. Tinder dry vegetation and strong winds combined with low humidity and warm temperatures contributed to extreme rates~~the community of ~~fire spread.”~~Igo. Cal Fire also indicated that its investigative report has been forwarded to the ~~Sonoma~~Shasta County District Attorney’s Office, which is ~~reviewing~~investigating the matter. For more information, see “2020 Zogg Fire” above.

Additional investigations and other actions may arise out of the 2019 Kincade fire or the 2020 Zogg fire. The timing and outcome for resolution of any such investigations are uncertain.

SEC Investigation

On March 20, 2019, PG&E Corporation learned that the SEC’s San Francisco Regional Office was conducting an investigation related to PG&E Corporation’s and the Utility’s public disclosures and accounting for losses associated with the 2018 Camp fire, the 2017 Northern California wildfires and the 2015 Butte fire. PG&E Corporation and the Utility are unable to predict the timing and outcome of the investigation.

~~Clean-up and Repair Costs~~

The Utility incurred costs of $826 million for clean-up and repair of the Utility’s facilities (including $358 million in capital expenditures) through June 30, 2020, in connection with the 2018 Camp fire. The Utility also incurred costs of $349 million for clean-up and repair of the Utility’s facilities (including $193 million in capital expenditures) through June 30, 2020, in connection with the 2017 Northern California wildfires. In addition, the Utility incurred costs of $62 million for clean-up and repair of the Utility’s facilities (including $18 million in capital expenditures) through June 30, 2020, in connection with the 2019 Kincade fire. The Utility is authorized to track and seek recovery of clean-up and repair costs through CEMA. (CEMA requests are subject to CPUC approval.) The Utility capitalizes and records as regulatory assets costs that are probable of recovery. At June 30, 2020, the CEMA regulatory asset balances related to the 2019 Kincade fire, 2018 Camp fire, and 2017 Northern California wildfires were 0, 0, and $49 million, respectively, and are included in long-term regulatory assets on the Condensed Consolidated Balance Sheets. Additionally, other than the amounts subject to the settlement agreement, as modified by the Decision Different approved by the CPUC on May 7, 2020, in connection with the OII into the 2017 Northern California wildfires and the 2018 Camp fire, the capital expenditures for clean-up and repair are included in property, plant and equipment at June 30, 2020.

Should PG&E Corporation and the Utility conclude that recovery of any clean-up and repair costs included in the CEMA is no longer probable, PG&E Corporation and the Utility will record a charge in the period such conclusion is reached. Failure to obtain a substantial or full recovery of these costs could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

~~Wildfire Assistance Fund~~

On May 24, 2019, the Bankruptcy Court entered an order authorizing PG&E Corporation and the Utility to establish and fund a program (the “Wildfire Assistance Fund”) to assist those displaced by the 2018 Camp fire and 2017 Northern California wildfires with the costs of substitute or temporary housing and other urgent needs. The Utility fully funded $105 million into the Wildfire Assistance Fund on August 2, 2019. As of June 30, 2020, the administrator had issued claimant payments totaling $100 million under the Wildfire Assistance Fund.

Wildfire Fund under AB 1054

On July 12, 2019, the California ~~Governor~~governor signed into law AB 1054, a bill which provides for the establishment of a statewide fund 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, subject to the terms and conditions of AB 1054. Eligible claims are claims for third party damages resulting from any such wildfires, limited to the portion of such claims that exceeds the greater of (i) $1.0 billion in the aggregate in any ~~calendar~~ year and (ii) the amount of insurance coverage required to be in place for the electric utility company pursuant to ~~Section~~section 3293 of the Public Utilities Code, added by AB 1054.

Electric utility companies that draw from the Wildfire Fund will only be required to repay amounts that are determined by the CPUC in an application for cost recovery not to be just and reasonable, subject to a ~~rolling three-year~~ disallowance cap equal to 20% of the ~~electric utility company’s~~IOU’s transmission and distribution equity rate base. For the Utility, ~~this~~the disallowance cap ~~is expected to~~would be approximately ~~$2.4~~$2.7 billion ~~for the three-year period starting in 2019,~~based on 2020 equity rate base, and is subject to adjustment based on changes in the Utility’s total transmission and distribution equity rate ~~base.~~base and would apply for a three calendar year period. The disallowance cap is inapplicable in certain circumstances, including if the Wildfire Fund administrator determines that the electric utility company’s actions or inactions that resulted in the applicable wildfire constituted “conscious or willful disregard for the rights and safety of others,” or the electric utility company fails to maintain a valid safety certification. Costs that the CPUC determines to be just and reasonable will not need to be repaid to the Wildfire Fund, resulting in a draw-down of the Wildfire Fund.

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~~On August 23, 2019,~~The Utility is required to attain a safety certification from the CPUC approved the Utility’s Initial Safety Certification, which under AB 1054 entitles the Utility to certain benefits, including eligibility for a cap on wildfire fund reimbursement and for a reformed prudent manager standard. The Utility satisfied the required elements for its Initial Safety Certificate, as follows: (i) the electrical corporation has an approved wildfire mitigation plan, (ii) the electrical corporation is in good standing, which can be satisfied by the electrical corporation having agreed to implement the findings of its most recent safety culture assessment, if applicable, (iii) the electrical corporation has established a safety committee of its board of directors composed of members with relevant safety experience, and (iv) the electrical corporation has established board-of-director-level reporting to the CPUC on safety issues. The Initial Safety Certification is valid for 12 months. Before the expiration of any current safety certification, the Utility must request a new safety certification for the followingevery 12 months, which ~~shall~~will be issued within 90 days if the Utility has provided documentation that it has satisfied the requirements for the safety certification pursuant to ~~Section~~section 8389(e) of the Public Utilities Code, added by AB 1054. On January 14, 2021, the WSD approved the Utility’s 2020 application and issued the Utility’s 2020 Safety Certification pursuant to the requirements of AB 1054. The ~~existing~~ safety certification ~~remains~~is separate from the CPUC’s enforcement authority and does not preclude the CPUC from pursuing remedies for safety or other applicable violations. The 2020 Safety Certification is valid for 12 months or until a timely request for a new safety certification is acted ~~upon.~~upon, whichever occurs later. On ~~July 29, 2020,~~January 26, 2021, TURN filed with the ~~Utility timely submitted its application~~CPUC a request for ~~a new~~review of WSD’s issuance of the safety ~~certification.~~certification, which the CPUC declined to provide on April 14, 2021.

The Wildfire Fund and disallowance cap will be terminated when the amounts therein are exhausted. The Wildfire Fund is expected to be capitalized with (i) $10.5 billion of proceeds of bonds supported by a 15-year extension of the Department of Water Resources charge to ~~ratepayers,~~customers, (ii) $7.5 billion in initial contributions from California’s three ~~investor-owned~~large electric ~~utility companies~~IOUs and (iii) $300 million in annual contributions paid by California’s three ~~investor-owned~~large electric ~~utility companies. The~~IOUs for at least a 10 year period. For more information regarding contributions ~~from~~to the investor-owned electric utility companies will be effectively borne by their respective shareholders, as they will not be permitted to recover these costs from ratepayers. The costs of the initial and annual contributions are allocated among the three investor-owned electric utility companies pursuant to a “Wildfire Fund allocation metric” set forth in AB 1054 based on land area in the applicable utility’s service territory classified as high fire threat districts and adjusted to account for risk mitigation efforts. The Utility’s Wildfire Fund, ~~allocation metric is 64.2% (representing an initial contribution of approximately $4.8 billion and annual contributions of approximately $193 million).~~ see Note 3 above.

The Wildfire Fund will only be available for payment of eligible claims so long as there are sufficient funds remaining in the Wildfire Fund. Such funds could be depleted more quickly than expected, including as a result of claims made by California’s other participating electric utility companies. The Wildfire Fund is available to pay for the Utility’s eligible claims arising as of July 12, 2019, the effective date of AB 1054, subject to a limit of 40% of the amount of such claims arising between the effective date of AB 1054 and the Utility’s emergence from Chapter 11. The 40% limit does not apply to eligible claims that arise after the Utility’s emergence from Chapter 11. The Wildfire Fund is additionally limited to the portion of such claims that exceeds the greater of (i) $1.0 billion in the aggregate in any year and (ii) the amount of insurance coverage required to be in place for the electric utility company pursuant to section 3293 of the Public Utilities Code, added by AB 1054.

AB 1054 also provides that the first $5.0 billion expended in the aggregate by California’s three ~~investor-owned~~large electric ~~utility companies~~IOUs on fire risk mitigation capital expenditures included in their respective approved WMPs will be excluded from their respective equity rate bases. The $5.0 billion of capital expenditures ~~will be~~were allocated among the ~~investor-owned electric utility companies~~IOUs in accordance with their Wildfire Fund allocation ~~metrics (described above).~~metrics. The Utility’s allocation is $3.21 billion. For more information on the Wildfire Fund allocation metrics, see Note 3 above. AB 1054 contemplates that such capital expenditures may be securitized through a customer charge.

~~On July 23, 2019,~~For more information see “Regulatory Recovery” above, Note 3 above and Note 14 of the Utility notified the CPUC of its intent to participate in the Wildfire Fund. On August 7, 2019, PG&E Corporation and the Utility submitted a motion with the Bankruptcy Court for the entry of an order authorizing PG&E Corporation and the Utility to participate in the Wildfire Fund and to make any initial and annual contributionsNotes to the ~~Wildfire Fund upon emergence from Chapter 11. On August 26, 2019, the Bankruptcy Court entered an order granting such authorizations. In order to participate~~Consolidated Financial Statements in ~~the Wildfire Fund, the Utility also was required to meet the eligibility and other requirements set forth in AB 1054, and to pay its share~~Item 8 of the ~~initial contribution to the Wildfire Fund upon emergence from Chapter 11.~~2020 Form 10-K.

On the Effective Date, having satisfied the conditions for the Utility’s participation in the Wildfire Fund, PG&E Corporation and the Utility contributed, in accordance with AB 1054, an initial contribution of approximately $4.8 billion and first annual contribution of approximately $193 million to the Wildfire Fund to secure participation of the Utility therein. SDG&E and Edison made their initial contributions to the Wildfire Fund in September 2019.

As of the Effective Date, the Wildfire Fund is available to the Utility to pay for eligible claims arising as of the effective date of AB 1054, i.e. July 12, 2019, subject to a limit of 40% of the amount of such claims arising between the effective date of AB 1054 and the Effective Date of the Plan.

~~For additional information on the Wildfire Fund, see Note 3 above.~~

NOTE 11: OTHER CONTINGENCIES AND COMMITMENTS

PG&E Corporation and the Utility have significant contingencies arising from their operations, including contingencies related to enforcement and litigation matters and environmental remediation. A provision for a loss contingency is recorded when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. PG&E Corporation and the Utility evaluate the range of reasonably estimated losses and record a provision based on the lower end of the range, unless an amount within the range is a better estimate than any other amount. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as negotiations, discovery, settlements and payments, rulings, penalties related to regulatory compliance, advice of legal counsel, and other information and events pertaining to a particular matter. PG&E Corporation’s and the Utility’s policy is to exclude anticipated legal costs from the provision for loss and expense these costs as incurred.

The Utility also has substantial financial commitments in connection with agreements entered into to support its operating activities. See “Purchase Commitments” below.

PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows may be materially affected by the outcome of the following matters.

Enforcement Matters

U.S. District Court Matters and Probation

In connection with the Utility’s probation proceeding, the United States District Court for the Northern District of California has the ability to impose additional probation conditions on the Utility. Additional conditions, if implemented, could be wide-ranging and would impact the Utility’s operations, number of employees, costs and financial performance. Depending on the terms of these additional requirements, costs in connections with such requirements could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

CPUC and FERC Matters

Order Instituting Investigation into the 2017 Northern California Wildfires and the 2018 Camp Fire

On June 27, 2019, the CPUC issued the Wildfires OII to determine whether the Utility “violated any provision(s) of the California Public Utilities Code, ~~(PU Code),~~ Commission General Orders ~~(GO)~~ or decisions, or other applicable rules or requirements pertaining to the maintenance and operation of its electric facilities that were involved in igniting fires in its service territory in 2017.” On December 5, 2019, the assigned commissioner issued a second amended scoping memo and ruling that amended the scope of issues to be considered in this proceeding to include the 2018 Camp fire.

As previously disclosed, on December 17, 2019, the Utility, the SED of the CPUC, the CPUC’s ~~Office of the Safety Advocate,~~OSA, and CUE jointly submitted to the CPUC a proposed settlement agreement in connection with this proceeding and jointly moved for its approval. The settlement agreement became effective on the Effective Date.

Pursuant to the settlement agreement, the Utility agreed to (i) not seek rate recovery of wildfire-related expenses and capital expenditures in future applications in the amount of $1.625 billion, as specified below, and (ii) incur costs of $50 million in shareholder-funded system enhancement initiatives as described further in the settlement agreement. The settlement agreement stipulates that no violations have been identified in the Tubbs fire. As a result of this finding, the settlement agreement does not prevent the Utility from seeking recovery of costs associated with the Tubbs fire through rates. The amounts set forth in the table below include actual recorded costs and forecasted cost estimates as of the date of the settlement agreement for expenses and capital expenditures which the Utility has incurred or ~~will~~planned to incur to comply with its legal obligations to provide safe and reliable service. While actual costs incurred for certain cost categories are different than what was assumed in the settlement agreement, the Utility has recorded $1.625 billion of the disallowed costs through March 31, 2021.


(in millions)
Description(1)	Expense		Capital		Total
Distribution Safety Inspections and Repairs Expense (FRMMA/WMPMA)	$	236	$	0	$	236
Transmission Safety Inspections and Repairs Expense (TO)(2)	433		0		433
Vegetation Management Support Costs (FHPMA)	36		0		36
2017 Northern California Wildfires CEMA Expense and Capital (CEMA)	82		66		148
2018 Camp Fire CEMA Expense (CEMA)	435		0		435
2018 Camp Fire CEMA Capital for Restoration (CEMA)	0		253		253
2018 Camp Fire CEMA Capital for Temporary Facilities (CEMA)	0		84		84
Total	$	1,222	$	403	$	1,625

(1)

(in millions)
Description⁽¹⁾
Expense Capital Total
Distribution Safety Inspections and Repairs Expense (FRMMA/WMPMA)⁽²⁾
$ 236 $ — $ 236
Transmission Safety Inspections and Repairs Expense (TO)⁽³⁾
433 — 433
Vegetation Management Support Costs (FHPMA) 36 — 36
2017 Northern California Wildfires CEMA Expense and Capital (CEMA) 82 66 148
2018 Camp Fire CEMA Expense (CEMA) 435 — 435
2018 Camp Fire CEMA Capital for Restoration (CEMA) — 253 253
2018 Camp Fire CEMA Capital for Temporary Facilities (CEMA)⁽⁴⁾
— 84 84
Total $ 1,222 $ 403 $ 1,625

⁽¹⁾ ~~Unless indicated otherwise, all~~All amounts included in the table reflect actual recorded costs for ~~2019.~~

⁽²⁾ ~~Includes $29 million forecasted for~~2019 and 2020.

⁽³⁾(2) Transmission amounts are under the FERC’s regulatory authority.

⁽⁴⁾~~Includes $59 million forecasted for 2020.~~

To the extent the recorded costs for each account apart from Transmission Safety Repairs total an amount that is different from $1.420 billion, then the amount for which the Utility shall not seek rate recovery for Transmission Safety Repairs will be adjusted so that the total amount for which the Utility shall not seek rate recovery equals $1.625 billion.

PG&E Corporation and the Utility record a charge when it is both probable that costs incurred or projected to be incurred for recently completed plant will not be recoverable through rates charged to customers and the amount of disallowance can be reasonably estimated.

As of June 30, 2020, PG&E Corporation and the Utility recorded charges of $348 million, related to the portion of the $403 million in disallowed capital that had been spent through June 30, 2020 and, in 2020, expects to record $34 million related to capital expenditures listed in the table above. In addition, PG&E Corporation and Utility recorded charges of approximately $84 million related to vegetation management and catastrophic event expense costs that were previously determined to be probable of recovery and expects to record an additional $6 million in expenses later in 2020.

The Utility expects that the system enhancement spending pursuant to the settlement agreement will occur through 2025.

On April 20, 2020, the assigned commissioner issued a Decision Different adopting, with changes, the proposed modifications set forth in the request for review. The Decision Different (i) increases the amount of disallowed wildfire expenditures by $198 million (as set forth in the POD); (ii) increases the amount of shareholder funding for System Enhancement Initiatives by $64 million (as set forth in the POD); (iii) imposes a $200 million fine but permanently suspends payment of the fine; and (iii) limits the tax savings that must be returned to ~~ratepayers~~customers to those savings generated by disallowed operating expenditures. The Decision Different also denies all pending appeals of the POD and denies, in part, the Utility’s motion requesting other relief. On April 30, 2020, the Utility submitted its comments on the Decision Different to the CPUC, accepting the modifications. The CPUC approved the Decision Different on May 7, 2020.

~~The settlement agreement,~~As it relates to the additional $198 million in disallowed costs as ~~modified by the Decision Different, became effective upon: (i) approval by the CPUC~~adopted in the Decision Different, ~~(ii) following such approval~~the Utility has recorded cumulative charges of $172 million primarily in WMPMAthrough March 31, 2021 and intends to record the remaining charges of $26 million by the ~~CPUC, the June 20, 2020 approval~~end of ~~the Bankruptcy Court, and (iii) the July 1, 2020 effectiveness of the Plan.~~2021.

On June 8, 2020, 2 parties filed separate ~~Applications~~applications for ~~Rehearing,~~rehearing, the purpose of which was to challenge the CPUC’s approval of the settlement agreement, as modified. On June 23, 2020, the Utility and CUE filed a joint response opposing the ~~Applications~~applications for ~~Rehearing.~~rehearing. On December 3, 2020, the CPUC issued a decision denying the application for rehearing. On January 4, 2021, 1 party filed a petition for review of the CPUC decision with the California court of appeals. Responses to the petition were submitted on March 25, 2021. The Utility is unable to predict the timing and outcome of the ~~CPUC’s rulings on the Applications for Rehearing.~~

~~OII and Order to Show Cause into the Utility’s Locate and Mark practices~~

On December 14, 2018, the CPUC issued an OII and order to show cause to assess the Utility’s practices and procedures related to the locating and marking of natural gas facilities. The OII directed the Utility to show cause as to why the CPUC should not find violations in this matter, and why the CPUC should not impose penalties, and/or any other forms of relief, if any violations are found. The Utility was also directed in the OII to provide a report on specific matters, including that it is conducting locate and mark programs in a safe manner.

On October 3, 2019, the Utility, SED and CUE jointly submitted to the CPUC a proposed settlement agreement. Pursuant to the settlement agreement, the Utility agreed to a total financial remedy of $65 million, comprised of (i) a fine of $5 million funded by shareholders to be paid to the General Fund of the State of California pursuant to, and in accordance with, the time frame and other provisions governing distributions as set forth in the Chapter 11 plan of reorganization for the Utility as confirmed by the Bankruptcy Court; and (ii) $60 million in shareholder-funded initiatives undertaken to enhance, among other things, the Utility’s locate and mark compliance and capabilities and the reliability of the Underground Service Alert ticket management information that the Utility maintains in the ordinary course of its business.

As previously disclosed, on January 17, 2020, the presiding officer issued a decision requiring modifications to the settlement agreement that would (i) require an extension of certain compliance audits required by the settlement agreement, at a cost to shareholders of $6 million, (ii) an additional fine of $39 million funded by shareholders to be paid to the General Fund of the State of California, (iii) certain additional system enhancements, and (iv) requirements on the previously proposed system enhancements, including a requirement that any funds remaining after completion of the system enhancements are not to be spent as agreed to by the parties, but is to be paid to the General Fund. On February 6, 2020, the settling parties filed a motion accepting the presiding officer’s proposed modifications to the settlement and proposing alternative relief.

On February 14, 2020, the presiding officer issued a decision noting that the settling parties had accepted the modifications included in the POD and rejected the alternative relief proposed by the settling parties. The POD became the final decision of the CPUC on February 20, 2020. On April 8, 2020, the Utility filed a motion with the Bankruptcy Court, seeking the approval of the settlement agreement, as modified by the POD. The Bankruptcy Court approved this motion on April 24, 2020.

As of June 30, 2020, PG&E Corporation’s and the Utility’s Consolidated Balance Sheets include a $44 million accrual. On July 21, 2020, the Utility paid $44 million to the California General Fund.

~~OII into Compliance with Ex Parte Communication Rules~~

On November 23, 2015, the CPUC issued an OII into whether the Utility should be sanctioned for violating rules pertaining to ex parte communications and Rule 1.1 of the CPUC’s Rules of Practice and Procedure governing the conduct of those appearing before the CPUC. The CPUC has subsequently divided the OII into two phases, pertaining to different sets of communications.

