SF-1/A

As filed with the Securities and Exchange Commission on April 25, 2022

REGISTRATION NOS. 333-263719 and 333-263719-01

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1

to

FORM SF-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PACIFIC GAS AND ELECTRIC COMPANY	PG&E WILDFIRE RECOVERY FUNDING LLC
(Exact name of registrant, sponsor and depositor as specified in its charter)	(Exact name of registrant and issuing entity as specified in its charter)
California	Delaware
(State or other jurisdiction of incorporation or organization)	(State or other jurisdiction of incorporation or organization)
001-02348
(Commission File Number)
0000075488	0001918072
(Central Index Key Number)	(Central Index Key Number)
94-0742640	88-1113018
(I.R.S. Employer Identification Number)	(I.R.S. Employer Identification Number)
77 Beale Street P.O. Box 770000 San Francisco, California 94177 (415) 973-1000	C/O Pacific Gas and Electric Company 77 Beale Street P.O. Box 770000 San Francisco, California 94177 (415) 973-1000
(Address, including zip code, and telephone number, including area code, of depositor’s principal executive offices)	(Address, including zip code, and telephone number, including area code, of issuing entity’s principal executive offices)

Brian M. Wong

Vice President, General Counsel and Corporate Secretary

Pacific Gas and Electric Company

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

(415) 973-1000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:

Michael F. Fitzpatrick, Jr., Esq.	Eric D. Tashman, Esq.
Hunton Andrews Kurth LLP	Norton Rose Fulbright US LLP
200 Park Avenue	555 California Street
New York, New York 10166	San Francisco, California
(212) 309-1000	94104
	(628) 231-6803

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 25, 2022

PRELIMINARY PROSPECTUS

$3,000,000,000 Senior Secured Recovery Bonds,

Series 2022-A

Pacific Gas and Electric Company

Sponsor, Depositor and

Initial Servicer Central Index Key Number: 0000075488

PG&E Wildfire Recovery Funding LLC

Issuing Entity

Central Index Key Number: 0001918072

Tranche	Expected Weighted Average Life (Years)	Principal Amount Offered	Scheduled Final Payment Date	Final Maturity Date	Interest Rate	Initial Price to Public	Underwriting Discounts and Commissions	Proceeds to issuing entity (Before Expenses)
A-1		$450,000,000
A-2		$450,000,000
A-3		$300,000,000
A-4		$1,050,000,000
A-5		$750,000,000

The total initial price to the public is $        . The total amount of the underwriting discounts and commissions is $            . The total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $            ) is $            . The distribution frequency is semi-annually. The first expected payment date is             .

Investing in the Senior Secured Recovery Bonds involves risks. Please read “Risk Factors” beginning on page 25 in this prospectus to read about factors you should consider before buying the recovery bonds.

Pacific Gas and Electric Company, as “sponsor”, is offering $3,000,000,000 Senior Secured Recovery Bonds, Series 2022-A, referred to herein as the “recovery bonds”, in five tranches to be issued by PG&E Wildfire Recovery Funding LLC, as the “issuing entity”. Pacific Gas and Electric Company is also the “seller”, initial “servicer” and “depositor” with regard to the recovery bonds. The recovery bonds are senior secured obligations of the issuing entity supported by “recovery property”, which includes the right to a special, irrevocable non-bypassable charge, known as “fixed recovery charges”, paid by all existing and future consumers (subject to the exceptions described in this prospectus) within PG&E’s service territory as it existed on the date of the financing order (as defined below). The Wildfire Financing Law (as defined below) requires that fixed recovery charges be adjusted (or “trued-up”) at least annually, and the California Public Utilities Commission (the “CPUC”) has authorized the fixed recovery charges to be adjusted more frequently to ensure the expected recovery of fixed recovery charge revenues sufficient to timely provide all scheduled payments of principal and interest on the recovery bonds and related financing costs, as described further in this prospectus. Credit enhancement for the recovery bonds will be provided by such “true-up” mechanisms as well as by accounts held under the indenture.

The recovery bonds will be issued pursuant to Article 5.8 of Chapter 4 of the California Public Utilities Code, as amended (the “Wildfire Financing Law”), and an irrevocable financing order issued by the CPUC on May 11, 2021 approving the issuance of the recovery bonds (the “financing order”). The CPUC’s obligations under the Wildfire Financing Law and the financing order are irrevocable and the CPUC shall neither reduce, alter nor impair the fixed recovery charges authorized under a financing order, except for the true-up adjustments to the fixed recovery charges.

The recovery bonds represent obligations only of the issuing entity, PG&E Wildfire Recovery Funding LLC, and do not represent obligations of the sponsor or any of its affiliates other than the issuing entity. The recovery bonds are secured by the collateral, consisting principally of the recovery property acquired pursuant to the sale agreement and funds on deposit in the collection account for the recovery bonds and related subaccounts. Please read “Security for the Recovery Bonds” in this prospectus. The recovery bonds are not a debt or general obligation of the State of California, the CPUC or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of California or any governmental agency or instrumentality.

Interest will accrue on the recovery bonds from the date of issuance. The recovery bonds are scheduled to pay principal and interest semi-annually on             and              of each year. The first scheduled payment date is             . On each payment date, each recovery bond will be entitled to payment of principal, sequentially, but only to the extent funds are available in the collection account after payment of certain fees and expenses and after payment of interest.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The underwriters expect to deliver the recovery bonds through the book-entry facilities of The Depository Trust Company for the accounts of its participants, including Clearstream Banking, S.A. and Euroclear Bank SA/NV, as operator of the Euroclear System, against payment in immediately available funds on or about             , 2022.

Joint Book-Running Managers

Citigroup Goldman Sachs & Co. LLC J.P. Morgan

The date of this prospectus is                 , 2022

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION	2
PROSPECTUS SUMMARY OF TERMS	4
SUMMARY OF RISK FACTORS	23
RISK FACTORS	25
RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS	26
SERVICING FORECASTING RISKS	32
RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE RECOVERY PROPERTY	36
NATURAL DISASTER-RELATED RISKS	37
RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER	38
OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE RECOVERY BONDS	43
REVIEW OF RECOVERY PROPERTY	49
THE RECOVERY PROPERTY AND THE WILDFIRE FINANCING LAW	53
PG&E’S FINANCING ORDER	58
THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR	64
PG&E WILDFIRE RECOVERY FUNDING LLC, THE ISSUING ENTITY	73
DESCRIPTION OF THE RECOVERY BONDS	78
EXPECTED SINKING FUND SCHEDULE	82
EXPECTED OUTSTANDING PRINCIPAL BALANCE PER TRANCHE	83
THE TRUSTEE	104
SECURITY FOR THE RECOVERY BONDS	106
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE RECOVERY BONDS	113
THE SALE AGREEMENT	115
THE SERVICING AGREEMENT	124
HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT	133
USE OF PROCEEDS	137
PLAN OF DISTRIBUTION	138
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	140
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	141
STATE AND OTHER TAX CONSEQUENCES	145
ERISA CONSIDERATIONS	146
LEGAL PROCEEDINGS	150
RATINGS FOR THE RECOVERY BONDS	151
WHERE YOU CAN FIND MORE INFORMATION	152
INCORPORATION BY REFERENCE	153
INVESTMENT COMPANY ACT OF 1940 AND VOLCKER RULE MATTERS	154
RISK RETENTION	155
LEGAL MATTERS	156
OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS	157
GLOSSARY OF DEFINED TERMS	161

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement filed with the Securities and Exchange Commission, or “SEC”. This prospectus provides information about the issuing entity, the recovery bonds and Pacific Gas and Electric Company, or “PG&E”, the depositor, sponsor and initial servicer. This prospectus describes the terms of the recovery bonds offered hereby. You should carefully review this prospectus, any free writing prospectus the issuing entity files with the SEC, and the information, if any, contained in the documents referenced in this prospectus under the heading “Where You Can Find More Information”.

References in this prospectus to the term “we”, “us”, or the “issuing entity” mean PG&E Wildfire Recovery Funding LLC, the entity which will issue the recovery bonds. References to the “recovery bonds”, unless the context otherwise requires, mean the recovery bonds offered pursuant to this prospectus. References to “PG&E”, the “seller”, the “depositor” or the “sponsor” mean Pacific Gas and Electric Company. References to the “bondholders” or the “holders” refer to the registered holders of the recovery bonds. References to the “recovery property” mean the recovery property sold to the issuing entity by PG&E pursuant to the sale agreement and pledged to the payment of the recovery bonds. References to the “servicer” refer to PG&E and any successor servicer under the servicing agreement referred to in this prospectus. References to the “CPUC” refer to the California Public Utilities Commission. References to the “Wildfire Financing Law” refer to Article 5.8 of Chapter 4 of the California Public Utilities Code, as amended. Unless the context otherwise requires, references to a “financing order” are to the irrevocable financing order issued by the CPUC as Decision 21-05-015, on May 11, 2021. Unless the context otherwise requires, the term “consumer” means “consumer” within the meaning of Wildfire Financing Law. Under the Wildfire Financing Law, “consumer” is defined as any existing or future individual, governmental body, trust, business entity, or nonprofit organization located in the service territory of PG&E as such territory existed on the date of the financing order (subject to the exceptions described in this prospectus) that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, PG&E, or any other party. References to “ESPs” refer to electric service providers as defined in the glossary. You can find a glossary of some of the other defined terms used in this prospectus on page 161 of this prospectus.

This prospectus includes cross-references to sections in this prospectus where you can find further related discussions. You can also find key topics in the preceding pages. Check the table of contents to locate these sections.

You should rely only on the information contained or incorporated by reference in this prospectus and in any free writing prospectus from us or the underwriters specifying the terms of this offering. Neither the issuing entity nor any underwriter, agent, dealer, salesperson, the CPUC or PG&E has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. The recovery bonds are not being offered in any jurisdiction where the offer or sale is not permitted. The information in this prospectus and any free writing prospectus is current only as of the date of this prospectus.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This prospectus and the documents incorporated by reference in this prospectus contain forward-looking statements that are necessarily subject to various risks and uncertainties. These statements reflect management’s judgment and opinions that are based on current estimates, expectations and projections about future events and assumptions regarding these events and management’s knowledge of facts as of the date of this prospectus. These forward-looking statements relate to, among other matters, estimated losses, including penalties and fines, associated with various investigations and proceedings; forecasts of capital expenditures; forecasts of expense reduction; estimates and assumptions used in critical accounting estimates, including those relating to insurance receivables, regulatory assets and liabilities, environmental remediation, litigation, third-party claims, the Wildfire Fund and other liabilities; and the level of future equity or debt issuances. These statements are also identified by words such as “assume,” “expect,” “intend,” “forecast,” “plan,” “project,” “believe,” “estimate,” “predict,” “anticipate,” “may,” “should,” “would,” “could,” “potential” and similar expressions. PG&E is not able to predict all the factors that may affect future results. Some of the factors that could cause future results to differ materially from those expressed or implied by the forward-looking statements, or from historical results, include, but are not limited to:

• state and federal legislative, judicial and regulatory actions or developments, including deregulation, re-regulation, restructuring of the electric utility industry and changes in, or changes in application of, laws or regulations applicable to various aspects of PG&E’s business;

• the risks and uncertainties associated with wildfires that have occurred or may occur in PG&E’s service territory; the damage caused by such wildfires; the extent of PG&E’s liability in connection with such wildfires, including potential liabilities in connection with fines or penalties that could be imposed on PG&E if the CPUC or any other enforcement agency were to bring an enforcement action in respect of any such fire, and including the extent of PG&E’s ability to recover costs from insurance, the Wildfire Fund, or through rates;

• the accuracy of the servicer’s estimates of market demand and prices for energy;

• the accuracy of the servicer’s estimates of industrial, commercial and residential growth;

• the accuracy of the servicer’s forecast of electrical consumption or the payment of fixed recovery charges;

• changes in market demand and demographic patterns;

• the impact of severe weather events and other natural disasters, including wildfires and other fires, storms, tornadoes, floods, extreme heat events, drought, earthquakes, lightning, tsunamis, rising sea levels, mudslides, solar events, electromagnetic events, wind events or other weather-related conditions, climate change, or natural disasters, and other events affecting consumer energy usage, the ability to supply electricity to consumers or PG&E’s ability to service the recovery property;

• pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption which could impact, among other things, electric energy usage;

• the operating performance of PG&E’s facilities and the facilities of third-party suppliers of electric energy;

• the implementation and reliability of the systems, procedures and other infrastructure necessary to operate PG&E’s retail electric business, including the systems owned and operated by the California independent system operator (“CAISO”);

• national or regional economic conditions affecting retail electric consumer energy usage;

• direct or indirect results of cyber-attacks, security breaches or other attempts to disrupt the business of PG&E, ESPs or the CAISO;

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• non-payment of fixed recovery charges due to financial distress of ESPs;

• the need of PG&E to recover substantial unrecovered wildfire costs through the issuance of additional recovery bonds or additional other recovery bonds; and

• other factors discussed in this prospectus.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the issuing entity will undertake no obligation to update or revise any forward-looking statement, including unanticipated events, after the date on which such statement is made, except as required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

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PROSPECTUS SUMMARY OF TERMS

The following section is only a summary of selected information and does not provide you with all the information you will need to make your investment decision. There is more detailed information in this prospectus. To understand all of the terms of the offering of the recovery bonds, carefully read this entire prospectus. You should carefully consider the Risk Factors beginning on page 25 of this prospectus before you invest in the recovery bonds.

Securities Offered: $ 3,000,000,000 Senior Secured Recovery Bonds, Series 2022-A, scheduled to pay principal semi-annually in accordance with the expected amortization schedule in this prospectus.

Tranche	Principal Amount*
A-1	$450,000,000
A-2	$450,000,000
A-3	$300,000,000
A-4	$1,050,000,000
A-5	$750,000,000
*Principalamounts are approximate and subject to change

Issuing Entity and Capital Structure:

The issuing entity is a special purpose Delaware limited liability company. PG&E is our sole member and owns all of our equity interests. The issuing entity has no commercial operations. The issuing entity was formed solely to purchase, own and administer recovery property, issue recovery bonds (including the recovery bonds) secured by recovery property and perform activities incidental thereto and our organizational documents prohibit us from engaging in any other activity except as specifically authorized by the financing order. The recovery bonds are the first recovery bonds which the issuing entity expects to issue. The issuing entity may issue additional recovery bonds (as defined herein) or additional other recovery bonds (as defined herein) secured by additional recovery property or additional other recovery property, subject to certain conditions and only as authorized under the financing order or a separate financing order. Please read “PG&E Wildfire Recovery Funding LLC, The Issuing Entity” in this prospectus. The issuing entity will be capitalized with an upfront cash deposit by PG&E of 0.50% of the recovery bonds’ initial aggregate principal amount issued (to be held in the capital subaccount to secure only this series of recovery bonds) and will have an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all scheduled payments due on such payment date for the recovery bonds have been made.

