PG&E Corporation (PCG) Q3 2026 earnings review
PG&E keeps 2027 profit plan, but cuts capital spending
PG&E Corporation, the Northern California electric and gas utility, pulled its long-term spending plan after state lawmakers did not pass wildfire liability reform. Third-quarter profit per share excluding one-offs fell 18% from a year ago as last year's tax timing benefit reversed, though chief executive Patti Poppe kept the 2026 and 2027 profit targets unchanged. By our math, the full-year outlook points to 14% profit growth in the fourth quarter.
| Profit per share, excluding one-offs | $0.41 -18% from a year ago (+4% excluding timing swings) |
|---|---|
| 2026 and 2027 profit outlook | Unchanged $1.64–$1.66 in 2026; $1.78–$1.82 in 2027 |
| 2027 capital spending plan | Cut $2B down 15% to $11.4B; 2028–2030 targets withdrawn |
| Data centers energized since 2024 | 174 MW up from 88 MW in June 2026 |
⚖️ Verdict: 🔴 Bearish
The story got worse because the five-year growth plan broke on the legislative deadline. Because California ended its session without a new wildfire liability law, the utility cut $2 billion from its 2027 capital plan, launched a strategic review, and withdrew all spending and profit targets for 2028 through 2030. The good news: grid sensors helped lower the ignition rate to 0.83, and operating cost cuts stayed on track.
The question now is what the strategic review produces to replace the withdrawn 2028–2030 growth plan. Either the company redirects the $2 billion of cut capital spending into debt paydown and shareholder distributions while waiting for lawmakers, or higher unrecoverable interest and deferred grid projects slow profit growth after 2027. The board's strategic review update and the November 13 wildfire cost recovery ruling will decide.
🐂 Bull Case
Near-Term Profit Growth Remains On Track
PG&E Corporation, the Northern California electric and gas utility, reported a drop in third-quarter profit per share excluding one-offs to $0.41 from $0.50 a year ago. That 18% decline was expected because the utility lapped a one-time tax change from 2025. Timing and tax items reduced quarterly profit by $0.11 per share, while customer capital investment added $0.03.
Excluding those timing swings, third-quarter profit per share rose 4% by our math. More importantly, management kept its 2026 plan at $1.64 to $1.66 per share and introduced a 2027 target of $1.78 to $1.82. By our math, the 2026 outlook leaves $0.41 for the fourth quarter, up 14% from a year ago, followed by 9.1% growth in 2027.
What to watch: fourth-quarter profit per share excluding one-offs when full-year results arrive in February. Hitting $0.41 will prove that first-half timing reversals have finished.
Grid Sensors and Undergrounding Cut Ignition Rates
The utility installs grid sensors and buries powerlines to prevent wildfires across its service territory. During the third quarter, PG&E Corporation buried 122 miles of powerlines by our math, bringing its total to 1,400 miles since 2021. It also filed a new 10-year plan with California regulators to bury another 5,000 miles of lines starting in 2028.
Meanwhile, its continuous monitoring system reached 35 "avoided ignitions using 35k+ sensors" since January 2025, up from 28 at the end of June. Those physical upgrades pushed the utility's weather-adjusted ignition rate down to 0.83 per 100,000 circuit mile days in 2026, compared to 1.10 in 2025 and 1.41 in 2024.
What to watch: the Office of Energy Infrastructure Safety review of the 2026 safety certificate, submitted in November. Approval preserves the legal presumption that the utility operated its grid reasonably.
Operating Cost Cuts Offset Revenue Dip
PG&E Corporation relies on annual cuts in operating and maintenance (O&M) costs—the day-to-day expense of running powerlines and gas pipes—to keep customer bills affordable while growing its profit. The pace of those annual cuts slowed from 5.5% in 2023 to 2.5% in 2025, raising concern that the cost-saving lever was wearing out.
In the third quarter, total O&M expense fell 3.7% from a year ago to $2,543 million, dropping by 1.2 percentage points of revenue by our math. Purchased electricity and gas costs also fell by 2.0 percentage points of revenue, lifting operating margin by 0.8 percentage points to 20.2%. Over the first nine months, O&M savings added $101 million, or $0.04 per share, to core profit.
What to watch: the full-year non-fuel O&M reduction percentage reported in the fourth quarter. Landing above 2.5% will show that procurement and workforce changes broke the multi-year slowdown in savings.
🐻 Bear Case
Wildfire Stalemate Triggers $2 Billion Capital Cut
"While we still believe California needs a durable wildfire liability framework that delivers for customers and investors, safety remains our foundation as we strengthen and build resilient energy infrastructure to support our state’s growth," chief executive Patti Poppe said. For four quarters, Poppe warned that PG&E Corporation would rethink its five-year, $73 billion spending plan if lawmakers did not pass phase-two wildfire reform by August 31.
The legislative session ended without a bill, and the company acted. "On September 2, 2026, PG&E Corporation withdrew its capital expenditure, rate base, and earnings growth guidance beyond 2027 in connection with the announcement of the Strategic Review," the presentation noted. The utility is also "Implementing previously announced $2 billion reduction to 2027 capital plan".
- 2027 capital spending plan: cut 14.9% from $13.4 billion to $11.4 billion by our math
- 2028 to 2030 targets: withdrew $47.7 billion of planned capital spending and 9%+ profit growth
- California regulatory ranking: lowered by Research Associates on October 14 to Average/2 from Average/1
Because the company pulled its multi-year plan, it will delay connecting new housing, renewable energy projects, and "Large load beyond initial 1.8 GWs".
What to watch: the board's strategic review conclusion and the 2027 general rate case proposed decision in March 2027. Without legislative reform, deferred capital reduces rate-base growth after 2027.