As previously disclosed, on December 5, 2019, the CPUC approved a settlement agreement between the Cities of San Bruno and San Carlos, Public Advocates Office, the SED, TURN, and the Utility, resolving phase two of this proceeding (phase one was settled in April 2018, for more information see “OII into Compliance with Ex Parte Communication Rules” in Note 15 of the Notes to the Consolidated Financial Statements in Item 8 the 2019 Form 10-K). Under the settlement agreement, the Utility was required to pay a total penalty of $10 million comprised of: (1) a $2 million payment to the General Fund of the State of California, (2) forgoing collection of $5 million in revenue requirements during the term of its 2019 GT&S rate case, (3) forgoing collection of $1 million in revenue requirement during the term of its 2020 GRC cycle, and (4) compensation payments of $1 million to each of the Cities of San Bruno and San Carlos. By the terms of the settlement, the financial remedies were not to be implemented until a plan of reorganization was approved in the Chapter 11 Cases. In accordance with accounting rules, adjustments related to forgone collections would be recorded in the periods in which they are incurred. On April 8, 2020, the Utility filed a motion with the Bankruptcy Court, seeking the approval of the settlement agreement. The Bankruptcy Court approved this motion on April 24, 2020.

~~On July 21, 2020, the Utility had effectuated the above payments to the California General Fund and the Cities of San Bruno and San Carlos.~~petition.

Transmission Owner Rate Case Revenue Subject to Refund

The FERC determines the amount of authorized revenue requirements, including the rate of return on electric transmission assets, that the Utility may collect in rates in the TO rate case. The FERC typically authorizes the Utility to charge new rates based on the requested revenue requirement, subject to refund, before the FERC has issued a final decision. The Utility bills and records revenue based on the amounts requested in its rate case filing and records a reserve for its estimate of the amounts that are probable of refund. Rates subject to refund went into effect on March 1, 2017, ~~and~~ March 1, 2018, and May 1, 2019 for TO18, the TO rate case for 2018 (“TO19”), and ~~TO19,~~the TO rate case for 2019 (“TO20”), respectively. ~~Rates subject to refund for TO20 went into effect on May 1, 2019.~~

On October 1, 2018, the ALJ issued an initial decision in the TO18 rate case and the Utility filed initial briefs on October 31, 2018, in response to the ALJ’s recommendations. On October 15, 2020, the FERC issued an order that affirmed in part and reversed in part the initial decision. The order reopens the record for the limited purpose of allowing parties an opportunity to present written evidence concerning the FERC’s revised ROE methodology adopted in the FERC Opinion No. 569-A, issued on May 21, 2020. Initial briefs were filed on December 14, 2020 and reply briefs were filed on February 12, 2021. In addition, the order addresses a number of other issues including: (1) approving depreciation rates that yield an estimated composite depreciation rate of 2.94% compared to the Utility’s request of 3.25%; (2) reducing forecasted capital, operations and maintenance, and cost of debt expense to actual costs incurred for the rate case period; and (3) upholding the initial decision’s rejection of the Utility’s direct assignment of common plant to transmission and requiring the allocation of all common plant between CPUC and FERC jurisdiction be based on operating and maintenance labor ratios. On the direct assignment issue, applying labor ratios to certain common plant would result in an allocation of 6.15% of common plant to FERC in comparison to 8.84% under the Utility’s direct assignment method. The Utility ~~expects~~filed a request for rehearing of certain aspects of the order, which was denied by the FERC on December 17, 2020. The Utility filed a petition for review of the order on February 11, 2021 in the District of Columbia Court of Appeals, and a separate petition for review was jointly filed the same day by two other parties in the Ninth Circuit Court of Appeals. The District of Columbia Court of Appeals and the Ninth Circuit Court of Appeals have issued orders holding the appeals in abeyance until July 14, 2021 and June 30, 2021, respectively, so that the FERC has time to issue a ~~decision in~~substantive order on rehearing. The ultimate outcome on appeal of certain items for which the ~~TO18 rate case in 2020, however,~~Utility requested rehearing could also impact the ~~timing of that decision is uncertain,~~revenues recorded for the TO19 and ~~it will likely be~~TO20 periods. On April 15, 2021, the ~~subject of requests~~FERC issued an order denying the Utility’s request for rehearing and ~~appeal.~~granting the request for rehearing of 2 parties regarding the impact of the Tax Act on TO18 rates in January and February 2018. The Utility may seek rehearing of the FERC’s reversal on the applicability of the Tax Act on TO18 rates which may affect the timing for judicial review of the FERC order on the Utility’s request for rehearing.

As a result of the FERC’s April 15, 2021 order denying rehearing on the common plant allocation, the Utility increased its Regulatory liabilities for amounts previously collected during the TO18, TO19, and TO20 rate case periods from 2017 through the first quarter of 2021 by approximately $270 million. A portion of these common plant costs are expected to be recovered at the CPUC in a separate application and as a result, the Utility has recorded approximately $150 million to Regulatory assets.

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On September 21, 2018, the Utility filed an all-party settlement with the FERC, which was approved by the FERC on December 20, 2018, in connection with TO19. As part of the settlement, the TO19 revenue requirement will be set at 98.85% of the revenue requirement for TO18 that will be determined upon issuance of a final unappealable decision in ~~TO18.~~the TO18 proceeding.

On ~~November~~December 30, 2020, the FERC approved an all-party settlement agreement in connection with TO20. The TO20 settlement resolved all issues of the Utility’s formula rate. However, some of the formula rate issues are contingent on the outcome of TO18, including the allocation of costs related to common, general and intangible plant. The settlement provides that the formula rate will remain in effect through December 31, 2023. The Utility is required to make a successor rate filing in 2023 which would go into effect on January 1, 2024.

CEMA Interim Rate Relief Subject to Refund

On March 30, 2018, the ~~FERC issued an order accepting~~Utility submitted to the CPUC its 2018 CEMA application requesting cost recovery of $183 million in connection with 7 catastrophic events that included fire and storm declared emergencies from mid-2016 through early 2017, as well as $405 million related to work performed in 2016 and 2017 to cut back or remove dead or dying trees that were exposed to years of drought conditions and bark beetle infestation.

On April 25, 2019, the CPUC approved the Utility’s request for interim rate relief, allowing for recovery of $373 million of costs as requested by the Utility at that time. The interim rate relief was implemented on October ~~2018 filing of its TO20 formula~~1, 2019. Costs included in the interim rate ~~case,~~relief are subject to ~~hearings~~audit and ~~refund,~~refund. On August 7, 2019, the Utility filed a revised application, revised testimony and ~~established May 1, 2019, as~~revised workpapers, reflecting a new revenue requirement request of $669 million, pursuant to a CPUC ruling allowing these changes.

The 2018 CEMA application does not include costs related to the ~~Effective Date for rate changes. The FERC also ordered that~~2015 Butte fire, the ~~hearings will be held in abeyance pending settlement discussions among~~2017 Northern California wildfires, or the ~~parties.~~ 2018 Camp fire.

On March ~~31,~~9, 2020, the CPUC issued a modified scoping memo and ruling. On May 4, 2020, the Utility filed a ~~partial settlement~~revised application, which included 2019 tree mortality costs, reflecting a new revenue requirement request of ~~TO20 resolving certain issues~~$757 million, and the costs of an independent auditor to be hired for audit of all vegetation management costs and related interest calculations.

On January 4, 2021, the independent audit of all vegetation management costs commenced, and the final audit report is expected in early July 2021.

On January 8, 2021, the Utility filed a revised application updating the revenue requirement to include an additional $5.6 million of tree mortality costs and the ~~formula rate but leaving several issues including return on equity, capital structure, and depreciation rates for further settlement discussions or hearing.~~cost of hiring an independent auditor.

The Utility is unable to predict the timing orand outcome of ~~FERC’s decisions~~this application.

WMCE Interim Rate Relief Subject to Refund

On September 30, 2020, the Utility filed an application with the CPUC requesting cost recovery of recorded expenditures related to wildfire mitigation, certain catastrophic events, and a number of other activities (the “WMCE application”). The recorded expenditures, which exclude amounts disallowed as a result of the CPUC’s decision in the ~~TO18~~OII into the 2017 Northern California Wildfires and ~~TO19 proceedings~~the 2018 Camp fire, consist of $1.18 billion in expense and $801 million in capital expenditures, resulting in a proposed revenue requirement of approximately $1.28 billion.

The costs addressed in the WMCE application cover activities mainly during the years 2017 to 2019 and are incremental to those previously authorized in the Utility’s 2017 GRC and other proceedings. The majority of costs addressed in this application reflect work necessary to mitigate wildfire risk and to respond to catastrophic events occurring during the years 2017 to 2019. The Utility’s requested revenue includes amounts for the FHPMA of $293 million, the FRMMA and the WMPMA of $740 million, and the CEMA of $251 million. The requested revenue for CEMA costs reflected in the application include the Utility’s costs incurred responding to 10 catastrophic events.

Given the CPUC’s prior approval of $447 million in interim rate relief (which includes interest), the Utility proposed to recover the remaining $868 million revenue requirement, including interest, over a one-year period (following the conclusion of interim rate relief recovery). Cost recovery requested in this application is subject to the CPUC’s reasonableness review, which could result in some or all of the ~~timing or~~interim rate relief of $447 million being subject to refund.

Intervenors’ testimony was served on April 14, 2021 and the Utility’s rebuttal testimony is due on April 30, 2021. The scoping memo and ruling for the proceeding calls for a PD to be issued in September 2021.

The Utility is unable to predict the outcome of this application. PG&E Corporation’s and the ~~TO20 proceeding.~~Utility’s financial condition, results of operations, liquidity and cash flows could be materially affected if the Utility is unable to timely recover costs included in this application.

For more information regarding the FHPMA, the FRMMA, the WMPMA, and the CEMA memorandum accounts, see Note 4 above and the 2020 Form 10-K.

Other Matters

PG&E Corporation and the Utility are subject to various claims ~~lawsuits,~~ and ~~regulatory proceedings~~lawsuits that separately are not considered material. Accruals for contingencies related to such matters (excluding amounts related to the contingencies discussed above under “Enforcement and Litigation Matters”) totaled ~~$171~~$134 million and ~~$116~~$144 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. These amounts were included in ~~LSTC at December 31, 2019 and were included in~~ Other current liabilities ~~at June 30, 2020.~~on the Condensed Consolidated Financial Statements. PG&E Corporation and the Utility do not believe it is reasonably possible that the resolution of these matters will have a material impact on their financial condition, results of operations, or cash flows.

PSPS Class Action

On December 19, 2019, a complaint was filed in the United States Bankruptcy Court for the Northern District of California naming PG&E Corporation and the Utility. The plaintiff seeks certification of a class consisting of all California residents and business owners who had their power shut off by the Utility during the October 9, October 23, October 26, October 28, or November 20, 2019 power outages and any subsequent voluntary outages occurring during the course of litigation. The plaintiff alleges that the necessity for the October and November 2019 power shutoff events was caused by the Utility’s negligence in failing to properly maintain its electrical lines and surrounding vegetation. The complaint seeks up to $2.5 billion in special and general damages, punitive and exemplary damages and injunctive relief to require the Utility to properly maintain and inspect its power grid. PG&E Corporation and the Utility believe the allegations are without merit and intend to defend this lawsuit vigorously.

On January 21, 2020, PG&E Corporation and the Utility filed a motion to dismiss the complaint or in the alternative strike the class action allegations. ~~The~~On March 30, 2020, the Bankruptcy Court granted the Utility’s motion to dismiss ~~and strike was heard~~this class action because the plaintiff’s class action claims are preempted as a matter of law by the ~~Bankruptcy Court on March 10, 2020, and on~~CPUC code. On April 3, 2020, the Bankruptcy Court entered an order dismissing the action without leave to ~~amend, finding that the action was preempted under the California Public Utilities Code.~~amend.

The plaintiff appealed the decision dismissing the complaint to the District Court. On March ~~30, 2020,~~26, 2021, the District Court affirmed the Bankruptcy ~~Court issued an opinion granting~~Court’s dismissal of this action, and the Utility's motion to dismiss this class action. The court held that plaintiff’s class action claims are preempted as a matter of law by section 1759 of the California Public Utilities Code and thus plaintiffs could not pursue civil damages. The court stated that “any claim for damages caused by PSPS events approved by the CPUC, even if based on pre-existing events that may or may not have contributed to the necessity of the PSPS events, would interfere with the CPUC’s policy-making decisions.”

~~On April 6, 2020,~~ plaintiff filed a notice of appeal to the Ninth Circuit Court of ~~the Bankruptcy Court decision dismissing the complaint. Plaintiff has elected to have the appeal heard~~Appeals. The appellant’s opening brief is due by ~~the District Court, rather than the Bankruptcy Appellate Panel. Plaintiff filed a designation of the record~~June 24, 2021, and ~~statement of the issues on April 20, 2020,~~PG&E Corporation’s and the ~~Utility had until May 4, 2020, 14 days thereafter, to file a designation of any additional items.~~

~~On June 8, 2020, plaintiff filed its opening brief. The Utility filed its~~Utility’s opposition brief onis due by July ~~6, 2020. Plaintiff’s~~26, 2021. The appellants’ reply brief is due ~~on August 5, 2020.~~21 days after the opposition brief is filed.

The Utility is unable to determine the timing and outcome of this proceeding.

~~2015~~ GT&S ~~Rate Case Disallowance of~~ Capital Expenditures 2011-2014

On June 23, 2016, the CPUC approved a final phase one decision in the Utility’s 2015 GT&S rate case. The phase one decision excluded from rate base $696 million of capital spending in 2011 through 2014 in excess of the amount adopted in the prior GT&S rate case. The decision permanently disallowed $120 million of that amount and ordered that the remaining $576 million be subject to a review of reasonableness to be conducted, or overseen, by the CPUC staff. The review was completed on June 1, 2020 and did not result in any additional disallowances. The report certified $512 million for future recovery. The difference between the certified amount and the $576 million previously disallowed is ~~mainly because~~primarily a result of differences between capital expenditures forecasted in the ~~$576 million was presented as a forecast level~~2015 GT&S rate case and recorded capital expenditures.

On July 31, 2020, the Utility filed an application seeking recovery of ~~spending, whereas~~revenue requirements on the $512 million ~~reflects actual recorded spending~~of capital expenditures retroactive to January 1, 2015. On October 16, 2020, the assigned commissioner issued a scoping memo establishing the scope and schedule for the proceeding. On January 20, 2021, the Utility provided supplemental testimony and supporting working papers addressing the reasonableness of the capital expenditures. Intervenors testimony was served on April 7, 2021 and the Utility’s rebuttal testimony is due on May 5, 2021. The scoping memo calls for the issuance of a PD in ~~2011 through 2014.~~the fourth quarter of 2021.

On November 10, 2020, the Utility filed a motion seeking approximately $100 million in interim rates, assuming the CPUC reaches a final decision in this matter in late 2021 or early 2022. The ~~Utility expects to file a cost recovery application seeking a revenue requirement corresponding to these capital expenditures in~~CPUC has not yet ruled upon the ~~third quarter of 2020. Capital disallowances are reflected in Operating and maintenance expenses in the Condensed Consolidated Statements of Income.~~Utility’s motion.

The Utility is unable to determine the timing and outcome of this ~~upcoming~~ proceeding.

CZU Lightning Complex Fire Notices of Violation

Several governmental entities have raised concerns regarding the Utility’s emergency response to the 2020 CZU Lightning Complex fire, including Cal Fire alleging violations of Public Resource Code sections related to timber harvest regulations and Forest Practice Rules, the California Coastal Commission alleging violations of the Coastal Act related to unpermitted development in the coastal zone, the Central Coast Regional Water Quality Control Board alleging unpermitted discharge to waters, and the Santa Cruz County Board of Supervisors adopting a resolution to file a complaint with the CPUC. The concerns include potential environmental impacts related to erosion and sedimentation from hazard tree removal and access road use, work in sensitive habitats, and the management of wood debris. The Coastal Commission issued a Notice of Violation letter to the Utility on November 20, 2020, the Central Coast Regional Water Quality Control Board issued a Notice of Violation letter on December 15, 2020, Cal Fire has issued 6 Notices of Violation through April 7, 2021, and Santa Cruz County filed a complaint with the CPUC on January 25, 2021. The Utility continues to work with all agencies, as well as Santa Cruz County, to resolve any outstanding issues. Santa Cruz County has agreed to extend the deadline for the Utility to answer the complaint and file a motion to dismiss to April 29, 2021, so the parties can discuss settlement opportunities.

Based on the information currently available, PG&E Corporation and the Utility believe it is probable that a liability has been incurred. The Utility is unable to reasonably estimate the amount or range of potential penalties that could be incurred given the number of factors that can be considered in determining penalties. PG&E Corporation and the Utility do not believe that the resolution of these matters will have a material impact on their financial condition, results of operations, or cash flows. Violations can result in penalties, remediation and other relief.

Environmental Remediation Contingencies

The Utility’s environmental remediation liability is primarily included in non-current liabilities on the Condensed Consolidated Balance Sheets and is comprised of the following:


		Balance at							Balance at
(in millions)	(in millions)	June 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Topock natural gas compressor station	Topock natural gas compressor station	$	339	$	362	Topock natural gas compressor station	$	298	$	303
Hinkley natural gas compressor station	Hinkley natural gas compressor station	135		138		Hinkley natural gas compressor station	130		132
Former manufactured gas plant sites owned by the Utility or third parties ⁽¹⁾	Former manufactured gas plant sites owned by the Utility or third parties ⁽¹⁾	680		568		Former manufactured gas plant sites owned by the Utility or third parties (1)	693		659
Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites ⁽²⁾	Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites ⁽²⁾	102		101		Utility-owned generation facilities (other than fossil fuel-fired), other facilities, and third-party disposal sites (2)	116		111
Fossil fuel-fired generation facilities and sites ⁽³⁾	Fossil fuel-fired generation facilities and sites ⁽³⁾	103		106		Fossil fuel-fired generation facilities and sites (3)	76		96
Total environmental remediation liability	Total environmental remediation liability	$	1,359	$	1,275	Total environmental remediation liability	$	1,313	$	1,301

OII to Examine the Late 2019 Public Safety Power Shutoff Events

On November 13, 2019, the CPUC issued an OII to determine “whether California’s ~~investor-owned utilities~~IOUs prioritized safety and complied with the ~~Commission’s~~CPUC’s regulations and requirements with respect to their ~~Public Safety Power Shutoff (PSPS)~~PSPS events in late 2019.” The first phase of this proceeding ~~will assess for each utility, among other things,~~focuses on (1) the effectiveness of the ~~utility’s~~utilities’ procedures to notify the public of the PSPS events, (2) the ~~utility’s~~utilities’ communication and coordination with first responders, local jurisdictions and state agencies, and (3) the ~~utility’s~~utilities’ management of its resources to ensure public safety. In later phases of this proceeding, the CPUC may consider taking action if it finds violations of statutes or its decisions or general orders have been committed and to enforce compliance, if necessary.

On ~~June 8,~~August 3, 2020, the ~~SED~~assigned commissioner issued a ~~Public Report~~ruling and scoping memo directing parties to file comments regarding: (1) whether the Utility and other large electric IOUs in October and November 2019 complied with the criteria set forth in applicable laws and regulations when pro-actively deenergizing and re-energizing their power lines, and (2) what corrective actions the CPUC should require of the Utility and other large electric IOUs for any failure in late 2019 to comply with the then-existing PSPS guidelines. Each of the large electric IOUs filed their comments on September 2, 2020, intervenors filed their comments on October 16, 2020, and reply comments were filed by all parties on November 16, 2020. Several parties proposed in their comments that penalties be imposed on the ~~Late~~utilities for inadequate implementation of the PSPS events. For example, TURN proposed that the CPUC should treat each customer affected by a PSPS event, for which the utility has not adequately demonstrated that the benefits outweigh the public safety risks, as a separate offense, with each offense subject to a penalty of no less than $500 and no more than $100,000. In reply comments, the Utility argued that the proposed penalties should not be adopted for procedural and substantive reasons. If adopted by the CPUC, such penalties could be expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

On March 10, 2021, the presiding judge directed the Utility and the other large electric IOUs to provide an accounting of the PSPS events that occurred in their service territories in calendar years 2019 ~~Public Safety Power Shutoff Events.~~and 2020 and how those PSPS events impacted revenue collections. On April 7, 2021, the Utility and San Diego Gas & Electric submitted their accountings. The ~~Report indicated~~Utility estimated the revenue impact from the 2019 PSPS and 2020 PSPS events at approximately $14 million and $5 million, respectively.