Issuing Entity’s Address and Telephone Number:

77 Beale Street P.O. Box 770000 San Francisco, California 94177 (415) 973-1000

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The Depositor, Sponsor, Seller and Initial Servicer:	PG&E is a public utility operating in northern and central California and a wholly-owned subsidiary of PG&E Corporation. PG&E was incorporated in California in 1905 and generates its revenues mainly through the sale and delivery of electricity and natural gas to consumers. The recovery bonds do not constitute a debt, liability or other legal obligation of PG&E or PG&E Corporation. PG&E provides natural gas and electric service to approximately 10 million consumers (including 5.6 million electric service consumers) throughout a 70,000-square-mile service area in northern and central California. As of December 31, 2021, PG&E and PG&E Corporation had approximately 26,000 regular employees. PG&E’s retail rates are regulated by the CPUC. PG&E, acting as the initial servicer, and any successor servicer, referred to in this prospectus as the servicer, will service the recovery property under a servicing agreement with the issuing entity. Please read “The Depositor, Seller, Initial Servicer and Sponsor” and “The Servicing Agreement” in this prospectus
PG&E’s Address and Telephone Number:	77 Beale Street P.O. Box 770000 San Francisco, California 94177 (415) 973-1000
Trustee:	The Bank of New York Mellon Trust Company, National Association, a national banking association, will act as trustee under the indenture pursuant to which the recovery bonds will be issued. Please read “The Trustee” in this prospectus for a description of the trustee’s duties and responsibilities under the indenture.
Purpose of Transaction:	This issuance of recovery bonds will enable PG&E to recover and refinance a portion of certain costs and expenses related to catastrophic wildfires with an ignition date in the 2017 calendar year (“2017 Wildfires”) and other financing costs eligible for recovery under the Wildfire Financing Law. Please read “The Recovery Property and the Wildfire Financing Law” and “PG&E’s Financing Order” in this prospectus.
Transaction Overview:	In response to catastrophic wildfires which engulfed portions of the State of California in 2017 and 2018, the California legislature enacted a series of pieces of legislation, including SB 901 enacted in 2018, and AB 1054 and AB 1513 enacted in 2019 to address wildfire damage and the related financial impacts, including providing financial stability for California’s electrical utilities. As part of such legislation, the California legislature amended the Public Utilities Code to enact the

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Wildfire Financing Law. The Wildfire Financing Law permits electric utilities, like PG&E, to recover certain costs and expenses related to catastrophic wildfires. These wildfire-related costs and expenses, including the costs of financing such costs and expenses, are referred to as “recovery costs” in the Wildfire Financing Law and in this prospectus. The Wildfire Financing Law authorizes the financing and recovery of “recovery costs” through the issuance of recovery bonds pursuant to and supported by an irrevocable financing order issued by the CPUC. Please read “PG&E’s Financing Order” in this prospectus for a discussion of the recovery costs authorized in the financing order.

In order to secure payment of the recovery bonds, the Wildfire Financing Law permits the CPUC to approve irrevocable non-bypassable, consumption-based fixed recovery charges which are imposed and collected from all “consumers,” subject to the exceptions described below. As used in the prospectus, the term “consumers” has the same meaning as “consumers” in the Wildfire Financing Law, and includes any existing or future consumer of PG&E, including consumers purchasing energy from any ESP, and any other individual, governmental body, trust, business entity, or nonprofit organization located in PG&E’s service territory (the geographic area where PG&E provides electric distribution service as of the date of the financing order) that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, PG&E, or any other party. Under the Wildfire Financing Law, the only consumers exempt from paying fixed recovery charges are those consumers enrolled in the California Alternative Rates for Energy (“CARE”) or the Family Electric Rate Assistance (“FERA”) programs, which consumers are collectively referred to herein as “Exempted Consumers”.

In January 2021, PG&E filed an application with the CPUC for an order seeking a determination that it could recover the “authorized amount” of up to $7.5 billion of costs relating to 2017 wildfires. In April 2021, the CPUC issued the Stress Test Order (as defined herein) that determined that PG&E had satisfied the requirements that the costs and expenses to be financed in this transaction are catastrophic wildfire amounts that may be financed through the issuance of recovery bonds approved by a separate CPUC order pursuant to the Wildfire Financing Law. Three parties filed applications for rehearing of the Stress Test Order and the CPUC issued a decision denying the applications for rehearing.

On May 11, 2021, the CPUC issued a financing order to PG&E to enable PG&E to recover $7.5 billion of costs and expenses

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relating to the 2017 Wildfires. References in this prospectus to the “financing order”, unless the context indicates otherwise, mean the financing order issued by the CPUC on May 11, 2021. Two parties filed applications for rehearing of the financing order and the CPUC issued a decision denying the applications for rehearing. One of the parties filed a petition for writ of review of the financing order and the Stress Test Order in the Court of Appeal of the State of California, First Appellate District (the “Appeal Court”). On February 18, 2022, the Appeal Court denied such party’s petition for writ of review. Such party did not file a further petition for review by the required deadline of February 28, 2022 and as such, the financing order became final and non-appealable. Please read “PG&E’s Financing Order” in this prospectus for a more comprehensive description of the financing order and related proceedings and for a description of the recovery costs authorized in the financing order, which the depositor refers to in this prospectus as “recovery costs”.

The primary transactions underlying the offering of the recovery bonds are as follows:

•   PG&E will sell recovery property to the issuing entity in exchange for the net proceeds from the sale of the recovery bonds;

•   the issuing entity will sell the recovery bonds, which will be secured primarily by the recovery property, to the underwriters; and

•   PG&E will act as the initial servicer of the recovery property.

The recovery bonds are not obligations of the trustee, the issuing entity’s managers, PG&E, PG&E Corporation or any of their respective affiliates other than the issuing entity. The recovery bonds are also not obligations of the State of California or any governmental agency, authority or instrumentality of the State of California and neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, the recovery bonds.

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Diagram of Transaction:	The following diagram represents a general summary of the structure of the recovery bonds offered, flow of funds and relationships among the parties:
Flow of Funds:	The following chart represents a general summary of the flow of funds:
Recovery Property, Fixed Recovery Charges, Fixed Recovery Tax Amounts and the True-Up Mechanism:	In general terms, all of the rights and interests of PG&E under the financing order that are transferred to the issuing entity pursuant to the sale agreement are referred to in this prospectus as the “recovery property”. The recovery property consists of all of PG&E’s rights and interests established under the financing order and further identified in the issuance advice letter transferred to the issuing entity in connection with the issuance of the recovery bonds, including (i) the right, title and interest in and to the fixed recovery charges, including all rights to obtain adjustments of such charges as authorized by provisions of the Wildfire Financing Law and the financing order, and (ii) the right to be paid the fixed recovery charges, as well as all revenues, collections, claims,

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payments, moneys, or proceeds of or arising from the fixed recovery charges. Recovery property is a present property right created by the Wildfire Financing Law and the financing order and is protected by the State Pledge in the Wildfire Financing Law described below. In addition, PG&E will recover any fixed recovery tax amounts (“FRTAs”), which are non-bypassable charges to recover federal or State of California income and franchise taxes associated with fixed recovery charges but are not approved as financing costs to be financed from the proceeds of the recovery bonds. FRTAs are not part of the recovery property sold to the issuing entity and shall not be used to pay principal or interest on the recovery bonds or financing costs.

Non-bypassable means that the issuing entity will be entitled to collect fixed recovery charges from all existing or future consumers of PG&E (except Exempted Consumers), including consumers purchasing energy from any ESP, or any other individual, governmental body, trust, business entity, or nonprofit organization located in the PG&E’s service territory (the geographic area where PG&E provides electric distribution service as of the date of the financing order) that consumes electricity that has been transmitted or distributed by means of transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, PG&E, or any other party. Therefore, in general, consumers can only avoid paying fixed recovery charges if they move out of PG&E’s service territory or if they are Exempted Consumers. Please read “The Recovery Property and the Wildfire Financing Law— The Financing Order and the Recovery Property—Exemptions from Fixed Recovery Charges” and “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges” in this prospectus. The financing order approves the methodology by which the fixed recovery charges will be calculated and adjusted from time to time by the servicer pursuant to the issuance advice letter and true-up advice letters submitted to the CPUC as described below. Pursuant to the financing order, except for Exempted Consumers, the fixed recovery charge will be an equal cent per kWh charge across all consumer classes. For residential rate schedules with a tiered rate structure, the fixed recovery charge rate component will be an equal cent per kWh charge and the total rates shall retain the rate relationships by tier determined by CPUC Decision (D.) 15-07-001. This means that all consumers that pay the fixed recovery charge would pay the same rate per kWh. All consumers that are required to pay the fixed recovery charge will also receive the benefit of the Customer Credit. To ensure that the fixed recovery charge and the Customer Credit will be equal when the Customer Credit revenue requirement and the fixed recovery charge revenue requirement are equal, the servicer will establish a Customer Credit rate on the same equal cent per kWh basis as the fixed recovery charge rate. Please

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	read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges” in this prospectus.
	The servicer may make a routine true-up adjustment to adjust the fixed recovery charges to ensure the recovery of revenues are sufficient to provide for the timely payment of the periodic payment requirement. Routine-true-up adjustments will be made on an annual basis and, if necessary, a semi-annual and an interim basis. In addition, the servicer may make a non-routine true-up adjustment to revise the cash flow model described in the financing order to meet scheduled payments of principal, interest, and other financing costs. There is no “cap” on the level of fixed recovery charges that may be imposed on consumers in order to timely pay scheduled principal and interest on the recovery bonds and related financing costs.
The Collateral:	The recovery bonds are secured only by the collateral. The principal asset securing the recovery bonds will be the recovery property, acquired by the issuing entity pursuant to the sale agreement, which is a present property right created under the Wildfire Financing Law by the financing order issued by the CPUC. The collateral also includes: •   the issuing entity’s rights under the sale agreement pursuant to which we will acquire the recovery property; •   the issuing entity’s rights under the financing order, including its rights under the true-up mechanism; •   the issuing entity’s rights under the servicing agreement, intercreditor or collection agreements executed in connection with the servicing agreement; •   the collection account for the recovery bonds and all related subaccounts; •   all of the issuing entity’s other property related to the recovery bonds, other than any cash released to PG&E by the trustee on any payment date representing a return of capital on its capital contribution; •   all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing; and •   all payments on or under, and all proceeds in respect of any or all of, the foregoing. The subaccounts consist of a capital subaccount, which will be funded at closing in the amount of 0.50% of the initial aggregate principal amount of the recovery bonds, a general subaccount, into which the servicer will deposit all fixed recovery charge collections, and an excess funds subaccount, into which the issuing entity will

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	transfer any amounts collected and remaining on a payment date after all payments to bondholders and other parties have been made. Amounts on deposit in each of these subaccounts will be available to make payments on the recovery bonds on each payment date. For the avoidance of doubt, however, the Customer Credit and Customer Credit Trust (as defined below) are not collateral for the recovery bonds, and any shortfalls or alterations of the Customer Credit or Customer Credit Trust shall not affect the fixed recovery charges or the obligations under the recovery bonds. For a description of the recovery property, please read “The Recovery Property and the Wildfire Financing Law” in this prospectus.
State Pledge:	Under the Wildfire Financing Law, the State of California has pledged that it will neither limit nor alter the fixed recovery charges, recovery property, the financing order, or any rights thereunder, except for true-up adjustments discussed in “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement—True-Up Adjustment Submissions”, until the recovery bonds, together with the interest thereon and related financing costs, are fully paid and discharged. However, the Wildfire Financing Law further provides that nothing in this pledge precludes the State of California from limiting or altering the fixed recovery charges, recovery property or the financing order of the CPUC, if and when adequate provision is made by law for the protection of electrical corporations and of owners and holders of recovery bonds. The depositor refers to this pledge in this prospectus as the “State Pledge”. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions” in this prospectus. Under the Wildfire Financing Law, we are expressly authorized to include the State Pledge for the State of California in the recovery bonds.
Relationship to 2021 Wildfire Recovery Bonds:	In November 2021, PG&E Recovery Funding LLC, a special purpose wholly-owned subsidiary of PG&E issued $860.4 million aggregate principal amount of senior secured recovery bonds (the “2021 Wildfire Recovery Bonds”) pursuant to the Wildfire Financing Law to recover and refinance a portion of certain wildfire risk management capital expenditures eligible for recovery under the Wildfire Financing Law. PG&E currently acts as servicer with respect to the 2021 Wildfire Recovery Bonds. The 2021 Wildfire Recovery Bonds were issued by a separate issuing entity, are secured by separate recovery property and were issued pursuant to a separate financing order.
Initial Fixed Recovery Charge as a Percentage of Consumer’s Bill:	The initial fixed recovery charge for the recovery bonds offered hereby is expected to represent approximately         % of the total electric bill, as of December 31, 2021, received by a 500 kWh residential consumer of PG&E. However, as described below, the impact of the fixed recovery charges is designed to be neutral, on average, to consumers, in part due to the Customer Credit. The Customer Credit, however, will not be used to pay fixed recovery charges.

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	The estimated aggregate initial fixed recovery charge for the recovery bonds offered hereby and the 2021 Wildfire Recovery Bonds is expected to represent approximately         % of the total electric bill, as of December 31, 2021, received by a 500 kWh residential consumer of PG&E.
Customer Credit:	To meet the rate neutrality requirement, PG&E will provide a credit to consumers in an amount that is designed to equal the fixed recovery charges paid by such consumer (the “Customer Credit”). Consumer obligations to pay the fixed recovery charges, however, are not contingent on receipt of the Customer Credit and fixed recovery charges and other terms and conditions in the Financing Order will not be adjusted in response to protests, the failure to pay the Customer Credit or the failure of PG&E to make contributions to the Customer Credit Trust. Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer—The State of California might seek to limit or alter the fixed recovery charges, recovery property or the financing order of the CPUC following a bankruptcy of PG&E” in this prospectus. Customer Credits will be paid from a trust established by PG&E (the “Customer Credit Trust”), the main contributions to which are being funded by the Initial Shareholder Contribution, Additional Shareholder Contributions, Customer Credit Trust Returns, and, if it is determined to be needed, the Contingent Supplemental Shareholder Contribution. Please read “PG&E’s Financing Order—Customer Credit Trust” in this prospectus. The financing order provides that PG&E’s failure to make the Initial Shareholder Contribution, the Additional Shareholder Contributions or any voluntary or required contribution to the Customer Credit Trust or PG&E’s failure to provide the Customer Credit shall not affect or impair the issuing entity’s ownership of the recovery property and consumers must pay the fixed recovery charge regardless of any failure by PG&E to pay the Customer Credit. For the avoidance of doubt, the Customer Credit Trust will not be pledged as collateral for the recovery bonds.
Payment Dates:	Semi-annually, on         and         , and on the scheduled final payment date or final maturity date for each tranche. The first scheduled payment date is         .
Interest Rates:	Interest is due on each payment date. Interest will accrue with respect to each tranche of recovery bonds on a 30/360 basis at the interest rate specified for such tranche in the table below:

Tranche	Interest Rate
A-1	%
A-2	%

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Tranche	Interest Rate
A-3	%
A-4	%
A-5	%

Principal Payments and Record Dates and Payment Sources: If any payment date is not a business day, payments scheduled to be made on such date may be made on the next succeeding business day and no interest shall accrue upon such payment during the intervening period.   The issuing entity will pay interest on each tranche of recovery bonds before the issuing entity will pay the principal of each tranche of recovery bonds. Please read “Description of the Recovery Bonds—Principal Payments” in this prospectus. If there is a shortfall in the amounts available in the collection account to make interest payments, the trustee will distribute interest pro rata to each tranche of recovery bonds based on the amount of interest payable on each outstanding tranche.   The issuing entity will be scheduled to make payments of principal on each payment date and sequentially in accordance with the expected sinking fund schedule included in this prospectus.   Principal for each tranche is due upon the final maturity date for that tranche. Failure to pay the entire outstanding principal amount of a tranche by the final maturity date for such tranche will result in an event of default.   Failure to pay a scheduled principal payment on any payment date or the entire outstanding amount of the recovery bonds of any tranche by the scheduled final payment date will not result in a default with respect to that tranche. The failure to pay the entire outstanding principal balance of the recovery bonds of any tranche will result in a default only if such payment has not been made by the final maturity date for the tranche.   If there is a shortfall in the amounts available to make principal payments on the recovery bonds that are due and payable, including upon an acceleration following an event of default, the trustee will distribute principal from the collection account pro rata to each tranche of recovery bonds based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on the recovery bonds that are scheduled to be paid, the trustee will distribute principal from the collection account pro rata to each tranche of recovery bonds based on the principal amount then scheduled to be paid on the payment date.

