PCGPG&E Corporation

The Utility could be is subject to additional regulatory or governmental enforcement action in the future with respect to compliance with extensive federal, state, or and local laws, regulations or orders that could result in additional fines, penalties or customer refunds, regulations, and orders, including those regarding renewable energy and RA requirements; customer billing; customer service; affiliate transactions; wildfire mitigation initiatives and WMP targets (including EPSS, PSPS, vegetation management, asset inspections, and system hardening); design, construction, operating and maintenance practices; safety and inspection practices; compliance with CPUC general orders (“GOs”) or other applicable CPUC decisions or regulations; whether the Utility is able to achieve the targets in its WMPs; federal electric reliability standards; and environmental compliance. compliance; resource adequacy;

PG&E Corporation’s and the Utility’s risk management and information security measures may be ineffective, and the The personal information that they PG&E Corporation and the Utility collect, as well as other commercially-sensitive data that they possess, could nonetheless become compromised because or improperly disclosed, including through the use of certain events, including generative artificial intelligence or as a result of a cyber incident, the insufficiency or failure of such measures, human error, the misappropriation of data, or the occurrence of any of the foregoing at any third party with which PG&E Corporation or the Utility has shared information.

Such funds could Funds in the Continuation Account may be depleted more quickly than PG&E Corporation’s Corporation and the Utility’s 20-year estimate for the life of the Wildfire Fund (see Note 2 of the Notes to the Consolidated Financial Statements in Item 8), including Utility anticipate as a result of claims made by California’s other participating electric utility companies.

PG&E Corporation and the Utility face various cybersecurity threats, including attempts to gain unauthorized access to their systems and networks, including access to confidential information about the Utility, its customers and employees, denial-of-service attacks, threats to their information technology infrastructure, ransomware ransomware, and phishing attacks, and attempts to gain unauthorized access to confidential or sensitive information about the Utility, customers and employees. attacks.

Additionally, artificial intelligence, including generative artificial intelligence, may be used to facilitate or perpetrate these cybersecurity threats, and PG&E Corporation’s and the Utility’s use of generative artificial intelligence (and use by their vendors and agents) may subject them to data privacy, legal, and security risks. threats.

If the Utility is unable to maintain a safety certification or if the Wildfire Fund Continuation Account is exhausted, exhausted as a result of claims made by California’s other participating electric utility companies or otherwise, the ineffectiveness unavailability or insufficiency of the Wildfire Fund Continuation Account could have a material effect on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows.

Non-compliance with these rules could result in the imposition of material fines fines, on PG&E Corporation and the Utility, other regulatory exposure, exposure and financial risk, significant litigation, and reputational harm, which could materially affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows. harm.

As of December 31, 2024, 2025, 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 $33.7 $38.3 billion and $34.9 $34.1 billion, respectively, and PG&E Corporation incurred and may also continue to incur significant net operating loss carryforwards and other tax attributes. respectively.

Any failure, interruption, or decrease in the functionality of the Utility’s operational networks could cause harm to the public or employees, significantly disrupt operations, negatively impact the Utility’s ability to safely generate, transport, deliver and store energy and gas or otherwise operate in a safe and efficient manner or at all, and damage the Utility’s assets or operations or those of third parties. parties, increase costs, and impact the Utility’s ability to track or collect revenues and to maintain effective internal controls over financial reporting.

The ability of PG&E Corporation may also continue to use some or all of these incur significant net operating loss carryforwards and certain other tax attributes may be subject to certain limitations. attributes.

Participation in the Wildfire Fund and the Continuation Account has had, and is expected to have continue to have, a material impact on PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows, and the benefits of participating in the Wildfire Fund and the Continuation Account may not ultimately outweigh the substantial costs of the Utility’s contributions to the Wildfire Fund. Fund or the Continuation Account.

PG&E Corporation’s and the Utility’s recorded liabilities liability estimates for probable losses in connection with these fires correspond to the lower end of the range of reasonably estimable losses unless there is a better estimate, do not include several categories of potential damages that are not reasonably estimable, and are subject to change based on new information.

If the Utility were unable to access the capital markets or the cost of financing were to substantially further increase, its financial condition, results of operations, liquidity, and cash flows could be materially affected.

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 IRC (which also applies for California state income tax purposes), if a corporation (or a consolidated group) undergoes an “ownership change,” such net operating loss carryforwards and other tax attributes may be subject to certain limitations.

