Company: PCG-PB
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001004980-25-000010
Chunk: 247

Company: PG&E Corp
Filing Date: 2025-02-13
Form: 10-K
Item: Item 8
Chunk 247
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 each of the fires. Pacific Gas and Electric Company has also recorded estimated recoveries, inclusive of the Wildfire Expense Memorandum Account (“WEMA”), included within Noncurrent Regulatory Assets, and the Wildfire Fund Receivable, within Accounts Receivable—Other and Other Noncurrent Assets

We identified wildfire-related contingencies and related-recoveries, specifically the WEMA, as well as the related disclosures as a critical audit matter because (1) of the significant judgments made by management to estimate losses, (2) the outcome of the wildfire-related contingencies materially affects the Company’s financial position, results of operations, and cash flows and (3) the significant judgments made by management in determining whether recoveries from WEMA are probable. This required the application of a significant degree of auditor judgment and audit effort when performing audit procedures to evaluate the reasonableness of management’s estimated losses, related recoveries, and disclosures.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding its estimated losses for wildfire-related contingencies, related recoveries, and disclosures included the following, among others:

•We tested the effectiveness of controls over (1) Pacific Gas and Electric Company’s determination of whether a loss was probable and/or reasonably possible and whether recoveries were probable; (2) the determination of the significant assumptions used in estimating the amount of probable loss, if any, including the information gained through investigations into the cause of the fire, information from claimants, and the advice of legal counsel that may impact the valuation of the liability; and (3) the disclosures related to the wildfires.

•We evaluated management’s judgments related to whether a loss was probable and/or reasonably possible for the wildfires and whether recoveries are probable, by inquiring of management and Pacific Gas and Electric Company’s legal counsel regarding the amount of probable and/or reasonably possible losses for each fire, including the potential impact of information gained through investigations into the cause of each fire, information from claimants, communication with insurers, the advice of legal counsel, and by reading external information for any evidence that might contradict management’s assertions.

•We obtained an analysis from management for recoveries specific to WEMA, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We evaluated the estimation methodology for determining the amount of probable loss through inquiries with management; we tested the significant assumptions used in the valuation of the liability.  

•We read the legal letters from Pacific Gas