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Weighted Average Life:	Tranche	Expected Weighted Average Life (years)
	A-1
	A-2
	A-3
	A-4
	A-5

Scheduled Final Payment Date and Final Maturity Date: The scheduled final payment date and final maturity date for each tranche of recovery bonds will be as set forth in the table below:

Tranche	Scheduled Final Payment Date	Final Maturity Date
A-1
A-2
A-3
A-4
A-5

Optional Redemption:	None. Non-call for the life of the recovery bonds.
Mandatory Redemption:	None. The issuing entity is not required to redeem the recovery bonds at any time prior to maturity.
Priority of Payments:	On each payment date for the recovery bonds (or any other date as directed by the servicer with respect to operating expenses in clause (4) below, payable prior to the next payment date), the trustee will, with respect to the recovery bonds, pay or allocate, solely at the written direction of the servicer, all amounts on deposit in the general subaccount of the collection account (including investment earnings thereon) in the following order of priority: 1.  amounts owed by the issuing entity to the trustee, the trustee’s fees, expenses and any outstanding indemnity amounts not to exceed $200,000 per annum (the “Trustee Cap”); provided, however, that the Trustee Cap shall be disregarded and inapplicable upon the acceleration of the recovery bonds following the occurrence of an event of default; 2.  the servicing fee and any unpaid servicing fees from prior payment dates to the servicer; 3.  the administration fee and the fees owed to the issuing entity’s independent manager; 4.  all of the issuing entity’s other ordinary periodic operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the administrator under the administration agreement and of the servicer under the servicing agreement; 5.  interest then due on the recovery bonds, including any past-due interest;

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6.  principal then due and payable on the recovery bonds as a result of an event of default or on the final maturity date for the recovery bonds;

7.  scheduled principal payments of recovery bonds according to its expected sinking fund schedule,

together with any overdue scheduled principal payments, paid pro rata among the recovery bonds if there is a deficiency;

8.  any remaining unpaid fees, expenses and indemnity amounts owed to the trustee;

9.  any other unpaid operating expenses and any remaining amounts owed pursuant to the basic documents;

10.  replenishment of any amounts drawn from the capital subaccount;

11.  provided that no event of default has occurred and is continuing, release to PG&E an amount representing a return on capital of its capital contribution calculated at an annual rate per annum equal to the weighted average interest rate on the recovery bonds;

12.  the remainder, if any, to the excess funds subaccount for distribution on subsequent payment dates; and

13.  after principal of and premium, if any, and interest on all recovery bonds and all of the other foregoing amounts have been paid in full, the balance (including all amounts then held in the applicable capital subaccount and the applicable excess funds subaccount), if any, shall be paid to PG&E free and clear from the lien of the indenture and the series supplement and credited to consumers through normal ratemaking processes.

The annual servicing fee for the recovery bonds in clause (2) above payable to PG&E while it is acting as servicer shall be $         (0.05% of the initial aggregate principal amount of the recovery bonds) per annum, plus out-of-pocket expenses. The annual servicing fee for the recovery bonds payable to any other servicer not affiliated with PG&E must be approved by the CPUC. The CPUC will not approve the appointment of a successor servicer unless the rating agency condition for the recovery bonds is satisfied. The annual administration fee in clause (3) above will be $100,000 per series of recovery bonds per annum. The annual servicing fee and administration fee payable to PG&E will be approved by the CPUC in the issuance advice letter and set forth in the final prospectus. Please read “PG&E’s Financing Order—Issuance Advice Letter” and “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

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Issuance of Additional Recovery Bonds:

PG&E is authorized to issue up to $7.5 billion of recovery bonds under the financing order from the CPUC under the Wildfire Financing Law in up to three series on or prior to December 31, 2022. Any additional series of recovery bonds issued after the first series of recovery bonds issued hereby (such additional series referred to hereinafter as “additional recovery bonds”) may be issued by the issuing entity, subject to the conditions described below. Each series of recovery bonds will be secured by separate recovery property created pursuant to the financing order. Any series of recovery bonds may include terms and provisions unique to that particular series of recovery bonds. Each series of additional recovery bonds will have the same true-up mechanism as required by the financing order. Additional recovery bonds may not be issued unless the rating agency condition for the recovery bonds is satisfied. In addition, the execution of a joinder to the intercreditor agreement is a condition precedent to the sale of property consisting of non-bypassable charges payable by consumers comparable to the recovery property sold by PG&E pursuant to the sale agreement. Please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—PG&E may cause the issuance of additional recovery bonds or additional other recovery bonds secured by additional recovery property or additional other recovery property that includes a non-bypassable charge on consumers, which may cause a delay in the payment of the recovery bonds and potential conflicts of interest among bondholders”, “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement— Covenants of the Seller” in this prospectus.

Issuance of Additional Other Recovery Bonds:

In addition, PG&E may, from time to time, seek approval from the CPUC to issue securities similar to the recovery bonds secured by non-bypassable charges similar to the fixed recovery charges to recover costs that are eligible to be financed under the Wildfire Financing Law or other legislation similar to the Wildfire Financing Law, and have been authorized by the CPUC. Such similar recovery bonds are referred to as “additional other recovery bonds”. In a separate proceeding, PG&E filed an application on March 11, 2022, requesting the CPUC approve a separate financing order permitting PG&E to issue additional other recovery bonds in an amount up to approximately $1.7 billion to finance a second portion of PG&E’s wildfire risk mitigation and capital expenditures under the Wildfire Financing Law. Any additional other recovery bonds (including any such additional other recovery bonds issued pursuant to the financing order described in the previous paragraph) would be secured by

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separate property created by a separate financing order or orders. PG&E has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution of a joinder to the intercreditor agreement is a condition precedent to the sale of property consisting of non-bypassable charges payable by consumers comparable to the recovery property sold by PG&E pursuant to the sale agreement. Please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—PG&E may cause the issuance of additional recovery bonds or additional other recovery bonds secured by additional recovery property or additional other recovery property that includes a non-bypassable charge on consumers, which may cause a delay in the payment of the recovery bonds and potential conflicts of interest among bondholders”, “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement— Covenants of the Seller” in this prospectus.

Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds by the Issuing Entity:

The issuing entity’s organizational documents and the basic documents give it the authority and flexibility to issue additional recovery bonds or additional other recovery bonds, subject to the satisfaction of each of the following conditions: •   the additional recovery bonds or additional other recovery bonds may be issued pursuant to the financing order or separate financing order(s) from the CPUC, respectively, to recover recovery costs under the Wildfire Financing Law; •   PG&E must serve as the initial servicer and administrator for the series of additional recovery bonds or additional other recovery bonds and the servicer and administrator cannot be replaced without the requisite approval of all series of recovery bonds; •   satisfaction of the rating agency condition; •   each series of additional recovery bonds or additional other recovery bonds will have recourse only to the recovery property of that series, will be nonrecourse to the issuing entity’s other assets and will not constitute a claim against the issuing entity if revenue from the recovery charges and funds on deposit in the trust accounts with respect to that series of additional recovery bonds or additional other recovery bonds are insufficient to pay such other series in full; •   the trustee and the rating agencies then rating any series of the issuing entity’s outstanding fixed recovery bonds will be provided an opinion of a nationally recognized law firm experienced in such matters to the effect that such issuance will not result in the issuing entity’s substantive consolidation with PG&E and that there will have been a true sale of the

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recovery property with respect to such series, subject to the customary exceptions, qualifications and assumptions contained therein; •   transaction documentation for the other series provides that the trustee on behalf of holders of the additional recovery bonds or additional other recovery bonds will not file or join in filing of any bankruptcy petition against the issuing entity; •   if holders of such additional recovery bonds or additional other recovery bonds are deemed to have any interest in any of the collateral dedicated to the recovery bonds, holders of such other additional recovery bonds or additional other recovery bonds must agree that their interest in the collateral dedicated to the additional recovery bonds or additional other recovery bonds, as the case may be, is only a first priority perfected interest in the assets relating to the additional recovery bonds or additional other recovery bonds, in accordance with the related intercreditor agreement; •   each series of additional recovery bonds or additional other recovery bonds issued under any separate indenture will have a separate collection account; •   no series of additional recovery bonds or additional other recovery bonds will be issued under the indenture governing the recovery bonds offered hereby; and •   each series of additional recovery bonds or additional other recovery bonds will bear its own trustee fees, servicer fees and administration fees. Please read “Description of the Recovery Bonds—Conditions of Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds” in this prospectus. The financing order requires that, in the event a consumer does not pay in full all amounts owed under any bill including fixed recovery charges, any resulting shortfalls in fixed recovery charges will be allocated ratably among the fixed recovery charges, FRTAs and other charges. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Allocation Among Series of Recovery Bonds:

The recovery bonds will not be subordinated in right of payment to any additional recovery bonds or additional other recovery bonds. Each series of additional recovery bonds or additional other recovery bonds will be secured by its own recovery property, which will include the right in and to fixed recovery charges calculated in respect of such series of additional recovery bonds or additional other recovery bonds, and the right

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to impose true-up adjustments to correct overcollections or undercollections in respect of that series. Each series of additional recovery bonds or additional other recovery bonds will also have its own collection account, including any related subaccounts, into which revenue from the fixed recovery charges relating to that series of additional recovery bonds or additional other recovery bonds will be deposited and from which amounts will be withdrawn to pay the related series of fixed recovery bonds. Holders of one series of recovery bonds will have no recourse to collateral for a different series. Each series of additional recovery bonds or additional other recovery bonds will also have the same true-up mechanism as required by the financing order. See “Security for the Recovery Bonds—Description of Indenture Accounts” and “—How Funds in the Collection Account will be Allocated” in this prospectus. Although each series of additional recovery bonds or additional other recovery bonds will have its own recovery property reflecting the right in and to a separate fixed recovery charge, fixed recovery charges relating to the recovery bonds and fixed recovery charges relating to any other series of additional recovery bonds or additional other recovery bonds, as the case may be, will be collected through single periodic bills to each consumer, and all fixed recovery charges might be combined into a single line item on those periodic bills. The fixed recovery charges for each series of recovery bonds may not be separately identified on consumer electricity bills, although consumer electricity bills will state that a portion of the electricity bill consists of the rights to the fixed recovery charges that have been sold to the financing entity created to issue such additional recovery bonds or additional other recovery bonds. In the event a consumer does not pay in full all amounts owed under any bill including fixed recovery charges, the servicer is required to allocate any resulting shortfalls in fixed recovery charges ratably based on the amounts of fixed recovery charges owing in respect of the recovery bonds and any amounts owing to any additional recovery bonds or additional other recovery bonds. See “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Credit Enhancement:

Credit enhancement for the recovery bonds, which is intended to protect you against losses or delays in scheduled payments on the recovery bonds, will be as follows: •   The CPUC will approve adjustments to the fixed recovery charges, but only upon petition of the servicer, to make up for any shortfall, due to any reason, or reduce any excess in collected fixed recovery charges. The issuing entity will sometimes refer to these adjustments as the “true-up

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adjustments” or the “true-up mechanism”. These adjustments will be made annually, and if determined necessary by the servicer, semi-annually and more frequently and if there are recovery bonds outstanding following the scheduled final payment date of the latest maturing tranche of the recovery bonds, quarterly, to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the recovery bonds. Please read “PG&E’s Financing Order—Fixed Recovery Charges” in this prospectus. •   Collection Account—Under the indenture, the trustee will hold a collection account for the recovery bonds, divided into various subaccounts. The primary subaccounts for credit enhancement purposes are: •   the general subaccount—the trustee will deposit into the general subaccount all fixed recovery charge collections remitted to it by the servicer; •   the capital subaccount—PG&E will deposit an amount equal to 0.50% of the recovery bonds principal amount issued into the capital subaccount on the date of issuance of the recovery bonds; and •   the excess funds subaccount—any excess amount of collected fixed recovery charges and investment earnings will be held in the excess funds subaccount.