(in millions) 2025 2024 Year Ended December 31, (in millions) 2024 2023 Net Change (1) Percentage Change Electric operating revenues $ 18,318 $ 17,811 $ 17,424 $507 3% Natural gas operating revenues 6,617 6,608 7,004 9 —% Total operating revenues 24,935 24,419 24,428 516 2% Cost of electricity 2,609 2,261 2,443 348 15% Cost of natural gas 1,107 1,192 1,754 (85) (7)% Operating and maintenance 11,337 11,787 11,913 (450) (4)% SB 901 securitization charges, net 35 33 1,267 2 6% Wildfire-related claims, net of recoveries 100 94 64 6 6% Wildfire Fund expense 352 383 567 (31) (8)% Depreciation, amortization, and decommissioning 4,634 4,189 3,738 445 11% Total operating expenses 20,174 19,939 21,746 235 1% Operating income 4,761 4,480 2,682 281 6% Interest income 509 589 593 (80) (14)% Interest expense (2,713) (2,781) (2,485) 68 (2)% Other income, net 328 319 293 9 3% Income before income taxes 2,885 2,607 1,083 278 11% Income tax benefit (194) (105) (1,461) (89) 85% Net income 3,079 2,712 2,544 367 14% Preferred stock dividend requirement 14 14 — —% Income Attributable to Common Stock $ 3,065 $ 2,698 $ 2,530 367 14%

The While the Utility has continued to work with the DOE, the Utility is not able to predict the timing or amount of any funds it may receive from the Facility facility in the future as a result of the January 20, 2025 executive order by President Trump entitled “Unleashing American Energy” regarding funds authorized by the Inflation Reduction Act. future.

State income tax (net of federal benefit) (1) (0.6)% (0.8)% (34.4)% Effect of regulatory treatment of fixed asset differences (2) (24.7)% (40.1)% (27.4)% (25.2)% Nontaxable or nondeductible items 1.1% 0.4% Tax credits (0.7)% (2.2)% Fire Victim Trust (3) —% (80.2)% (0.9)% (0.9)% Changes in unrecognized tax benefits 0.1% 1.9% Other, net 1.2% 1.1% —% (0.4)% Effective tax rate (6.7)% (4.0)% (134.8)%

In estimating the period longevity of coverage, the fund, PG&E Corporation and the Utility use a Monte Carlo simulation that began dataset with 12 years of historical, publicly available fire-loss data from wildfires caused by electrical equipment, and subsequently plan equipment to add an additional year create Monte Carlo simulations of data each following year. expected loss.

If the eligible claims for liabilities arising from wildfires were to exceed $1.0 billion in any Wildfire Fund or Continuation Account coverage year (“Coverage Year”), the Utility Wildfire Fund or the Continuation Account, as applicable, may be eligible available to make a claim against reimburse the Wildfire Fund under AB 1054 for Utility such excess amount.

Although the Utility generally seeks to recover its recorded costs on a timely basis, in recent years, the amount of the costs recorded in greater memorandum and balancing accounts has increased. account balances increase the Utility’s financing costs.

Under Section 382 of the IRC, if a corporation (or a consolidated group) undergoes an “ownership change,” net operating loss carryforwards and other tax attributes may be subject to certain limitations. limitations (which could limit PG&E Corporation’s or the Utility’s ability to use these deferred tax assets to offset taxable income).

The Key updates to the Utility’s forward-looking rate cases that are pending, have pending appeals, or were completed during the year ended December 31, 2024 are summarized in the following table:

The NRC’s schedule indicates that it will issue a In June 2025, the NRC issued the final safety evaluation report and supplemental environmental impact statement by June 2025. statement.

Net cash provided by financing activities decreased by $631 $433 million, or 16%, in 2024 13%, during the year ended December 31, 2025 as compared to 2023. the same period in 2024.

This risk may be attributable to, and is exacerbated by, by a variety of factors, including climate change and severe weather events (in particular, extended periods of seasonal dryness coupled with periods of high wind velocities and other storms), infrastructure, as well as infrastructure and vegetation conditions.

As of December 31, 2024, 2025, the Utility had recorded an aggregate amount of approximately $3.6 $2.2 billion in costs for the CEMA, WEMA, FHPMA, FRMMA, WMPMA, VMBA, and WMBA, and MGMA. substantially all of which was accounted for as long term.

The Utility plans intends to achieve such savings by improving the planning and execution of its work business through increased efficiencies, including waste elimination through the Lean operating system.

For more information about the risks that could materially affect PG&E Corporation’s and the Utility’s financial condition, results of operations, liquidity, and cash flows, or that could cause future results to differ materially from historical results, see Item 1A. 1A: