How We’re Streamlining Operations and Finding Ways to Serve at Lower Costs

By Carla Peterman
Executive Vice President and Chief Sustainability Officer

We at PG&E are building a better future for California and the world by delivering a clean, climate-resilient energy system to meet our customers' future needs.

Our goal is to build this system at the lowest cost for our customers, and we are proud of our progress.

Our most recent General Rate Case is full of examples of that progress. When the California Public Utilities Commission approved the rate case in November, the agency's decision supported:

• Undergrounding 1,230 miles of powerlines in PG&E's highest fire-risk areas to cut wildfire threat, improve air and water quality, protect wildlands, and improve access to homeowners insurance at lower premiums over the long run
• Replacing more than 150 miles of gas distribution pipelines
• Inspecting hundreds of miles of gas transmission pipeline
• Increasing electric capacity to support state goals related to affordable housing, economic development and adoption of electric vehicles
• Expanding microgrids to protect and strengthen the grid during extreme weather and peak energy demand

Our investments in these areas have already paid off for our customers: Our multiple layers of protection have reduced wildfire risk from company equipment by 94%. We delivered 100% greenhouse gas-free electricity in 2023 to residential customers and businesses to whom we directly sell power. And in 2023, we reinvested more than 99% of our allowed profit back into our system.

These investments are critical to providing our customers with the energy system they want and deserve. We are working hard to have average bills decrease in 2025 and 2026 compared to this year-even as these investments continue to pay off in greater safety and reliability for our customers.

However, we realize electric rates in California are some of the nation's highest. To ease the burden of rising energy costs, we're focused on how we can make these and future investments at the lowest cost for our customers.

In fact, we achieved operating cost savings of $510 million in 2023, in part by doing our work more efficiently.

Our efforts so far include:

• Reducing vegetation management costs by $300 million in 2023
• Lowering undergrounding costs through new trenching methods, for savings of $70 million in 2023
• Developing process improvements in new business connections to decrease end-to-end lead and processing time, while increasing customer on time delivery, saving $24 million.

We also worked with customer advocates on an alternative to commercial insurance to save our customers up to $1.8 billion over the next four years. And we're pursuing nontraditional financing, including U.S. Department of Energy grants and lower-cost loans, to reduce borrowing costs by hundreds of millions of dollars over the life of the loans.

We're not finished: We're managing more than 150 projects systemwide to reduce materials, labor and other costs. We continue to explore dozens of other ways to reduce our operating costs, and to reduce or delay costs that state regulations require us to pass on to our customers. Overall, we expect prices will rise, on average, 3% a year from 2023-2026.

However, we need the partnership of California's lawmakers and policymakers to make even greater strides in reducing customer bills.

Almost a third of what customers pay is the result of state policy.

That means we need the state's help to reduce or remove subsidies and societal costs from customers' bills without compromising our progress on safety and climate change.

For example, Public Purpose Programs that pay for low-income bill discounts, energy efficiency programs and other state mandates serve important societal benefits but are not part of delivering energy to customers. These programs make up about 6% of customers' bills today.

Additionally, non-solar customers' bills are 15%, or $34 a month, higher because of Net Energy Metering incentives.

Beyond removing these subsidies and societal costs off our customers' bills, lawmakers and policymakers should also ensure state funding to meet climate goals; support continued financing of critical wildfire safety work through recovery bonds; and support a fixed charge to provide more bill transparency and predictability and lower the energy-use rate for all customers to help make electric homes and vehicles more affordable for everyone.

We're proud of the progress we've made to reduce the risk of wildfire and to strengthen our energy system against the effects of extreme weather. We're also proud of the progress we've made to build a better future for California and the world by delivering a clean and climate-resilient energy system.

We want our customers to know that we are committed to continuing these vital investments while reducing the financial effects of these improvements. We invite the state's lawmakers and policymakers to join us in that effort. And we look forward to keeping our customers and stakeholders informed of our progress on reducing our costs.

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