Reports to Bondholders; SEC Filings:

Pursuant to the indenture, the trustee will make available on its website (currently located at https://gctinvestorreporting.bnymellon.com) to the holders of record of the recovery bonds regular reports prepared by the servicer containing information concerning, among other things, the issuing entity and the collateral. Unless and until the recovery bonds are issued in definitive certificated form, the reports will be provided to The Depository Trust Company. The reports will be available to beneficial owners of the recovery bonds upon written request to the trustee or the servicer. These reports will not be examined and reported upon by an independent public accountant. In addition, no independent public accountant will provide an opinion thereon. Please read “Description of the Recovery Bonds—Reports to Bondholders” in this prospectus. Neither the issuing entity nor the depositor will be an asset-backed issuer and the recovery bonds are not asset-backed securities as such terms are defined by the SEC in governing regulations Item 1101 of Regulation AB. However, the issuing entity will file offering documents and will plan to file with the SEC required periodic and current reports related to the

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	recovery bonds consistent with the disclosure and reporting regime established in Regulation AB and will also post those periodic and current reports at the website set forth above.
	Please read “Description of the Recovery Bonds—SEC Filings; Website Disclosure” in this prospectus.
Servicing Compensation:	The issuing entity will pay the servicer on each payment date the servicing fee with respect to the recovery bonds. As long as PG&E or any affiliated entity acts as servicer, this fee will be 0.05% of the initial aggregate principal amount of the recovery bonds per annum, plus out-of-pocket expenses. The annual servicing fee for the recovery bonds payable to any other servicer not affiliated with PG&E will be negotiated by the successor servicer and the trustee, but must be approved by the CPUC. The CPUC will not approve the appointment of a successor servicer unless the rating agency condition for the recovery bonds is satisfied. In no event will the trustee be liable for any servicing fee in its individual capacity.
Federal Income Tax Status:	In the opinion of Hunton Andrews Kurth LLP (“Hunton”) counsel to the issuing entity and to PG&E, for federal income tax purposes, the issuance of the recovery bonds will be a “qualifying securitization” within the meaning of Revenue Procedure 2005-62, the recovery bonds will constitute indebtedness of PG&E, the issuing entity’s sole member and PG&E will not be treated as recognizing gross income upon the issuance of the recovery bonds. If you purchase a beneficial interest in any recovery bond, you agree by your purchase to treat the recovery bonds as debt of the issuing entity’s sole member for federal income tax purposes. Please read “Material U.S. Federal Income Tax Consequences” in this prospectus.
ERISA Considerations:	Employee benefit plans or other arrangements that provide retirement income that are subject to ERISA or Section 4975 of the Internal Revenue Code and investors acting on behalf of, or using assets of, such plans or arrangements may acquire the recovery bonds subject to specified conditions. The acquisition, holding or disposition of the recovery bonds could be treated as a direct or indirect prohibited transaction under ERISA and/or Section 4975 of the Internal Revenue Code. Accordingly, by acquiring and holding the recovery bonds, each investor that is, or is acting on behalf of, or using assets of, such an employee benefit plan or arrangement subject to ERISA and/or Section 4975 of the Internal Revenue Code will be deemed to certify that the purchase, holding and subsequent disposition of the recovery bonds will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code. Please read “ERISA Considerations” in this prospectus.
Credit Ratings:	The issuing entity expects the recovery bonds will receive credit ratings from at least two nationally recognized statistical rating

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	organizations. Please read “Ratings for the Recovery Bonds” in this prospectus.
Use of Proceeds:	Proceeds will be used to pay expenses of issuance and to purchase the recovery property from PG&E. In accordance with the financing order, PG&E will use the proceeds it receives from the sale of the recovery property to reimburse itself for previously incurred recovery costs, including the retirement of related debt. Please read “Use of Proceeds” in this prospectus.
1940 Act Registration:	The issuing entity will be relying on an exclusion from the definition of “investment company” under the 1940 Act contained in Section 3(c)(5) of the 1940 Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity will be structured so as not to constitute a “covered fund” for purposes of the Volcker Rule under the Dodd-Frank Act.
Credit Risk Retention:	The recovery bonds are not subject to the 5% risk retention requirements imposed by Section 15G of the Securities Exchange Act of 1934 or the Exchange Act due to the exemption provided in Rule 19(b)(8) of the risk retention regulations in 17 C.F.R. Part 246 of the Exchange Act or Regulation RR. For information regarding the requirements of the European Union Securitization Regulation as to risk retention and other matters, please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds— Regulatory provisions affecting certain investors could adversely affect the price and liquidity of the recovery bonds” in this prospectus.
Minimum Denomination:	$2,000, or integral multiples of $1,000 in excess thereof, except for one recovery bond of each tranche which may be of a smaller denomination.
Expected Settlement:	On or about             , 2022, settling flat. DTC, Clearstream and Euroclear.

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SUMMARY OF RISK FACTORS

Set forth below is a summary of the material risk factors which you should consider before deciding whether to invest in the recovery bonds. These risks can affect the timing or ultimate payment of the recovery bonds and value of your security. A description of such risk factors in greater details follows this summary.

Limited Source of Payment for the Recovery Bonds: The only source of funds for the recovery bonds is the recovery property and the other limited moneys held by the trustee. At the time of issuance of the recovery bonds, the issuing entity will have no other assets and the recovery bonds are non-recourse to PG&E. Therefore, the sources for repayment of the recovery bonds are limited. You must rely for payment of the recovery bonds solely upon the Wildfire Financing Law, state and federal constitutional rights to enforcement of the securitization provisions of the Wildfire Financing Law, the irrevocable financing order, collections of the fixed recovery charges and funds on deposit in the related accounts held by the trustee.

Risks Associated with Potential Judicial, Legislative or Regulatory Actions: The recovery property is an asset created under the Wildfire Financing Law and through regulatory proceedings at the CPUC. The Wildfire Financing Law may be challenged in court. The Stress Test Order and the financing order were challenged before the CPUC and in court, but became final and non-appealable on February 28, 2022.

The California legislature, or the voters of the State using their initiative powers, may attempt to amend the Wildfire Financing Law, which could potentially impair the value of the recovery property. Further, PG&E may fail or be unsuccessful in challenging such actions. Neither the issuing entity nor PG&E will indemnify you for any changes of law, whether as a result of constitutional amendment, legislative enactment, any regulatory or administrative action or any judicial proceedings.

In addition, the CPUC retains the power to adopt, revise or rescind rules or regulations affecting PG&E and may attempt to take actions which could potentially impair the value of the recovery property. Also, true-up adjustment submissions made with the CPUC may be challenged before the CPUC or in court, resulting in delays in implementation of the true-up adjustment. Additionally, subject to any required CPUC approval, PG&E may establish billing, collection and posting arrangements with consumers which could impact the timing and amount of consumer payments.

Also, a municipality may seek to acquire portions of PG&E’s service territory, and may dispute their obligation to pay the fixed recovery charges, or even if obligated to do so, may fail to bill and remit the fixed recovery charges on a timely basis.

Servicing Forecasting and Related Servicing Risks: The collection of fixed recovery charges on a timely and sufficient basis depend upon the ability of the servicer to accurately forecast consumer usage. If the servicer inaccurately forecasts consumption or underestimates consumer delinquencies for any reason, there could be a shortfall or material delay in fixed recovery charge collections. Factors which might cause inaccurate projections of usage or consumer delinquencies, include unanticipated weather conditions, rolling blackouts due to capacity constraints, cyber-attacks on PG&E or CAISO infrastructure, general economic conditions, natural or man-made disasters, such as wildfires, earthquakes or pandemics, such as the current pandemic caused by COVID-19. PG&E’s ability to collect fixed recovery charges from consumers may also be impacted by some of these same factors. In response to the COVID-19 pandemic, the Governor of California and the CPUC have taken actions which could impact the ability to collect the fixed recovery charges, including the cessation of PG&E’s ability to disconnect service, the requirement to defer payments from consumers and the suspension of the requirement for

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consumer credit deposits. Any of these actions or any future actions by the California legislature or the CPUC taken in response to COVID-19 or any future pandemic or other natural disaster may adversely affect the ability of the Servicer to forecast and to collect fixed recovery charges.

Servicing of the fixed recovery charges may also be adversely affected by a growth in the number of ESPs which elect to bill and collect the fixed recovery charges and who fail to do so promptly or completely.

It may be difficult for the issuing entity to find a replacement servicer should PG&E default in its obligations. Assuming the issuing entity can obtain a successor servicer, the successor servicer may be less effective in servicing the charges, potentially resulting in delay in collections, which might reduce the value of your investment.

Risks Associated with the Unusual Nature of Recovery Property: The unusual nature of the recovery property makes it unlikely that, in the event of a default, the recovery property could be sold. Although the recovery bonds may be accelerated in the event of a default, as a practical matter, the fixed recovery charges would likely not be accelerated.

Natural Disaster-Related Risk: Severe weather events and other natural disasters, including wildfires and other fires, storms, tornadoes, floods, extreme heat events (including recent extreme heat events during the 2021 wildfire season), drought, earthquakes, lightning, tsunamis, rising sea levels, solar events, electromagnetic events, wind events or other weather-related conditions, climate change, or natural disasters, could result in severe business disruptions, prolonged power outages, property damage, injuries and loss of life, significant decreases in revenues and earnings, and significant additional costs to PG&E. Transmission and/or distribution and generation facilities could be damaged or destroyed and usage of electricity could be interrupted temporarily, reducing the collections of fixed recovery charges or otherwise impacting PG&E’s ability to service the recovery property. As the fixed recovery charge is a consumption-based charge, any unexpected failure to deliver electricity may impact the collection of fixed recovery charges. Further, there could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity among PG&E’s consumers. As a consequence of and in response to these severe events, legislative action adverse to the bondholders might be taken, and such legislation, if challenged as a violation of the State Pledge, might be defended on the basis of public necessity.

Risks Associated with Potential Bankruptcy of the Seller or the Servicer: In the event of a bankruptcy by PG&E, you may experience a delay in payment or a default on payment of the recovery bonds due to various factors, including the comingling of fixed recovery charges with other revenue of the servicer, a challenge to the characterization of the sale of the recovery property as a financing transaction, an effort to consolidate the issuing entity’s assets and liabilities with those of PG&E, a characterization of fixed recovery payments to the trustee as preferential transfers, the treatment of the issuing entity’s claims against the seller as unsecured claims and a general limitation on the remedies available in a bankruptcy, including the risk of an automatic stay.

Other Risks Associated with an Investment in the Recovery Bonds: Other risks associated with the purchase of the recovery bonds include the inadequacy of any indemnification obligations provided by the seller, the impact of a change of ratings or the issuance of an unsolicited rating, the absence of a secondary market for the recovery bonds, the issuance of additional recovery bonds, additional other recovery bonds or similar instruments creating greater burdens on the same consumers, regulatory actions affecting certain investors and losses on investments held by the trustee.

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RISK FACTORS

Please carefully consider all the information the depositor has included or incorporated by reference in this prospectus, including the risks described below and the statements contained under the heading “Cautionary Statement Regarding Forward-Looking Information” in this prospectus before deciding whether to invest in the recovery bonds.

You may experience material payment delays or incur a loss on your investment in the recovery bonds because the source of funds for payment is limited.

The only source of funds for payment of the recovery bonds will be the collateral, which consist of:

• the recovery property securing the recovery bonds, including the right to impose, collect and receive related fixed recovery charges and the issuing entity’s rights under the financing order to the true-up mechanism;

• the funds on deposit in the accounts for the recovery bonds held by the trustee; and

• the issuing entity’s rights under various contracts the issuing entity describes in this prospectus.

The recovery bonds will not be insured or guaranteed by PG&E, including in its capacity as sponsor, depositor, seller or servicer, or by its parent, PG&E Corporation, any of their respective affiliates, the trustee or any other person or entity. The recovery bonds will be nonrecourse obligations, secured only by the collateral. Delays in payment on the recovery bonds might result in a reduction in the market value of the recovery bonds and, therefore, the value of your investment in the recovery bonds.

Thus, you must rely for payment of the recovery bonds solely upon the Wildfire Financing Law, state and federal constitutional rights to enforcement of the Wildfire Financing Law, the irrevocable financing order, collections of the fixed recovery charges and funds on deposit in the related accounts held by the trustee. If these amounts are not sufficient to make payments or there are delays in recoveries, you may experience material payment delays or incur a loss on your investment in the recovery bonds. The issuing entity’s organizational documents will restrict the issuing entity’s right to acquire other assets unrelated to the transactions described in this prospectus. Please read “PG&E Wildfire Recovery Funding LLC, The Issuing Entity” in this prospectus.

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RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE

OR REGULATORY ACTIONS

The issuing entity will not be obligated to indemnify you for changes in law.

Neither the issuing entity nor PG&E will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Wildfire Financing Law, that may affect the value of your recovery bonds. PG&E will agree in the sale agreement to institute any action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or amendment to the Wildfire Financing Law that would be materially adverse to the issuing entity, the trustee or bondholders. However, PG&E may not be able to take such action and, if PG&E does take action, such action may not be successful. Although PG&E or any successor seller might be required to indemnify the issuing entity if legal action based on the law in effect at the time of the issuance of the recovery bonds invalidates the recovery property, such indemnification obligations do not apply for any changes in law after the date the recovery bonds are issued, whether such changes in law are effected by means of any legislative enactment, any constitutional amendment, any regulatory or administrative action or any final and non-appealable judicial decision. Please read “The Sale Agreement—Seller Representations and Warranties” and “The Servicing Agreement—Servicing Standards and Covenants” in this prospectus.

Future judicial action could reduce the value of your investment in the recovery bonds.

The recovery property is created pursuant to the Wildfire Financing Law, the financing order and the issuance advice letter relating to the recovery bonds. The Wildfire Financing Law initially became effective on January 1, 2019. PG&E is the second utility to issue recovery bonds under the Wildfire Financing Law.

The Wildfire Financing Law or any provisions thereof, as well as the financing order, might be directly contested in courts or otherwise become the subject of litigation. As of the date of this prospectus, no such litigation has arisen. A lawsuit has been brought challenging the constitutionality of Public Utilities Code Division 1, Part 6 of the California Public Utilities Code (the “Wildfire Fund Law”), which authorizes the CPUC’s imposition of a non-bypassable charge by each electric utility in California to fund California’s Wildfire Fund. The Wildfire Fund Law was enacted in the same legislation (“AB 1054”) that amended the Wildfire Financing Law. In June 2020, the United States District Court for the Northern District of California (the “District Court”) dismissed the lawsuit with prejudice, plaintiffs subsequently appealed to the United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”), and on December 30, 2021, the Ninth Circuit affirmed the District Court’s dismissal. The plaintiffs filed a petition for rehearing and rehearing en banc, which was denied on February 23, 2022. Under the United States Supreme Court’s (the “Supreme Court”) rules, the plaintiffs have until May 24, 2022 to file a petition for a writ of certiorari to appeal the Ninth Circuit’s decision. To date, the plaintiffs have not filed such a petition.

The lawsuit seeking to invalidate the Wildfire Fund Law does not challenge the Wildfire Financing Law. If, however, the plaintiffs petition for a writ of certiorari, the writ is granted, and the Supreme Court reverses the Ninth Circuit’s decision (thereby allowing the lawsuit to proceed in the District Court), it is possible that any such decision would provoke a challenge to the Wildfire Financing Law or the financing order. If the Wildfire Financing Law or financing order is challenged, such a challenge could be successful. If any relevant underlying legislative enactment or a provision of the Wildfire Financing Law were invalidated, you might lose some or all of your investment or you might experience delays in recovering your investment.

California and other states have passed laws permitting the securitization of electrical corporation costs similar to the Wildfire Financing Law, such as costs associated with the deregulation of the electric market, environmental control costs and hurricane recovery costs. Some of the laws have been challenged by judicial actions or in utility commission proceedings. To date, none of these challenges has succeeded, but future challenges might ensue. An unfavorable decision regarding another state’s law would not automatically

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invalidate the Wildfire Financing Law or the financing order, but it might provoke a challenge to the Wildfire Financing Law, establish a non-binding legal precedent for a successful challenge to the Wildfire Financing Law or heighten awareness of the political and other risks of the recovery bonds, and in that way may limit their liquidity and value. Therefore, legal activity in other states may indirectly affect the value of your investment in the recovery bonds.

Future state legislative action, including a voter initiative, might attempt to reduce the value of your investment in the recovery bonds.

In the Wildfire Financing Law, the State has pledged that it will neither limit nor alter the fixed recovery charges, recovery property, financing orders of the CPUC or any rights thereunder until the recovery bonds, together with the interest thereon and related financing costs, are fully paid and discharged. For a description of the State Pledge, please read “The Recovery Property and the Wildfire Financing Law—The Financing Order and the Recovery Property— State Pledge” in this prospectus. However, the Wildfire Financing Law further provides that nothing therein precludes the State from limiting or altering the fixed recovery charges, recovery property or any financing order of the CPUC, if and when adequate provision is made by law for the protection of PG&E and of owners and holders of recovery bonds. It is unclear what “adequate provision” would be afforded to holders of recovery bonds by the State if such limitation or alteration were attempted. Accordingly, that adequate provision could conceivably have an adverse effect on the market value of the recovery bonds or the timing of receipt of payments with respect to the recovery bonds.

