Hello, and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to the PG&E Corporation Post-Legislative Session Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please limit yourself to one question and one follow-up. Thank you. I would now like to turn the call over to Jonathan Arnold, Vice President of Investor Relations. Please go ahead. Good morning, everyone, and thank you for joining us for PG&E's Investor Update. With us today in our Oakland headquarters are Patti Poppe, our Chief Executive Officer, Carolyn Burke, our Executive Vice President and Chief Financial Officer, and Carla Peterman, President of PG&E Corporation. Before we start, I should remind you that today's discussion will include forward-looking statements about our outlook for future financial results. These statements are based on information currently available to management. Some of the important factors which could affect our actual financial results are described on page two of today's presentation. The slides, along with other relevant information, can be found online at investor.pgecorp.com. With that, it's my pleasure to hand the call over to our CEO, Patti Poppe. Thank you, Jonathan. Good morning, everyone. Earlier today, we announced that our board of directors has authorized a strategic review. This review will evaluate the full range of regulatory, financial, operational, and strategic alternatives, including how PG&E is organized and financed, with the goal of best serving our customers in California. Becoming a financially strong, investment-grade company is a foundational objective of this review. As part of this, the company will seek input from California regulators and policymakers, investors, and other stakeholders. Today, I'll cover why we're initiating this process, other actions we're announcing, and what they mean for our financial outlook. First, I want to set some context. California has the talent and ambition to lead the world in innovation, economic opportunity, and the clean energy transition. Realizing that potential requires a well-functioning energy system capable of meeting growing demand. At PG&E, we understand the responsibility we carry. We power the homes, hospitals, schools, farms, businesses, and infrastructure that keep California moving. That responsibility includes continuing to invest to reduce wildfire risk while being held accountable for operating our system safely every day. This is a consequential moment for PG&E and for California's energy future, and I also believe it can be a turning point. Over the last few years, our team at PG&E has been dedicated to transforming the company for the benefit of our customers. During this time, we've made meaningful, quantifiable improvements in wildfire safety and delivering on our commitments under our Wildfire Mitigation Plans. As of today, we're in our fourth consecutive year of no major wildfires associated with our equipment. Our reliability has improved by more than 30% over the past two years. We've implemented the Lean Operating System, consistently exceeding our annual target of 2% O&M reduction, delivering savings, and improving service to our customers. We've partnered with many of the world's most innovative companies to modernize our energy system, a recent example being our continuous monitoring program. All the while, we've made electricity more affordable, lowering rates five times since January of 2024. Those are real results delivered by my coworkers. They prove that this company can change and that we are changing. They also demonstrate something else. Improving our performance alone is not enough to solve the challenges created by California's current liability framework. Despite our progress, the current framework continues to translate wildfire risk into higher financing costs, limiting our ability to fund the energy system California needs at an affordable cost. Something has to change if we're going to preserve affordability, improve reliability, and continue making the investments needed to keep our communities safe. Our progress gives us confidence in what PG&E can accomplish. Having a policy environment worthy of investment-grade credit ratings is essential to attracting affordable long-term capital and funding the work our customers need. Combined with continued execution of the Simple, Affordable Model and an unwavering commitment to safety, we believe that we can deliver on the priorities of our customers and California policymakers. Over the past few years, it's become increasingly clear that targeted reforms to our state's wildfire liability structure are required for California utilities to affordably deliver the energy future that our customers expect. This year's legislative session ended without wildfire liability reform. The governor provided real leadership on a complex issue, yet he himself said that the work here is not finished and that this system needs broader structural reform. We agree. Two things determine whether the company can attract capital at a cost our customers can afford. The first is a permanent source of liquidity beyond the current Wildfire Fund, which ensures that sufficient funds are available to pay claims if needed. The second is a maximum disallowance that is independent of the funding source, setting a known and quantifiable downside tail risk for investors. Neither has been addressed. We have concluded that PG&E cannot simply wait for the policy framework to change. We