On April 20, 2021, the CPUC issued a PD in the case that ~~it described~~found each of the ~~manner and extent~~large electric IOUs to ~~which each electric investor-owned utility implemented the CPUC’s PSPS Guidelines during~~be noncompliant with CPUC-required guidelines in certain of their ~~late~~ 2019 PSPS events. The ~~Report stated~~PD proposes a financial remedy and a number of corrective actions. The financial remedy would consist of forgoing collection of revenues from customers associated with electricity not sold during future PSPS events until it can be demonstrated that ~~it was intended~~the utilities have made improvements in assessing public harm when determining whether to ~~be advisory in nature, subject to modification,~~initiate a PSPS event. The corrective actions involve the Utility’s processes, reporting, and ~~not intended to serve as an adjudicatory-staff investigatory pre-enforcement report. On June 19, 2020, parties to the OII submitted prehearing statements that provided, among~~ other ~~things, views on the appropriate next steps in the proceeding. On June 22, 2020, the ALJ held a prehearing conference that discussed appropriate next steps in the proceeding.~~aspects of its PSPS program. The ~~ALJ indicated that a ruling on those issues would be forthcoming.~~

~~The Utility~~CPUC’s final decision is ~~unable to predict the timing or outcome of this proceeding.~~

~~For additional information, see the 2019 Form 10-K.~~anticipated no sooner than May 20, 2021.

Power Charge Indifference Adjustment OIR

InAs previously disclosed, in 2017, the CPUC initiated the PCIA Rulemaking to make refinements to the PCIA, a cost recovery mechanism to ensure that customers that leave the Utility’s bundled service for a non-Utility provider, such as a DA or CCA provider, pay their fair share of the ~~above market~~above-market costs associated with long-term power purchase commitments and Utility-owned generation made on their behalf. The ~~above market~~above-market costs of the Utility’s generation portfolio are calculated using benchmarks for energy, ~~resource adequacy (RA)~~RA and ~~RPS~~renewables portfolio standard attributes.

As previously disclosed, on October 11, 2018, the CPUC approved a phase one decision to modify the PCIA methodology. The Utility implemented a revised PCIA reflecting this decision in rates as of July 1, 2019.

Also, as previously disclosed, on October 10, 2019, the CPUC approved a final decision that finalized the true-up for the new PCIA methodology.

On March 26, 2020, the CPUC approved a final decision on departing load forecasting and PCIA bill presentation issues, establishing that the IOUs shall show a PCIA line item in their tariffs and bill summary tables on all customer bills, which shall be implemented by the last business day of 2021.

On ~~June 30,~~August 6, 2020 the CPUC issued a PDfinal decision that would provide a non-Utility provider an option to prepay ~~their~~its entire PCIA obligation. ~~The earliest date the CPUC will consider this prepayment option is August 6, 2020.~~

The proceeding is now examining structures and rules governing how the Utility addresses excess resources in its portfolio due to load loss to CCA and DA, including standards for active management of the Utility’s portfolios. AOn December 16, 2020, the assigned commissioner issued an amended scoping memo and ruling expanding the rulemaking’s scope to include the potential modification of the annual PCIA rate cap and potential changes to the Utility’s cost recovery and rate setting proceedings to improve PCIA and energy resource recovery account alignment. On April 5, 2021, the CPUC issued a PD ~~is expected in~~that addresses portfolio optimization. The PD removes the ~~third quarter of 2020.~~PCIA rate cap and trigger mechanism and adopts a limited proposal for portfolio management focused only on the Utility’s renewables portfolio standard eligible resources. Opening comments were filed on April 26, 2021, and reply comments are due on May 3, 2021.

~~114~~

~~For additional information, see~~The Utility is unable to predict the ~~2019 Form 10-K.~~outcome of this proceeding.

Central Procurement of the Resource Adequacy Program

On June 17, 2020, the CPUC issued a decision on the Central Procurement of the RA ~~Program.~~program. The decision shifts local RA procurement responsibility under the CPUC’s RA program from all LSEs to a CPE in two distribution service areas, including the Utility’s distribution service area, resulting in a change from decentralized to centralized local RA procurement in those distribution service areas. The decision also adopted implementation details for the central procurement of multi-year local RA, ~~procurement,~~ ordered the Utility and another IOU to serve as the ~~central procurement entities~~CPE for their respective distribution service areas, and adopted a hybrid central procurement framework for the multi-year local RA program beginning for the 2023 RA compliance year.

The decision requires the Utility, as the ~~central procurement entity~~CPE for its distribution service area, to conduct a competitive, all-source solicitation for local RA procurement, with any existing local resource that does not have a contract, any new local resource that can be brought online in time to meet solicitation requirements, or any ~~load serving entity~~LSE or third-party with an existing local RA contract eligible to bid into the solicitation.

Subsequently, on December 3, 2020, the CPUC issued a follow-up decision adopting a compensation mechanism applicable to certain local resources that may be procured by the CPE for purposes of reducing the total CPE procurement requirements. This mechanism applies to new preferred local resources and new local energy storage resources, including utility-owned generation. Procurement by the Utility of, and compensation for, such resources will occur outside of the competitive, all-source solicitation.

The ~~Cost Allocation Mechanism~~cost allocation mechanism methodology is adopted as the cost recovery mechanism to cover procurement costs incurred in serving the central procurement function. The administrative costs incurred in serving the central procurement entity function ~~shall~~will also be recoverable under the ~~Cost Allocation Mechanism.~~cost allocation mechanism.

On January 29, 2021, the Utility submitted an advice letter seeking approval by the CPUC’s energy division of a detailed CPE procurement plan. On March 25, 2021, the CPUC’s energy division issued a disposition letter converting the advice letter into an information-only submittal, which does not require approval by the CPUC.

Integrated Resource Planning Procurement

On November 13, 2019, the CPUC issued a decision that takes a number of steps to address the potential for system RA shortages beginning in 2021. The decision requires incremental procurement of system-level qualifying RA capacity of 3,300 MWs by all LSEs operating within the CAISO’s balancing area for the period 2021-2023, of which the Utility is responsible for 716.9 MWs for its bundled customer portion. The decision requires that at least 50% of LSE resource responsibilities come online by August 1, 2021, at least 75% by August 1, 2022, and the remaining by August 1, 2023. Additionally, the decision directs the IOUs to act as the backstop procurement agent for CCAs and Energy Service Providers (ESPs) that choose not to voluntarily self-procure or that fail to meet their procurement responsibilities after electing to self-provide their assigned MWs of system RA capacity under the decision. On April 15, 2020, the ALJ issued a ruling that the Utility must procure 48.2 MWs of RA capacity for LSEs that chose to opt-out of voluntarily self-providing their required portion.

The Utility has procured its required RA capacity for the August 1, 2021 milestone from third parties through CPUC-approved contracts for lithium ion battery energy storage resources with terms ranging from 10-15 years. On December 22, 2020, the Utility filed an advice letter seeking CPUC approval of an additional group of similar contracts that would satisfy the balance of the Utility’s procurement obligations for the August 1, 2022 and August 1, 2023 milestones. On April 15, 2021, the CPUC approved the contracts.

The CPUC is developing a modified cost allocation mechanism methodology, under which the Utility will be able to recover procurement and administrative costs it incurs in serving the backstop procurement function.

On February 22, 2021, an ALJ issued a ruling seeking comments on a CPUC staff analysis of system reliability need between the years 2024-2026 due to, in part, the pending retirements of Diablo Canyon and once-through-cooling natural gas plants in Southern California. The ALJ ruling includes a CPUC staff recommendation that 7,500 MWs of incremental system reliability resources be ordered to come online by 2026 and be allocated among CPUC-jurisdictional LSEs. A decision is expected by end of the second quarter 2021.

OIR to Further Develop a Risk-Based Decision-Making Framework for Electric and Gas Utilities

On July 20, 2020, the CPUC initiated a rulemaking proceeding to consider ways to strengthen the risk-based decision-making framework that regulated energy utilities use to assess, manage, mitigate and minimize safety risks. The rulemaking will build on requirements for a utility risk framework adopted in the first Safety Model Assessment Proceeding. The CPUC’s goal is to further the prioritization of safety by electric and gas utilities.

On November 2, 2020, the assigned commissioner issued a scoping memo establishing the scope, schedule, and categorization for Phase I and Phase II of the proceeding. Phase I, which began November 2020, is considering (i) clarifications to the technical requirements of the risk-based decision-making framework; (ii) safety and operational performance metrics; and (iii) refining RAMP procedural requirements.

On November 17, 2020, the assigned commissioner issued a ruling regarding the development of safety and operational metrics for the Utility. The ruling directed the Utility to propose metrics that are “suitable for the use as triggering events as specified in the Enhanced Oversight and Enforcement Process” and “suitable, over time, for the Commission, intervenors, and the public to potentially use to gauge the safety and operational performance of all gas and electric IOUs.” On January 15, 2021, the Utility filed a response proposing 12 safety and operational metrics using the criteria outlined by the ruling. On January 25, 2021, parties filed responses to the Utility’s proposal. On January 28, 2021, the CPUC hosted a public workshop where the Utility, the other IOUs, and intervenors commented on the Utility’s safety and operational metrics proposal. All parties filed comments on the Utility’s safety and operational metrics on March 1, 2021.

On April 22, 2021, the SPD issued a draft staff proposal regarding the Utility’s safety and operational metrics. The proposal recommends 36 safety and operational metrics addressing worker and contractor safety, electric safety risks, reliability, gas safety risks, and customer satisfaction. The SPD will host a workshop on May 4, 2021 to discuss the proposal, and informal comments are due by May 10, 2021. A ruling on the proposal and a PD are expected in May 2021 and August 2021, respectively.

OIR to Revisit Net Energy Metering Tariffs

On August 17, 2020, the CPUC initiated a rulemaking proceeding to develop a successor to the existing NEM tariffs. The successor tariff is being developed pursuant to the requirements of AB 327. Under AB 327, the successor to the existing NEM tariffs should provide customer-generators with credit or compensation for electricity generated by their renewable facilities based on the value of that generation to all customers and allows customer-sited renewable generation to grow sustainably among different types of customers.

On November 19, 2020, the assigned commissioner and the ALJ issued a scoping memo and ruling for this proceeding. The scoping memo separated the proceeding into two phases. In the first phase, the CPUC will address several issues, including determining the principles to assist in the development and evaluation of a successor to the current NEM tariffs, assessing what information from a study on existing tariffs should inform the successor, outlining the methods to use to analyze the program elements and the resulting proposals, and determining the program elements or specific features that should be included in the successor tariff. In the second phase, the CPUC will consider what additional or enhanced consumer protections for customers should be adopted, as well as other issues that may arise, such as the virtual net energy metering tariffs, NEM aggregation tariff, the Renewable Energy Self-Generation Bill Credit Transfer program, and the NEM fuel cell tariff.

On February 11, 2021, the CPUC issued a final decision that outlined certain guiding principles to assist in the development and evaluation of proposals for successor to the current NEM tariff.

On March 15, 2021, several parties submitted proposals to reform the existing NEM tariff. Parties presented their proposals at workshops on March 23 and 24, 2021, and an additional workshop was held on April 22, 2021. A PD is expected in the fourth quarter of 2021.

OIR to Address Energy Utility Customer Debt Accumulated during the Coronavirus Pandemic

On February 11, 2021, the CPUC initiated a rulemaking proceeding to consider arrearage relief for utility customers who will have outstanding utility bills when the moratorium on service disconnections ends. The OIR will evaluate a more global program beyond the currently approved arrearage management program focused on low-income residential customers that is funded by the Utility’s customers. The OIR may consider various funding approaches for this expanded debt forgiveness proposal, which could include shareholder funding.

The CPUC has indicated that it expects to issue a PD on May 21, 2021 and a final decision on June 24, 2021.

The Utility is unable to predict the outcome of this proceeding.

Electric Asset Inspections

On November 17, 2020, the Utility notified the CPUC of missed inspections associated with the Utility’s Pole Test and Treat program. In an audit, the Utility was unable to locate records confirming that approximately 41,000 poles had received intrusive tests in accordance with the 20-year intrusive inspection cycle required by the CPUC General Order 165. The Utility is reviewing its records to reconcile available data to determine the status of inspections on these poles. Where records are inconclusive or where the Utility confirms that inspections have not taken place, the Utility is performing inspections on the poles. The Utility is also taking measures to prevent recurrence of this issue in the future. The Utility is providing bi-weekly updates to the CPUC on the status of the review. The Utility also identified a need to correct representations made in prior General Order 165 annual reports once the data review is complete.

On March 4, 2021, the Utility notified the CPUC of errors that the Utility identified in connection with electric asset inspections under its 2020 WMP. The Utility determined that it did not perform enhanced inspections of approximately 24 hydroelectric substations in HFTD Tier 3 areas under the 2020 WMP, or approximately 43% of substations in this tier. The Utility completed remedial inspections on an expedited basis to inspect the hydroelectric substations in HFTD Tier 3 and approximately one-third of the hydroelectric substations in HFTD Tier 2 by March 31, 2021. HFTD areas are those designated by the CPUC where there is an elevated risk for power line fires igniting and spreading rapidly and where stricter fire-safety regulations apply. In addition, the Utility is taking corrective measures to prevent similar errors going forward. Under the EOEP, the Utility “fail[ing] to comply with, or [showing] insufficient progress toward, any of the metrics (i) set forth in its approved wildfire mitigation plan” constitutes a step one triggering event. The Utility could face penalties, enforcement action, or other adverse legal or regulatory consequences for the errors reported in the notification. The Utility is unable to predict the likelihood and amount of any fines or penalties related to this matter.

The Utility is currently in the process of identifying missed electric asset inspections, beyond those identified in the Pole Test and Treat audit or the hydroelectric substations remedial inspections. The Utility intends to update the CPUC upon completion of its reviews. The Utility could face penalties, enforcement action, or other adverse legal or regulatory consequences for the late inspections. The Utility is unable to predict the likelihood and the amount of potential fines or penalties related to these matters.

LEGISLATIVE AND REGULATORY INITIATIVES

~~Senate Bill 350~~

On June 30, 2020, the California Governor signed into law SB 350 (the Golden State Energy Act), a bill which authorizes the creation by the Governor of a new entity “Golden State Energy,” a nonprofit public benefit corporation, for the purpose of acquiring the Utility’s assets and serving electric and gas in the Utility’s service territory only in the event that the CPUC determines that the Utility’s Certificate of Public Convenience and Necessity should be revoked pursuant to any process or procedures adopted by the CPUC in its decision approving PG&E Corporation’s and the Utility’s Plan of Reorganization.

~~Senate Bill 901~~

SB 901, signed into law on September 21, 2018, requires the CPUC to establish a CHT, directing the CPUC to limit certain disallowances in the aggregate, so that they do not exceed the CHT. SB 901 also authorizes the CPUC to issue a financing order that permits recovery, through the issuance of recovery bonds (also referred to as “securitization��), of wildfire-related costs found to be just and reasonable by the CPUC and, only for the 2017 Northern California wildfires, any amounts in excess of the CHT.

~~For additional information, see the 2019 Form 10-K.~~

Assembly Bill 1054

On July 12, 2019, the California ~~Governor~~governor signed into law AB 1054, a bill which provides for the establishment of a statewide fund 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, subject to the terms and conditions of AB 1054. Eligible claims are claims for third party damages resulting from any such wildfires, limited to the portion of such claims that exceeds the greater of (i) $1.0 billion in the aggregate in any ~~calendar~~ year and (ii) the amount of insurance coverage required to be in place for the electric utility company pursuant to section 3293 of the Public Utilities Code, added by AB 1054.

AB 1054 also provides that the first $5.0 billion expended in the aggregate by California’s three ~~investor-owned~~large electric ~~utility companies~~IOUs on fire risk mitigation capital expenditures included in their respective approved ~~wildfire mitigation plans~~WMPs will be excluded from their respective equity rate bases. The $5.0 billion of capital expenditures will be allocated among the ~~investor-owned~~large electric ~~utility companies~~IOUs in accordance with their Wildfire Fund allocation ~~metrics (described above).~~metrics. (See Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1.) AB 1054 contemplates that such capital expenditures may be securitized through a customer charge. On February 24, 2021, the Utility filed an application with the CPUC seeking authorization for a transaction to securitize up to a principal amount of approximately $1.19 billion related to fire risk mitigation capital expenditures that have been or will be incurred by the Utility in 2020 and 2021.

Each of California’s large ~~investor owned utilities~~electric IOUs have elected to participate in the Wildfire Fund. ~~On July 23, 2019, the Utility notified the CPUC of its intent to participate in the Wildfire Fund, subject to the conditions set forth in AB 1054.~~ On July 1, 2020, having satisfied the conditions for the Utility’s participation in the Wildfire Fund, the Utility deposited approximately $5 billion in the Wildfire Fund, which represents PG&E’s initial and first annual contributions.

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~~For additional information, see~~ On December 30, 2020, the ~~2019 Form 10-K.~~Utility made its second annual contribution of $193 million to the Wildfire Fund.

ENVIRONMENTAL MATTERS

The Utility’s operations are subject to extensive federal, state, and local laws and permits relating to the protection of the environment and the safety and health of the Utility’s personnel and the public. These laws and requirements relate to a broad range of the Utility’s activities, including the remediation of hazardous wastes; the reporting and reduction of carbon dioxide and other greenhouse gas emissions; the discharge of pollutants into the air, water, and soil; the reporting of safety and reliability measures for natural gas storage facilities; and the transportation, handling, storage, and disposal of spent nuclear fuel. (See Note 11 of the Notes to the Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q, as well as “Item 1A. Risk Factors” and Note 15 of the Notes to the Consolidated Financial Statements in Item 8 of the ~~2019~~2020 Form 10-K.)

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 11 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” in Item 7 of the ~~2019~~2020 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 15 of the Notes to the Consolidated Financial Statements in Item 8 of the ~~2019~~2020 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 ~~2019~~2020 Form 10-K. There were no significant developments to the Utility’s and PG&E Corporation’s risk management activities during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

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. PG&E Corporation and the Utility consider their accounting policies for ~~LSTC,~~ regulatory assets and liabilities, loss contingencies associated with environmental remediation liabilities and legal and regulatory matters, AROs, contributions to the Wildfire Fund, and pension and other post-retirement benefit 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 and assumptions. These accounting policies and their key characteristics are discussed in detail in the ~~2019~~2020 Form 10-K.

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~~Contributions to the Wildfire Fund~~

On the Effective Date, PG&E Corporation and the Utility contributed, in accordance with AB 1054, an initial contribution of approximately $4.8 billion and first annual contribution of approximately $193 million to the Wildfire Fund to secure participation of the Utility therein. PG&E Corporation and the Utility will account for the contributions to the Wildfire Fund similarly to prepaid insurance with expense being allocated to periods ratably based on an estimated period of coverage. At June 30, 2020, PG&E Corporation and the Utility satisfied the eligibility and other requirements set forth in AB 1054 and as a result, upon payment of the initial contribution on the Effective Date, the Wildfire Fund is available to pay for eligible claims arising as of the effective date of AB 1054, subject to a limit of 40% of the amount of such claims arising as of the effective date of AB 1054 and the Utility’s emergence from Chapter 11, additionally limited to the portion of such claims that exceeds the greater of (i) $1.0 billion in the aggregate in any calendar year and (ii) the amount of insurance coverage required to be in place for the electric utility company pursuant to Section 3293 of the Public Utilities Code, added by AB 1054. Therefore, PG&E Corporation and the Utility have recorded a current liability of $5.2 billion in “Wildfire fund liability” and $1.5 billion in Other noncurrent liabilities for the present value of unpaid contribution amounts, as well as $6.5 billion in assets for its commitment to make contributions, reduced by amortization, of which $6.0 billion are non-current, called “Wildfire fund asset” in the Condensed Consolidated Balance Sheets. On June 30, 2020, the Utility recorded amortization expense of $173 million related to the coverage received from the effective date of AB 1054 to June 30, 2020. The amortization of the asset, accretion of the liability, and if applicable, impairment of the asset is reflected in “Wildfire fund expense” in the Condensed Consolidated Statements of Income. Contributions are discounted to the present value using the 10-year US treasury rate at the date PG&E Corporation and the Utility satisfied all the eligibility requirements to participate in the Wildfire Fund. A useful life of 15 years is being used to amortize the Wildfire Fund asset.

AB 1054 did not specify a period of coverage, therefore, this accounting treatment is subject to significant accounting judgments and estimates. In estimating the period of coverage, PG&E Corporation and the Utility used a Monte Carlo simulation based on twelve years of historical data from wildfires caused by electrical equipment to estimate expected loss. The assumptions create a high degree of uncertainty related to the estimated useful life of the Wildfire Fund. The most significant assumption is the number and severity of catastrophic fires that could occur in California within the participating electric utilities’ service territories during the term of the Wildfire Fund. PG&E Corporation and the Utility utilize historical, publicly available fire-loss data as a starting point; however, future fire-loss can be difficult to estimate due to uncertainties around the impacts of climate change, land use changes, and mitigation efforts by the California electric utility companies.