In addition, under Article II of the California Constitution, the electorate has the right through its initiative powers to propose statutes as well as amendments to the California Constitution. Generally, any matter that is a proper subject of legislation can become the subject of an initiative. For an initiative measure to qualify for an election, the initiative measure must, among other procedural requirements, be submitted to the California Attorney General. A petition signed by electors constituting five percent in the case of a statutory initiative and eight percent in the case of a constitutional initiative of the votes cast at the immediately preceding gubernatorial election also must be submitted to the California Secretary of State. To become effective, the initiative must then be approved by a majority vote of the electors voting at the next general election.

As of the date of this prospectus, the depositor is not aware of any pending California legislation or voter initiative that would materially and adversely affect any of the provisions of the Wildfire Financing Law. Nevertheless, the depositor cannot assure you that a repeal or amendment of the Wildfire Financing Law will not be adopted or sought, either by the California legislature, or the electorate acting through its initiative powers, or that any action or refusal to act by the State of California will not occur, any of which may constitute a violation of the State Pledge with the holders. If a violation of the State Pledge occurs, costly and time-consuming litigation might ensue. Any litigation might materially and adversely affect the price of the recovery bonds and your ability to resell the recovery bonds and might delay the timing of payments on the recovery bonds. Moreover, given the lack of controlling precedent directly addressing the recovery bonds and the State Pledge, the depositor cannot predict the outcome of any litigation with certainty. Accordingly, such litigation could result in delays in receipt of payments on the recovery bonds or losses on your investment in the recovery bonds.

The CPUC might attempt to take actions that could reduce the value of your investment in the recovery bonds.

The Wildfire Financing Law provides that a financing order is irrevocable and that the CPUC may not directly or indirectly, by any subsequent action, rescind or amend a financing order or reduce or impair the fixed recovery charges authorized under a financing order, except for the true-up adjustments to the fixed recovery charges. However, the CPUC retains the power to adopt, revise or rescind rules or regulations affecting PG&E.

For instance, in 2020 and 2021, the CPUC adopted new consumer protection regulations and extended or made permanent some of the temporary consumer protections enacted in response to COVID-19 that may

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prolong the time it takes to complete the process of disconnecting consumers for nonpayment or completely prevent disconnections in excess of certain set thresholds. Please read “The Depositor, Seller, Initial Servicer and Sponsor—Billing and Collections” and “The Depositor, Seller, Initial Servicer and Sponsor—COVID-19 Consumer Protections” in this prospectus. Similarly, the CPUC may prevent disconnections during extreme weather conditions. Any new or amended regulations or orders from the CPUC might affect the ability of the servicer to disconnect consumers for nonpayment or prevent disconnections in excess of certain regional thresholds, which may ultimately hinder PG&E’s ability to collect fixed recovery charges in full, and on a timely basis, which may in turn negatively impact, the rating of the recovery bonds or their price and, accordingly, the amortization of the recovery bonds and their weighted average lives.

The servicer is required to submit with the CPUC, on the issuing entity’s behalf, certain adjustments of the fixed recovery charges. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement— True-Up Adjustment Submissions” in this prospectus. Challenges to or delays in the true-up process might adversely affect the market perception and valuation of the recovery bonds. Also, any litigation might not only be costly and time-consuming, but also materially interrupt fixed recovery charge collections due to delayed implementation of true-up adjustments and might result in missing payments or payment delays and lengthened weighted-average lives of the recovery bonds.

PG&E is subject to the Enhanced Oversight and Enforcement Process and may be subject to additional fines, penalties, or other regulatory actions in the future which could impact PG&E’s ability to service the recovery property.

The Enhanced Oversight and Enforcement Process (“EOEP”) is a six-step process with potentially escalating CPUC oversight and enforcement measures based on specific “triggering events” identified for each of the six steps. If PG&E is placed into the EOEP, it will be subject to additional reporting requirements and additional monitoring and oversight by the CPUC. Higher steps of the process (steps 3 through 6) also contemplate additional enforcement mechanisms, including appointment of an independent third-party monitor, appointment of a chief restructuring officer, pursuit of the receivership remedy, and review of PG&E’s Certificate of Public Convenience and Necessity (i.e., its license to operate as a utility). The process contains provisions for PG&E to cure and exit the process if it can satisfy specific criteria. The EOEP states that PG&E should presumptively move through the steps of the process sequentially, but the CPUC may place PG&E into the appropriate step of the process upon occurrence of a specified triggering event.

On April 15, 2021, the CPUC placed PG&E into step 1 of the EOEP for failing to sufficiently prioritize clearing vegetation on its highest risk power lines as part of the 2020 wildfire mitigation plan. There can be no assurance regarding if or when PG&E will exit the EOEP, or whether the CPUC will initiate another step 1 proceeding or whether the CPUC will seek to move PG&E into a higher step of the process.

The EOEP does not replace or limit the CPUC’s regulatory authority, including the authority to issue orders to show cause and orders instituting investigations and to impose fines and penalties or take other regulatory actions. PG&E may be subject to additional fines, penalties, or other regulatory actions in the future which could impact PG&E’s ability to service the recovery property, whether in connection with the EOEP or otherwise.

PG&E Corporation and PG&E could be liable as a result of the 2019 Kincade fire, the 2020 Zogg fire, the 2021 Dixie fire, or future wildfires, which could impact PG&E’s ability to service the recovery property.

Based on the facts and circumstances available as of the date of this registration statement, PG&E Corporation and PG&E have determined that it is probable they will incur losses in connection with the 2019 Kincade fire, the 2020 Zogg fire and the 2021 Dixie fire. PG&E could be subject to significant liability in excess of recoveries that would be expected to have a material impact on PG&E’s financial condition, results of operations, liquidity, and cash flows. PG&E Corporation and PG&E have also received and have responded or

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are responding to document, data, and other information requests from the Safety and Enforcement Division of the CPUC and law enforcement agencies that are investigating these wildfires. PG&E Corporation and PG&E could be the subject of additional investigations, lawsuits, or enforcement actions in connection with the 2019 Kincade fire, the 2020 Zogg fire, the 2021 Dixie fire or other wildfires. If PG&E were convicted of any criminal charges in connection with the 2020 Zogg fire, the sentencing court must order PG&E to make restitution in an amount that is sufficient to fully reimburse victims for their economic losses. PG&E does not expect that any of its liability insurance would be available to cover restitution payments ordered by the court presiding over the criminal proceeding in connection with the 2020 Zogg fire. PG&E is currently unable to determine a reasonable estimate of the amount of such additional losses but believes that, depending on which charges it were to be convicted of, its total losses associated with the 2020 Zogg fire would materially exceed the accrued estimated liabilities that PG&E Corporation and PG&E have recorded to reflect the lower end of the range of the reasonably estimated range of losses. PG&E is currently unable to determine a reasonable estimate of the amount of such additional losses.

Additionally, under the doctrine of inverse condemnation, courts have imposed liability against utilities on the grounds that losses borne by the person whose property was damaged through a public-use undertaking should be spread across the community that benefited from such undertaking, even if PG&E is unable to recover these costs through rates.

Although PG&E has taken extensive measures to reduce the threat of future wildfires, the potential that PG&E’s equipment will be involved in the ignition of future wildfires, including catastrophic wildfires, is significant. Despite significant investment in mitigation measures to improve infrastructure and manage vegetation, as well as implementation of de-energization strategies, PG&E may not be successful in mitigating the risk of future wildfires.

In addition, wildfires have had and, along with any future wildfires, could continue to have, adverse consequences on PG&E’s proceedings with the CPUC and the FERC, and future regulatory proceedings, including future applications with the Office of Energy Infrastructure Safety for the safety certification required by the Wildfire Financing Law. PG&E may also suffer additional reputational harm and face an even more challenging operating, political, and regulatory environment as a result of past or any future wildfires, which could impact PG&E’s ability to service the recovery property.

The servicer may not fulfill its obligations to act on behalf of the bondholders to protect bondholders from actions by the CPUC or the State of California, or the servicer may be unsuccessful in any such attempt.

The servicer will agree in the servicing agreement to take any action or proceeding necessary to compel performance by the CPUC and the State of California of any of their obligations or duties under the Wildfire Financing Law or the financing order, including any actions reasonably necessary to block or overturn attempts to cause a repeal or modification of the Wildfire Financing Law or the financing order. The servicer, however, may not be able to take those actions for a number of reasons, including legal or regulatory restrictions, financial constraints and practical difficulties in challenging any such legislative enactment or constitutional amendment. Additionally, any action the servicer is able to take may not be successful. Any such failure to perform the servicer’s obligations or to successfully compel performance by the CPUC or the State of California could negatively affect bondholders’ rights and result in a loss of their investment.

A municipal entity might assert the right to acquire portions of PG&E’s electric facilities and/or serve the load of consumers within their jurisdictional areas and avoid or reduce the affected consumers’ payment of the fixed recovery charges.

California law authorizes certain local municipalities to seek to acquire portions of PG&E’s electric facilities through the power of eminent domain for use as part of municipally-owned utility systems and serve consumers with those facilities. Additionally, local municipalities may extend their own facilities to take over service of consumers located within their jurisdictional areas, which may overlap with PG&E’s service territory. These circumstances involve what is referred to under existing tariffs as municipal departing load (“Municipal DL”),

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where the affected consumers are no longer interconnected with PG&E’s electric facilities. As of the date of this prospectus, the depositor is aware that certain municipalities have suggested municipalization of part or all of PG&E’s businesses, offers by municipalities and other public entities to acquire the electric assets of PG&E within their respective jurisdictions and calls for state intervention, including the possibility of a state takeover of PG&E.

As required by the Wildfire Financing Law, the financing order provides that the fixed recovery charges must be paid by all existing and future consumers within PG&E’s service territory as it existed on the date of the financing order (subject to certain exceptions). The financing order provides that, except in the case of municipalization, consumers that no longer take transmission and distribution retail service from PG&E after the date of the financing order, or that meet relevant criteria in the applicable tariff, shall be treated as departing load consumers (“DL consumers”) using applicable tariffs for DL consumers, including the Electric-Departing Customer Generation tariff, and will be subject to pay the fixed recovery charges and any FRTAs and entitled to receive the Customer Credit. In addition, under the financing order and the Wildfire Financing Law, in the event that residents of a municipality who are consumers no longer take transmission and distribution retail service after the date of the financing order, such consumers will be subject to pay the fixed recovery charges and any FRTAs. DL consumers, including Municipal DL consumers, are required to pay the fixed recovery charge and any FRTAs based on approaches that are consistent with the methods in place for other non- bypassable charges. PG&E’s Municipal DL tariffs provide for calculation of certain non-bypassable charges based on consumption as metered or estimated. PG&E has administered these Municipal DL tariffs by reaching an agreement with the Municipal DL consumer or the local municipality serving the Municipal DL consumer for the payment of one or more lump sums based on a mutually acceptable estimate of the Municipal DL consumer’s non-bypassable cost obligations, which include charges similar to the fixed recovery charges. No assurance can be provided that such agreements will be reached in the future with respect to Municipal DL consumers, and any failure to reach such an agreement could result in litigation or otherwise make it difficult to collect the fixed recovery charges (including any lump sum payment). Please read “The Depositor, Seller, Initial Servicer and Sponsor— Municipalization; Municipal Departing Load” and “—Successors” in this prospectus. If such agreements relating to Municipal DL consumers are, however, reached, the payments allocable to the fixed recovery charges will constitute recovery property.

The Wildfire Financing Law also specifies that any successor to an electric utility shall perform and satisfy all obligations of the electric utility pursuant to the Wildfire Financing Law, including collecting and paying to the bondholders revenues arising with respect to the recovery property. In the servicing agreement, PG&E will covenant to assert in an appropriate forum that any public entity or municipality that acquires any portion of PG&E’s electric distribution facilities must be treated as a successor to PG&E under the Wildfire Financing Law and the financing order and that retail consumers remain responsible for payment of fixed recovery charges. No assurance can be provided that such assertion will be accepted by a public entity or municipality or sustained by a court. Please read “The Recovery Property and the Wildfire Financing Law—The Financing Order and the Recovery Property—The Wildfire Financing Law Requires the Electrical Corporation and its Successors to Service the Recovery Property” in this prospectus.

Despite these provisions of the Wildfire Financing Law and the financing order, the involved public entity or municipality might assert that its consumers are not responsible for payment of fixed recovery charges or that it is not responsible for collecting the charges, and as a result, PG&E may find collection of fixed recovery charges from such consumers difficult or impractical or the recovery of such charges to be delayed. In any such cases, there can be no assurance that the fixed recovery charges will be collected from consumers of publicly-owned utilities who were formerly consumers of PG&E. Any decrease in the consumer base from which fixed recovery charges are collected might result in missing payments or payment delays and lengthened weighted average life of the recovery bonds.

In the financing order, the CPUC has committed, in furtherance of the State Pledge and in accordance with the Wildfire Financing Law, in connection with any CPUC proceeding to authorize the voluntary or involuntary change in ownership of PG&E facilities by a public entity, to ensure the new asset owner either (a) will continue

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to bill and collect fixed recovery charges from consumers and remit such collections to PG&E or a new servicer for the recovery bonds or (b) ensure the upfront funding of the fixed recovery charges that would otherwise be paid by consumers where rate payment would be affected by the ownership change.

Whether and how the law giving the CPUC jurisdiction to approve a public entity’s acquisition of electric or gas assets would be applied to a condemnation has not been tested, and no assurance can be provided that the provisions of the financing order referenced herein will be successfully implemented. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Provides that Fixed Recovery Charges are Non-bypassable” in this prospectus.

It may be difficult to accurately estimate and collect fixed recovery charges from consumers who self- generate and who disconnect from PG&E’s grid.

Broader use of distributed generation by consumers may result from consumers’ changing perceptions of the merits of utilizing existing generation technology, tax or other economic incentives or from technological developments resulting in smaller-scale, more fuel efficient, more environmentally friendly and/or more cost effective distributed generation. Moreover, an increase in distributed generation may result if extreme weather conditions result in shortages of grid-supplied energy or if other factors cause grid-supplied energy to be less reliable. More widespread use of distributed generation, particularly battery storage, might allow greater numbers of consumers to reduce or eliminate their payment of fixed recovery charges causing fixed recovery charges to remaining consumers to increase.

