PG&E CEO Poppe on Earnings, Rates and AI Buildout

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00:00How exactly is business?

00:03Yeah, look, business is great, Romain.

00:05Great to be with you.

00:06Thanks for having me today.

00:08Look, we had a great quarter.

00:10We narrowed our guidance for full-year earnings, and we're biased to our midpoint of that narrowed

00:16guidance, which would be a 10% EPS growth off last year, and then forecast at least

00:239% EPS growth every year through 2030.

00:25We announced our $73 billion capital plan here a couple weeks ago that is our capital

00:32plan through 2030 with no new equity, a dividend growth rate that's about 50% CAGR every year

00:40for the next three years, and at the same time, we're lowering rates for customers.

00:45We have a simple, affordable model at PG&E, and it delivers high value for customers at

00:50a lower cost.

00:50With regards to that capital expenditure plan, the one you're referencing through 2030, I

00:55think the last update you gave was $73 billion.

00:58Of that, and you have to know, this is the question that every investor wants to know,

01:01how much of that is going to sort of be allocated or earmarked, if you will, specifically for

01:07the demands coming out of this AI infrastructure build-out?

01:11Yeah, it's only about $300 million a year for that today.

01:15We have a large transmission system.

01:17We do serve Silicon Valley.

01:18We serve the AI tech companies.

01:20Our building pace is matching their building pace.

01:23And we have further upside, actually, to our capital plan as their plans materialize.

01:30But we see all of the new load from AI being a rate reducer here in California.

01:37Our grid is underutilized.

01:39We're able to fully utilize that grid with that new load and lower rates for customers.

01:44So we're pretty excited about partnering with our tech customers who we serve today as their

01:49growth materializes here in California.

01:51But with regards to some of the upgrades that you are starting to do and that you still need

01:55to do, I mean, how long does that take?

01:56I mean, when do customers actually see that actually being completed?

02:03Yeah, we showed today on our call about 1.6 gigawatts of final engineering, of which about

02:0995% will be online by the end of 2030.

02:13So for every gigawatt that we bring online, it's about a 1% rate reduction.

02:18But the good news is we're lowering rates.

02:20In fact, we've lowered rates three times in the last 15 months.

02:23We're lowering rates again in 2026.

02:26And we do that through a variety of capital investments and offsetting costs.

02:30We've implemented a lean operating system here at PG&E.

02:33And we are scrubbing out waste from our system, serving our customers better at a lower cost.

02:38And in fact, we shared today that we had the highest increase in brand trust of any U.S.

02:44utility over the last 12 months.

02:47And that is, I believe, because in the face of the national trend of increasing rates,

02:51our rates are going the opposite direction because we're transforming how we do work at PG&E.

02:55And Patty, you think you can do that, maintain that, I should say.

02:58And I ask that more about the balance between what we've been seeing from the AI build out and

03:03their needs and, of course, the traditional customers that you've served for years, for decades.

03:08And the idea that there is some concern that residential customers, and even for that matter,

03:13some corporate customers feel like they may end up getting the short end of that stick.

03:19Well, Romain, there's no doubt it's all about pricing.

03:21You have to get the pricing right.

03:23But our tech companies are working with us to make sure that the infrastructure they need

03:28is both at a price that they can afford, but they care very much about their neighbors

03:33and their own families.

03:35And so they want to make sure that they are not a cost shift.

03:38And so rates are designed in California to not be a cost shift from industrial customers

03:43to residential.

03:44In fact, by design, our cost allocation is such that it is not a cost shift.

03:49And so that new load is net beneficial.

03:52In fact, we call it rate-reducing load.

03:54That is net beneficial for customers.

03:56So we've been building new generation capacity in California.

04:00I think there's been some misunderstanding about that nationwide that people thought we

04:05were out of power.

04:06We've actually added 20 gigawatts of capacity in the last five years here in California.

04:11Our California independent system operator forecasts that load with the California Energy Commission.

04:18We've been building, and that building is already embedded in the customer's bills, these additional

04:24utilization, whether it's through electric vehicles, building electrification, or new compute

04:30power, or even just new buildings, new housing, et cetera, all that new load is net beneficial

04:35for customers.

04:36All right, Patty, before we let you go, I do have to get your thoughts here on the wildfires.

04:40I mean, we're heading back into the wildfire season, the heart of it, I should say, out there

04:43in California, particularly with everything fresh on everyone's minds from what happened

04:48at the start of this year or the end of last year.

04:50How are you preparing for this?

04:52Are you prepared for it?

04:53Look, we are prepared every day for wildfire season.

04:56Those wildfires happen in January.

04:58I don't think we would say we have a season, but we have a readiness posture.

05:02And I will tell you that we have had the lowest ignitions this year over the years since

05:08we've been tracking since 2015 as a result of our layers of protection, which protect

05:13customers all the way from the point of hardening our power lines.

05:17We hit a major milestone just a couple weeks ago.

05:19We buried our 1,000th mile of power lines underground.

05:23We know that's the most affordable risk reduction in our highest risk areas.

05:28In addition to sensor technology that we're deploying, we're using our smart meters to predict

05:34where there will be a fault before there is a fault, and that prevents ignitions.

05:38The last three years have been high fire seasons, and we've had zero structures damaged as a

05:45result of our equipment.

05:46Our layers are working.

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