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

PG&E Corporation and the Utility will evaluate all assumptions quarterly, or upon claims being made from the Wildfire Fund for catastrophic wildfires, and the expected life of the Wildfire Fund will be adjusted as required. PG&E Corporation and the Utility will assess the Wildfire Fund asset for impairment in the event that a participating utility's electrical equipment is found to be the substantial cause of a catastrophic wildfire. Timing of any such impairment could lag as the emergence of sufficient cause and claims information can take many quarters and could be limited to public disclosure of the participating electric utility, if ignition were to occur outside the Utility’s service territory. At June 30, 2020, there were no such known events requiring a reduction of the Wildfire Fund asset.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

See the discussion above in Note 3 of the Notes to the Condensed Consolidated Financial Statements in Item 1.

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~~Notes 8 and ~~Note~~ 9 of the Notes to the Condensed Consolidated Financial Statements in Item 1.)

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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, 2020,~~March 31, 2021, 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, 2020,~~March 31, 2021, 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~~material lawsuits and ~~the Utility’s legal~~ proceedings, ~~and contingencies,~~ see Notes 2, 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.

Upon the court’s request, on March 2, 2020, the Utility provided to the court its target number of contract tree trimmers for 2020, information regarding the Utility’s 2019 inspections of Tower 009/081 on the Cresta-Rio Oso 230 kV Transmission Line (the “Cresta-Rio Oso Line”), information regarding the relationship between priority codes set forth in the Utility’s Electric Transmission Preventive Maintenance Manual and the safety factors specified in General Order 95 promulgated by the CPUC, as well as the application of each to the C-hooks of interest on the Cresta-Rio Oso Line. In addition, on April 2, 2020, the Utility submitted a report to the court regarding the Utility’s March 19, 2020 collection of equipment from the Cresta-Rio Oso Line. On April 10, 2020, the TCC in the Utility’s Chapter 11 Cases and estimation proceedings filed a declaration from a TCC expert concerning Cresta-Rio Oso 230kV Transmission Line evidence collection and removal on March 19, 2020.

~~On April 29, 2020, the court issued an order imposing new conditions of probation that would require the Utility, among other things, to:~~

•employ, on its own payroll, “a sufficient number of inspectors to manage the outsourced tree-trimming work,” including pre-inspectors to “identify trees and limbs in violation of California clearance laws that require trimming” and post-inspectors to “spot-check the work of the contracted tree-trimmers to ensure that no hazard trees or limbs were missed,” and submit a detailed plan to carry out this requirement by May 28, 2020;

•“keep records identifying the age of every item of equipment on every transmission tower and line,” ensuring that “every part [has] a recorded date of installation” and “[i]f the age of a part is unknown, [] conduct research and estimate the year of installation;”

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•“[i]n consultation with the Monitor, [] design a new inspection system for assessing every item of equipment on all transmission towers,” using forms that are “precise enough to track what inspectors actually do, such as whether they touch or tug on equipment,” take videos of every inspection, and “submit plans for its new inspection system to the [court] for approval by May 28[, 2020];” and

•~~“require all contractors performing such inspections to carry insurance sufficient to cover losses suffered by the public should their inspections be deficient and thereby start a wildfire.”~~

The order noted that the court will be flexible in approving any protocols submitted by May 28, 2020, that achieve the essence of the newly imposed conditions of probation if the CPUC, the federal monitor, and the Utility unanimously recommend such protocols. Such conditions, if implemented, could have a material effect on the Utility’s financial condition, results of operations, liquidity and cash flows.

On May 13, 2020, the Utility filed motions with the court asking that it reconsider the order and issue a stay on implementing the new conditions until it has had a chance to rule on the Utility’s request for reconsideration.

~~Also, on May 13, 2020, the Utility filed a notice of appeal with the Ninth Circuit Court of Appeals.~~

On May 14, 2020, the court issued an order staying the April 29th order and ordering certain other procedural actions. On June 24, 2020, after a hearing on the Utility’s motion for reconsideration, the Utility filed a joint brief with the Monitor overseeing its probation and the Department of Justice, outlining which actions, if any, the court should take regarding the conditions of the Utility’s probation. On July 1, 2020, the court issued a notice inviting comments from “any interested party . . . on whether and the extent to which these joint proposed probation conditions should be accepted.” One interested party filed comments on July 16, 2020, stating that the proposed probation conditions submitted by the joint parties were inadequate and should be rejected by the court. The CPUC also filed comments indicating it did not oppose the conditions agreed to by the Utility, the Monitor, and the Department of Justice.

On June 17, 2020, the court issued an order requiring the Utility to respond to each statement in the Butte County District Attorney’s report filed in the criminal prosecution of the Utility in connection with the 2018 Camp Fire entitled “People’s Statement of Factual Basis in Support of the Pleas and Sentencing Statement” that the Utility denies is true and provide the reason for the denial. The Utility filed its response on July 1, 2020.

On July 21, 2020, the court issued an order requiring the Utility, the Monitor, and the Department of Justice to clarify certain aspects of the proposed additional conditions of probation set forth in the June 24, 2020 joint submission. The Utility filed its response on July 28, 2020.

On July 24, 2020, the Utility submitted a report to the court to update the court on the condition of the Utility’s Caribou-Palermo 115 kV Transmission Line (the “Caribou-Palermo Line”). The Utility indicated in its report that energized lines in the same vicinity as the Utility’s de-energized Caribou-Palermo Line may have the potential to induce voltage and current onto the Caribou-Palermo Line, despite the Caribou-Palermo Line’s de-energized state. The Utility further indicated in its report the steps it has taken to mitigate this risk and additional steps that it will be taking in the future. The Utility also has notified the Monitor, its probation officer, the CPUC and the Butte County District Attorney of the facts and mitigation efforts set forth in its report.

~~For more information on the Utility’s probation, see the 2019 Form 10-K.~~

~~The Utility expects to continue receiving additional orders from the court in the future.~~

~~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 (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 SED engaged a consultant to assist in the SED’s investigation and the preparation of a report containing the SED’s assessment, and subsequently, to report on the implementation by the Utility of the consultant’s recommendations.

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

On June 2, 2020, the ALJ sent a procedural email disclosing a forthcoming ruling requesting input from parties on the scope, schedule and priorities for the Safety Culture OII, and indicating that after such pleadings are filed a new scoping memorandum would be issued.

~~For more information, see the 2019 Form 10-K.~~

~~Diablo Canyon 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 Proceedings” in the 2019 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 ~~2019~~2020 Form 10-K 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 the 2019 Kincade fire.~~

On July 16, 2020, Cal Fire issued a press release addressing the cause of the 2019 Kincade fire. Cal Fire stated that it had “determined that the Kincade Fire was caused by electrical transmission lines owned and operated by Pacific Gas and Electric (PG&E) located northeast of Geyserville. Tinder dry vegetation and strong winds combined with low humidity and warm temperatures contributed to extreme rates of fire spread.” Cal Fire also indicated that its investigative report has been forwarded to the Sonoma County District Attorney’s Office, which is reviewing the matter.

Although there are a number of unknown facts surrounding Cal Fire’s causation determination, the Utility could be subject to significant liability in excess of insurance coverage that would be expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. PG&E Corporation and the Utility have also received and are responding to data requests from the CPUC’s SED relating to the Kincade fire. PG&E Corporation and the Utility could be the subject of additional investigations, lawsuits, or enforcement actions in connection with the 2019 Kincade fire.

In addition, the 2019 Kincade fire or future wildfires could have adverse consequences on the Utility’s probation proceeding, the Utility’s proceedings with the CPUC and FERC (including the Safety Culture OII), and future regulatory proceedings, including future applications for the safety certification required by AB 1054. PG&E Corporation and the Utility may also suffer additional reputational harm and face an even more challenging operating, political, and regulatory environment. For more information about the 2019 Kincade fire, see Note 10 “Wildfire-Related Contingencies” in Part I, Item 1.

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~~PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows could be significantly affected by the outbreak of the COVID-19 pandemic.~~

PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity and cash flows have been (beginning in March 2020) and could continue to be significantly affected by the outbreak of COVID-19, but the extent of such impact is uncertain. In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China, resulting in significant disruptions to manufacturing, supply chain, markets, and travel world-wide. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the COVID-19 outbreak a public health emergency of international concern and on March 12, 2020, announced the outbreak was a pandemic. On March 16, 2020, the Governor issued an Executive Order requiring the CPUC to direct electric utility companies to follow customer protection measures including a moratorium on service disconnections, retroactive to March 4, 2020. On March 19, 2020, the California Governor instituted shelter-in-place measures that became effective state-wide on March 19, 2020. On April 28, 2020, the California Governor announced four different stages for easing the California shelter-in-place measures. On May 4, 2020, the California Governor issued an executive order directing the State Public Health Officer to establish criteria to determine whether and how local health officers may implement less restrictive measures, and on May 7, 2020, the State Public Health Officer issued an order, effective May 8, 2020, directing local health officers to begin gradual movement into Stage 2 of the Pandemic Resilience Roadmap for the State of California in which the shelter-in-place measures are modified to allow certain low-risk businesses and other spaces to re-open. However, the previously announced stages of reopening are subject to modifications as California’s COVID-19 data evolves. On July 13, 2020, the California Department of Public Health issued an order, effective immediately, indicating community spread of infection is of increasing concern across the state and directing closures of certain indoor and/or outdoor spaces and businesses, unless an exception applies. It is uncertain when further modifications and restrictions will be implemented.

While the extent of the impact of the current COVID-19 outbreak on PG&E Corporation and the Utility’s business and financial results is uncertain, the consequences of a continued and prolonged outbreak and resulting government and regulatory orders could have a further negative impact on the Utility’s financial condition, results of operations, liquidity and cash flows.

The outbreak of COVID-19 and the resulting economic conditions, including but not limited to the shelter-in-place order and resulting decrease in economic and industrial activity in the Utility’s service territory have and will continue to have a significant adverse impact on the Utility’s customers; these circumstances have impacted and will continue to impact the Utility for a period of time that PG&E Corporation and the Utility are unable to predict. For example, the economic downturn has already resulted in a reduction in customer receipts and collection delays in the second quarter of 2020.

The Utility’s customer energy accounts receivable balances over 30 days outstanding as of June 30, 2020 were approximately $491 million, or $148 million higher as compared to the corresponding month in 2019. The Utility is unable to estimate the portion of the increase directly attributable to the COVID-19 pandemic. The Utility expects to continue experiencing an impact on monthly cash collections in 2020 and for as long as current COVID-19 circumstances persist.

On April 16, 2020, the CPUC passed a resolution requiring the customer protection measures from the March 16, 2020 Executive Order and allowing associated costs to be tracked in a memorandum account, the COVID-19 Pandemic Protections Memorandum Account (CPPMA). The CPPMA allows tracking of residential and small business customers’ incremental uncollectible costs. In addition, the Utility’s proposed 2020 GRC settlement would continue the Utility’s existing mechanism to address uncollectibles, which allows the Utility to readjust its uncollectibles rate on an annual basis based on the most-recent 10-year average of uncollectibles. In addition, the June 11, 2020 decision in the ~~OIR to Consider New Approaches to Disconnections and Reconnections to Improve Energy Access and Contain Costs (Disconnections OIR)~~ adopted a two-way balancing account for residential uncollectibles and memorandum account for OIR implementation costs. The Utility is unable to predict whether these measures will allow for future recovery of these amounts.

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In addition, the Utility has experienced average reductions of approximately 3% in electric load and approximately 4% in core gas load on a weather-adjusted basis from mid-March to mid-July, resulting in an estimated $200 million reduction in billed revenues for the mid-March to mid-July period. PG&E Corporation and the Utility are currently unable to quantify the long-term potential impact of the changes in customer collections or changes in energy demand on earnings and cash flows due, in part, to uncertainties regarding the timing, duration and intensity of the COVID-19 outbreak and the resulting economic downturn. Although the CPUC authorized the establishment of memorandum and balancing accounts to track costs associated with customer protection measures, the timing of regulatory relief, if any, and ultimately cost recovery from such memorandum accounts or otherwise, are uncertain. The COVID-19 pandemic and resulting economic downturn have resulted and will continue to result in workforce disruptions, both in personnel availability (including a reduction in contract labor resources) and deployment. In preparation for the return of a few teams to their offices, the Utility has issued a “Return to PG&E Playbook” that explains the safety-related steps the company is taking, as well as the steps that PG&E Corporation’s and the Utility’s employees should take. The guidance includes important reminders of policies on personal hygiene, travel, reporting exposure or illness, and other topics.

Although the Utility continues to prioritize customer and community safety, these disruptions necessitate changes to the Utility’s operating and capital expenditure plans, which could lead to project delays or service disruptions in certain programs. Delays in production and shipping of materials used in the Utility’s operations may also impact operations.

In addition, COVID-19 has the potential to cause delays and disruptions in various regulatory proceedings in which the Utility is involved. Following Department of Health guidance concerning restrictions on public gatherings, the CPUC has cancelled all public forums and has been conducting remote meetings for events it deems essential. A disruption in CPUC operations could impact the timing of PG&E Corporation’s and the Utility’s rate cases and other regulatory proceedings.

In addition, as discussed above, a group of local government entities and organizations filed a Joint Motion asking the CPUC to require utilities to comply with additional requirements when implementing PSPS events while local areas are sheltering-in-place due to COVID-19. A CPUC decision could restrict or impose additional requirements on the Utility in implementing PSPS events.

PG&E Corporation and the Utility expect additional financial impacts in the future as a result of COVID-19. Potential longer-term impacts of COVID-19 on PG&E Corporation or the Utility include the potential for higher credit spreads and borrowing costs and incremental financing needs. PG&E Corporation and the Utility’s analysis of the potential impact of COVID-19 is preliminary and subject to change. PG&E Corporation and the Utility are unable to predict the timing, duration or intensity of the COVID-19 situation and its effects on the business and general economic conditions in the State of California and the United States of America.

~~PG&E Corporation and the Utility will not benefit from all of the features of AB 1054 if the Wildfire Fund is exhausted.~~

~~For more information on AB 1054, see “Wildfire Fund under AB 1054” in Note 10 of the Notes to the Condensed Consolidated Financial Statements.~~

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~~PG&E Corporation’s and the Utility’s substantial indebtedness following the Reorganization may adversely affect their financial health and operating flexibility.~~

PG&E Corporation and the Utility have a substantial amount of indebtedness as a result of the reorganization transactions in connection with implementation of the Plan, most of which is secured by liens on the assets of PG&E Corporation and the Utility. As of June 30, 2020, on an as adjusted basis after giving effect to such reorganization transactions (including the amounts of indebtedness that PG&E Corporation and the Utility incurred on the Effective Date) as if such transactions occurred on June 30, 2020, PG&E Corporation would have had approximately $4.75 billion of outstanding indebtedness (such indebtedness consisting of the 2028 Notes, the 2030 Notes and borrowings under the Term Loan), and the Utility would have had approximately $33.3 billion of outstanding indebtedness (such indebtedness including the Utility Reinstated Senior Notes, the Mortgage Bonds and the Utility Term Loan Credit Agreement). In addition, PG&E Corporation and the Utility would have had $500 million of additional borrowing capacity under the Corporation Revolving Credit Agreement, and the Utility would have had $2.53 billion of additional borrowing capacity under the Utility Revolving Credit Agreement (after taking into account letters of credit outstanding under the DIP revolving facility that will become outstanding under the Utility Revolving Credit Agreement on the Effective Date, which, as of June 30, 2020, were $904 million). In addition, the Utility had outstanding preferred stock with an aggregate liquidation preference of $252 million.

Since PG&E Corporation and the Utility will have a historically high level of debt, a substantial portion of cash flow from operations will be used to make payments on this debt. Furthermore, since a significant percentage of the Utility’s assets are used to secure its debt, this reduces the amount of collateral available for future secured debt or credit support and reduces its flexibility in operating these secured assets. This relatively high level of debt and related security could have other important consequences for PG&E Corporation and the Utility, including:

•~~limiting their ability or increasing the costs to refinance their indebtedness;~~

•~~limiting their ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of their business strategy or other purposes;~~

•~~limiting their ability to use operating cash flow in other areas of their business because they must dedicate a substantial portion of these funds to service debt;~~

•increasing their vulnerability to general adverse economic and industry conditions, including increases in interest rates, particularly given their substantial indebtedness that bears interest at variable rates, as well as to catastrophic events; and

•~~limiting their ability to capitalize on business opportunities.~~

Under the terms of the agreements and indentures governing their respective indebtedness, PG&E Corporation and the Utility are permitted to incur additional indebtedness, some of which could be secured (subject to compliance with certain tests) and which could further accentuate these risks. As a result of the high level of indebtedness, PG&E Corporation and the Utility may be unable to generate sufficient cash through operations to service such debt, and may need to refinance such indebtedness at or prior to maturity and be unable to obtain financing on suitable terms or at all, any of which could have a material adverse effect on PG&E Corporation’s and the Utility’s business, financial condition and results of operations.

~~The documents that govern PG&E Corporation’s and the Utility’s indebtedness contain restrictions that limit their flexibility in operating their business.~~

PG&E Corporation’s and the Utility’s material financing agreements, including certain of their respective credit agreements and indentures, contain various covenants restricting, among other things, their ability to:

•~~incur or assume indebtedness or guarantees of indebtedness;~~

•~~incur or assume liens;~~

•~~sell or dispose of all or substantially all of its property or business;~~

•~~merge or consolidate with other companies;~~

•~~enter into any sale leaseback transactions; and~~

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•~~enter into swap agreements.~~

The restrictions contained in these material financing agreements could affect PG&E Corporation’s and the Utility’s ability to operate their business and may limit their ability to react to market conditions or take advantage of potential business opportunities as they arise. For example, such restrictions could adversely affect PG&E Corporation’s and the Utility’s ability to finance their operations and expenditures, make strategic acquisitions, investments or alliances, restructure their organization or finance their capital needs. Additionally, PG&E Corporation’s and the Utility’s ability to comply with these covenants and restrictions may be affected by events beyond their control, including, but not limited to, prevailing economic, financial and industry conditions.

~~Parties have appealed the Confirmation Order.~~

Following entry of the Confirmation Order confirming the Plan, certain parties filed notices of appeal with respect to the Confirmation Order. There can be no assurance that any such appeal will not be successful and, if successful, that any such appeal would not have a material adverse effect on PG&E Corporation and the Utility.

~~PG&E Corporation may be required to issue shares with respect to HoldCo Rescission or Damage Claims, which would result in dilution to holders of PG&E Corporation common stock.~~

On the Effective Date, PG&E Corporation issued to the Fire Victim Trust a number of shares of common stock equal to 22.19% of the outstanding common stock on such date. As further described in “Satisfaction of HoldCo Rescission or Damage Claims and Subordinated Debt Claims” in Note 10 of the Notes to the Condensed Consolidated Financial Statements in Item 1, PG&E Corporation may be required to issue shares of its common stock in respect of allowed HoldCo Rescission or Damage Claims. If such issuance is required, it may be determined that, under the Plan, the Fire Victim Trust should receive additional shares of PG&E Corporation common stock such that it would have owned 22.19% of the outstanding common stock of reorganized PG&E Corporation on the Effective Date, assuming that such issuance of shares in respect of the HoldCo Rescission or Damage Claims had occurred on the Effective Date. Any such issuances will result in dilution to anyone who holds shares of PG&E Corporation common stock prior to such issuance and may cause the trading price of PG&E Corporation shares to decline.

~~PG&E Corporation common stock is subject to ownership and transfer restrictions intended to preserve PG&E Corporation’s ability to use its net operating loss carryforwards and other tax attributes.~~

PG&E Corporation has incurred and will incur in connection with the Plan significant net operating loss carryforwards and other tax attributes, the amount and availability of which are subject to certain qualifications, limitations and uncertainties. The Amended Articles (as defined below) impose certain restrictions on the transferability and ownership of PG&E Corporation common stock and preferred stock (together, the “capital stock”) and other interests designated as “stock” of PG&E Corporation by the Board of Directors as disclosed in an SEC filing (such stock and other interests, the “Equity Securities,” and such restrictions on transferability and ownership, the “Ownership Restrictions”) in order to reduce the possibility of an equity ownership shift that could result in limitations on PG&E Corporation’s ability to utilize net operating loss carryforwards and other tax attributes from prior taxable years or periods for federal income tax purposes. Any acquisition of PG&E Corporation capital stock that results in a shareholder being in violation of these restrictions may not be valid.