Data Center Engineering Pipeline Stops Growing
PG&E Corporation pitches new data center power demand as a major affordability driver, stating that every gigawatt of new load can lower monthly electric bills for existing customers by 1% or more. After tightening its pipeline rules in the second quarter to require a 10% deposit for final engineering, total pipeline capacity reached 12,710 megawatts.
In the third quarter, total pipeline capacity edged up by 160 megawatts to 12,870 megawatts, but projects in final engineering stayed unchanged at 3,880 megawatts across 18 projects. Projects with signed construction agreements or active construction rose by just 10 megawatts to 640 megawatts. While energized data centers doubled from 88 megawatts in June to 174 megawatts, the 2027 capital cut explicitly delays serving large load beyond the initial 1.8 gigawatts.
What to watch: megawatts in final engineering and construction agreements in the fourth-quarter presentation. If projects do not advance from early study into construction, the promised bill reductions will stall.
Unrecoverable Interest and Wildfire Fund Charges Rise
As a regulated utility, PG&E Corporation cannot pass parent-company debt interest or Wildfire Fund amortization onto customers. It must absorb those costs, along with any wildfire claims that regulators disallow. S&P and Fitch still rate the parent company's debt at BBB-, the lowest investment-grade tier, while the utility subsidiary carries sub-investment-grade ratings on some metrics from prior years.
This quarter, the company raised its 2026 forecast for unrecoverable net interest after tax by $25 million, to a range of $350 million to $400 million, and guided $375 million to $425 million for 2027. Meanwhile, third-quarter pre-tax Wildfire Fund expense jumped 64% from a year ago to $141 million, and Dixie fire legal and claims costs added $12 million pre-tax.
What to watch: the California Public Utilities Commission proposed decision on 2019 Kincade and 2021 Dixie fire cost recovery, scheduled for November 13, 2026. An adverse ruling would force write-offs of recorded wildfire receivables.
👓 Other Themes
Strategic Review and Layoffs Cost $58 Million
PG&E Corporation recorded $58 million in pre-tax charges ($42 million after tax, or $0.02 per share) during the third quarter for strategic repositioning. That total includes $37 million in severance costs for "simplifying the Utility's employee structure" and $21 million in legal and financial advisory fees as it evaluates corporate structure and capital allocation options under its new strategic review.
💲 Other KPIs
Total operating revenue dipped 1.0% from a year ago, slowing from 0.1% growth in the second quarter and 15.0% in the first quarter. Electric revenue fell 2.0% to $4,660 million as lower authorized return on equity and lower pass-through electricity costs took effect, while natural gas revenue rose 2.2% to $1,528 million.
Weighted average diluted shares rose 0.2% from a year ago in the third quarter, and increased 3.7% over the first nine months to 2,284 million. While PG&E Corporation plans no new common equity sales through 2030, its mandatory convertible preferred stock added roughly 82 million shares to the nine-month diluted count compared to last year.
Total debt adjusted for securitized bonds and cash rose 6.3% in 2025 from $49,077 million in 2024, as the utility borrowed to fund grid capital spending. Adjusted funds from operations rose 8.6% to $7,295 million, lifting the ratio of cash flow to debt by 0.3 percentage points to 14.0%. Interim 2026 balance sheet debt was not in the release.
🔮 Guidance
Unchanged. The full-year plan still calls for 10.0% growth at the middle of the range over 2025's $1.50. With $1.24 earned in the first nine months, the outlook leaves $0.40 to $0.42 for the fourth quarter by our math, or 13.9% growth at the middle of the range compared to $0.36 in the fourth quarter of 2025.
Unchanged. Management translated its prior target of at least 9% annual growth into a dollar range of $1.78 to $1.82 per share. At the middle of the range ($1.80), profit per share grows 9.1% over the 2026 midpoint, supported by an $81 billion weighted-average rate base.
Cut. Management reduced planned 2027 capital spending by $2.0 billion, or 14.9% by our math, down from the $13.4 billion forecast in the second quarter. The utility kept 2026 capital spending at $12.4 billion, so 2027 spending will drop 8.1% from 2026 levels as non-safety work is deferred.
Unchanged. The total rate base—the value of grid assets on which regulators allow the utility to earn a profit return—stays at $75 billion for 2026 and $81 billion for 2027, an 8.0% increase. Within the 2027 total, state-regulated assets rose $1 billion to $68 billion while federally regulated transmission assets fell $1 billion to $13 billion.
Raised. Management lifted the expected drag from unrecoverable interest expense by $25 million at both ends of the range, a 7.1% increase at the middle of the range by our math. The company also issued a 2027 forecast of $375 million to $425 million after tax.
Unchanged. The utility remains on track to cut non-fuel operating and maintenance costs by 2% to 4% in 2026, matching its long-term annual model after delivering a 2.5% reduction in 2025.
❓ Key Questions
Where will the $2 billion of 2027 capital savings go?
Management cut 2027 capital spending from $13.4 billion to $11.4 billion but kept its 2027 rate base at $81 billion. Investors need to know whether the cash saved goes toward debt reduction, higher dividends, or share buybacks.
What corporate structure options are inside the strategic review?
PG&E Corporation spent $21 million on advisory fees in the third quarter to evaluate how the company is organized and financed. Management has not stated whether it is considering asset sales, a holding-company split, or utility securitizations.
Why did data center final engineering stall at 3,880 megawatts?
Despite adding 150 megawatts to early-stage applications, zero net megawatts moved into final engineering during the third quarter. Will the 2027 capital cut slow down the timeline for signing interconnection construction agreements?
What drove the $25 million increase in unrecoverable net interest?
After-tax unrecoverable interest rose to $350–$400 million for 2026 and $375–$425 million for 2027. Management did not specify whether higher borrowing rates, Wildfire Fund debt, or lower balancing-account interest caused the increase.