must take action now to sustainably serve our customers. That's why we're moving to reinvent PG&E, building on what is working and changing what is not. Today, we're announcing two specific actions. First, as a near-term step, we're planning to reduce our 2027 capital investment by $2 billion from $13.4 billion to $11.4 billion, bringing next year's plan closer to 2025 actual levels. This will allow us to borrow less at a time when financing costs are high, helping reduce the cost ultimately borne by customers. Some work will be delayed or deferred, but we will never compromise on safety. We will carefully select the affected work so that we can continue to deliver on our critical safety programs and continue to maintain our current compliance performance, including our Wildfire Mitigation Plan and safety certificate requirements. The lower capital plan reduces our 2027 utility and parent debt needs by approximately $1 billion each. This will directly benefit customers through lower financing costs. In addition to this near-term action, our board of directors has also authorized a strategic review. Our goal is to identify a solution that can attract affordable long-term capital to California and finance the work our customers need. Achieving that objective is essential to preserving affordability and supporting the energy investment that California's future requires. That's why we intend to consider the full range of options for how PG&E is organized and financed with investment-grade credit remaining a foundational objective. As part of our review, we'll seek input from California regulators, policymakers, and stakeholders, including our investors. We'll bring the facts, the options, the openness, and the urgency this moment requires as we work together to build a sustainable path forward. Key guardrails will include maintaining our safety commitments, delivering on commitments to the Wildfire Fund and Continuation Account, honoring all of our labor agreements, including pensions, and identifying durable, sustainable solutions that allow us to best serve our customers, our coworkers, and our investors. The status quo policy framework does not deliver what any of our stakeholders need. We will keep working for policy reform, and we intend to be a constructive participant when lawmakers return to it. But we cannot plan around that alone. We must now be open to considering additional ways to unlock value for both customers and investors. The PG&E team is already working actively to identify the best path forward and will get input from key stakeholders so we can proceed with confidence and urgency. We expect to provide updates on our regular quarterly calls. Turning to our financial plan. Today, I'm reaffirming our 2026 core EPS guidance of $1.64 - $1.66, based on our first half results and the progress we've made this quarter. We're also initiating our 2027 core EPS guidance range of $1.78 - $1.82, which at the midpoint is up 9% over 2026. While slower capital spending will reduce our 2027 rate base forecast, we expect the earnings impact to be offset by lower unrecoverable net interest. Considering our strategic review, we're no longer providing five-year CapEx and rate base guidance or an earnings growth rate beyond 2027. We anticipate providing a new long-term outlook at an appropriate time once we're further along with our review. We do not take any of these decisions lightly, and they are collectively motivated by our desire to deliver safe, affordable, reliable, and clean energy. Our customers deserve nothing less. The last six years have been an extraordinary example of what people can do when properly aligned. I am so proud of the people of PG&E. Our equipment and our people are essential to the daily life of every Californian. No one should be confused about that. We've done the hard part. We have transformed the operations of this company. We've never been safer and have never operated better. That's a great foundation on which to build the coming era of PG&E, and it starts today. Thank you for your time this morning, and we're now happy to take your questions. At this time, I would like to remind everyone, in order to ask a question, press star one. Please limit yourself to one question and one follow-up. Your first question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead. Yeah. Hi, good morning. Good morning, Steve. Thanks. Good morning. Hi. I know you've talked about alternative options if the appropriate legislation didn't pass for a while and been working a while, but this sounds like you have a plan to a plan B, as opposed to actually getting our plan B. Maybe you could just talk to how much work you've already done to, or any color on what are some of these options. The follow-up is really just how can any option work without addressing the two key issues that you mentioned without a law that does that? Yeah. It's a great question, Steve. I think fundamentally, we definitely still need liability reform. One of the things I believe people don't appreciate or they often forget is that our hold co structure doesn't necessarily allow us to independently reflect the value of our different businesses. Where wildfire reform is essential for our electric distribution business, we think there's a range of options that could create the ability to unlock value for both customers and investors. In addition to or alongside policy reform. A range of options could be as simple