Subject to certain exceptions, the Ownership Restrictions restrict (i) any person or entity (including certain groups of persons) from directly or indirectly acquiring or accumulating 4.75% or more of the outstanding Equity Securities and (ii) the ability of any person or entity (including certain groups of persons) already owning, directly or indirectly, 4.75% or more of the Equity Securities to increase their proportionate interest in the Equity Securities. Any transferee receiving Equity Securities that would result in a violation of the Ownership Restrictions will not be recognized as a shareholder of PG&E Corporation or entitled to any rights of shareholders, including, without limitation, the right to vote and to receive dividends or distributions, whether liquidating or otherwise, in each case, with respect to the Equity Securities causing the violation.

~~124~~

The Ownership Restrictions remain in effect until the earliest of (i) the repeal, amendment or modification of Section 382 (and any comparable successor provision) of the Internal Revenue Code, in a manner that renders the restrictions imposed by Section 382 of the Internal Revenue Code no longer applicable to PG&E Corporation, (ii) the beginning of a taxable year in which the Board of Directors determines that no tax benefits attributable to net operating losses or other tax attributes are available, (iii) the date selected by the Board of Directors if it determines that the limitation amount imposed by Section 382 of the Internal Revenue Code as of such date in the event of an “ownership change” of PG&E Corporation (as defined in Section 382 of the Internal Revenue Code and Treasury Regulation Sections 1.1502-91 et seq.) would not be materially less than the net operating loss carryforwards or “net unrealized built-in loss” (within the meaning of Section 382 of the Internal Revenue Code and Treasury Regulation Sections 1.1502-91 et seq.) of PG&E Corporation and (iv) the date selected by the Board of Directors if it determines that it is in the best interests of PG&E Corporation’s shareholders for the Ownership Restrictions to be removed or released. The Ownership Restrictions may also be waived by the Board of Directors on a case by case basis.

If PG&E Corporation elects to treat the Fire Victim Trust as a “grantor ~~trust”,~~trust,” the application of the Ownership Restrictions, as defined in PG&E Corporation’s Amended Articles of Incorporation, will be determined on the basis of a number of shares outstanding that could differ materially from the number of shares reported as outstanding on the cover page of its periodic reports under the Exchange Act.

The Plan contemplates that the Fire Victim Trust will be treated as a “qualified settlement fund” for U.S. federal and state income tax purposes, subject to PG&E Corporation’s ability to elect to treat the Fire Victim Trust as a “grantor trust” for U.S. federal and state income tax purposes instead. ~~Based on~~In January 2021, PG&E Corporation received an IRS ruling that states the ~~facts known~~Utility is eligible to ~~date,~~make a grantor trust election for U.S. federal income tax purposes, with respect to the Fire Victim Trust and addressed certain, but not all, related issues. PG&E Corporation believes ~~that it may be beneficial~~benefits associated with “grantor trust” treatment, including, a potentially larger tax deduction related to ~~elect to treat~~the proceeds realized by the Fire Victim Trust ~~as a “grantor trust”,~~from the sale of shares contributed to the Fire Victim Trust, could be realized, but only if PG&E Corporation ~~receives favorable determinations from the Internal Revenue Service regarding certain aspects of such election. If PG&E Corporation does not receive such favorable determinations, it expects to treat~~and the Fire Victim Trust ascan meet certain requirements of the Internal Revenue Code and Treasury Regulations thereunder, relating to sales of PG&E Corporation stock. PG&E Corporation expects to elect grantor trust treatment if it is able to enter into a ~~“qualified settlement fund” for U.S. federal income tax purposes.~~definitive agreement with the Fire Victim Trust. On April 28, 2021, the Bankruptcy Court issued an oral ruling that it would approve the material terms of an agreement between PG&E Corporation, the Utility and the Fire Victim Trust that supports the election of the grantor trust treatment. There can be no assurance that the parties will execute a definitive agreement or that PG&E Corporation will be able to avail itself of the benefits of a grantor trust election.

If PG&E Corporation were to elect to treat the Fire Victim Trust as a “grantor ~~trust”,~~trust,” any shares owned by the Fire Victim Trust would effectively be excluded from the total number of outstanding ~~Equity Securities~~equity securities when calculating a ~~Person’s~~person’s Percentage Ownership (as defined in the Amended Articles) for purposes of the Ownership Restrictions. For example, whereas the number of outstanding shares of PG&E Corporation common stock for corporate purposes as of ~~July 27, 2020,~~April 26, 2021 was ~~1,941,473,377~~1,985,105,703 shares, for purposes of the Ownership Restrictions, the number of outstanding shares of PG&E Corporation common stock ~~as of July 27, 2020,~~ would be ~~the~~1,507,362,113 shares (the number of outstanding shares of ~~PG&E Corporation~~ common stock less the number of shares ~~of common stock~~ owned by the Fire Victim Trust oras of April 26, 2021). As such, based on the total number of outstanding equity securities and assuming the Fire Victim Trust has not sold any shares ~~per SEC less 476,995,175. Note that~~of PG&E Corporation common stock, a person’s effective percentage ownership restriction for purposes of the Amended Articles would be 3.6%. PG&E Corporation does not control the number of shares held by the Fire Victim Trust and is not able to determine in advance the number of shares the Fire Victim Trust will ~~hold at any time.~~hold. PG&E Corporation intends to periodically make available to investors information about the number of shares of common stock held by the Fire Victim Trust as of a specified date for purposes of the Ownership Restrictions, including in its Quarterly Reports and Annual Reports filed with the SEC.

PG&E Corporation ~~will~~expects to publicly announce its determination on whether it will elect to treat the Fire Victim Trust as a “grantor trust” ~~no later than April 1, 2021.~~promptly after entering into definitive documentation with the Fire Victim Trust with respect to meeting certain requirements of the Internal Revenue Code and Treasury Regulations necessary to realize the benefits associated with “grantor trust” treatment. In the event PG&E Corporation ~~decides to make~~makes a “grantor trust” election with respect to the Fire Victim Trust, PG&E Corporation intends to enforce the Ownership Restrictions as described in the foregoing paragraph (excluding any shares owned by the Fire Victim Trust from the number of outstanding ~~Equity Securities)~~equity securities), including with respect to Transfers (as defined in the Amended Articles) occurring before such announcement. However, it is anticipated that the Board of Directors of PG&E Corporation will exempt Transfers to shareholders ~~occurring~~that occurred prior to July 30, 2020 (the date PG&E Corporation initially announced it was considering treating the ~~date hereof~~Fire Victim Trust as a grantor trust in its Form 10-Q for the quarterly period ended June 30, 2020), solely to the extent that such Transfers would have complied with the Ownership Restrictions if the Ownership Restrictions were applied on the basis that the shares owned by the Fire Victim Trust were treated as outstanding ~~Equity Securities.~~equity securities. For the avoidance of doubt, all other Transfers of ~~Equity Securities~~equity securities (including acquisitions from and after the ~~date hereof~~July 30, 2020 by shareholders ~~benefitting~~benefiting from an exemption described in the preceding sentence) will continue to be subject to the ~~Ownership Restrictions.~~ownership restrictions. All current and prospective shareholders are advised to consider the foregoing in determining their ownership and acquisition of PG&E Corporation common stock.

~~125~~

~~The ability of PG&E Corporation to use some or all of its net operating loss carryforwards and other tax attributes to offset future income may be limited.~~

As of December 31, 2019, PG&E Corporation had net operating loss carryforwards for PG&E Corporation’s consolidated group for U.S. federal and California income tax purposes of approximately $5.9 billion and $1.9 billion, respectively, and PG&E Corporation incurred and will incur in connection with the Plan significant net operating loss carryforwards and other tax attributes. The ability of PG&E Corporation to use some or all of these net operating loss carryforwards and certain other tax attributes may be subject to certain limitations. Under Section 382 of the Internal Revenue Code (which also applies for California state income tax purposes), if a corporation (or a consolidated group) undergoes an “ownership change,” and the corporation does not qualify for (or elects out of) the special bankruptcy exception in Section 382(l)(5) of the Internal Revenue Code, such net operating loss carryforwards and other tax attributes may be subject to certain limitations. In general, an ownership change occurs if the aggregate stock ownership of certain shareholders (generally 5% shareholders, applying certain look-through and aggregation rules) increases by more than 50% over such shareholders’ lowest percentage ownership during the testing period (generally three years). Losses incurred in the same taxable year as an ownership change generally can be pro-rated between the pre- and post-change portions of the taxable year, even if a disproportionate amount of such losses were actually incurred on or prior to the date of the ownership change. Only the portion of such losses allocated to the pre-change portion of the year would be subject to the annual limitation.

As of the Effective Date, PG&E Corporation does not believe that it has undergone an ownership change and its net operating loss carryforwards and other tax attributes are not limited by Section 382 of the Internal Revenue Code. However, whether PG&E Corporation underwent or will undergo an ownership change as a result of the transactions in PG&E Corporation’s equity that occurred and will occur pursuant to the Plan depends on several factors outside PG&E Corporation’s control and the application of certain laws that are uncertain in several respects. Accordingly, there can be no assurance that the IRS would not successfully assert that PG&E Corporation has undergone or will undergo an ownership change pursuant to the Plan. In addition, even if these transactions did not cause an ownership change, they may increase the likelihood that PG&E Corporation may undergo an ownership change in the future. If the IRS successfully asserts that PG&E Corporation did undergo, or PG&E Corporation otherwise does undergo, an ownership change, the limitation on its net operating loss carryforwards and other tax attributes under Section 382 of the Internal Revenue Code could be material to its operations.

In particular, limitations imposed on PG&E Corporation’s ability to utilize net operating loss carryforwards or other tax attributes could cause U.S. federal and California income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such net operating loss carryforwards or other tax attributes to expire unused, in each case reducing or eliminating the benefit of such net operating loss carryforwards and other tax attributes. Specifically, PG&E Corporation’s ability to utilize its net operating loss carryforwards is critical to a successful rate-neutral securitization transaction after the Effective Date, the proceeds of which are expected to be used to satisfy PG&E Corporation’s and the Utility’s obligations to the Fire Victim Trust, and to PG&E Corporation’s and the Utility’s commitment to make certain operating and capital expenditures. Failure to consummate a securitization transaction or obtain alternative sources of capital could have a material adverse effect on PG&E Corporation and the Utility and the value of PG&E Corporation common stock.

~~The ability of PG&E Corporation to pay dividends on shares of PG&E Corporation common stock is subject to restrictions.~~

In response to concerns raised by California Governor Gavin Newsom, PG&E Corporation and the Utility filed the Case Resolution Contingency Process Motion with the Bankruptcy Court setting forth certain commitments in connection with the confirmation process and implementation of the Plan, including, among other things, limitations on the ability of PG&E Corporation to pay dividends on shares of its common stock (the “Dividend Restriction”). The Dividend Restriction provides that PG&E Corporation may not pay dividends on shares of its common stock until it recognizes $6.2 billion in Non-GAAP Core Earnings following the Effective Date. “Non-GAAP Core Earnings” means GAAP earnings adjusted for certain non-core items. Additionally, the ruling of the court overseeing the Utility’s probation dated April 3, 2019 places further restrictions on the ability of PG&E Corporation and the Utility to issue dividends. Under the ruling, no dividends may be issued until the Utility is fully in compliance with all applicable laws concerning vegetation management and clearance requirements, as well as the vegetation management and enhanced vegetation management targets and metrics in the Utility’s wildfire mitigation plan.

Subject to the foregoing restrictions, any decision to declare and pay dividends in the future will be made at the discretion of the Board of Directors and will depend on, among other things, PG&E Corporation’s results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board of Directors may deem relevant. Certain of the Utility’s debt instruments contain covenants that restrict the ability of the Utility to pay dividends to PG&E Corporation.

~~126~~

~~PG&E Corporation is a holding company and relies on dividends, distributions and other payments, advances and transfers of funds from the Utility to meet its obligations.~~

PG&E Corporation conducts its operations primarily through its subsidiary, the Utility, and substantially all of PG&E Corporation’s consolidated assets are held by the Utility. Accordingly, PG&E Corporation’s cash flow and its ability to meet its debt service obligations under its existing and future indebtedness are largely dependent upon the earnings and cash flows of the Utility and the distribution or other payment of these earnings and cash flows to PG&E Corporation in the form of dividends or loans or advances and repayment of loans and advances from the Utility. The ability of the Utility to pay dividends or make other advances, distributions and transfers of funds will depend on its results of operations and may be restricted by, among other things, applicable laws limiting the amount of funds available for payment of dividends, the conditions of the Utility’s probation proceeding and certain restrictive covenants contained in the agreements of those subsidiaries. The Utility is not expected to commence payment of dividends on its common stock or preferred stock upon emergence from Chapter 11. Additionally, the Utility must use its resources to satisfy its own obligations, including its obligation to serve customers, to pay principal and interest on outstanding debt, to pay preferred stock dividends and meet its obligations to employees and creditors, before it can distribute cash to PG&E Corporation. Under the Utility’s Articles of Incorporation, the Utility cannot pay common stock dividends unless all cumulative preferred dividends on the Utility’s preferred stock have been paid. In addition, the CPUC has imposed various conditions that govern the relationship between PG&E Corporation and the Utility, including financial conditions that require the Board of Directors to give first priority to the capital requirements of the Utility, as determined to be necessary and prudent to meet the Utility’s obligation to serve or to operate the Utility in a prudent and efficient manner. As a result of these restrictions and conditions, the Utility does not expect to commence payment of dividends on its common stock or preferred stock upon emergence from Chapter 11. The deterioration of income from, or other available assets of, the Utility for any reason could limit or impair the Utility’s ability to pay dividends or other distributions to PG&E Corporation, which could, in turn, materially and adversely affect PG&E Corporation’s ability to meet its obligations.

California law and certain provisions in the Amended Articles and the amended and restated bylaws of PG&E Corporation (the “Amended Bylaws”) may prevent efforts by shareholders to change the direction or management of the Company.

The Amended Articles and the Amended Bylaws contain provisions that may make the acquisition of PG&E Corporation more difficult without the approval of the Board of Directors, including, but not limited to, the following:

•~~until 2024, the Board of Directors will be divided into two equal classes, with members of each class elected in different years for different terms;~~

•only holders of shares who are entitled to cast ten percent or more of the votes can request a special meeting of the shareholders, and any such request must satisfy the requirements specified in the Amended Bylaws; action by shareholders may otherwise only be taken at an annual or special meeting duly called by or at the direction of a majority of the Board of Directors;

•~~advance notice for all shareholder proposals is required; and~~

•any person acquiring PG&E Corporation Equity Securities will be restricted from owning more than 4.75% of such Equity Securities, subject to certain expectations as may be determined by the Board of Directors of PG&E Corporation.

These and other provisions in the Amended Articles, the Amended Bylaws and California law could make it more difficult for shareholders or potential acquirers to obtain control of the Board of Directors or initiate actions that are opposed by the then-current Board of Directors, including delay or impede a merger, tender offer or proxy contest involving PG&E Corporation. The existence of these provisions could negatively affect the price of PG&E Corporation common stock and limit opportunities for shareholders to realize value in a corporate transaction.

~~127~~

~~PG&E Corporation’s and the Utility’s financial results 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 the California legislature. Pursuant to SB 901, on April 30, 2020, the Utility filed an application with the CPUC seeking authorization for a post-emergence transaction to securitize $7.5 billion of 2017 wildfire claims costs that is designed to not impact amounts billed to customers, with the proceeds used to pay or reimburse the Utility for the payment of wildfire claims costs associated with the 2017 Northern California wildfires. As a result of the proposed transaction, the Utility would retire $6.0 billion of Utility debt and accelerate a $700 million payment due to the Fire Victim Trust. Failure to consummate a securitization transaction 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 7. MD&A.)~~flows could be materially affected as a result of the 2019 Kincade fire, the 2020 Zogg fire or future wildfires.

~~In addition, SB 901 requires utilities to submit annual wildfire mitigation plans for approval by~~PG&E Corporation’s and the 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. Failure to substantially comply with the plan could result in finesUtility’s financial condition, results of operations, liquidity, and ~~other penalties imposed on the Utility that~~cash flows could be ~~material. (See “Regulatory Matters – Other Regulatory Proceedings” in Item 7. MD&A.)~~materially affected as a result of the 2019 Kincade fire, the 2020 Zogg fire or future wildfires.

~~On July 12,~~

Based on the facts and circumstances available as of the date of this report, PG&E Corporation and the Utility have determined that it is probable they will incur a loss in connection with the 2019 Kincade fire and the California Governor signed into law AB 1054, which, among other policy reforms, provides for the establishment of a statewide fund that is 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.2020 Zogg fire. Although PG&E Corporation and the Utility have ~~delivered notice~~recorded liabilities for probable losses in connection with such wildfires, these liability estimates correspond to the ~~CPUC electing~~lower end of the range of reasonably estimable losses, do not include several categories of potential damages that are not reasonably estimable, and are subject to ~~participate~~change based on new information.

Although there are a number of unknown facts surrounding Cal Fire’s causation determinations of the 2019 Kincade fire and the 2020 Zogg fire, the Utility could be subject to significant liability in excess of insurance coverage or amounts available under the Wildfire Fund ~~and even if the Utility were eligible to do so, the impact of~~under AB 1054 ~~on PG&E Corporation and the Utility is subject to numerous uncertainties, including the Utility’s ability to demonstrate to the CPUC~~ that ~~wildfire-related costs paid from the Wildfire Fund are just and reasonable, subject to a disallowance cap, and that the Wildfire Fund has sufficient remaining funds.~~

~~The costs of participating in the Wildfire Fund (should the Utility~~would be eligible to do so) are expected to exceed $6.7 billion over the anticipated ten-year life of the fund. The timing and amount of any potential charges associated with shareholder contributions would also depend on various factors. In addition, there could also be a significant delay between the occurrence of a wildfire and the timing on which the Utility recognizes impairment for the reduction in future coverage, due to the lack of data available to the Utility following a catastrophic event, especially if the wildfire occurs in the service territory of another participating electric utility. Participation in the Wildfire Fund is expected to have a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash ~~flows, and there can be no assurance that the benefits of participating in the Wildfire Fund ultimately outweigh these substantial costs.~~

Further, AB 1054 revised some of the SB 901 requirements regarding wildfire mitigation plans, including creating a Wildfire Safety Division to review future plans and that plans should cover a three-year period.

Also, in June 2018, the State of California enacted the CCPA, which went into effect on January 1, 2020, with a 12-month look-back period requiring compliance by January 1, 2019. On October 11, 2019, the State of California announced proposed regulations which provide guidance on the requirements of the CCPA. 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 penalties in the event of non-compliance and statutory damages in the event of a data security breach. Failure to comply with the CCPA could result in fines imposed onflows. PG&E Corporation and the Utility ~~that~~have also received and have responded or are responding to data requests from the CPUC’s SED relating to the 2019 Kincade fire and the 2020 Zogg fire. Furthermore, the Sonoma County District Attorney’s Office has filed criminal charges against the Utility in connection with the 2019 Kincade fire and the Shasta County District Attorney’s Office is conducting an investigation into the 2020 Zogg fire. If the Utility were to be convicted of the charges in the criminal complaint, the Utility could be ~~material.~~subject to fines, penalties, and restitution to victims for their economic losses, as well as non-monetary remedies such as oversight requirements. The Utility does not expect that any of its liability insurance would be available to cover restitution payments ordered by the court presiding over the criminal proceeding. PG&E Corporation and the Utility could be the subject of additional investigations, lawsuits, or enforcement actions in connection with the 2019 Kincade fire, the 2020 Zogg fire or future wildfires.

~~Finally, on June 30, 2020,~~Although the ~~California Governor signed into law SB 350 (the Golden State Energy Act), a bill which authorizes~~Utility has taken extensive measures to reduce the ~~creation by~~threat of future wildfires, the Governor of a new entity “Golden State Energy,” a nonprofit public benefit corporation, for the purpose of acquiring the Utility’s assets and serving electric and gas in the Utility’s service territory only in the event that the CPUC determinespotential that the Utility’s ~~Certificate~~equipment will be involved in the ignition of ~~Public Convenience~~future wildfires, including catastrophic wildfires, is significant. This risk may be attributable to, and ~~Necessity should~~exacerbated by, a variety of factors, including climate (in particular extended periods of seasonal dryness coupled with periods of high wind velocities and other storms), infrastructure, and vegetation conditions. Despite significant investment in mitigation measures to improve infrastructure and manage vegetation, as well as implementation of de-energization strategies, the Utility may not be ~~revoked pursuant~~successful in mitigating the risk of future wildfires.