In respect of consumers who self-generate, the financing order provides that, except in the case of municipalization, consumers that no longer take transmission and distribution retail service from PG&E after the date of the financing order, or that meet relevant criteria in the applicable tariff, shall be treated as DL consumers using applicable tariffs for DL consumers, including the Electric-Departing Customer Generation tariff, and will be subject to pay the fixed recovery charges and any FRTAs and entitled to receive the Customer Credit. In addition, under the financing order and the Wildfire Financing Law, in the event that residents of a municipality who are consumers no longer take transmission and distribution retail service after the date of the financing order, such consumers will be subject to pay the fixed recovery charges and any FRTAs. The financing order provides that these self-generating DL consumers will be required to pay fixed recovery charges consistent with the methodology in place under existing DL tariffs for the payment of other non-bypassable charges by such consumers, except as stated below. This methodology requires that the fixed recovery charge be imposed on DL consumers based upon the consumption displaced by the new generation. Please read “The Depositor, Seller, Initial Servicer and Sponsor—Community Choice Aggregation, Direct Access and Departing Load” in this prospectus. The financing order does not limit the CPUC’s or PG&E’s discretion to modify DL tariffs in the future, but does provide assurance that fixed recovery charges will be recovered from consumers consistent with the method set forth in the DL tariffs in place as of the date of the financing order.

However, current DL tariffs do not require the payment of non-bypassable charges on DL consumers (other than Municipal DL consumers) that terminate service and disconnect from PG&E’s grid. While the financing order provides that such consumers remain responsible for payment of fixed recovery charges, it may be difficult for PG&E to accurately estimate and collect fixed recovery charges from these disconnected (former) consumers, and these consumers may dispute their obligation to pay the fixed recovery charge, thus potentially adversely impacting the timing and receipt of fixed recovery charge collections.

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SERVICING FORECASTING RISKS

Inaccurate consumption or collection forecasting might reduce scheduled payments on the recovery bonds.

The fixed recovery charges are calculated based on forecasted consumer usage. The amount and the rate of fixed recovery charge collections will depend in part on actual electricity consumption and the timing of collections and write-offs. The financing order approves the methodology by which the fixed recovery charges will be calculated and adjusted from time to time by the servicer pursuant to true-up advice letters submitted to the CPUC as described below. Pursuant to the financing order, except for Exempted Consumers, the fixed recovery charge will be an equal cent per kWh charge across all consumer classes. For residential rate schedules with a tiered rate structure, total rates shall retain the rate relationships by tier determined by CPUC Decision (D.) 15-07-001 with the addition of the fixed recovery charges, any FRTAs and the Customer Credit. If the servicer inaccurately forecasts either electricity consumption or underestimates consumer delinquency or write-offs when setting or adjusting the fixed recovery charge, there could be a shortfall or material delay in fixed recovery charge collections, which might result in missed or delayed payments of principal and interest and lengthened weighted average life of the recovery bonds. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges” and “The Servicing Agreement— True-Up Adjustment Submissions” in this prospectus.

Inaccurate forecasting of electricity consumption by the servicer might result from, among other things:

• unanticipated weather or economic conditions, resulting in less electricity consumption than forecast;

• general economic conditions, including the economic downturn caused by COVID-19 pandemic being worse than expected, causing consumers to migrate from PG&E’s service territory or reduce their electricity consumption;

• the occurrence of a natural disaster, such as wildfires or earthquakes or an act of war or terrorism, or other catastrophic event, including pandemics, unexpectedly disrupting electrical service and reducing electricity consumption;

• unanticipated changes in the market structure of the electric industry;

• large consumers unexpectedly ceasing business or departing PG&E’s service territory;

• dramatic and unexpected changes in energy prices resulting in decreased electricity consumption;

• consumers consuming less electricity than anticipated because of increased energy prices, unanticipated increases in conservation efforts or unanticipated increases in electric consumption efficiency; or

• differences or changes in forecasting methodology.

Inaccurate forecasting of delinquencies or write-offs by the servicer could result from, among other things:

• unexpected deterioration of the economy, the occurrence of a natural disaster, an act of war or terrorism or other catastrophic events, including pandemics, causing greater write-offs than expected or forcing PG&E or a successor utility to grant additional payment relief to more consumers;

• an unexpected change in law that makes it more difficult for PG&E or a successor distribution company to terminate service to nonpaying consumers, or that requires PG&E or a successor to apply more lenient credit standards for consumers;

• the expansion of the “direct access” program which permits ESPs to collect payments arising from the fixed recovery charges, but who may fail to remit consumer charges to the servicer in a timely manner; or

• rolling blackouts instituted by CAISO by the lack of installed capacity and high demand.

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PG&E has been and could continue to be significantly affected by the outbreak of the COVID-19 pandemic, which could impact PG&E’s ability to collect and service the fixed recovery charges and might reduce scheduled payments on the recovery bonds.

PG&E continues to evaluate the impact of the current COVID-19 outbreak on its business and financial results. The consequences of a continued and prolonged outbreak and resulting governmental and regulatory orders have had and could continue to have a negative impact on PG&E’s financial condition, results of operations, liquidity, and cash flows, which in turn, could impact PG&E’s ability to collect and service the fixed recovery charges and might reduce scheduled payments on the recovery bonds. The financing order requires that the servicer submit with the CPUC periodic true-up advice letters to adjust the fixed recovery charges to ensure the recovery of revenues sufficient to provide for the timely payment of the periodic payment requirement. Routine annual true-up adjustment advice letters, routine semi-annual true-up advice letters, and routine interim true-up adjustment advice letters must be submitted at least fifty days prior to the proposed effective date of the adjustment. Given that there is at least fifty days between submission of a true-up advice letter and the effective date of an adjustment, a reduction in collections as the result of the imposition of a new moratorium or similar consumer protection measure and delay of implementing an adjustment may reduce scheduled payments on the recovery bonds.

The outbreak of the COVID-19 pandemic and the resulting economic conditions, and resulting decrease in economic and industrial activity in PG&E’s service territory, have and will continue to have a significant adverse impact on PG&E’s consumers. For example, reduced consumer receipts and collection delays have occurred throughout the COVID-19 pandemic. Although the CPUC authorized the establishment of memorandum and balancing accounts to track costs associated with consumer protection measures, the timing of regulatory relief, if any, and ultimate cost recovery from such accounts or otherwise, are uncertain. Please read “The Depositor, Seller, Initial Servicer and Sponsor—COVID-19 Consumer Protections” in this prospectus.

PG&E expects additional financial impacts in the future as a result of the COVID-19 pandemic but is unable to predict the timing, duration or intensity of the COVID-19 pandemic situation.

Consumer protection measures may limit the ability of PG&E to collect all charges owed by consumers, including the fixed recovery charges.

Consumer protection measures may limit the ability of PG&E to collect all charges owed by consumers, including the fixed recovery charges. In addition, California legislature or the CPUC may take additional actions in response to COVID-19 or any future pandemic which may adversely affect the timing of fixed recovery charge collections. As a consequence, the effect of any required true-up could be delayed, resulting in a shortfall or material delay in fixed recovery charge collections, which in turn might result in missed or delayed payments of principal and interest and lengthened weighted average life of the recovery bonds and downgrade of the credit ratings on the recovery bonds. Please read “The Depositor, Seller, Initial Servicer and Sponsor—COVID-19 Consumer Protections” in this prospectus.

Your investment in the recovery bonds depends on PG&E or its successor or assignee, acting as servicer of the recovery property.

PG&E, as servicer, will be responsible for, among other things, calculating, billing and collecting the fixed recovery charges from ESPs, submitting requests to the CPUC to adjust these charges, monitoring the collateral for the recovery bonds and taking certain actions in the event of non-payment by consumers. The trustee’s receipt of collections in respect of the fixed recovery charges, which will be used to make payments on recovery bonds, will depend in part on the skill and diligence of the servicer in performing these functions. The systems that the

servicer has in place for fixed recovery charge billings and collections, together with the CPUC regulations governing ESPs, might, in particular circumstances, cause the servicer to experience difficulty in performing these functions in a timely and completely accurate manner. If the servicer fails to make collections for any

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reason, then the servicer’s payments to the trustee in respect of the fixed recovery charges might be delayed or reduced. In that event, the issuing entity’s payments on the recovery bonds might be delayed or reduced.

If the issuing entity replaces PG&E as the servicer, the issuing entity may experience difficulties finding and using a replacement servicer.

If PG&E ceases to service the recovery property related to the recovery bonds, it might be difficult to find a successor servicer. Also, any successor servicer might have less experience and ability than PG&E and might experience difficulties in collecting fixed recovery charges and determining appropriate adjustments to the fixed recovery charges and billing and/or payment arrangements may change, resulting in delays or disruptions of collections. A successor servicer might not be willing to perform except for fees higher than those approved by the CPUC pursuant to the financing order and might charge fees that, while permitted under the financing order, are substantially higher than the fees paid to PG&E as servicer. Although a true-up adjustment would be required to allow for the increase in fees, there could be a gap between the incurrence of those fees and the implementation of a true-up adjustment to adjust for that increase that might adversely affect distributions to bondholders. In the event of the commencement of a case by or against the servicer under Title 11 of the United States Code, as amended, of the Bankruptcy Code, or similar laws, the issuing entity and the trustee might be prevented from effecting a transfer of servicing due to operation of the Bankruptcy Code. Any of these factors might delay the timing of payments and reduce the value of your investment.

PG&E’s operational networks and information technology systems could be impacted by a cyber incident, cyber security breach, severe natural event, or physical attack, which could limit PG&E’s ability to service the recovery property.

PG&E’s electricity systems rely on a complex, interconnected network of generation, transmission, distribution, control, and communication technologies, which can be damaged by natural events-such as severe weather or seismic events-and by malicious events, such as cyber and physical attacks. Private and public entities, such as the North American Electric Reliability Corporation, and the U.S. federal government, including the Departments of Defense, Homeland Security and Energy, and the White House, have noted that cyber-attacks targeting utility systems are increasing in sophistication, magnitude, and frequency. PG&E’s operational networks also may face new cyber security risks due to modernizing and interconnecting the existing infrastructure with new technologies and control systems. Any failure or decrease in the functionality of PG&E’s operational networks could cause harm to the public or employees, significantly disrupt operations, negatively impact PG&E’s ability to safely generate, transport, deliver and store energy and gas or otherwise operate in the most safe and efficient manner or at all, and damage PG&E’s assets or operations or those of third parties.

PG&E also relies on complex information technology systems that allow it to create, collect, use, disclose, store and otherwise process sensitive information, including PG&E’s financial information, consumer energy usage and billing information, and personal information regarding consumers, employees and their dependents, contractors, and other individuals. In addition, PG&E often relies on third-party vendors to host, maintain, modify, and update its systems, and to provide other services to PG&E or PG&E’s consumers. In addition, PG&E is increasingly being required to disclose large amounts of data (including consumer energy usage and personal information regarding consumers) to support changes to California’s electricity market related to grid modernization and consumer choice. These third-party vendors could cease to exist, fail to establish adequate processes to protect PG&E’s systems and information, or experience security incidents or inadequate security measures. Any incidents or disruptions in PG&E’s information technology systems could impact PG&E’s ability to track or collect fixed recovery charges and limit PG&E’s ability to service the recovery property.

PG&E and its third-party vendors have been subject to, and will likely continue to be subject to, breaches and attempts to gain unauthorized access to PG&E’s information technology systems or confidential data (including information about consumers and employees), or to disrupt PG&E’s operations. None of these breaches or attempts has individually or in the aggregate resulted in a security incident with a material effect on

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PG&E’s financial condition, results of operations, liquidity, and cash flows. Despite implementation of security and control measures, there can be no assurance that PG&E will be able to prevent unauthorized access to its operational networks, information technology systems or data, or the disruption of its operations. Such events could subject PG&E to significant expenses, claims by consumers or third parties, government inquiries, penalties for violation of applicable privacy laws, investigations, and regulatory actions that could result in material fines and penalties, loss of consumers and harm to PG&E’s reputation, any of which could have a material effect on PG&E’s ability to bill and collect fixed recovery charges or otherwise service the recovery property.

It may be difficult to collect fixed recovery charges from other parties who bill retail consumers.

Under California’s “direct access” program, PG&E faces competition in certain areas of its retail business from ESPs. Currently the direct access program is limited to 11,393 gigawatt hours of annual sales for PG&E’s service area. However, as has been done previously in 2009 and 2018, the California legislature or the CPUC could expand the direct access program at any time. Please read “The Depositor, Seller, Initial Servicer and Sponsor—Community Choice Aggregation, Direct Access and Departing Load” in this prospectus. In respect of consumers taking service from an ESP, PG&E remains the transmission and distribution provider. The Wildfire Financing Law and the financing order provide that the fixed recovery charges must be paid by all existing and future consumers, except for Exempted Consumers, within PG&E’s service territory as it existed on the date of the financing order. The financing order provides that consumers with departing load must pay the fixed recovery charges on such departing load. Nevertheless, ESPs that elect to do their own billing will be responsible for billing the fixed recovery charges and any delay in the remittance of such fixed recovery charges may reduce the fixed recovery charge collections available to make payments on the recovery bonds.

It might be difficult for successor servicers to collect the fixed recovery charges from PG&E’s consumers.

Any successor servicer may bring an action against a consumer for non-payment of the fixed recovery charge, but only a successor servicer that is a successor electric utility may terminate service for failure to pay the fixed recovery charges. A successor servicer that does not have the threat of termination of service available to enforce payment of the fixed recovery charge would need to rely on the successor electric utility to threaten to terminate service for nonpayment of other portions of monthly electric utility bills. This inability might reduce the value of your investment.

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RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE RECOVERY PROPERTY

Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect.

Under the Wildfire Financing Law and the indenture, the trustee or the bondholders have the right to foreclose or otherwise enforce the lien on the recovery property securing the recovery bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the recovery property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of the recovery bonds will be due and payable upon acceleration of the recovery bonds before maturity, fixed recovery charges likely would not be accelerated and the nature of the issuing entity’s business will result in principal of the recovery bonds being paid as funds become available. If there is an acceleration of the recovery bonds, all tranches of the recovery bonds will be paid pro rata; therefore, some tranches might be paid earlier than expected and some tranches might be paid later than expected.

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NATURAL DISASTER-RELATED RISKS

Severe weather conditions, extended drought, and climate change could materially affect PG&E.

Extreme weather, drought and shifting climate patterns have intensified the challenges associated with many of the other risks facing PG&E, particularly wildfire management in California. PG&E’s service territory encompasses some of the most densely forested areas in California and, as a consequence, is subject to higher risk from vegetation-related ignition events than other California investor-owned utilities. Further, environmental extremes, such as drought conditions and extreme heat followed by periods of wet weather, can drive additional vegetation growth (which can then fuel fires) and influence both the likelihood and severity of extraordinary wildfire events. In particular, the risk posed by wildfires, including during the 2021 wildfire season, has increased in PG&E’s service area as a result of an ongoing extended period of drought, bark beetle infestations in the California forest and wildfire fuel increases due to rising temperatures and record rainfall following the drought, and strong wind events, among other environmental factors. As of December 31, 2021, more than 86% of California is experiencing severe to extreme drought. Moderate or severe drought conditions occur and can persist in virtually all of PG&E’s service territory. More than half of PG&E’s service area is in a high fire-threat district as set forth in the CPUC Fire-Threat Map (“HFTD”). Contributing factors other than environmental can include local land use policies and historical forestry management practices. The combined effects of extreme weather and climate change also impact this risk. In January 2018, the CPUC approved a statewide fire-threat map that shows that approximately half of PG&E’s service territory is facing “elevated” or “extreme” fire danger. Approximately 25,000 circuit miles of PG&E’s nearly 81,000 distribution overhead circuit miles and approximately 5,500 miles of the nearly 18,000 transmission overhead circuit miles are in such HFTDs, significantly more in total than other California investor-owned utilities.