as, number one, policy reform, but also some regulatory improvements, corporate structure, capital allocation strategy, legal structure. There's a range of alternatives. The team's been working on that in preparation, as any good company does. We're always looking to see how to maximize value for customers and investors. We've got ideas and concepts, but any ideas and concepts would obviously have to be approved by our regulator. It's going to be important that we make sure that we're engaging and sharing our thoughts in a way that meets the needs of our regulators and the expectations of our policy leaders. We have a new governor coming into office. That new governor may have a point of view about what's the best structure of the energy system to best deliver for California. We think it's an exciting time. We think it can create value. By announcing the Strategic Review today, that gives us an umbrella under which to have critical conversations and maintain our obligations to inform. Thank you. Yeah. Thanks, Steve. Your next question comes from the line of Shahriar Pourreza with Wells Fargo. Please go ahead. Morning, Shar. Good morning, Patti. This is Marcella on for Shar. Oh, hi, Marcella. Thanks for taking our question. It's been a big debate, and we've been watching the comments out of the legislature closely, but do you think it's possible or likely we see a special session in 2026 at this point? If we do, and that yields a solution this year, how might that change your calculus on how to go about implementing the revised 2027 plan? Are we on the Strategic Review path indefinitely at this point? Well, first we're reading the same reports you are on the potential of a special session, but as it goes for us, we'll obviously participate and work with the legislature if they decide to take it up. Most importantly, we're moving forward today. Our goal is investment grade for customer affordability and the ability to track that long-term capital. All of our solutions are being reviewed through that lens. If there is policy reform, we'll revisit if the policy reform is sufficient to unlock the full value that we see exists at PG&E. Perfect. Thank you. Thanks, Marcella. Your next question comes from the line of Nicholas Campanella with Barclays. Please go ahead. Hey, morning, Nick. Good morning. I guess, thanks for telling everyone about you're contemplating a range of outcomes here and the work being done. That's good to hear. But I guess just a strategic review just does raise further uncertainty and can you talk about how you plan to protect your own cost of capital for customers while you're going through the strategic review, especially with the stock now kind of trading in certain years below one times rate base? Thanks. Yeah. Nick, that is top of mind every day for us, and we're working on how to minimize that cost of capital for customers. There's no doubt the current policy construct is a big anchor on that, on our ability to deliver value for customers at a cost that they can afford. Which is why we're taking actions to look at the totality of our business. The business is, again, as I said, the holding company structure just doesn't necessarily allow us to provide the value and the visibility to the value of our different businesses. We're a very large and complicated company with lots of businesses within which today I feel value is trapped, and that value can be unlocked for customers and investors. We're exploring what steps would be necessary to unlock that value. The $2 billion capital reduction, I guess if I'm interpreting the slides correctly, that's mostly coming from that prior $23 billion bucket of capacity and new business. Can you talk about if that is the base case that we should expect into 2028 and beyond here at a minimum? How do we think about the current rate case that's been filed? Thanks. Yeah. I'll hit your first question, then I'll kick it to Carla to talk about the implications for the general rate case. This is a one-year capital reduction under the umbrella of the Strategic Review. We felt, given the cost of interest, we could do savings for customers. Look, it was a tough decision to make because every dollar that we had in our $13.4 billion plan had value for customers, and we felt we were justified in investing those dollars, but we just can't justify the cost for our customers to do that much work. Therein lies the rub. That is the problem. There's more work to be done than at this capital structure we can afford to do. We've got to make a change in the absence of policy reform. These are the tough decisions that we have to make. Therefore, we really think the Strategic Review provides the umbrella, again, to find a way to unlock that value so that we can do the right amount of work for customers, the work that they value at the lowest cost possible. Carla, why don't you just hit on the implications for the GRC? Sure, Patti. Good morning, Nick. We believe with our GRC that we propose the right work for our four-year case. Just as a reminder, we did file the lowest GRC increase in a decade. We do believe it's quite anchored in our commitment to affordability. As it relates to the short-term reduction, which does include for expend, it should not impact our overall case. Thank you very much. Thanks, Nick. Your next question comes from the line of Carly Davenport with Goldman Sachs. Please go ahead. Hey, this is Jay on for Carly. Thanks for taking our