Good morning, and welcome to the PG&E Corporation First Quarter 2018 Conference Call. All lines will be muted during the presentation portions of the call, with an opportunity for question-and-answers at the end. At this time, I would like to pass the conference over to your host to, Chris Foster. Thank you and have a great conference. You may proceed, Mr. Foster? Chris Foster - PG&E Corp.: Thank you, Lisa. And thanks to those of you on the phone for joining us. Before I turn it over to Geisha Williams, I want to remind you that our discussion today will focus on forward-looking statements about our outlook for future financial results, which are based on assumptions, forecasts, expectations, and information currently available to management. Some of the important factors that could affect the company's actual financial results are described on the second page of today's first quarter earnings call presentation. The presentation also includes the reconciliation between non-GAAP and GAAP measures. We also encourage you to review our Quarterly Report on Form Q-10 (sic) [Form 10-Q] that will be filed with the SEC later today, and the discussion of risk factors that appear there and in the 2017 Annual Report. With that, I'll hand it over to Geisha. Geisha J. Williams - PG&E Corp.: Thank you, Chris, and good morning, everyone. Today, I'll provide an overview of our initiatives to drive comprehensive, operational and policy solutions that address extreme weather-driven events, and the impact they're having on our communities, our company, and our state. I'll also be covering how we continue to advance our business strategy and position PG&E for the future, with examples that represent our vision of meeting the challenges of climate change while providing affordable energy for all of our customers. And finally, we'll close with Jason,…

Our first question comes from the line of Stephen Byrd of Morgan Stanley. Please proceed. Stephen Byrd - Morgan Stanley & Co. LLC: Hi. Good afternoon, good morning. Jason P. Wells - PG&E Corp.: Good morning, Stephen. Geisha J. Williams - PG&E Corp.: Good morning. Stephen Byrd - Morgan Stanley & Co. LLC: Geisha, you mentioned in your prepared remarks the need to directly address inverse condemnation. I think the investor community very much understands the seriousness of that issue. Without speaking for the Legislature, but just broadly, is that well appreciated at the Legislature? Is it your sense that that's – it's understood that that is a very significant issue and needs to be addressed? Is there a broad understanding, or is there still more education to be done on that? Geisha J. Williams - PG&E Corp.: Thanks for the question, Steve. Let me just start by saying what we've been doing. We've been spending a great deal of time educating a lot of the different stakeholders in the state on how truly flawed the application of inverse condemnation is to investor-owned utilities. And I do believe that that message is resonating and is well understood. And that's why we were so encouraged to see the Governor and the bipartisan leaders come out in March announcing their intention to develop comprehensive solutions this year to really address the climate change issues and how they impact California. And of course, we were particularly encouraged to see the liability rules and regulations for utility service actually called out as an area requiring updating. So, we've shared many times with all of you and of course, all the various stakeholders, inverse condemnation is a risk to the financial health of all the California IOUs, and by extension, to the state's ability to…

Thank you. Our next question comes from the line of Jonathan Arnold of Deutsche Bank. Please proceed.

Good morning, guys. Jason P. Wells - PG&E Corp.: Good morning, Jonathan. Geisha J. Williams - PG&E Corp.: Good morning.

A question on since I was planning to ask this, I know the 10-Q just came out and it might be answered in there but if it is, I haven't seen it. So, I'm just curious on the Butte Fire. The past two quarters you haven't taken additional charges but you've said you didn't know – you haven't been able to estimate the high end. At one point, it was because you didn't have information on the claims, but that's like two quarters ago now. So, can you give us any perspective on sort of how the settlement of those cases is going along, how it's trended relative to what you booked, whether there's anything to read into you not having taken incremental charges, et cetera? Jason P. Wells - PG&E Corp.: Jonathan, we are about halfway through sort of a settlement of claims associated with Butte. And to your point, we saw a large influx of claims in September of last year. We're still working through the details of some of those claims that came in late, as well as we are working through the impact of our legal challenges with respect to inverse condemnation in the Butte case. So as of the first quarter, we have not modified or provided a high end of that range. It's still $1.1 billion.

So, are you still saying that you can't estimate the high end, or is there – is the inference that it's possible that numbers – what you booked is the high-end? Jason P. Wells - PG&E Corp.: At this point, we still cannot estimate the high-end of the range, but I think that there are a number of factors that are having an impact on settlement values, and we need more time to understand how those long-term trends will play out as we resolve the remaining sort of 50% of the claims.