In addition, the 2019 Kincade fire and the 2020 Zogg fire have had and, along with any future wildfires could continue to ~~any process or procedures adopted by~~have adverse consequences on the Utility’s probation proceeding, the Utility’s proceedings with the CPUC ~~in its decision approving~~and the FERC (including the Safety Culture OII), and future regulatory proceedings, including future applications for the safety certification required by AB 1054. PG&E ~~Corporation’s~~Corporation and the ~~Utility’s Plan~~Utility may also suffer additional reputational harm and face an even more challenging operating, political, and regulatory environment as a result of ~~Reorganization.~~the 2019 Kincade fire, 2020 Zogg fire or any future wildfires. For more information about the 2019 Kincade fire and the 2020 Zogg fire, see Note 10 in Item 1.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

OnDuring the ~~Effective Date,~~quarter ended March 31, 2021, PG&E Corporation ~~made an~~did not contribute any equity ~~contribution of $12.9 billion in cash, along with the Fire Victim Trust Shares,~~securities to the ~~Utility, which used~~Utility. Also during the ~~funds to satisfy and discharge certain liabilities of~~quarter ended March 31, 2021, PG&E Corporation ~~and the Utility under the Plan and transferred the Fire Victim Trust Shares to the Fire Victim Trust. PG&E Corporation’s cash~~did not make any sales of unregistered equity ~~contribution was funded by proceeds from the financing transactions. This equity issuance to PG&E Corporation by the Utility was exempt~~securities in reliance on an exemption from registration under ~~the Securities Act of 1933.~~

~~128~~

On June 7, 2020, PG&E Corporation entered into an Investment Agreement as described in Note 6 of the Notes to the Condensed Consolidated Financial Statements in Item 1. Pursuant to the terms of the Investment Agreement, on the Effective Date, PG&E Corporation issued 342.1 million shares of common stock to the Investors. This issuance and sale were exempt from registration under the Securities Act of 1933. The Investors represented to PG&E Corporation that they were “accredited investors” as defined in Rule 501 under the Securities Act and that the common stock was being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof, and acknowledged that the common stock acquired in connection with the Investment Agreement, or any transaction statement evidencing ownership of such common stock, would bear a restrictive legend.

On June 19, 2020, PG&E Corporation entered into the Forward Stock Purchase Agreements with the Backstop Parties as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements in Item 1. The Forward Stock Purchase Agreement required PG&E Corporation to issue a number of shares of common stock equal to the unredeemed portion of such Backstop Party’s Greenshoe Backstop Purchase Amount divided by the Settlement Price (such shares of common stock, each Backstop Party’s “Greenshoe Backstop Shares”) to the Backstop Parties subject to the terms and conditions thereof. On August 3, 2020, PG&E Corporation will redeem $120.5 million of the Forward Stock Purchase Agreements as a result of the exercise by the underwriters of their option to purchase Equity Units pursuant to the Equity Units Underwriting Agreement. On August 3 2020, PG&E Corporation will deliver 42.3 million shares of PG&E Corporation common stock to the Backstop Parties to settle the portion of the Forward Stock Purchase Agreements that had not been redeemed. This issuance and sale will be exempt from registration under the Securities Act of 1933. The Backstop Parties represented to PG&E Corporation that they are “accredited investors” and that the Greenshoe Backstop Shares are being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof, and the Greenshoe Backstop Shares acquired in connection with the Forward Stock Purchase Agreements, or any transaction statement evidencing ownership of such shares, will bear an appropriate restrictive legend.

Also, pursuant to the Forward Stock Purchase Agreement, PG&E Corporation has agreed to issue the Additional Backstop Premium shares as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements in Item 1. Pursuant to the terms of the Forward Stock Purchase Agreements and the Backstop Commitment Letters, on the Effective Date, PG&E Corporation issued to the Backstop Parties 169.0 million shares of common stock.~~This issuance and sale were exempt from registration under the Securities Act of 1933.~~

On the Effective Date, pursuant to the Plan, the Utility entered into an assignment agreement with the Fire Victim Trust, pursuant to which the Utility agreed to transfer to the Fire Victim Trust on the Effective Date 477.0 million shares (such shares, the “Fire Victim Trust Shares”) of common stock of PG&E Corporation, no par value. The transfer of shares of common stock to the Fire Victim Trust was exempt from registration under the Securities Act pursuant to Section 1145 of the Bankruptcy Code, as approved by the Bankruptcy Court in the Order dated June 16, 2020.

On the Effective Date, PG&E Corporation made an equity contribution of $12.9 billion in cash, along with the Fire Victim Trust Shares, to the Utility, which used the funds to satisfy and discharge certain liabilities of PG&E Corporation and the Utility under the Plan and transferred the Fire Victim Trust Shares to the Fire Victim Trust as described above. PG&E Corporation’s cash equity contribution was funded by proceeds from the financing transactions described herein. This equity issuance to the Utility by PG&E Corporation was exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

As a result of the Equity Units Underwriters exercising their option to purchase 1.45 million additional Equity Units, on August 3, 2020, PG&E Corporation will deliver 748,415 additional shares of Common Stock to the Fire Victim Trust pursuant to an anti-dilution provision in the assignment agreement with the Fire Victim Trust.

On August 3, 2020, PG&E Corporation will make an equity contribution of such additional 748,415 shares to the Utility, which will use the shares to satisfy and discharge certain liabilities of PG&E Corporation and the Utility under the Plan (and related assignment agreement) and transfer the Fire Victim Trust Shares to the Fire Victim Trust as described above. This equity issuance to the Utility by PG&E Corporation will be exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

Issuer Purchases of Equity Securities

During the quarter ended ~~June 30, 2020,~~March 31, 2021, 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, 2020,~~March 31, 2021, the Utility did not redeem or repurchase any shares of its various series of preferred stock outstanding.

~~129~~

~~ITEM 5. OTHER INFORMATION~~

As previously disclosed, the amended and restated bylaws of PG&E Corporation and the Utility provide that the next joint annual meeting of shareholders will take place within 15 months of the Effective Date on a date designated by the Boards of Directors. The Boards of Directors of PG&E Corporation and the Utility have not yet designated the date for such joint annual meeting. When the exact date has been determined, PG&E Corporation and the Utility intend to provide notice and the information required by Rule 14a-5(f) in a report filed with the SEC.

ITEM 6. EXHIBITS

EXHIBIT INDEX


~~2.1~~						~~Confirmation Order, dated June 20, 2020 (incorporated by reference to PG&E Corporation’s Form 8-K dated June 20, 2020 (File No. 1-12609), Exhibit 2.1)~~

3.1						Amended and Restated Articles of Incorporation of PG&E Corporation, effective as of May 29, 2002, as amended by the Amendment dated June 22, 2020 (incorporated by reference to PG&E Corporation’s Form ~~8 K~~8-K dated June 20, 2020 (File No. 1-12609), Exhibit 3.1)

3.2						Certificate of Determination for PG&E Corporation Series A Preferred Stock filed December 22, 2000 (incorporated by reference to PG&E Corporation’s Form 10-K for the year ended December 31, 2000 (File No. 1-12609), Exhibit 3.2)

~~3.3~~						Bylaws of PG&E Corporation, Amended and Restated as of June 22, 2020 (incorporated by reference to PG&E Corporation’s Form 8-K dated June 20, 2020 (File No. 1-12609), Exhibit 3.3)

~~3.4~~3.3						Amended and Restated Articles of Incorporation of Pacific Gas and Electric Company, effective as of June 22, 2020 (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 20, 2020 (File No. 1-2348), Exhibit 3.2)


~~3.5~~3.4						Bylaws of Pacific Gas and Electric Company, ~~Amend~~edAmended and Restated as of June 22, 2020 (incorporated by reference in Form 8-K dated June 20, 2020 (File No. 1-2348), Exhibit 3.4)

4.1						~~Indenture of Mortgage, dated as of June 19, 2020, between Pacific Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A., as trustee~~ ~~(incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 19, 2020 (File No. 1-2348), Exhibit 4.1)~~

~~4.2~~						~~First~~Eighth Supplemental Indenture, dated ~~as of June 19, 2020,~~March 11, 2021, relating to the Mortgage Bonds, between Pacific Gas and Electric Company and the Trustee (including the form of Mortgage Bonds of each series) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated ~~June 19, 2020 (File No. 1-2348), Exhibit 4.2)~~

~~4.3~~						Indenture, dated as of June 23, 2020, between PG&E Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee incorporated by reference to PG&E Corporation’s Form 8-K dated June 19, 2020 (File No. 1-12609), Exhibit 4.1)

~~4.4~~						First Supplemental Indenture, dated as of June 23, 2020, relating to the Notes among PG&E Corporation, the Trustee and JP Morgan Chase Bank N.A., as collateral agent (including the form of Notes for each series) (incorporated by reference to PG&E Corporation’s Form 8-K dated June 19, 2020 (File No. 1-2609), Exhibit 4.2)

~~4.5~~						Escrow Deposit and Disbursement Agreement, dated as of June 23, 2020, by and among PG&E Corporation, The Bank of New York Mellon Trust Company, N.A., as escrow agent, and the Trustee (incorporated by reference to PG&E Corporation’s Form 8-K dated June 19, 2020 (File No. 1-2609), Exhibit 4.3)

~~4.6~~						Calculation Agency Agreement, dated as June 19, 2020, between Pacific Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A, as calculation agent (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 19, 2020 (File No. 1-2 ~~348), Exhibit 4.3)~~

~~4.7~~						Escrow Deposit and Disbursement Agreement, dated as of June 19, 2020, by and among Pacific Gas and Electric Company, The Bank of New York Mellon Trust Company, N.A., as escrow agent, and the Trustee (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 19, 2020 (File No. 1-2 ~~348), Exhibit 4.4)~~

~~130~~


~~4.8~~		Third Supplemental Indenture, dated as of July 1, 2020, to the Indenture of Mortgage, between Pacific Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A., as trustee (including forms of the New Short-Term Bonds and the New Long-Term Bonds) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated ~~June~~30 ~~, 2020~~March 8, 2021 (File No. 1-2348), Exhibit 4.1)

~~4.9~~10.1		~~Fourth Supplemental Indenture,~~Underwriting Agreement, dated ~~as of July 1, 2020, to the Indenture of Mortgage, between~~March 8, 2021, by and among Pacific Gas and Electric Company, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and ~~The Bank of New York Mellon Trust Company, N.A., as trustee (including forms of the Funded Debt Exchange Bonds)~~MUFG Securities Americas Inc. (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020~~March 8, 2021 (File No. 1-2348), Exhibit ~~4.2)~~

~~4.10~~		Thirtieth Supplemental Indenture, dated as of July 1, 2020, to the Amended and Restated Indenture, dated as of April 22, 2005, between Pacific Gas and Electric Company and BOKF, N.A., as trustee (including forms of certain series of Reinstated Senior Notes) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-2348), Exhibit 4.3)~~

~~4.11~~		First Supplemental Indenture, dated as of July 1, 2020, to the Indenture, dated as of November 29, 2017, between Pacific Gas and Electric Company and BOKF, N.A., as trustee (including forms of certain series of Reinstated Senior Notes) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-2348), Exhibit 4.4)~~

~~4.12~~		Second Supplemental Indenture, dated as of July 1, 2020, to the Indenture, dated as of August 6, 2018, between Pacific Gas and Electric Company and BOKF, N.A., as trustee (including forms of certain series of Reinstated Senior Notes) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated July 2, 2020 (File No. 1-2348), Exhibit 4.5)

~~4.13~~		Second Supplemental Indenture, dated as of July 1, 2020, to the Indenture of Mortgage, between Pacific Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A., as trustee (including forms of the Senior Notes Collateral Bonds) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-2348), Exhibit 4.6)~~

~~4.14~~		Fifth Supplemental Indenture, dated as of July 1, 2020, to the Indenture of Mortgage, between Pacific Gas and Electric Company and The Bank of New York Mellon Trust Company, N.A., as trustee (including forms of the Credit Agreement Collateral Bonds) (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-2348), Exhibit 4.7)~~

~~10.1~~		Settlement Agreement dated April 21, 2020 by and among the TCC, PG&E Corporation and the Utility, FEMA, the SBA, the Department of Agriculture, the Department of the Interior, the United States Department of Housing and Urban Development and the General Services Administration (incorporated by reference to PG&E Corporation’s Form 10-Q dated May 1, 2020 (File No. 1-12609), Exhibit 10.7)1.1)

10.2		~~Settlement Agreement~~Repricing Amendment, dated ~~April 21, 2020~~February 1, 2021, by and among ~~the TCC,~~ PG&E Corporation, the Consenting Lenders, the New Lenders (each as defined therein) and ~~the Utility, Cal DDS, Cal DTSC, Cal Fire, Cal OES, Cal Parks, CSU, Caltrans and Cal Vet (incorporated by reference to PG&E Corporation’s Form 10-Q dated May 1, 2020 (File No. 1-12609), Exhibit 10.8)~~JPMorgan Chase Bank, N.A, as administrative agent

10.3		~~Utility RCF Commitment Letter,~~Amendment No. 1 to Purchase and Sale Agreement, dated ~~May 26, 2020,~~as of January 14, 2021, by and ~~among the Utility, JP Morgan Chase Bank, N.A.,~~between PG&E AR Facility, LLC, as buyer, and ~~Citibank, N.A.,~~Pacific Gas and Electric Company in its capacity as ~~co-administrative agents,~~initial Servicer and ~~the commitment party thereto~~in its capacity as Originator (incorporated by reference to ~~Pacific Gas and Electric Company’s~~PG&E Corporation’s Form ~~8-K~~10-K dated ~~May 26, 2020~~February 25, 2021 (File No. ~~1-2348)~~1-12609), Exhibit ~~10.1)~~10.75)

10.4		~~Utility Term Loan Commitment Letter,~~Amendment No. 1 to Receivables Financing Agreement, dated ~~May 26, 2020,~~as of January 14, 2021, by and among PG&E AR Facility, LLC, as borrower, Pacific Gas and Electric Company, in its individual capacity and as initial Servicer, the ~~Utility, JP Morgan Chase~~Persons from time to time party thereto as Lenders and Group Agents and MUFG Bank, ~~N.A.~~Ltd., as ~~administrative agent, and~~Administrative Agent on behalf of the ~~commitment party thereto~~Credit Parties (incorporated by reference to ~~Pacific Gas and Electric Company’s~~PG&E Corporation’s Form ~~8-K~~10-K dated ~~May 26, 2020~~February 25, 2021 (File No. ~~1-2348)~~1-12609), Exhibit ~~10.2)~~10.77)

10.5		~~Corporation RCF Commitment Letter,~~Amendment No. 2 to Receivables Financing Agreement, dated ~~May 26, 2020,~~as of February 12, 2021, by and among PG&E AR Facility, LLC, as borrower, Pacific Gas and Electric Company, in its individual capacity and as initial Servicer, the ~~Corporation, JP Morgan Chase~~Persons from time to time party thereto as Lenders and Group Agents and MUFG Bank, ~~N.A.~~Ltd., as ~~administrative agent and collateral agent, and~~Administrative Agent on behalf of the ~~commitment parties party thereto.~~Credit Parties (incorporated by reference to PG&E Corporation’s Form ~~8-K~~10-K dated ~~May 26, 2020~~February 25, 2021 (File No. 1-12609), Exhibit ~~10.3)~~10.78)

10.6	*	~~Form~~Master Transaction Agreement, dated as of ~~Consent Form~~February 2, 2021, by and between Pacific Gas and Electric Company and Golden State Licensing, LLC (incorporated by reference to PG&E Corporation’s Form ~~8-K~~10-K dated ~~June 7, 2020~~February 25, 2021 (File No. 1-12609), Exhibit ~~10.1)~~10.80)

10.7	*	~~Schedule Relating to Form of Consent Form (incorporated by reference to PG&E Corporation’s Form 8-K~~Offer Letter between Pacific Gas and Electric Company and Adam L. Wright, dated ~~June 9, 2020 (File No. 1-12609), Exhibit 10.1)~~January 16, 2021

~~131~~

10.8

~~Exhibit A to Consent Form– Form of Amended~~Restricted Stock Unit Agreement between Adam L. Wright and ~~Restated Chapter 11 Plan Backstop Commitment Letter (incorporated by reference to PG&E Corporation’s Form 8-K~~Pacific Gas and Electric Company, dated ~~June 7, 2020 (File No. 1-12609), Exhibit 10.2)~~March 1, 2021

10.9

~~Exhibit B to Consent Form – Redeemable Forward Stock Purchase Contract Term Sheet (incorporated by reference to PG&E Corporation’s Form 8-K~~Offer Letter between Pacific Gas and Electric Company and Marlene M. Santos, dated ~~June 7, 2020 (File No. 1-12609), Exhibit 10.2)~~January 26, 2021

10.10

~~Investment~~Non-Annual Restricted Stock Unit Award Agreement ~~among~~between PG&E Corporation and ~~the Investors listed in Schedule A thereto (incorporated by reference to PG&E Corporation’s Form 8-K~~Marlene M. Santos, dated ~~June 7, 2020 (File No. 1-12609), Exhibit 10.4)~~March 15, 2021 ~~PG&E Corporation and the Investors listed in Schedule A thereto (incorporated by reference to PG&E Corporation’s Form 8-K dated June 7, 2020 (File No. 1-12609), Exhibit 10.4)~~

10.11

Non-Annual Restricted Stock Unit Award Agreement ~~to Enter Into Lease~~between PG&E Corporation and ~~Purchase Option~~,Christopher A. Foster, dated ~~June 5, 2020~~ ~~between Pacific Gas and Electric Company and TMG Bay Area Investments II, LLC~~ ~~(incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 5, 2020 (File No. 1-2348), Exhibit 10.1)~~March 22, 2021

10.12

~~Underwriting Agreement dated June 16, 2020, by and among~~Offer Letter between Pacific Gas and Electric Company ~~J.P. Morgan Securities LLC, Barclays Capital Inc., BofA Securities, Inc., Citigroup Global Markets~~ and ~~Goldman Sachs & Co. LLC (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K~~Jason M. Glickman, dated ~~June 19, 2020 (File No. 1-2348), Exhibit 1.1)~~March 24, 2021

10.13

~~Underwriting~~Form of Restricted Stock Unit Agreement ~~dated June 18, 2020, by and among~~ for 2021 grants under the PG&E Corporation ~~, J.P. Morgan Securities LLC, Barclays Capital Inc., BofA Securities, Inc., Citigroup Global Markets and Goldman Sachs & Co. LLC (incorporated by reference to~~ ~~PG&E Corporation’s Form 8-K dated June 19, 2020 (File No. 1-2609), Exhibit 1.1)~~ 2014 Long-Term Incentive Plan

10.14

~~Term Loan~~ ~~Credit~~ Form of Performance Share Unit Agreement ~~dated June 23, 2020 by~~subject to customer experience, public safety and ~~among~~ financial goals for 2021 grants under the PG&E Corporation 2014 Long-Term Incentive Plan ~~, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to PG&E Corporation’s Form 8-K dated June 19, 2020 (File No. 1-12609), Exhibit 10.1)~~

10.15

***

Form of ~~Forward Stock Purchase~~Performance Share Unit Agreement subject to total shareholder return goals for 2021 grants under the PG&E Corporation 2014 Long-Term Incentive Plan

10.16

Description of Short-Term Incentive Plan for Officers of PG&E Corporation and its subsidiaries, effective January 1, 2021 (incorporated by reference to PG&E Corporation’s Form 8-K dated ~~June 19, 2020~~February 9, 2021 (File No. 1-12609)~~, Exhibit 10.1)~~

~~10.16~~

Underwriting Agreement dated June 25, 2020, among PG&E Corporation, Goldman Sachs & Co., LLC and J.P. Morgan Securities, LLC, as representatives of the several underwriters named in Schedule I thereto, in respect of the Common Stock Offering (incorporated by reference to PG&E Corporation’s Form 8-K dated June 25, 2020 (File No. 1-12609), Exhibit 10.1)

~~10.17~~

Underwriting Agreement dated June 25, 2020, among PG&E Corporation, Goldman Sachs & Co., LLC and J.P. Morgan Securities, LLC, as representatives of the several underwriters named in Schedule I thereto, in respect of the Equity Units Offering (incorporated by reference to PG&E Corporation’s Form 8-K dated June 25, 2020 (File No. 1-12609), Exhibit 10.2)

~~10.18~~

Pledge Agreement, dated as of July 1, 2020, among PG&E Corporation, JPMorgan Chase Bank, N.A., as collateral agent, revolving administrative agent and term administrative agent, The Bank of New York Mellon Trust Company, N.A., and the secured representatives party thereto from time to time (incorporated by reference to PG&E Corporation’s Form 8-K dated June 30, 2020 (File No. 1-12609), Exhibit 4.8)

~~10.19~~

Purchase Contract and Unit Agreement, dated July 1, 2020, between the Corporation and The Bank of New York Mellon Trust Company, N.A., as purchase contract agent and attorney-in-fact for the holders from time to time as provided therein (incorporated by reference to PG&E Corporation’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-12609), Exhibit 4.9)~~

~~10.20~~

Custodial Agreement, dated July 1, 2020, between The Bank of New York Mellon Trust Company, N.A., as purchase contract agent and The Bank of New York Mellon Trust Company, N.A., as custodian (incorporated by reference to PG&E Corporation’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-12609), Exhibit 4.12)~~

~~10.21~~

~~Tax Benefits Payment Agreement, dated July 1, 2020,~~ ~~between the Corporation and the Fire Victim Trust~~ ~~(incorporated by reference to PG&E Corporation’s Form 8-K dated Ju~~ne 30 ~~, 2020 (File No. 1-12609), Exhibit 10.1)~~

~~10.22~~

~~Registration Rights Agreement, dated July 1, 2020,~~ ~~between the Fire Victim Trust and the Corporation~~ ~~(incorporated by reference to PG&E Corporation’s Form 8-K dated Ju~~ne 30 ~~, 2020 (File No. 1-12609), Exhibit 10.2)~~

~~132~~


~~10.23~~		Credit Agreement, dated as of July 1, 2020, among Pacific Gas and Electric Company, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A. and Citibank, N.A., as co-administrative agents, and Citibank, N.A., as designated agent. (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated Ju ne 30 ~~, 2020 (File No. 1-2348), Exhibit 10.3)~~

~~10.24~~		Term Loan Credit Agreement, dated as of July 1, 2020, among Pacific Gas and Electric Company, the several lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. (incorporated by reference to Pacific Gas and Electric Company’s Form 8-K dated June 30, 2020 (File No. 1-2348), Exhibit 10.4)

~~10.25~~		Credit Agreement, dated as of July 1, 2020, among PG&E Corporation, the several lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as collateral agent. (incorporated by reference to PG&E Corporation’s Form 8-K dated June 30, 2020 (File No. 1-12609), Exhibit 10.5)

~~10.26~~		~~Amendment to the 2014 Long-Term Incentive Plan, effective as of July 1, 2020. (incorporated by reference to PG&E Corporation’s Form 8-K dated July~~ 1 ~~, 2020 (File No. 1-12609), Exhibit 10.1)~~)

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

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

100


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

32.2	****	Certifications of Principal Executive Officers and 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.SC		XBRL Taxonomy Extension Schema Document

101.CA		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DE		XBRL Taxonomy Extension Definition Linkbase Document

104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

*The Form of Consent Form is substantially identical in all material respects to each Consent Form that is otherwise required to be filed as an exhibit, except as to the Backstop Party, the amount of such Backstop Party’s Backstop Commitment Amount (as defined in the Backstop Commitment Letter) and the amount of such Backstop Party’s Forward Contract Purchase Commitment (as defined in the Consent Form). In accordance with instruction no. 2 to Item 601 of Regulation S-K, the registrant has filed the form of such Consent Form, with a schedule dated as of June 9, 2020 identifying the Consent Forms omitted and setting forth the material details in which each Consent Form differs from the form that was filed. The registrant acknowledges that the Securities and Exchange Commission may at any time in its discretion require filing of copies of any agreement so omitted.Management contract or compensatory agreement.