questions. Go ahead, Jay. Maybe first on the Strategic Review. While we know that there's no definitive conclusion, are you able to provide any color on the timing of it in the event that it continues beyond this time next year? In that case, should we expect 2028 guidance or any revisions to the capital plan as provided today? Yeah. The timing of our review will be dependent on the timing, obviously, of discussions here in California and any filings we might make. But a typical, other reviews have taken in the 12 to 18-month range. So we wouldn't be surprised if we were in that zip code, but yet more to understand, and we'll provide updates on our quarterly calls going forward. Okay. Super helpful. Then maybe just a quick one on the credit rating side. Could you talk about any recent engagement you've had with the agencies regarding this legislative uncertainty? At what point does the lack of liability caps or subrogation put downward pressure on credit metrics? Yeah. Hi, Jay. This is Carolyn. I'll respond to that. We have been in touch with the rating agencies. They are disappointed that the state has not followed through on the second phase of SB 254. We had been hoping for further ratings improvements if credit-supportive legislation has been passed. S&P has already indicated that our ratings will be unchanged. We're obviously very disappointed on behalf of our customers that we will not be making progress on our ratings improvement, and its ratings improvement has stalled. The rating agencies have indicated in their reports that an upgrade is unlikely for PCG, and given the lack of legislation, there is a risk of multi-notch downgrades to us and others. We've been in contact with them. They are aware of these plans that we've just announced today as well, and they're disappointed as we are. Great. Thanks so much. Your next question comes from the line of Julien Dumoulin-Smith with Jefferies. Please go ahead. Hey, good morning, team. Thank you guys very much. Hope you guys are hanging in there. Just wanted to ask, how do you think about M&A here? In as much as typically when we hear strategic review, that's the word association many think of. In this instance, I think a lot of folks were expecting buyback, dividend change. Is that principally what you're thinking about? Or if you can elaborate a little bit more about what the core of the strategic review consists of. Even within that, how do you think about PacGen and revisiting a structure like that, in as much as that was a recent conversation we all had? Yeah. Well, let me start there on the PacGen. As we reflect on the PacGen filing, that was a completely different circumstance. We were absolutely trying to raise cash. We were unable to share proceeds with customers. It wasn't a desirable framework on behalf of our regulators, and they denied the filing. I would say today we have so much more value. We're so much more stable. Our balance sheet is healthy. We have a strong financial foundation. It's a capital attraction problem that we are having to solve. When we think about the range of options within the Strategic Review, it certainly can include regulatory items. Policy reform would make a big difference. Also corporate structure and capital allocation strategy. There's no doubt that our different businesses, if looked at individually, would have different value propositions. We're really just thinking about how best to reflect the full value of this entire corporation, and make it visible to investment capital in a variety of forms. We're really open. Everything's on the table. We've got ideas, but we're anxious to hear input from others and see the best way to maximize value for customers and investors. Excellent. If I can follow up on a quick detail here, will you declare the September dividend in two weeks, and is there anything we should know about that dividend? In as much as this is a good opportunity to just ask directly as to how you're thinking about that dividend increase overall. Yeah, Julien. The dividend is a board decision, and we are on normal course with our timing on that, which will be at the end of the year when we make a decision around the dividend. This is Carolyn, by the way. Got it. Yeah. Hi. You will declare the September dividend in a couple weeks? That will be a board decision. Indeed. Excellent. We will leave it there. Thank you guys very much. Your next question comes from the line of David Arcaro with Morgan Stanley. Please go ahead. Hey, thank you. Good morning. Morning. How do you get to investment grade? I guess, could you give, to the extent there's no further policy actions, and we've got what we've got here. You mentioned, Carolyn, the pressure that the agencies have suggested to the extent there's not broader reform. I guess, what are some of the ingredients or strategies you would potentially see, or if you've gotten any guidance from the agencies as to how you could eventually get to investment grade? Well, I think it's a gauge. It's an outcome that we expect any decisions, any ideas, any concepts to need to be able to fulfill. It's really an outcome that we're setting as a standard for any changes that we would make. Obviously, policy reform is essential to the electric distribution business, to be investment grade, and that currently affects the whole HoldCo today. The credit agencies have been clear. We meet all the financial metrics. There's questions about the risk and the policy