Okay. Great. And then just sticking on Butte, I believe the judge decided not to certify his denial of your motion to the appellate court. Does that have much of a bearing in your legal team's view of how long an appeals process might take? John R. Simon - PG&E Corp.: Hi, Jonathan, it's John Simon, the General Counsel. I – not materially. So, as you were saying, the judge at our request could have certified his Butte ruling on appeal. He chose not to and when he said that – when he issued his ruling, he said there were two factors in that. One is that if there are significant disagreements about substantive law that might militate for certification. And he said there were significant disagreements. But the second factor is would certification materially advance the timing of the litigation and he felt that certification would not. So, he denied the certification. Certification might have some moderate impact on whether the Court of Appeals takes the writ on appeal. But there's cases where certifications are granted by the trial judge and the Court of Appeals doesn't take the appeal and vice versa. So, it really could go either way on the writ at this point.

Okay. And then just sticking on the legal. I have one other thing. If I'm not wrong, the sort of form of the motion that you filed in the North Bay case in San Francisco is sort of – is different from the type of motion that was filed in the Butte Fire case. Can you, for us non-lawyers, explain, what the – if that has any bearing on sort of how that's likely to play out just procedurally? John R. Simon - PG&E Corp.: I'll do my best for the non-lawyers. Bottom line is we don't think it makes a material difference on how it plays out. You're right that procedural vehicles of the motions in Butte and the North Bay cases are different but they're substantively the exact same arguments, which is inverse ought not to be applied to investor-owned utilities for many of the reasons that Geisha mentioned. The difference in the procedures really has to do with the difference in the vintage of those two cases. So as you know, the Butte cases have been on file for going on several years now. The North Bay cases are brand new. And as soon as the first opportunity for us to attack inverse after the Commission issued its WEMA decision, we brought those motions. So, the difference again is the vehicle had more to do with where the cases were in their lifecycles substantively they're the same.

Okay. That's probably enough for me. Thank you.

Thank you. Our next question comes from line of Steve Fleishman of Wolfe Research. Please proceed.

Yeah. Hi. Can you hear me? Jason P. Wells - PG&E Corp.: Yep. Geisha J. Williams - PG&E Corp.: Yep.

Okay great. So first question, just on the Legislature. So, I get that there has been very strong high-level support to address fire issues including utility liability in this session. But maybe to go into more detail on that, if you listen to the legislative hearings, there does seem to be the difference in willingness to address things like pre-prudence in the future relative to actually fixing inverse i.e. there's a lot more openness to pre-prudence than picking inverse. So, could you be more specific in addressing Legislation with respect to the chance that fixing inverse will actually be part of it relative to some of these other utility liability fixes. Geisha J. Williams - PG&E Corp.: Yes, Steve. This is Geisha. We view fixes that need to occur in the state Legislature as being threefold and they're broad in nature. So first, we have three specific goals. First, there's a need to reform strict liability. And it's simply not sustainable to put all the states' utilities whether they'd be investor-owned or publicly-owned at that level of risk when these wildfires are occurring, particularly when they haven't violated any safety rules or regulations. So, the first order of business is we need a reform on strict liability as it applies to utilities. The second issue that we need a solution on is the 17 wildfires which impacted both Northern and Southern California. And then the third significant issue that we need movement on is looking at the standard that establishes the legal baseline of reasonableness. And that's really part of what is the prudent manager of the system. We believe that all three of those elements need to be addressed to get the comprehensive reform needed on utility liability.

Okay. And is there any way you could give a sense of just how much willingness there is to move beyond just that third one into the first two? Geisha J. Williams - PG&E Corp.: Yes. So, it's early days. We still have four months left in the session. There are many conversations and dialogue going on with the various stakeholders. The legislative session is, I've mentioned before, it's not linear, it's a highly fluid sort of process. You're going to see different bills, I believe. You're going to see different amendments. I would really caution everyone not to get over-fixated on any one particular piece of legislation, as I do believe we're going to see many different bills, many different amendments, and there's going to be a lot of ups and downs during those process. So, conversations are occurring, lots of discussions are occurring, and it's just a question now of putting the right text on paper to figure out what is the right comprehensive solution for the state?