**In accordance with Item 601(a)(5) of Regulation S-K, certain schedules (or similar attachments) to this exhibit have been omitted from this filing. Such omitted schedules (or similar attachments) include information relating to the Property. The registrants will provide a copy of any omitted schedule to the Securities and Exchange Commission or its staff upon request. In accordance with Item 601(b)(10)(iv) of Regulation S-K, certain provisions or terms of the Lease Agreement attached as an exhibit to the Agreement have been redacted. Such redacted information includes proprietary information about the Property. The registrants will provide an unredacted copy of the exhibit on a supplemental basis to the Securities and Exchange Commission or its staff upon request.

~~133~~

***The Form of Forward Stock Purchase Agreement is substantially identical in all material respects to each Forward Stock Purchase Agreement that is otherwise required to be filed as an exhibit, except as to the Purchaser (as defined in the Forward Stock Purchase Agreement), the amount of such Purchaser’s Greenshoe Backstop Purchase Amount and the amount of such Purchaser’s Additional Backstop Premium Shares. In accordance with instruction no. 2 to Item 601 of Regulation S-K, the registrant has filed the form of such Forward Stock Purchase Agreement, with a schedule identifying the Forward Stock Purchase Agreements omitted and setting forth the material details in which each Forward Stock Purchase Agreement differs from the form that was filed. The registrant acknowledges that the Securities and Exchange Commission may at any time in its discretion require filing of copies of any agreement so omitted.

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

~~134~~101

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~~CHRISTOPHER A. FOSTER
~~Jason P. Wells~~Christopher A. Foster 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 30, 2020~~April 29, 2021

~~135~~102


GLOSSARY
FORWARD-LOOKING STATEMENTS
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
			CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
			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~~SSHAREHOLDERS ’ EQUITY
			NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
			NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
			NOTE 2: BANKRUPTCY FILING
			NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
			NOTE 4: REGULATORY ASSETS, LIABILITIES, AND BALANCING ACCOUNTS
			NOTE 5: DEBT
			NOTE 6: EQUITY
			NOTE 7: EARNINGS PER SHARE
			NOTE 8: DERIVATIVES
			NOTE 9: FAIR VALUE MEASUREMENTS
			NOTE 10: WILDFIRE-RELATED CONTINGENCIES
			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
			ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
			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 ~~5. OTHER INFORMATION~~
			~~ITEM~~ 6. EXHIBITS
			SIGNATURES


~~2019 Form 10-K~~			~~PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2019~~
2019 Wildfire Mitigation Plan			the wildfire mitigation plan for 2019 submitted by the Utility to the CPUC pursuant to SB 901, previously also referred to as the “2019 Wildfire Safety Plan”
2020 Form 10-K			PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2020
AB			Assembly ~~Bill~~bill
~~ABR~~AFUDC			~~alternate base rate~~allowance for funds used during construction
ALJ			~~administrative law judge~~Administrative Law Judge
ARO			asset retirement obligation
ASU			accounting standard update issued by the FASB ~~(see below)~~
~~Backstop Party~~			~~a third-party investor party to a Backstop Commitment Letter~~
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
~~CARB~~			~~California Air Resources Board~~
~~CARE~~			~~California Alternate Rates for Energy~~
CCA			Community Choice Aggregator
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
CHT			~~Customer Harm Threshold~~customer harm threshold
~~CPUC~~Confirmation Order			~~California Public Utilities Commission~~the order confirming PG&E Corporation’s and the Utility’s and the Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization, dated as of June 20, 2020 with the Bankruptcy Court
CPE			central procurement entities
CPPMA			COVID-19 Pandemic Protections Memorandum Account
CPUC			California Public Utilities Commission
CRRs			congestion revenue rights
CUE			Coalition of California Utility Employees
~~CVA~~			~~Climate Vulnerability Assessment~~
DA			Direct Access
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
DTSC			Department of Toxic Substances Control
~~EPS~~			~~earnings per common share~~
Effective Date			July 1, 2020, the effective date of the Plan in the Chapter 11 Cases
EMANI			European Mutual Association for Nuclear Insurance
EOEP			Enhanced Oversight and Enforcement Process
EPS			earnings per common share
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
~~FEMA~~			~~Federal Emergency Management Agency~~
FERC			Federal Energy Regulatory Commission
FHPMA			Fire Hazard Prevention Memorandum Account
~~FRMMA~~			~~Fire Risk Mitigation Memorandum Account~~
Fire Victim Trust			trust ~~to be~~ established pursuant to the Plan for the benefit of holders of the Fire Victim Claims into which the Aggregate Fire Victim Consideration (as defined in the Plan) ishas been, and will continue to be funded
Formula Rate Proceedings			consolidated proceedings for the TO18 and TO20 rate cases
FRMMA			Fire Risk Mitigation Memorandum Account
GAAP			U.S. Generally Accepted Accounting Principles
GRC			general rate case
GT&S			gas transmission and storage
HFTD			High Fire-Threat District


HSM			Hazardous Substance Memorandum Account
IOU(s)			investor-owned utility(ies)
~~LIBOR~~IRS			~~London Interbank Offered Rate~~Internal Revenue Service
~~LSTC~~Lakeside Building			~~liabilities subject to compromise~~300 Lakeside Drive, Oakland, California, 94612
LSE			load serving entity
MW			1 Megawatt (MW) = One thousand kilowatts
MWh			1 Megawatt-Hour (MWh) = One megawatt continuously for one hour
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~~NBC			~~Nuclear Decommissioning Cost Triennial Proceedings~~non-bypassable charge
NEIL			Nuclear Electric Insurance Limited
NEM			net energy metering
NRC			Nuclear Regulatory Commission
~~OES~~			~~State of California Office of Emergency Services~~
OII			order instituting investigation
OIR			order instituting rulemaking
OSA			Office of the Safety Advocate, a division of the CPUC
PCIA			Power Charge Indifference Adjustment
PERA			Public Employees Retirement Association of New Mexico
POD			Presiding Officer’s Decision
PD			proposed decision
Petition Date			January 29, 2019
~~PSA~~the Plan			~~plan support agreement~~Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization, dated June 19, 2020
PSPS			Public Safety Power Shutoff
RA			resource adequacy
RAMP			Risk Assessment Mitigation Phase Report
ROE			return on equity
RSA			restructuring support agreement (as amended)
RTBA			Risk Transfer Balancing Account
SB			Senate Bill
SEC			U.S. Securities and Exchange Commission
Securities Act			The Securities Act of 1933, as amended
SED			Safety and Enforcement Division of the CPUC
SPD			CPUC’s Safety Policy Division
SPV			PG&E AR Facility, LLC
Subrogation RSA			Restructuring Support Agreement dated September 22, 2019 with certain holders of insurance subrogation claims, as amended
Tax Act			Tax Cuts and Jobs Act of 2017
TCC			Official Committee of Tort Claimants
TCC RSA			Restructuring Support Agreement dated December 6, 2019 with the TCC and attorneys and other advisors and agents for certain holders of Fire Victim Claims (as defined therein), as amended
TO			transmission owner
TURN			The Utility Reform Network
Utility			Pacific Gas and Electric Company
VIE(s)			variable interest entity(ies)


VMBA			Vegetation Management Balancing Account
WEMA			Wildfire Expense Memorandum Account
~~Wildfire Assistance Fund~~			~~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
Wildfires OII			Order Instituting Investigation into the 2017 Northern California Wildfires and the 2018 Camp Fire
WMBA			Wildfire Mitigation Balancing Account
WMCE			Wildfire Mitigation and Catastrophic Events
WMP			Wildfire Mitigation Plan
WMPMA			Wildfire Mitigation Plan Memorandum Account
WSD			Wildfire Safety Division


		(Unaudited)														(Unaudited)
		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2020		2019		2020		2019		(in millions, except per share amounts)	2021		2020
Operating Revenues	Operating Revenues									Operating Revenues
Electric	Electric	$	3,435	$	2,946	$	6,475	$	5,738	Electric	$	3,395	$	3,040
Natural gas	Natural gas	1,098		997		2,364		2,216		Natural gas	1,321		1,266
Total operating revenues	Total operating revenues	4,533		3,943		8,839		7,954		Total operating revenues	4,716		4,306
Operating Expenses	Operating Expenses									Operating Expenses
Cost of electricity	Cost of electricity	759		837		1,304		1,436		Cost of electricity	590		545
Cost of natural gas	Cost of natural gas	134		108		418		447		Cost of natural gas	307		284
Operating and maintenance	Operating and maintenance	2,141		1,942		4,108		4,029		Operating and maintenance	2,336		1,967
Wildfire-related claims, net of insurance recoveries	Wildfire-related claims, net of insurance recoveries	170		3,900		170		3,900		Wildfire-related claims, net of insurance recoveries	172		0
Wildfire fund expense		173		—		173		—
Wildfire Fund expense										Wildfire Fund expense	119		0
Depreciation, amortization, and decommissioning	Depreciation, amortization, and decommissioning	874		796		1,729		1,593		Depreciation, amortization, and decommissioning	888		855
Total operating expenses	Total operating expenses	4,251		7,583		7,902		11,405		Total operating expenses	4,412		3,651
Operating Income (Loss)		282		(3,640)		937		(3,451)
Operating Income										Operating Income	304		655
Interest income	Interest income	12		22		28		44		Interest income	2		16
Interest expense	Interest expense	(199)		(60)		(453)		(163)		Interest expense	(408)		(254)
Other income, net	Other income, net	100		66		197		137		Other income, net	127		97
Reorganization items, net	Reorganization items, net	(1,624)		(56)		(1,800)		(183)		Reorganization items, net	0		(176)
Loss Before Income Taxes		(1,429)		(3,668)		(1,091)		(3,616)
Income tax provision (benefit)		539		(1,119)		503		(1,203)
Net Loss		(1,968)		(2,549)		(1,594)		(2,413)
Income Before Income Taxes										Income Before Income Taxes	25		338
Income tax benefit										Income tax benefit	(98)		(36)
Net Income										Net Income	123		374
Preferred stock dividend requirement of subsidiary	Preferred stock dividend requirement of subsidiary	4		4		7		7		Preferred stock dividend requirement of subsidiary	3		3
Loss Attributable to Common Shareholders		$	(1,972)	$	(2,553)	$	(1,601)	$	(2,420)
Income Available for Common Shareholders										Income Available for Common Shareholders	$	120	$	371
Weighted Average Common Shares Outstanding, Basic	Weighted Average Common Shares Outstanding, Basic	529		529		529		528		Weighted Average Common Shares Outstanding, Basic	1,985		529
Weighted Average Common Shares Outstanding, Diluted	Weighted Average Common Shares Outstanding, Diluted	529		529		529		528		Weighted Average Common Shares Outstanding, Diluted	2,131		648
Net Loss Per Common Share, Basic		$	(3.73)	$	(4.83)	$	(3.03)	$	(4.58)
Net Loss Per Common Share, Diluted		$	(3.73)	$	(4.83)	$	(3.03)	$	(4.58)
Net Earnings Per Common Share, Basic										Net Earnings Per Common Share, Basic	$	0.06	$	0.70
Net Earnings Per Common Share, Diluted										Net Earnings Per Common Share, Diluted	$	0.06	$	0.57

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.


Supplemental disclosures of cash flow information
Cash paid for:
Interest, net of amounts capitalized	$	—	$	(21)
Supplemental disclosures of noncash investing and financing activities
Capital expenditures financed through accounts payable	$	273	$	836
Operating lease liabilities arising from obtaining right-of-use assets	13		2,816

See accompanying Notes to the Condensed Consolidated Financial Statements.


(in millions, except share amounts)	(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		(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, 2019		529,236,741	$	13,038	$	(7,892)	$	(10)	$	5,136	$	252	$	5,388
Balance at December 31, 2020															Balance at December 31, 2020	1,984,678,673	$	30,224	$	(9,196)	$	(27)	$	21,001	$	252	$	21,253
Net income	Net income	—	—		374		—		374		—		374		Net income	—	—		123		—		123		—		123
Other comprehensive loss		—	—		—		—		—		—		—
Other comprehensive income															Other comprehensive income	—	—		—		1		1		—		1
Common stock issued, net	Common stock issued, net	549,155	—		—		—		—		—		—		Common stock issued, net	427,030	0		—		—		0		—		0
Stock-based compensation amortization	Stock-based compensation amortization	—	(3)		—		—		(3)		—		(3)		Stock-based compensation amortization	—	2		—		—		2		—		2
Balance at March 31, 2020		529,785,896	$	13,035	$	(7,518)	$	(10)	$	5,507	$	252	$	5,759
Net loss		—	—		(1,968)		—		(1,968)		—		(1,968)
Other comprehensive loss		—	—		—		—		—		—		—
Common stock issued, net		7,459	—		—		—		—		—		—
Stock-based compensation amortization		—	10		—		—		10		—		10
Balance at June 30, 2020		529,793,355	$	13,045	$	(9,486)	$	(10)	$	3,549	$	252	$	3,801
Balance at March 31, 2021															Balance at March 31, 2021	1,985,105,703	$	30,226	$	(9,073)	$	(26)	$	21,127	$	252	$	21,379


(in millions)	Preferred Stock		Common Stock Amount		Additional Paid-in Capital		Reinvested Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at December 31, 2019	$	258	$	1,322	$	8,550	$	(4,796)	$	1	$	5,335
Net income	—		—		—		451		—		451
Balance at March 31, 2020	$	258	$	1,322	$	8,550	$	(4,345)	$	1	$	5,786
Net loss	—		—		—		(473)		—		(473)
Balance at June 30, 2020	$	258	$	1,322	$	8,550	$	(4,818)	$	1	$	5,313


(in millions)	Utility		PG&E Corporation⁽¹⁾		December 31, 2019 PG&E Corporation Consolidated		Change in Estimated Allowed Claim 2020 ⁽²⁾		Cash Payment		Reclassified ⁽³⁾		Utility		PG&E Corporation⁽¹⁾		June 30, 2020 PG&E Corporation Consolidated
Financing debt	$	22,450	$	666	$	23,116	$	351	$	—	$	(23,467)	$	—	$	—	$	—
Wildfire-related claims	25,548		—		25,548		18		(23)		(25,543)		—		—		—
Trade creditors ⁽⁴⁾	1,183		5		1,188		6		(14)		(1,180)		—		—		—
Non-qualified benefit plan	20		137		157		—		—		(157)		—		—		—
2001 bankruptcy disputed claims	234		—		234		4		—		(238)		—		—		—
Customer deposits & advances	71		—		71		12		—		(83)		—		—		—
Other	230		2		232		59		—		(291)		—		—		—
Total Liabilities Subject to Compromise	$	49,736	$	810	$	50,546	$	450	$	(37)	$	(50,959)	$	—	$	—	$	—


		Three Months Ended June 30, 2020											Three Months Ended March 31, 2021
(in millions)	(in millions)	Utility		PG&E Corporation⁽¹⁾		PG&E Corporation Consolidated		(in millions)	Utility		PG&E Corporation (1)		PG&E Corporation Consolidated
Debtor-in-possession financing costs	Debtor-in-possession financing costs	$	1	$	—	$	1	Debtor-in-possession financing costs	$	0	$	0	$	0
Legal and other ⁽²⁾	Legal and other ⁽²⁾	109		1,513		1,622		Legal and other ⁽²⁾	5		(2)		3
Interest income		—		—		—
Trustee fees ⁽³⁾		1		—		1
Other								Other	(3)		0		(3)
Total reorganization items, net	Total reorganization items, net	$	111	$	1,513	$	1,624	Total reorganization items, net	$	2	$	(2)	$	0


		Six Months Ended June 30, 2020											Three Months Ended March 31, 2020
(in millions)	(in millions)	Utility		PG&E Corporation⁽¹⁾		PG&E Corporation Consolidated		(in millions)	Utility		PG&E Corporation (1)		PG&E Corporation Consolidated
Debtor-in-possession financing costs	Debtor-in-possession financing costs	$	3	$	—	$	3	Debtor-in-possession financing costs	$	3	$	0	$	3
Legal and other ⁽²⁾	Legal and other ⁽²⁾	205		1,597		1,802		Legal and other (2)	95		84		179
Interest income	Interest income	(5)		(2)		(7)		Interest income	(5)		(1)		(6)
Trustee fees ⁽³⁾		1		1		2
Total reorganization items, net	Total reorganization items, net	$	204	$	1,596	$	1,800	Total reorganization items, net	$	93	$	83	$	176


	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)
Trustee fees ⁽²⁾	—		1		1
Total reorganization items, net	$	57	$	(1)	$	56


	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)
Trustee fees ⁽²⁾	—		1		1
Total reorganization items, net	$	168	$	15	$	183


		Pension Benefits						Other Benefits							Pension Benefits				Other Benefits
		Three Months Ended June 30,															Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)	2021		2020		2021		2020
Service cost for benefits earned⁽¹⁾	Service cost for benefits earned⁽¹⁾	$	132	$	111	$	16	$	14	Service cost for benefits earned (1)	$	147	$	132	$	16	$	15
Interest cost	Interest cost	179		190		15		19		Interest cost	161		178		13		16
Expected return on plan assets	Expected return on plan assets	(261)		(226)		(35)		(30)		Expected return on plan assets	(261)		(261)		(35)		(34)
Amortization of prior service cost	Amortization of prior service cost	(2)		(2)		4		3		Amortization of prior service cost	(1)		(1)		4		3
Amortization of net actuarial loss	Amortization of net actuarial loss	1		—		(5)		(1)		Amortization of net actuarial loss	1		1		(8)		(5)
Net periodic benefit cost	Net periodic benefit cost	49		73		(5)		5		Net periodic benefit cost	47		49		(10)		(5)
Regulatory account transfer⁽²⁾	Regulatory account transfer⁽²⁾	34		10		—		—		Regulatory account transfer (2)	37		34		0		0
Total	Total	$	83	$	83	$	(5)	$	5	Total	$	84	$	83	$	(10)	$	(5)


		Pension Benefits		Other Benefits		Total			Pension Benefits		Other Benefits			Total
(in millions, net of income tax)	(in millions, net of income tax)	Three Months Ended June 30, 2020											(in millions, net of income tax)	Three Months Ended March 31, 2021
Beginning balance	Beginning balance	$	(22)	$	17	$	(5)	Beginning balance	$	(39)	$	17		$	(22)
Amounts reclassified from other comprehensive income:⁽¹⁾	Amounts reclassified from other comprehensive income:⁽¹⁾							Amounts reclassified from other comprehensive income: (1)
Amortization of prior service cost (net of taxes of $1 and $1, respectively)		(1)		3		2
Amortization of net actuarial loss (net of taxes of $1 and $1, respectively)		—		(4)		(4)
Regulatory account transfer (net of taxes of $0 and $0, respectively)		1		1		2
Amortization of prior service cost (net of taxes of $0 and $1, respectively)								Amortization of prior service cost (net of taxes of $0 and $1, respectively)	(1)		3			2
Amortization of net actuarial loss (net of taxes of $0 and $2, respectively)								Amortization of net actuarial loss (net of taxes of $0 and $2, respectively)	1		(6)			(5)
Regulatory account transfer (net of taxes of $0 and $1, respectively)								Regulatory account transfer (net of taxes of $0 and $1, respectively)	1		3			4
Net current period other comprehensive gain (loss)	Net current period other comprehensive gain (loss)	—		—		—		Net current period other comprehensive gain (loss)	1		0			1
Ending balance	Ending balance	$	(22)	$	17	$	(5)	Ending balance	$	(38)	$	17		$	(21)


		Receivable Balance at							Receivable Balance at
(in millions)	(in millions)	June 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Electric distribution	Electric distribution	$	255	$	—	Electric distribution	$	266	$	0
Electric transmission		—		9
Gas distribution and transmission	Gas distribution and transmission	119		363		Gas distribution and transmission	3		102
Energy procurement	Energy procurement	1,300		901		Energy procurement	346		413
Public purpose programs	Public purpose programs	216		209		Public purpose programs	309		292
Fire hazard prevention memorandum account						Fire hazard prevention memorandum account	121		121
Fire risk mitigation memorandum account						Fire risk mitigation memorandum account	33		33
Wildfire mitigation plan memorandum account						Wildfire mitigation plan memorandum account	161		161
Wildfire mitigation balancing account						Wildfire mitigation balancing account	29		27
General rate case memorandum accounts						General rate case memorandum accounts	468		313
Vegetation management balancing account						Vegetation management balancing account	49		115
Insurance premium costs						Insurance premium costs	157		135
Other	Other	748		632		Other	307		289
Total regulatory balancing accounts receivable	Total regulatory balancing accounts receivable	$	2,638	$	2,114	Total regulatory balancing accounts receivable	$	2,249	$	2,001


		Payable Balance at							Payable Balance at
(in millions)	(in millions)	June 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Electric distribution	Electric distribution	$	—	$	31	Electric distribution	$	0	$	55
Electric transmission	Electric transmission	197		119		Electric transmission	260		267
Gas distribution and transmission	Gas distribution and transmission	33		45		Gas distribution and transmission	280		76
Energy procurement	Energy procurement	731		649		Energy procurement	116		158
Public purpose programs	Public purpose programs	547		559		Public purpose programs	372		410
Other	Other	407		394		Other	340		279
Total regulatory balancing accounts payable	Total regulatory balancing accounts payable	$	1,915	$	1,797	Total regulatory balancing accounts payable	$	1,368	$	1,245


(in millions)	Termination Date	Facility Limit			Borrowings Outstanding		Letters of Credit Outstanding		Facility Availability
Utility revolving credit facility	July 2023	$	3,500	(1)	$	0	$	979	$	2,521
Utility term loan credit facility (2)	January 2022	1,500			1,500		0		0
Utility receivables securitization program (3)	October 2022	1,000		(4)	650		0		350		(4)
PG&E Corporation revolving credit facility	July 2023	500			0		0		500
Total credit facilities		$	6,500		$	2,150	$	979	$	3,371


(in millions)	Termination Date	Aggregate Limit		Term Loan Borrowings		Revolver Borrowings		Letters of Credit Outstanding		Aggregate Availability
DIP Facilities	December 2020	$	5,500	$	2,000	$	—	$	904	$	2,596


		Balance at
(in millions)	Contractual Interest Rates	June 30, 2020		December 31, 2019		Treatment under Plan on the Effective Date ⁽¹⁾
Pre-Petition Debt⁽²⁾
PG&E Corporation
Borrowings under Pre-Petition Credit Facility
PG&E Corporation Revolving Credit Facilities - Stated Maturity: 2022	variable rate⁽³⁾	$	300	$	300	Repaid in cash ⁽¹²⁾
Other borrowings
Term Loan - Stated Maturity: 2020	variable rate ⁽⁴⁾	350		350		Repaid in cash ⁽¹²⁾
Less: current portion ⁽⁵⁾		(650)		—
Total PG&E Corporation Pre-Petition Long-Term Debt, net of current portion		—		650

Utility
Senior Notes - Stated Maturity:
2020 through 2022	2.45% to 4.25%	1,750		1,750		Exchanged ⁽¹³⁾
2023 through 2028	2.95% to 4.65%	5,025		5,025		Reinstated ⁽¹⁴⁾
2034 through 2040	5.40% to 6.35%	5,700		5,700		Exchanged ⁽¹⁵⁾
2041 through 2042	3.75% to 4.50%	1,000		1,000		Reinstated ⁽¹⁴⁾
2043	5.13%	500		500		Exchanged ⁽¹⁵⁾
2043 through 2047	3.95% to 4.75%	3,550		3,550		Reinstated ⁽¹⁴⁾
Total Pre-Petition Senior Notes		17,525		17,525
Pollution Control Bonds - Stated Maturity:
Series 2008 F and 2010 E, due 2026	1.75%	100		100		Repaid in cash ⁽¹²⁾
Series 2009 A-B, due 2026	variable rate ⁽⁶⁾	149		149		Exchanged ⁽¹⁶⁾
Series 1996 C, E, F, 1997 B due 2026	variable rate ⁽⁷⁾	614		614		Exchanged ⁽¹⁶⁾
Less: current portion ⁽⁵⁾		(100)		—
Total Pre-Petition Pollution Control Bonds, net of current portion		763		863
Borrowings under Pre-Petition Credit Facilities
Utility Revolving Credit Facilities - Stated Maturity: 2022	variable rate ⁽⁸⁾	2,888		2,888		Exchanged ⁽¹⁶⁾
Other borrowings:
Term Loan - Stated Maturity: 2019	variable rate ⁽⁹⁾	250		250		Exchanged ⁽¹⁶⁾
Total Borrowings under Pre-Petition Credit Facility		3,138		3,138
Total Utility Pre-Petition Debt, net of current portion		21,426		21,526
Total PG&E Corporation Consolidated Pre-Petition Debt, net of current portion		$	21,426	$	22,176

New Debt
PG&E Corporation
Term Loan - Stated Maturity: 2025	variable rate ⁽¹⁰⁾	$	2,750	$	—
Senior Secured Notes due 2028	5.00%	1,000		—
Senior Secured Notes due 2030	5.25%	1,000		—
Unamortized discount, net of premium and debt issuance costs		(93)		—
Total PG&E Corporation New Debt		4,657		—


Utility
First Mortgage Bonds - Stated Maturity:
2022	variable rate ⁽¹¹⁾	500		—
2022	1.75%	2,500		—
2027	2.10%	1,000		—
2031	2.50%	2,000		—
2040	3.30%	1,000		—
2050	3.50%	1,925		—
Unamortized discount, net of premium and debt issuance costs		(88)		—
Total Utility New Debt		8,837		—
Total PG&E Corporation Consolidated New Debt		$	13,494	$	—

Total Utility Long-Term Debt		$	30,263
Total PG&E Corporation Consolidated Long-Term Debt		$	34,920


			Contract Volume at					Contract Volume at
Underlying Product	Underlying Product	Instruments	June 30, 2020	December 31, 2019	Underlying Product	Instruments	March 31, 2021	December 31, 2020
Natural Gas ⁽¹⁾ (MMBtus ⁽²⁾)	Natural Gas ⁽¹⁾ (MMBtus ⁽²⁾)	Forwards, Futures and Swaps	199,547,057	131,896,159	Natural Gas (1) (MMBtus (2))	Forwards, Futures and Swaps	219,348,075	146,642,863
		Options	33,810,000	14,720,000		Options	17,080,000	14,140,000
Electricity (Megawatt-hours)		Forwards, Futures and Swaps	9,754,771	18,675,852
Electricity (MWh)					Electricity (MWh)	Forwards, Futures and Swaps	11,127,600	9,435,830
		Options	1,620,000	—		Options	588,800	0
		Congestion Revenue Rights ⁽³⁾	287,183,280	308,467,999		Congestion Revenue Rights (3)	264,206,953	266,091,470


	Commodity Risk
(in millions)	Gross Derivative Balance		Netting		Cash Collateral		Total Derivative Balance
Current assets – other	$	50	$	(3)	$	105	$	152
Noncurrent assets – other	136		0		0		136
Current liabilities – other	(41)		3		17		(21)
Noncurrent liabilities – other	(228)		0		3		(225)
Total commodity risk	$	(83)	$	0	$	125	$	42


		Fair Value Measurements																			Fair Value Measurements
		June 30, 2020																			March 31, 2021
(in millions)	(in millions)	Level 1		Level 2		Level 3		Netting ⁽¹⁾		Total		(in millions)	Level 1		Level 2		Level 3		Netting (1)		Total
Assets:	Assets:											Assets:
Short-term investments	Short-term investments	$	718	$	—	$	—	$	—	$	718	Short-term investments	$	228	$	0	$	0	$	—	$	228
Nuclear decommissioning trusts	Nuclear decommissioning trusts											Nuclear decommissioning trusts
Short-term investments	Short-term investments	34		—		—		—		34		Short-term investments	29		0		0		—		29
Global equity securities	Global equity securities	2,135		—		—		—		2,135		Global equity securities	2,461		0		0		—		2,461
Fixed-income securities	Fixed-income securities	794		753		—		—		1,547		Fixed-income securities	953		812		0		—		1,765
Assets measured at NAV	Assets measured at NAV	—		—		—		—		20		Assets measured at NAV	—		—		—		—		27
Total nuclear decommissioning trusts ⁽²⁾	Total nuclear decommissioning trusts ⁽²⁾	2,963		753		—		—		3,736		Total nuclear decommissioning trusts (2)	3,443		812		0		—		4,282
Price risk management instruments (Note 8)	Price risk management instruments (Note 8)											Price risk management instruments (Note 8)
Electricity	Electricity	—		14		148		21		183		Electricity	0		17		165		1		183
Gas	Gas	—		5		—		1		6		Gas	0		4		0		101		105
Total price risk management instruments	Total price risk management instruments	—		19		148		22		189		Total price risk management instruments	0		21		165		102		288
Rabbi trusts	Rabbi trusts											Rabbi trusts
Fixed-income securities	Fixed-income securities	—		105		—		—		105		Fixed-income securities	0		102		0		—		102
Life insurance contracts	Life insurance contracts	—		77		—		—		77		Life insurance contracts	0		76		0		—		76
Total rabbi trusts	Total rabbi trusts	—		182		—		—		182		Total rabbi trusts	0		178		0		—		178
Long-term disability trust	Long-term disability trust											Long-term disability trust
Short-term investments	Short-term investments	6		—		—		—		6		Short-term investments	5		0		0		—		5
Assets measured at NAV	Assets measured at NAV	—		—		—		—		150		Assets measured at NAV	—		—		—		—		158
Total long-term disability trust	Total long-term disability trust	6		—		—		—		156		Total long-term disability trust	5		0		0		—		163
TOTAL ASSETS	TOTAL ASSETS	$	3,687	$	954	$	148	$	22	$	4,981	TOTAL ASSETS	$	3,676	$	1011	$	165	$	102	$	5,139
Liabilities:	Liabilities:											Liabilities:
Equity Backstop Commitments and Forward Stock Purchase Agreements		$	—	$	1,500	$	—	$	—	$	1,500
Price risk management instruments (Note 8)	Price risk management instruments (Note 8)											Price risk management instruments (Note 8)
Electricity	Electricity	—		9		214		(6)		217		Electricity	0		5		259		(20)		244
Gas	Gas	—		4		—		(1)		3		Gas	0		5		0		(3)		2
TOTAL LIABILITIES	TOTAL LIABILITIES	$	—	$	1,513	$	214	$	(7)	$	1,720	TOTAL LIABILITIES	$	0	$	10	$	259	$	(23)	$	246


	Price Risk Management Instruments
(in millions)	2020		2019
Asset (liability) balance as of April 1	$	(5)	$	129
Net realized and unrealized losses:
Included in regulatory assets and liabilities or balancing accounts ⁽¹⁾	(61)		(20)
Asset (liability) balance as of June 30	$	(66)	$	109


	At June 30, 2020						At December 31, 2019
(in millions)	Carrying Amount		Level 2 Fair Value		Carrying Amount⁽¹⁾		Level 2 Fair Value⁽¹⁾⁽²⁾
Debt (Note 5)
PG&E Corporation	$	2,257	$	2,005	$	—	$	—
Utility	25,962		28,853		1,500		1,500


	At March 31, 2021				At December 31, 2020
(in millions)	Carrying Amount		Level 2 Fair Value		Carrying Amount		Level 2 Fair Value
Debt (Note 5)
PG&E Corporation	$	3,372	$	2,118	$	1,901	$	2,175
Utility	32,056		33,200		29,664		32,632


	As of
(in millions)	~~June 30, 2020~~March 31, 2021
Less than 1 year	$	2832
1–5 years	~~416~~501
5–10 years	~~404~~427
More than 10 years	~~699~~805
Total maturities of fixed-income securities	$	~~1,547~~1,765


Insurance Receivable (in millions)	Insurance Receivable (in millions)	2019 Kincade fire		2018 Camp fire		2017 Northern California wildfires		2015 Butte fire		Total		Insurance Receivable (in millions)	2020 Zogg fire		2019 Kincade fire		2017 Northern California wildfires		Total
Balance at December 31, 2019		$	—	$	1,380	$	807	$	50	$	2,237
Balance at December 31, 2020												Balance at December 31, 2020	$	219	$	430	$	25	$	674
Accrued insurance recoveries	Accrued insurance recoveries	430		—		—		—		430		Accrued insurance recoveries	28		0		0		28
Reimbursements	Reimbursements	—		(408)		(121)		—		(529)		Reimbursements	0		0		0		0
Balance at June 30, 2020		$	430	$	972	$	686	$	50	$	2,138
Balance at March 31, 2021												Balance at March 31, 2021	$	247	$	430	$	25	$	702


(in millions)
Description⁽¹⁾	Expense		Capital		Total
Distribution Safety Inspections and Repairs Expense (FRMMA/WMPMA)⁽²⁾	$	236	$	—	$	236
Transmission Safety Inspections and Repairs Expense (TO)⁽³⁾	433		—		433
Vegetation Management Support Costs (FHPMA)	36		—		36
2017 Northern California Wildfires CEMA Expense and Capital (CEMA)	82		66		148
2018 Camp Fire CEMA Expense (CEMA)	435		—		435
2018 Camp Fire CEMA Capital for Restoration (CEMA)	—		253		253
2018 Camp Fire CEMA Capital for Temporary Facilities (CEMA)⁽⁴⁾	—		84		84
Total	$	1,222	$	403	$	1,625


		Three Months Ended June 30, 2020										Three Months Ended June 30, 2019											Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
		Revenues/Costs:										Revenues/Costs:											Revenues/Costs:				Revenues/Costs:
(in millions)	(in millions)	That Impacted Earnings		That Did Not Impact Earnings		Total Utility		That Impacted Earnings		That Did Not Impact Earnings		Total Utility		(in millions)	That Impacted Earnings		That Did Not Impact Earnings		Total Utility		That Impacted Earnings		That Did Not Impact Earnings		Total Utility
Electric operating revenues	Electric operating revenues	$	2,303	$	1,132	$	3,435	$	1,872	$	1,074	$	2,946	Electric operating revenues	$	2,343	$	1,052	$	3,395	$	2,155	$	885	$	3,040
Natural gas operating revenues	Natural gas operating revenues	832		266		1,098		792		205		997		Natural gas operating revenues	897		424		1,321		864		402		1,266
Total operating revenues	Total operating revenues	3,135		1,398		4,533		2,664		1,279		3,943		Total operating revenues	3,240		1,476		4,716		3,019		1,287		4,306
Cost of electricity	Cost of electricity	—		759		759		—		837		837		Cost of electricity	—		590		590		—		545		545
Cost of natural gas	Cost of natural gas	—		134		134		—		108		108		Cost of natural gas	—		307		307		—		284		284
Operating and maintenance	Operating and maintenance	1,596		549		2,145		1,562		378		1,940		Operating and maintenance	1,708		623		2,331		1,463		502		1,965
Wildfire-related claims, net of insurance recoveries	Wildfire-related claims, net of insurance recoveries	170		—		170		3,900		—		3,900		Wildfire-related claims, net of insurance recoveries	172		—		172		—		—		—
Wildfire fund expense		173		—		173		—		—		—
Wildfire Fund expense														Wildfire Fund expense	119		—		119		—		—		—
Depreciation, amortization, and decommissioning	Depreciation, amortization, and decommissioning	874		—		874		796		—		796		Depreciation, amortization, and decommissioning	888		—		888		855		—		855
Total operating expenses	Total operating expenses	2,813		1,442		4,255		6,258		1,323		7,581		Total operating expenses	2,887		1,520		4,407		2,318		1,331		3,649
Operating income (loss)	Operating income (loss)	322		(44)		278		(3,594)		(44)		(3,638)		Operating income (loss)	353		(44)		309		701		(44)		657
Interest income	Interest income	12		—		12		22		—		22		Interest income	2		—		2		16		—		16
Interest expense	Interest expense	(189)		—		(189)		(60)		—		(60)		Interest expense	(348)		—		(348)		(252)		—		(252)
Other income, net	Other income, net	49		44		93		20		44		64		Other income, net	89		44		133		49		44		93
Reorganization items		(111)		—		(111)		(57)		—		(57)
Income (loss) before income taxes		$	83	$	—	$	83	$	(3,669)	$	—	$	(3,669)
Income tax provision (benefit) ⁽¹⁾						556						(1,119)
Net loss						(473)						(2,550)
Reorganization items, net														Reorganization items, net	(2)		—		(2)		(93)		—		(93)
Income before income taxes														Income before income taxes	$	94	$	—	$	94	$	421	$	—	$	421
Income tax benefit (1)														Income tax benefit (1)					(83)						(30)
Net income														Net income					177						451
Preferred stock dividend requirement⁽¹⁾	Preferred stock dividend requirement⁽¹⁾					4						4		Preferred stock dividend requirement (1)					3						3
Loss Attributable to Common Stock						$	(477)					$	(2,554)
Income Attributable to Common Stock														Income Attributable to Common Stock					$	174					$	448


	Six Months Ended June 30, 2020										Six Months Ended June 30, 2019
	Revenues/Costs:										Revenues/Costs:
(in millions)	That Impacted Earnings		That Did Not Impact Earnings		Total Utility		That Impacted Earnings		That Did Not Impact Earnings		Total Utility
Electric operating revenues	$	4,459	$	2,016	$	6,475	$	3,786	$	1,952	$	5,738
Natural gas operating revenues	1,696		668		2,364		1,586		630		2,216
Total operating revenues	6,155		2,684		8,839		5,372		2,582		7,954
Cost of electricity	—		1,304		1,304		—		1,436		1,436
Cost of natural gas	—		418		418		—		447		447
Operating and maintenance	3,059		1,051		4,110		3,256		788		4,044
Wildfire-related claims, net of insurance recoveries	170		—		170		3,900		—		3,900
Wildfire fund expense	173		—		173		—		—		—
Depreciation, amortization, and decommissioning	1,729		—		1,729		1,593		—		1,593
Total operating expenses	5,131		2,773		7,904		8,749		2,671		11,420
Operating income (loss)	1,024		(89)		935		(3,377)		(89)		(3,466)
Interest income	28		—		28		43		—		43
Interest expense	(441)		—		(441)		(161)		—		(161)
Other income, net	97		89		186		41		89		130
Reorganization items	(204)		—		(204)		(168)		—		(168)
Income (loss) before income taxes	$	504	$	—	$	504	$	(3,622)	$	—	$	(3,622)
Income tax provision (benefit) ⁽¹⁾					526						(1,205)
Net loss					(22)						(2,417)
Preferred stock dividend requirement⁽¹⁾					7						7
Loss Attributable to Common Stock					$	(29)					$	(2,424)