Severe weather events and other natural disasters, including wildfires and other fires, storms, tornadoes, floods, extreme heat events (including recent extreme heat events during the 2021 wildfire season), drought, earthquakes, lightning, tsunamis, rising sea levels, solar events, electromagnetic events, wind events or other weather-related conditions, climate change, or natural disasters, could result in severe business disruptions, prolonged power outages, property damage, injuries and loss of life, significant decreases in revenues and earnings, and significant additional costs to PG&E. Transmission and/or distribution and generation facilities could be damaged or destroyed and usage of electricity could be interrupted temporarily, reducing the collections of fixed recovery charges or otherwise impacting PG&E’s ability to service the recovery property. There could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity among PG&E’s consumers, which could cause the fixed recovery charges to be greater than expected. In addition, heat waves and other extreme weather events may require the implementation of rolling blackouts, temporarily reducing electricity sales and resulting in reduced fixed recovery charge collections. Legislative action adverse to the bondholders might be taken in response, and such legislation, if challenged as a violation of the State Pledge, might be defended on the basis of public necessity. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—Future state legislative action, including a voter initiative, might attempt to reduce the value of your investment in the recovery bonds” in this prospectus.

Events or conditions caused by climate change could have a greater impact on PG&E’s operations than PG&E’s studies suggest and could result in lower revenues or increased expenses, or both. If PG&E’s rates cannot be adjusted to reflect the impact of events or conditions caused by climate change, PG&E’s financial condition, results of operations, liquidity, and cash flows could be materially affected, which, in turn, could reduce the collections of fixed recovery charges or otherwise impact PG&E’s ability to service the recovery property.

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RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER

For a more detailed discussion of the following bankruptcy risks, please read “How a Bankruptcy May Affect Your Investment” in this prospectus.

The servicer will commingle the fixed recovery charges with other revenues it collects, which might obstruct access to the fixed recovery charges in case of the servicer’s bankruptcy and reduce the value of your investment in the recovery bonds.

The servicer will be required to remit estimated fixed recovery charge collections to the trustee no later than the second servicer business day of receipt. The servicer will not segregate the fixed recovery charges from the other funds it collects from consumers or ESPs or its general funds. The fixed recovery charges will be estimated and segregated only when the servicer remits them to the trustee.

Despite this requirement, the servicer might fail to remit the full amount of the fixed recovery charges payable to the trustee or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of fixed recovery charge collections available to make payments on the recovery bonds.

Absent a default under the servicing agreement, PG&E will be permitted to remit estimated fixed recovery charges to the trustee. While PG&E will be responsible for identifying and calculating the actual amount of fixed recovery charges in the event of a default under the servicing agreement, it may be difficult for PG&E to identify such charges, given existing limitations in its billing system.

The Wildfire Financing Law provides that the priority of a lien and security interest perfected in recovery property is not impaired by the commingling of the funds arising from fixed recovery charges with any other funds. In a bankruptcy of the servicer, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Wildfire Financing Law and might decline to recognize the issuing entity’s right to collections of the fixed recovery charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the fixed recovery charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owing on the recovery bonds. In this case, the issuing entity would have only a general unsecured claim against the servicer for those amounts. This decision could cause material delays in payments of principal or interest, or losses, on your recovery bonds and could materially reduce the value of your investment in the recovery bonds.

The bankruptcy of PG&E or any successor seller might result in losses or delays in payments on the recovery bonds.

The seller will represent and warrant in the sale agreement that the transfer of the recovery property to the issuing entity under that sale agreement is a valid sale and assignment of that recovery property from the seller to the issuing entity. The seller will also represent, warrant, and covenant that it will take the appropriate actions under the Wildfire Financing Law to perfect this sale. The Wildfire Financing Law provides that the transactions described in the sale agreement shall constitute a sale of the recovery property to the issuing entity, and the seller and the issuing entity will treat the transaction as a sale under applicable law, although for financial reporting and tax reporting purposes the transaction will be treated as debt of the seller. If the seller were to become a debtor in a bankruptcy case, and a party in interest (including the seller itself) were to take the position that the sale of the recovery property to the issuing entity should be recharacterized as the grant of a security interest in such recovery property to secure a borrowing of the seller, delays in payments on the recovery bonds could result. If a court were to adopt such position, then delays or reductions in payments on the recovery bonds could result.

Pursuant to the Wildfire Financing Law and the financing order, upon the sale of the recovery property, the recovery property is created as a current property right, and it thereafter continuously exists as property for all

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purposes. Nonetheless, if the seller were to become the debtor in a bankruptcy case, a party in interest (including the seller itself) may take the position that, because the fixed recovery charges are usage-based charges, recovery property comes into existence only as consumers use electricity. If a court were to adopt this position, no assurance can be given that the court would not also rule that any recovery property relating to electricity consumed after the commencement of the seller’s bankruptcy case was not required to be transferred to the issuing entity, thus resulting in delays or reductions of payments on the recovery bonds.

A bankruptcy court generally follows state property law on issues such as those addressed by the state law provisions described above. However, a bankruptcy court does not follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a PG&E bankruptcy refused to enforce one or more of the state property law provisions described above, the effect of this decision on you as a beneficial owner of the recovery bonds might be similar to the treatment you would receive in a PG&E bankruptcy if the recovery bonds had been issued directly by PG&E. A decision by the bankruptcy court that, despite the issuing entity’s separateness from PG&E, the issuing entity’s assets and liabilities and those of PG&E should be consolidated would have a similar effect on you as a bondholder.

The issuing entity has taken steps together with PG&E, as the seller, to reduce the risk that in the event the seller or an affiliate of the seller were to become the debtor in a bankruptcy case, a court would order that the issuing entity’s assets and liabilities be substantively consolidated with those of PG&E or an affiliate. Additionally, the financing order provides that PG&E’s failure to make the Initial Shareholder Contribution, the Additional Shareholder Contributions or any voluntary or required contribution to the Customer Credit Trust or PG&E’s failure to pay the Customer Credit shall not affect or impair the issuing entity’s ownership of the recovery property and any failure by PG&E to pay the Customer Credit shall not change the obligation of consumers to pay the fixed recovery charge.

Nonetheless, these steps might not be completely effective, and thus if PG&E or an affiliate of the seller were to become a debtor in a bankruptcy case, a court might order that the issuing entity’s assets and liabilities be consolidated with those of PG&E or an affiliate of the seller. This might cause material delays in payment of, or losses on, your recovery bonds and might materially reduce the value of your investment in the recovery bonds. For example:

• without permission from the bankruptcy court, the trustee might be prevented from taking actions against PG&E or recovering or using funds on your behalf or replacing PG&E as the servicer;

• the bankruptcy court might order the trustee to exchange the recovery property for other property of lower value;

• tax or other government liens on PG&E’s property might have priority over the trustee’s lien and might be paid from collected fixed recovery charges before payments on the recovery bonds;

• the trustee’s lien might not be properly perfected in the collected recovery property collections prior to or as of the date of PG&E’s bankruptcy, with the result that the recovery bonds would represent only general unsecured claims against PG&E;

• the bankruptcy court might rule that neither the issuing entity’s property interest nor the trustee’s lien extends to fixed recovery charges in respect of electricity consumed after the commencement of PG&E’s bankruptcy case, with the result that the recovery bonds would represent only general unsecured claims against PG&E;

• the issuing entity and PG&E might be relieved of any obligation to make any payments on the recovery bonds during the pendency of the bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the bankruptcy case;

• PG&E might be able to alter the terms of the recovery bonds as part of its plan of reorganization,

• the bankruptcy court might rule that the fixed recovery charges should be used to pay, or that the issuing entity should be charged for, a portion of the cost of providing electric service; or

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• the bankruptcy court might rule that the remedy provisions of the sale agreement are unenforceable, leaving the issuing entity with an unsecured claim for actual damages against PG&E that may be difficult to prove or, if proven, to collect in full.

Furthermore, if PG&E enters bankruptcy proceedings, it might be permitted to stop acting as servicer, and it may be difficult to find a third party to act as servicer. The failure of the servicer to perform its duties or the inability to find a successor servicer might cause payment delays or losses on your investment in the recovery bonds. Also, the mere fact of a servicer or seller bankruptcy proceeding might have an adverse effect on the resale market for the recovery bonds and on the value of the recovery bonds.

The State of California might seek to limit or alter the fixed recovery charges, recovery property or the financing order of the CPUC following a bankruptcy of PG&E.

Pursuant to the Stress Test Order, the assets of the Customer Credit Trust can only be used for limited purposes (including reimbursing PG&E for providing the Customer Credit and its expenses), and the Customer Credit Trust should be unavailable to PG&E’s general unsecured creditors. For the avoidance of doubt, the assets of the Customer Credit Trust will not pledged as collateral for the recovery bonds.

The financing order provides that nonpayment of the Customer Credit will not change the obligations of consumers to pay the fixed recovery charges. The failure of PG&E to provide the Customer Credit may, however, cause the recovery bonds to no longer be considered rate neutral and result in consumers bearing a greater burden, even if only temporarily. If the recovery bonds are no longer considered rate neutral, governmental entities could be motivated to take actions that would lessen the burden on consumers, which could instigate litigation which could be costly and time-consuming, and, which could limit or reduce the value of your investment. See “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions— Future judicial action could reduce the value of your investment in the recovery bonds” and “The Recovery Property and the Wildfire Financing Law—The Financing Order and the Recovery Property—State Pledge”.

Under the Wildfire Financing Law, the State of California has pledged that it will neither limit nor alter the fixed recovery charges, recovery property, the financing order, or any rights thereunder, except for adjustments discussed in this prospectus and in “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement— True-Up Adjustment Submissions”, until the recovery bonds, together with the interest thereon and related financing costs, are fully paid and discharged. The Wildfire Financing Law further provides that nothing in the State Pledge precludes the State of California from limiting or altering the fixed recovery charges, recovery property or the financing order of the CPUC, if and when adequate provision is made by law for the protection of electrical corporations and of owners and holders of recovery bonds. However, following a bankruptcy of PG&E or any successor seller, provided other exigent circumstances justified such an action, governmental entities may seek to limit or alter the fixed recovery charges, recovery property, and the value of the recovery bonds.

The sale of the recovery property might be construed as a financing and not a sale in a case of PG&E’s bankruptcy which might delay or limit payments on the recovery bonds.

The Wildfire Financing Law provides that the characterization of a transfer of recovery property as a sale or other absolute transfer will not be affected or impaired by treatment of the transfer as a financing for federal or state tax purposes or financial reporting purposes. Additionally, the financing order provides that the failure to provide the Customer Credit will not impair the characterization of the transfer of recovery property as a sale or other absolute transfer. The issuing entity and PG&E will treat the transaction as a sale under applicable law, although for financial reporting and income and franchise tax purposes the transaction is intended to be treated as a financing. In the event of a bankruptcy of PG&E, a party in interest in the bankruptcy might assert that the sale of the recovery property to the issuing entity was a financing transaction and not a “sale or other absolute transfer” and that the treatment of the transaction for financial reporting and tax purposes as a financing and not a

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sale, and the existence of the Customer Credit, each lends weight to that position. If a court were to characterize the transaction as a financing, the issuing entity expects that it would, on behalf of itself and the trustee, be treated as a secured creditor of PG&E in the bankruptcy proceedings, although a court might determine that the issuing entity only has an unsecured claim against PG&E. Even if the issuing entity had a security interest in the recovery property, the issuing entity would not likely have access to the related fixed recovery charge collections during the bankruptcy and would be subject to the risks of a secured creditor in a bankruptcy case, including the possible bankruptcy risks described in the immediately preceding risk factor. As a result, repayment of the recovery bonds might be significantly delayed and a plan of reorganization in the bankruptcy might permanently modify the amount and timing of payments to the issuing entity of the related fixed recovery charge collections and therefore the amount and timing of funds available to the issuing entity to pay bondholders.

If the servicer enters bankruptcy proceedings, the collections of the fixed recovery charges held by the servicer as of the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the recovery bonds.

In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be avoidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that fixed recovery charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, the issuing entity may be considered an “insider” of the servicer. If the issuing entity is considered to be an “insider” of the servicer, any such remittance to the issuing entity made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, the issuing entity or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, the issuing entity would expect that the amount of any future fixed recovery charges would be increased through the statutory true-up mechanism to recover such amount, though this would not eliminate the risk of payment delays or losses on your investment in the recovery bonds.

Claims against PG&E or any successor seller might be limited in the event of a bankruptcy of the seller.

If the seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by the issuing entity against the seller under the sale agreement and the other documents executed in connection with the sale agreement would be unsecured claims and would be adjudicated in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that the issuing entity has against the seller and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of the seller might challenge the enforceability of the indemnity provisions in a sale agreement. If a court were to hold that the indemnity provisions were unenforceable, the issuing entity would be left with a claim for actual damages against the seller based on breach of contract principles, which would be subject to estimation and/or calculation by the court. The issuing entity cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, the issuing entity cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving the seller.

The bankruptcy of PG&E or any successor seller might limit the remedies available to the trustee.

Upon an event of default for the recovery bonds under the indenture, the Wildfire Financing Law permits the trustee to enforce the security interest in the recovery property, as well as the statutory lien created by the Wildfire Financing Law in the recovery property, in accordance with the terms of the indenture. In this capacity, and pursuant to the Wildfire Financing Law and the financing order, the trustee is permitted to request the CPUC

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to order the sequestration and payment to bondholders of all revenues arising with respect to the related recovery property. There can be no assurance, however, that the CPUC or a court would issue this order, or that a court would respect the CPUC’s right to order sequestration, after a PG&E bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee would be required to seek an order from the bankruptcy court lifting the automatic stay to permit this action by the CPUC or a court, and an order requiring an accounting and segregation of the revenues arising from the recovery property. There can be no assurance that a court would grant either order.

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OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE RECOVERY BONDS

PG&E’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the recovery bonds.

PG&E is obligated under the sale agreement to indemnify the issuing entity and the trustee, for itself and on behalf of the bondholders, only in specified circumstances and will not be obligated to repurchase any recovery property in the event of a breach of any of its representations, warranties or covenants regarding the recovery property. Similarly, PG&E is obligated under the servicing agreement to indemnify the issuing entity and the trustee, for itself and on behalf of the bondholders, only in specified circumstances. Please read “The Sale Agreement” and “The Servicing Agreement” in this prospectus.

Neither the trustee nor the bondholders will have the right to accelerate payments on the recovery bonds as a result of a breach under the sale agreement or servicing agreement, absent an event of default under the indenture relating to the recovery bonds as described under “Description of the Recovery Bonds—Events of Default; Rights Upon Event of Default” in this prospectus. Furthermore, PG&E might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by PG&E might not be sufficient for you to recover all of your investment in the recovery bonds. In addition, if PG&E becomes obligated to indemnify bondholders, the then-current ratings on the recovery bonds will likely be downgraded as a result of the circumstances causing the breach and the fact that bondholders will be unsecured creditors of PG&E with respect to any of these indemnification amounts. PG&E will not indemnify any person for any loss, damages, liability, obligation, claim, action, suit or payment resulting solely from a downgrade in the ratings on the recovery bonds, or for any consequential damages, including any loss of market value of the recovery bonds resulting from a default or a downgrade of the ratings of the recovery bonds. Please read “The Sale Agreement—Seller Representations and Warranties” and “The Sale Agreement—Indemnification” in this prospectus.

