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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES PG&E Corporation and the Utility use the asset and liability method of accounting for income taxes. The income tax provision includes current and deferred income taxes resulting from operations during the year. PG&E Corporation and the Utility estimate current period tax expense in addition to calculating deferred tax assets and liabilities. Deferred tax assets and liabilities result from temporary tax and accounting timing differences, such as those arising from depreciation expense. PG&E Corporation and the Utility recognize a tax benefit if it is more likely than not that a tax position taken or expected to be taken in a tax return will be sustained upon examination by taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements is measured based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement. As such, the difference between a tax position taken or expected to be taken in a tax return in future periods and the benefit recognized and measured pursuant to this guidance in the financial statements represents an unrecognized tax benefit. Investment tax credits are deferred and amortized to income over time. PG&E Corporation amortizes its investment tax credits over the projected investment recovery period. The Utility amortizes its investment tax credits over the life of the related property in accordance with regulatory treatment. PG&E Corporation files a consolidated U.S. federal income tax return that includes the Utility and domestic subsidiaries in which its ownership is 80% or more. PG&E Corporation files a combined state income tax return in California. PG&E Corporation and the Utility are parties to a tax-sharing agreement under which the Utility determines its income tax provision (benefit) on a stand-alone basis. The significant components of income tax benefit by taxing jurisdiction were as follows:
| PG&E Corporation |  | Utility
| Year Ended December 31,
(in millions) | 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 2 |  |  | $ | (1) |  |  | $ | (1) |  |  | $ | 2 |  |  | $ | (1) |  |  | $ | (1) |
State | (78) |  |  | — |  |  | — |  |  | (78) |  |  | — |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  |
Federal | (137) |  |  | (1,047) |  |  | (943) |  |  | (72) |  |  | (981) |  |  | (852) |
State | 15 |  |  | (507) |  |  | (389) |  |  | 45 |  |  | (477) |  |  | (348) |
Tax credits | (2) |  |  | (2) |  |  | (5) |  |  | (2) |  |  | (2) |  |  | (5) |
Income tax benefit | $ | (200) |  |  | $ | (1,557) |  |  | $ | (1,338) |  |  | $ | (105) |  |  | $ | (1,461) |  |  | $ | (1,206) |
The following tables describe net deferred income tax assets and liabilities:
| PG&E Corporation |  | Utility
| Year Ended December 31,
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
Deferred income tax assets: |  |  |  |  |  |  |
Tax carryforwards | $ | 9,429 |  |  | $ | 9,132 |  |  | $ | 8,955 |  |  | $ | 8,740 |
Compensation | 171 |  |  | 145 |  |  | 86 |  |  | 82 |
GHG allowance | 471 |  |  | 361 |  |  | 471 |  |  | 361 |
Wildfire-related claims (1) | 295 |  |  | 1,069 |  |  | 295 |  |  | 1,069 |
Operating lease liability | 78 |  |  | 142 |  |  | 78 |  |  | 142 |
Transmission tower wireless licenses | 251 |  |  | 250 |  |  | 251 |  |  | 250 |
Bad debt | 127 |  |  | 134 |  |  | 127 |  |  | 134 |
Other (2) | 140 |  |  | 130 |  |  | 137 |  |  | 109 |
Total deferred income tax assets | $ | 10,962 |  |  | $ | 11,363 |  |  | $ | 10,400 |  |  | $ | 10,887 |
Deferred income tax liabilities: |  |  |  |  |  |  |
Property-related basis differences | 11,021 |  |  | 10,058 |  |  | 11,009 |  |  | 10,047 |
Regulatory balancing accounts | 878 |  |  | 1,433 |  |  | 878 |  |  | 1,433 |
Debt financing costs | 390 |  |  | 428 |  |  | 390 |  |  | 428 |
Operating lease ROU asset | 78 |  |  | 142 |  |  | 78 |  |  | 142 |
Income tax regulatory asset (3) | 1,335 |  |  | 991 |  |  | 1,335 |  |  | 991 |
Environmental reserve | 248 |  |  | 200 |  |  | 248 |  |  | 200 |
Other (4) | 94 |  |  | 91 |  |  | 94 |  |  | 82 |
Total deferred income tax liabilities | $ | 14,044 |  |  | $ | 13,343 |  |  | $ | 14,032 |  |  | $ | 13,323 |
Total net deferred income tax liabilities | $ | 3,082 |  |  | $ | 1,980 |  |  | $ | 3,632 |  |  | $ | 2,436 |
(1) Amounts primarily relate to wildfire-related claims, net of recoveries, and legal and other costs related to various wildfires that have occurred in the Utility’s service area over the past several years. (2) Amounts include benefits, state taxes, and customer advances for construction. (3) Represents the tax gross up portion of the deferred income tax for the cumulative differences between amounts recognized for ratemaking purposes and amounts recognized for tax, including the impact of changes in net deferred taxes associated with a lower federal income tax rate as a result of the TCJA. (4) Amounts primarily include property taxes and prepaid expense. The following table reconciles income tax expense at the federal statutory rate to the income tax provision:
| PG&E Corporation |  | Utility
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in income tax rate resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax (net of federal benefit) (1) | (2.0) |  |  | (57.9) |  |  | (75.8) |  |  | (0.8) |  |  | (34.4) |  |  | (26.9) |