Okay. And then a separate question on the – there was a Bloomberg story last night where President Picker mentioned that he expected the Cal Fire reports this summer. And I'm just curious if there – if I'm not sure where that reference came from. But just have you gotten any indications on a timing update for the Cal Fire report? Geisha J. Williams - PG&E Corp.: No. We haven't gotten any timing updates from Cal Fire. Maybe he's, I don't know, doing the math and thinking through the comments of the Cal Fire Chief back in January. I think it was Ken Pimlott, at a hearing in Santa Rosa. He talked about reports, many reports, individual reports coming out in the next few months and perhaps President Picker is making an assumption there that those are ready sometime this summer. But, no certainly we haven't gotten any indication of when the timing for those reports will be.

Okay. Thank you.

Thank you. Our next question comes from the line of Praful Mehta of Citigroup. Please proceed.

Thanks so much. Hi, guys. Geisha J. Williams - PG&E Corp.: Good morning. Jason P. Wells - PG&E Corp.: Good morning, Praful.

Morning. So, just on this Cal Fire report, just wanted to understand given we don't know timing. But if it does happen before the assumed solution on the legislative side, how do you see that impacting the legislative process? As in if it is come out saying there is some sort of causation connecting the utilities, do you think that hampers the process and do you think the legislators wait to see that before they do something? Geisha J. Williams - PG&E Corp.: Praful, this is Geisha. We don't know is really the honest answer here. There are going to be multiple reports. We know that there were 21 fires. The reality is we don't know what kind of impact the actual reports themselves will have on the legislative leaders as they consider utility liability both in the short and the long-term. It's a great question. I have the same question but I don't have an answer for you.

Fair enough. No, it's one that troubles me as well so just want to check. Moving on, I know Jason you mentioned that the settlement amounts are coming down from the Butte settlement. So just want to get a sense firstly of where do you think those ranges are going? And you mentioned there are a number of drivers that were helping bring those settlement amounts down. So, would like to get some color on what those drivers are, you think? Jason P. Wells - PG&E Corp.: Thanks, Praful, for the question. As you can imagine any settlement negotiation is very fluid. The reason why we are unable to provide a high end of the range is we really need to understand a longer-term impact that the various legal challenges we have to inverse condemnation, what those will do to the underlying settlement values. And so, I think providing a specific range today just probably wouldn't be productive.

Yeah. No. I totally understand on the number but in terms of like drivers, is there any drivers that you would say would help your story in terms of helping reduce those settlement amounts further? John R. Simon - PG&E Corp.: I think, Praful, John Simon. I think the earlier slide talked about the number of claimants or plaintiffs in the Butte cases, you've got more than 3,000 plaintiffs. Every single one is a bit different so you can imagine that when you're talking settlement or mediation, you're talking about very unique facts that have to do with each case, and then you overlay on that the uncertainties around inverse and we believe as again Geisha said, that inverse will be decided at some point in an appeals court and we take that into account. Some of the more severe claims tended to be brought up front. You can imagine why that would be. So, it's a whole lot of different things and it's hard to come up with sort of any sort of there is no algorithm on it. Geisha J. Williams - PG&E Corp.: And how about the statute of limitations, the fact, that that is another determinant. John R. Simon - PG&E Corp.: So, Geisha mentioning the statute of limitations, that's a good point. So there's two statute of limitations that are at play in the Butte case, one is for personal injury, and that's a two-year statute of limitations, and that ran in September of 2017. And right before that ran or expired, we saw a fairly big spike in claims. I think we had something like 700 to 900 or so more claims filed. The second statute of limitations in play is on property damage. That expires three years after the fire. So that's September 2018, and it's certainly possible if that past this prologue, that we'll get and more claims filed before that run. So that's another factor.

Got you. Super helpful, guys. Thank you.

Thank you. Our next question comes from the line of Julien Dumoulin-Smith of Bank of America. Please proceed.

Hey. Good morning. Jason P. Wells - PG&E Corp.: Good morning, Julien. Geisha J. Williams - PG&E Corp.: Good morning.