environment. That obviously still needs to be fixed. But all other ideas may provide other entities that could be investment grade as well. So that's all we're saying, is that investment grade has to be a threshold, an outcome that we would expect to be delivered out of the strategic review. Okay, got it. That's helpful. I'll leave it there. Thanks so much. Your next question comes from the line of Richard Sunderland with Truist Securities. Please go ahead. Hey, Richard. Hey, good morning, and thanks for the time. I want to circle back to this $2 billion CapEx reduction for 2027. You list some of these kind of broader buckets around insert connection of renewables, large load, connecting new housing projects. How do you think about the impact of that work on state policies, state goals across stakeholders, and I guess really the ramifications of that delay and bigger picture, is this about finding a path to then do this work in 2028? Or I guess, how do you see the consequences of the current impasse we're at? Yeah. Look, we love to do the work. This is an operating team. I am an operator at my heart, and so to have to slow the work is heartbreaking for us. We really want to make sure that our customers are able to afford that work that we do. The point is, it is a one-year slowdown. It will push dates out, defer some work, but not necessarily cancel work. We will be working closely with those projects that are affected, the work elements, and we have not finalized the specific work that will be delayed and deferred because this is for 2027 work. Our objective is to minimize customer disruption, though I think, as Carla mentioned, we have articulated both through our GRC and through all of our capital plans that the work that we are doing is essential. We know when we do not have access to low-cost capital, it affects customer service. That is why this business model actually works. When we have capital access, we have investment-grade ratings, we can deliver work that customers need. California is growing. We want to power that growth, but if we cannot afford to, it is going to have to go at the pace our customers can afford. The affordability drumbeat has been loud and persistent, and we need to answer that call. Thank you. That is helpful context. On the possibility of quarterly updates across the strategic review, could you speak a little bit more to what transparency you may be able to offer into the process along the way? Recognize there are just a lot of different moving pieces here, but I feel like generically, we often see these as you go radio silent for a while. How do you think you can speak to this on a quarterly basis? Well, obviously, we will, as you said, report out on a quarterly basis as we shared. But in the case where if there were regulatory changes or policy changes, I think you would see that in the public square. We will be making filings, and you would be able to see evidence of those filings. In some cases, you will see that, and then some of the areas of the review will be radio silent until we are ready to announce something. Great. Thanks for the time today. Yep. Thank you so much. Yeah. This is Carolyn. I am just going to follow up on Julien's question around the dividend, just to be very clear that when we said December, we were referring to our normal course around our annual decision on setting our dividend for next year. It will be a board decision at that timeframe. If we were going to signal a change in 2026, we would have said so today. Okay. Thanks, Carolyn. Your next question comes from the line of Gregg Orrill with UBS. Please go ahead. UBS. Hi, Gregg. Thanks for taking the call- Hi, Gregg. Question. Welcome to the team. Thanks. As you enter the Strategic Review, you talked about investment grade as a predisposition. Are there any sort of financial metrics that you have as a predisposition going into the Strategic Review, sort of guardrails you might be thinking about? Thanks. Well, it's got to be accretive to our current construct and plan. Anything that we would do, just like any company, would only be if it was net beneficial. That's obviously on all things, on balance sheet and earnings and return, and customer value. I'd say the boundaries are always that for us. We definitely would want to move forward, not rearward. That would be an objective for us, but it starts with investment grade. We've been chasing investment grade for six years, and we've been eligible from all of our financial performance for two years. The single policy issue that is holding us back, we have to look at how to unlock the trapped value in our company for our customers and our investors. The Strategic Review is intended to explore those alternatives that would best be able to do that. Thank you. Thanks, Gregg. Again, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions at this time. I would like to turn the call back to Patti Poppe, CEO, for closing remarks. Thank you, Lacey. Everyone, the transformation of PG&E's operations is a real point of pride for us. We're proud of the progress we've made. We're not done yet. We have more to do, and we know there's more to improve, but that foundation of that operational turnaround is absolutely a great place to start and to launch this new era of PG&E and launch our future. We start today, and we hope you'll join us on the journey. We'll look forward to keeping you posted as we go. This concludes today's call. You may disconnect.