Effect of regulatory treatment of fixed asset differences (2) | (28.3) |  |  | (63.4) |  |  | (123.8) |  |  | (24.7) |  |  | (40.1) |  |  | (49.2) |
Tax credits | (0.7) |  |  | (2.2) |  |  | (3.2) |  |  | (0.7) |  |  | (2.2) |  |  | (1.3) |
Fire Victim Trust (3) | — |  |  | (126.9) |  |  | (160.9) |  |  | — |  |  | (80.2) |  |  | (64.0) |
Other, net (4) | 1.2 |  |  | 2.2 |  |  | 12.9 |  |  | 1.2 |  |  | 1.1 |  |  | 2.2 |
Effective tax rate | (8.8) | % |  | (227.2) | % |  | (329.8) | % |  | (4.0) | % |  | (134.8) | % |  | (118.2) | %
(1) Includes the effect of state flow-through ratemaking treatment. (2) Includes the effect of federal flow-through ratemaking treatment for certain property-related costs. For these temporary tax differences, PG&E Corporation and the Utility recognize the deferred tax impact in the current period and record offsetting regulatory assets and liabilities. Therefore, PG&E Corporation’s and the Utility’s effective tax rates are impacted as these differences arise and reverse. PG&E Corporation and the Utility recognize such differences as regulatory assets or liabilities as it is probable that these amounts will be recovered from or returned to customers in future rates. In 2024, 2023, and 2022, the amounts also reflect the impact of the amortization of excess deferred tax benefits to be refunded to customers as a result of the TCJA passed in December 2017. In addition, for the 2024 tax year, PG&E Corporation and the Utility will implement the accounting method change related to gas repairs in accordance with Revenue Procedure 2013-15. (3) Includes an adjustment for the tax benefit of the sale of shares by the Fire Victim Trust in 2023 and 2022 and a deferred tax asset write-off associated with the grantor trust election for the Fire Victim Trust in 2021. (4) These amounts primarily represent the impact of tax audit settlements and non-tax deductible penalty costs. Unrecognized Tax Benefits The following table reconciles the changes in unrecognized tax benefits:
| PG&E Corporation |  | Utility
(in millions) | 2024 |  | 2023 |  | 2022 |  | 2024 |  | 2023 |  | 2022
Balance at beginning of year | $ | 616 |  |  | $ | 570 |  |  | $ | 498 |  |  | $ | 616 |  |  | $ | 570 |  |  | $ | 498 |
Additions for tax position taken during a prior year | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |  |  | — |
Reductions for tax position taken during a prior year | (257) |  |  | — |  |  | (1) |  |  | (257) |  |  | — |  |  | (1) |
Additions for tax position taken during the current year | 95 |  |  | 45 |  |  | 73 |  |  | 95 |  |  | 45 |  |  | 73 |
Settlements | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Balance at end of year | $ | 454 |  |  | $ | 616 |  |  | $ | 570 |  |  | $ | 454 |  |  | $ | 616 |  |  | $ | 570 |
The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate at December 31, 2024 for PG&E Corporation and the Utility was $106 million. PG&E Corporation’s and the Utility’s unrecognized tax benefits may change significantly within the next 12 months based on tax audit progress. Interest income, interest expense and penalties associated with income taxes are reflected in income tax expense on the Consolidated Statements of Income. For the years ended December 31, 2024, 2023, and 2022, these amounts were immaterial. Tax Audits PG&E Corporation’s tax returns have been accepted through 2015 for federal income tax purposes. The IRS is auditing PG&E Corporation’s tax returns for 2015 through 2018. The most significant unresolved matter relates to the deductibility of approximately $850 million in costs for San Bruno related safety spend, which the CPUC did not allow the Utility to recover through rates, and $400 million in customer bill credits. PG&E Corporation records an income tax benefit related to a deduction for an uncertain tax position when it determines it is more likely than not that the uncertain tax position will ultimately be sustained. On June 4, 2024, the Office of Chief Counsel of the IRS issued a technical advice memorandum taking the position that the costs the Utility incurred for San Bruno related to safety spend and customer bill credits are nondeductible fines or penalties. As a result, in the year ended December 31, 2024, PG&E Corporation determined that it is no longer more likely than not that its deduction related to a portion of the customer bill credits would ultimately be sustained. Accordingly, PG&E Corporation has decreased its Income tax benefit by $70 million in the year ended December 31, 2024 related to state and federal income taxes. PG&E Corporation intends to defend itself vigorously as to all costs in this matter. Carryforwards The following table describes PG&E Corporation’s operating loss and tax credit carryforward balances:
(in millions) | December 31, 2024 |  | Expiration Year
Federal: |  |  |
Net operating loss carryforward - Pre-2018 | $ | 3,369 |  |  | 2031 - 2036
Net operating loss carryforward - Post-2017 | 30,288 |  |  | N/A
Tax credit carryforward | 125 |  |  | 2029 - 2041
State: |  |  |
Net operating loss carryforward | $ | 34,901 |  |  | 2039 - 2041
Tax credit carryforward | 146 |  |  | Various
PG&E Corporation does not believe that the Chapter 11 Cases resulted in loss of or limitation on the utilization of any of the tax carryforwards. PG&E Corporation will continue to monitor the status of tax carryforwards.

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