Hey. If we can, can I come back to this insurance question just real quickly? A couple of pieces of nuance there. So, I know we're early on and it's a little bit difficult to talk about, but how do you think about mitigating the impact from an earnings perspective of the higher insurance premiums, just you talked about bringing down the total volume. I mean I know you're not providing guidance, but how do you think about that sort of in the back half of the year as these new policies take effect over the next quarter or so? And could we see efforts for full recovery? And I'll leave it there. Jason P. Wells - PG&E Corp.: Yeah. There's a couple of ways we're trying to manage the cost. As we thought about our financial plan for 2018, we understood that pricing for insurance was going to go up. And it was one of the reasons why we're continuing our focus to keep our service affordable for our customers, driving efficiencies throughout our business. And so, it was one of the headwinds that helped shape our efficiency targets for the year, which are essentially probably on an order of magnitude basis similar to what we announced last year. The other thing that I'll mention is, we do have the opportunity to seek cost recovery. Currently, we have filed in our WEMA application, the ability to recover excessive insurance premiums. That application is pending before the Commission. And finally, the other tool that we have available if WEMA application is denied, it's a Z-Factor filing, which essentially allows us to recover costs that could not be contemplated in our original forecasts that were included in our rate cases. So, we have a couple of tools available to try to mitigate sort of the ongoing risk of an earnings drag from these higher insurance costs.

Got it. But just from a timing perspective given the WEMA application out there, so how do you think we should be thinking through even a transient impact here? Jason P. Wells - PG&E Corp.: So, I think as it relates to 2018, in my prepared remarks I mentioned that our financial plan for the year on an earnings from operations basis not a per share basis but on an earnings from operations basis, it's our plan to earn our CPUC authorized return on equity. So, we are contemplating higher insurance costs for the latter part of the year. The challenge that we're confronted with is the longer-term impact of these elevated insurance costs. Probably more in 2019 and 2020 and beyond.

Got it. But the implication, sorry, the implementation of the WEMA filing and the timeline there just to kind of reconcile with that 2019 impact. Jason P. Wells - PG&E Corp.: In terms of the WEMA application it's been filed. We are just essentially awaiting a proposed decision in that case. I don't think we have a timeline for that proposed decision. But we're currently awaiting that PDs that we have better clarity after that potential recovery path.

Got it. Excellent. And then if I could cut back, I know we're talking about several different cases. But if you could perhaps spread a little bit of a road map of upcoming data points. I know you've attempted to do so. A little bit in the slide deck here but what subsequent court cases should we be paying attention to that could really be the sort of these critical – addressing these critical milestones. Sort of from a more chronological perspective here rather than talking about the individual case merits. John R. Simon - PG&E Corp.: I think the next – Julien, it's John that the next milestone would be and we're prepared and ready to file our appeal of the Butte decision that came out last week relatively soon. So, that's the next milestone. And once we do that then we're asking for the Court of Appeals in the 3rd District here in California to take that appeal. There's not an exact rule on when they will decide whether or not to take that appeal. But I think it's fair to say that's usually within a couple of months, maybe a little bit shorter. If they take the appeal then the appeal process on that motion goes forward. Separately in the 2017 wildfire cases, we have a motion Geisha alluded to that's pending to dismiss inverse condemnation from all those cases, the hearing for that case is in mid-May. I think it may be May 18 and so that would be the next milestone. Then I think one might look to the litigation involving Edison and motions they may be filing along the same lines. I don't know the timelines with respect to them though.

Excellent. Thank you very much.

Thank you. Our next question comes from the line of Christopher Turnure of JPMorgan. Please proceed.

Good afternoon. Could you guys just give a little bit more detail on that last response there as it pertains to the 2017 wildfire case and the hearing on I guess, May 18? How does the case itself proceed when either you or the plaintiffs end up appealing the initial decision there? John R. Simon - PG&E Corp.: It's John, Christopher. The case, you should presume the case will go forward if an appeal on an inverse motion is filed. I think it's a fair assumption that an appeal would be filed either by whichever party is disappointed on that ruling. Normally, the case would go forward. Again, I think that's a fair assumption. It is possible for either party to try to stay a case while an appeal is moving forward but that – all I'm doing there is telling you there is a rule that allows for it. It would be and I wouldn't speculate on whether either party would seek a stay.

Gotcha. Okay. So in the absence of that basically two parallel processes to watch obviously the focus being on the higher court proceeding. Jason P. Wells - PG&E Corp.: Yes. It's a good way to look at it.

Okay. And then I also wanted to ask about your catastrophic memorandum account that you filed, I guess, around the same time as your tax reform proposal with the CPUC. Can you give us some color on your decision to use this account to get recovery of past and future spending versus maybe any opportunity you would have had to displace CapEx in your current rate plans and kind of get recovery in that manner? Is it that you're kind of putting a spotlight on these costs and the total amount? Is it that you get a return on the balance while it's being looked at by the Commission, or are there other factors? Jason P. Wells - PG&E Corp.: Yeah. Thanks for the question, Chris. This is Jason. Essentially, the Catastrophic Event Memorandum Account we often refer to as CEMA is the procedural mechanism to recover costs for declared events. So, it really wasn't an analysis of alternative recovery paths or re-prioritizing spend in our General Rate Cases. What it was is essentially an ability for us to recover the costs to restore service and repair our system after declared events. The one nuance to this CEMA application that we recently filed is that we also included a forecast of the elevated vegetation management work that we've been executing in our system, just given sort of the size of those investments, and the delay in recovery periods from previous CEMA events. So essentially, an average sort of CEMA application generally takes about three years between the time we actually spend the money on our system before we actually start to collect the money in rates. And as we are significantly increasing the amount of work related to vegetation management, we felt that delay in recovery was not in the best interest of our customers which is why we've included a forecast of the vegetation, drought-related vegetation management work in this most recent CEMA application.

Okay. And to clarify there, you felt like you did not have an alternative to this like there was no other option that you could use. This was the appropriate account and you used it and then separately, do you get a return on that balance before a decision? Jason P. Wells - PG&E Corp.: On the first question in terms of the appropriateness, this is the account that the Commission directs recovery for these types of costs. So, there was really no analysis or decision where we're using the essentially the procedural vehicle that's available to us for recovery of these types of costs. In terms of our ability to recover the balance before it's, before we receive a decision, our balancing accounts do have a short-term financing rate component. Essentially that we're allowed to recover and as well the capital that we've invested in our system, to restore and repair service, also earns a rate of return during the period which the application is being heard.

Got it. Thanks for the detail, Jason.

Thank you. Our next question comes from the line of Paul Fremont of Mizuho Financial Group. Please proceed.

Thanks. I guess first question relates to the timing of the release of the Cal Fire report. I mean as you indicated earlier, it sounded as if the Cal Fire was thinking of releasing within several months if in fact, Picker, was right and it ends up coming out in the summer that would seem to represent a delay. Is there a sense that they want to issue the Nor Cal and the Southern California fire reports at the same time? Geisha J. Williams - PG&E Corp.: Well. Hi, this is Geisha. No, we haven't heard that. We as a matter of fact have heard that as they finish up their investigations and have their reports ready to go. What we had heard back in January was that there was not going to be a delay in groupings sort of strategy there. So, we have not heard anything different since January. So, our expectation would be that when they're ready as they're ready they would be issued.

Great. And then to-date – I mean aside from the very general comment that the Governor made earlier in the year. Has the Governor's office may come out specifically on the issue of strict liability or inverse condemnation? Geisha J. Williams - PG&E Corp.: Just in terms of their statement that utility liability needed to be reviewed, updated actually I think was the word that their statement had and relative to the fact that we're seeing more frequent and more severe issues impacting the state that's the one public statement that I've seen from the Governor's office.

And I guess the last question that I have is sort of a legal question on the judge's decision in the Butte case. He seemed to indicate that the recovery was in his view not a central tenet of inverse based on a footnote, I guess, and in one of the prior legal decisions issued by the appellate court. Any thoughts on sort of that interpretation of recoverability? John R. Simon - PG&E Corp.: Paul, it's John. The judge was referring to a footnote in the Pac Bell case that wasn't part of the Pac Bell Holding. And it was really a statement that was trying to distinguish immunities from IOUs. But honestly, that Pac Bell case came out way before the CPUC's recent decision on San Diego's WEMA case where both the Commission and in the concurrences, there was strong language that inverse needs to be reformed. So, no, I can't speak to why the judge included the reference to that footnote, but we think everything's changed, and that footnote really no longer applies on a going forward basis.

Great. Thank you. Chris Foster - PG&E Corp.: Thank you for that question, Paul. This is Chris. I'll go ahead and close this out. I just want to thank, everyone, again for joining us this morning on the call and for the questions. And have a safe day. Thank you.

Thank you. This now concludes the conference. Enjoy the rest of your day.