The issuing entity will issue several tranches of the recovery bonds.

The financing order authorizes the issuing entity to issue one or more tranches of the recovery bonds not to exceed the Authorized Amount (as defined under “PG&E’s Financing Order”). Fixed recovery charges collected by or for the benefit of PG&E will be allocated among the tranches of recovery bonds as set forth in the expected sinking fund schedule and the priority of payments set forth under “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. However, the issuing entity cannot assure you that the existence of multiple tranches of recovery bonds would not cause reductions or delays in payment on your recovery bonds. In addition, some matters relating to the recovery bonds may require the vote of the holders of all tranches of the recovery bonds. Your interests in these votes might conflict with the interests of the beneficial owners of recovery bonds of another tranche and therefore these votes could result in an outcome that is materially unfavorable to you.

PG&E may cause the issuance of additional recovery bonds or additional other recovery bonds secured by additional recovery property or additional other recovery property that includes a non-bypassable charge on consumers, which may cause a delay in the payment of the recovery bonds and potential conflicts of interest among bondholders.

The financing order permits PG&E to issue up to $7.5 billion of recovery bonds through up to three separate series of recovery bonds prior to December 31, 2022.

In addition to the previously issued 2021 Wildfire Recovery Bonds, PG&E may cause the issuance of additional other recovery bonds secured by additional other recovery property. In a separate proceeding, PG&E filed an application on March 11, 2022, requesting the CPUC approve a separate financing order permitting PG&E to issue additional other recovery bonds in an amount up to approximately $1.7 billion to finance a second

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portion of PG&E’s wildfire risk mitigation and capital expenditures under the Wildfire Financing Law. Any additional other recovery bonds (including any such additional other recovery bonds issued pursuant to the financing order described in this paragraph) would be secured by separate property created by a separate financing order or orders.

The issuing entity may, at its sole discretion, but subject to conditions set forth in its organizational documents and the indenture, acquire additional recovery property created under the financing order or additional other recovery property created under a separate financing order, and issue a series of additional recovery bonds or additional other recovery bonds supported by such additional recovery property or additional other recovery property without your prior review or approval. Please read “Description of the Recovery Bonds—Conditions of Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds” and “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated—Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds”. In addition, PG&E may in its sole discretion sell recovery property or property similar to the recovery property, created by a separate financing order to one or more entities other than the issuing entity in connection with the issuance of additional other recovery bonds or obligations similar to the recovery bonds without your prior review or approval.

Any new issuance would be offered pursuant to a separate registration statement and may include terms and provisions that would be unique to that particular issuance. PG&E has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution and delivery of a joinder to the intercreditor agreement are condition precedents to the sale of additional recovery property or additional other recovery property, as the case may be, consisting of non-bypassable charges payable by consumers comparable to the recovery property to another entity. Please read “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

In the event a consumer does not pay in full all amounts owed under any bill, including fixed recovery charges, PG&E, as servicer, is required to allocate any resulting shortfalls in fixed recovery charges ratably based on the amounts of fixed recovery charges owing in respect of the recovery bonds, and amounts owing in respect of additional recovery bonds or additional other recovery bonds. However, if a dispute arises with respect to the allocation of such fixed recovery charges or other delays occur on account of the administrative burdens of making such allocation, the issuing entity cannot assure you that any new issuance would not cause reductions or delays in payment of your recovery bonds.

In addition, actions taken by the holders of one or more series of additional recovery bonds and additional other recovery bonds might conflict with the interests of the beneficial owners of the recovery bonds, and could result in an outcome that is materially unfavorable to you.

The credit ratings are no indication of the expected rate of payment of principal on the recovery bonds.

The issuing entity expects the recovery bonds will receive credit ratings from at least two nationally recognized statistical rating organizations (“NRSRO”). A rating is not a recommendation to buy, sell or hold the recovery bonds. The ratings merely analyze the probability that the issuing entity will repay the total principal amount of the recovery bonds at the final maturity date (which is later than the scheduled final payment date) and will make timely interest payments. The ratings are not an indication that the rating agencies believe that principal payments are likely to be paid on time according to the expected sinking fund schedule.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsor with the requisite certification will have access to all information posted on a website by the sponsor for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the recovery bonds. As a result, an NRSRO other than a NRSRO hired by the sponsor (a “hired NRSRO”) may issue ratings on the recovery bonds (“unsolicited ratings”), which may be lower, and could be significantly lower, than the ratings assigned by the hired NRSROs. The unsolicited ratings may be issued prior to, or after, the closing date in respect of the recovery bonds. Issuance

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of any unsolicited rating will not affect the issuance of the recovery bonds. Issuance of an unsolicited rating lower than the ratings assigned by the hired NRSRO on the recovery bonds might adversely affect the value of the recovery bonds and, for regulated entities, could affect the status of the recovery bonds as a legal investment or the capital treatment of the recovery bonds. Investors in the recovery bonds should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO. None of PG&E, the issuing entity, the underwriters or any of their affiliates will have any obligation to inform you of any unsolicited ratings assigned after the date of this prospectus. In addition, if either the issuing entity or PG&E fail to make available to a non-hired NRSRO any information provided to any hired rating agency for the purpose of assigning or monitoring the ratings on the recovery bonds, a hired NRSRO could withdraw its ratings on the recovery bonds, which could adversely affect the market value of your recovery bonds and/or limit your ability to resell your recovery bonds.

The recovery bonds’ credit ratings might affect the market value of your recovery bonds.

A downgrading of the credit ratings of the recovery bonds might have an adverse effect on the market value of the recovery bonds. Credit ratings might change at any time and an NRSRO has the authority to revise or withdraw its rating based solely upon its own judgment. In addition, any downgrade in the credit ratings of the recovery bonds may result in the recovery bonds becoming ineligible to be held by certain funds or investors, which may require such investors to liquidate their investment in the recovery bonds and result in lower prices and a less liquid trading market for the recovery bonds.

The absence of a secondary market for the recovery bonds might limit your ability to resell your recovery bonds.

The underwriters for the recovery bonds might assist in resales of the recovery bonds, but they are not required to do so. A secondary market for the recovery bonds might not develop, and the issuing entity does not expect to list the recovery bonds on any securities exchange. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your recovery bonds. Please read “Plan of Distribution” in this prospectus.

You might receive principal payments for the recovery bonds later than you expect.

The amount and the rate of collection of the fixed recovery charges for the recovery bonds, together with the related fixed recovery charge adjustments, will generally determine whether there is a delay in the scheduled repayments of recovery bond principal. If the servicer collects the fixed recovery charges at a slower rate than expected from any ESP, it might have to request adjustments of the fixed recovery charges. If those adjustments are not timely and accurate, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the recovery bonds. A failure to pay principal as anticipated by the scheduled bond repayment schedule will not constitute an event of default under the indenture.

Regulatory provisions affecting certain investors could adversely affect the price and liquidity of the recovery bonds.

European Union (“EU”) legislation comprising Regulation (EU) 2017/2402 of 12 December 2017 (as amended, the “EU Securitization Regulation”) together with any guidance published in relation thereto by the European Banking Authority, the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority or the European Commission and any relevant regulatory and/or implementing technical standards adopted by the European Commission in relation thereto or to precedent legislation (together, the “European Securitization Rules”) imposes certain restrictions and obligations with regard to securitisations (as such term is defined for purposes of the EU Securitization Regulation). The European Securitization Rules are in force throughout the EU in respect of securitisations the securities of which were issued (or the securitisation positions of which were created) on or after January 1, 2019.

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Pursuant to Article 5 of the European Securitization Rules, EU Institutional Investors, prior to investing in, (or otherwise holding an exposure to) a securitisation (as so defined) other than the originator, sponsor or original lender (each as defined in the EU Securitization Regulation), must, amongst other things, (a) where the originator or original lender is established in a third country (that is, not within the EU or the EEA), verify that the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness, (b) verify that the originator, sponsor or original lender retains on an ongoing basis a material net economic interest which, in any event, shall not be less than 5% in the securitisation, determined in accordance with Article 6 of the EU Securitization Regulation, and discloses that risk retention to such EU Institutional Investors in accordance with Article 7 of the EU Securitization Regulation, and (c) verify that the originator, sponsor or relevant securitisation special purpose entity (“SSPE”) has, where applicable, made available information as required by Article 7 of the EU Securitization Regulation in accordance with the frequency and modalities provided for in that Article (which sets out transparency requirements for originators, sponsors and SSPEs), and (d) carry out a due-diligence assessment which enables the institutional investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures, and (ii) all the structural features of the securitisation that can materially impact the performance of the securitisation position. “EU Institutional Investors” include: (a) insurance undertakings and reinsurance undertakings as defined in Directive 2009/138/EC, as amended; (b) institutions for occupational retirement provision falling within the scope of Directive (EU) 2016/2341 (subject to certain exceptions), and certain investment managers and authorized entities appointed by such institutions; (c) alternative investment fund managers as defined in Directive 2011/61/EU which manage and/or market alternative investment funds in the EU; (d) certain internally-managed investment companies authorized in accordance with Directive 2009/65/EC, and managing companies as defined in that Directive; (e) credit institutions as defined in Regulation (EU) No 575/2013 (CRR) (and certain consolidated affiliates thereof); and (f) investment firms as defined in CRR (and certain consolidated affiliates thereof).

With respect to the United Kingdom (“UK”), relevant UK established or UK regulated persons (as described below) are subject to the restrictions and obligations of the EU Securitization Regulation directly applicable in the UK adopted as part of UK domestic law by operation of the European Union (Withdrawal) Act 2018 as amended by the European Union (Withdrawal) Act 2020 (as amended, the “EUWA”), and as amended by the Securitisation (Amendment) (EU Exit) Regulations 2019 (together with the EUWA, the “EU Exit Regulations”), (the “UK Securitization Regulation”) and as further amended from time to time.

The UK Securitization Regulation, together with (a) all applicable binding secondary legislation, technical standards or implementing technical standards made under the UK Securitization Regulation (in each case, as amended, varied or substituted from time to time), (b) any EU regulatory technical standards or implementing technical standards relating to the EU Securitization Regulation (including such regulatory technical standards or implementing technical standards) that are applicable and binding in the UK pursuant to EU Exit Regulations and subject to any transitional directions from the Financial Conduct Authority (the “FCA”), (c) all relevant guidance, policy statements or directions relating to the application of the UK Securitization Regulation (or any binding technical standards) published by the FCA, the Bank of England, the UK pensions regulator (the “Pensions Regulator”) and/or the Prudential Regulation Authority (the “PRA”) or any other UK regulator (or their successors), (d), any other transitional direction and any transitional relief of the FCA, the Bank of England, the PRA, the Pensions Regulator (or their successors) and (e) any other applicable laws, acts, statutory instruments, rules, guidance or policy statements published or enacted relating to the UK Securitization Regulation, in each case, as may be further amended, supplemented or replaced, from time to time, are referred to in this prospectus as the “UK Securitization Rules”.

Article 5 of the UK Securitization Regulation places certain conditions on investments in a “securitisation” (as defined in the UK Securitization Regulation) by a UK Institutional Investor. “UK Institutional Investors”

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include: (a) an insurance undertaking as defined in section 417(1) of the Financial Services And Markets Act 2000 (as amended, the “FSMA”); (b) a reinsurance undertaking as defined in section 417(1) of the FSMA; (c) an occupational pension scheme as defined in section 1(1) of the Pension Schemes Act 1993 that has its main administration in the UK, or a fund manager of such a scheme appointed under section 34(2) of the Pensions Act 1995 that, in respect of activity undertaken pursuant to that appointment, is authorized for the purposes of section 31 of the FSMA; (d) an alternative investment fund manager as defined in regulation 4(1) of the Alternative Investment Fund Managers Regulation 2013 that markets or manages alternative investments funds (as defined in regulation 3 of the Alternative Investment Fund Managers Regulation 2013) in the UK; (e) a management company as defined in section 237(2) of the FSMA; (f) an undertaking for collective investment in transferable securities as defined by section 236A of the FSMA, which is an authorized open ended investment company as defined in section 237(3) of the FSMA; and (g) a CRR firm as defined in Regulation (EU) No 575/2013, as it forms part of UK domestic law by virtue of the EU Exit Regulations (and certain consolidated affiliates thereof).

Prior to investing in (or otherwise holding an exposure to) a “securitisation position” (as defined in the UK Securitization Regulation), a UK Institutional Investor, other than the originator, sponsor or original lender (each as defined in the UK Securitization Regulation), must, among other things: (a) verify that, where the originator or original lender is established in a third country (i.e. not within the UK), the originator or original lender grants all the credits giving rise to the underlying exposures on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits and has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness; (b) verify that, if established in the third country (i.e. not within the UK), the originator, sponsor or original lender retains on an ongoing basis a material net economic interest that, in any event, shall not be less than 5%, determined in accordance with Article 6 of the UK Securitization Regulation, and discloses the risk retention to the affected UK Institutional Investors; (c) verify that, where established in a third country (i.e. not within the UK), the originator, sponsor or relevant securitisation special purpose entity, where applicable, made available information that is substantially the same as that which it would have made available under Article 7 of the UK Securitization Regulation (which sets out certain transparency requirements) if it had been established in the UK and has done so with such frequency and modalities as are substantially the same as those with which it would have made information available if it had been established in the UK; and (d) carry out a due-diligence assessment that enables the UK Institutional Investor to assess the risks involved, considering at least (i) the risk characteristics of the securitisation position and the underlying exposures and (ii) all the structural features of the securitisation that can materially impact the performance of the securitisation position.

The issuing entity and PG&E do not believe that the recovery bonds fall within the definition of a “securitisation” for purposes of the EU Securitization Regulation or the UK Securitization Regulation as there is no tranching of credit risk associated with exposures under the transactions described in this prospectus.

Therefore, the issuing entity and PG&E believe such transactions are not subject to the European Securitization Rules or the UK Securitization Rules. As such, neither the issuing entity nor PG&E, nor any other party to the transactions described in this prospectus, intend, or are required under the transaction documents, to retain a material net economic interest in respect of such transactions, or to take, or to refrain from taking, any other action, in a manner prescribed or contemplated by the European Securitization Rules or the UK Securitization Rules. In particular, no such Person undertakes to take, or to refrain from taking, any action for purposes of compliance by any investor (or any other Person) with any requirement of the European Securitization Rules or the UK Securitization Rules to which such investor (or other Person) may be subject at any time.

However, if a competent authority were to take a contrary view and determine that the transactions described in this prospectus do constitute a securitisation for purposes of the EU Securitization Regulation or the UK Securitization Regulation, then any failure by an EU Institutional Investor or a UK Institutional Investor (as applicable) to comply with any applicable European Securitization Rules or UK Securitization Rules (as applicable) with respect to an investment in the recovery bonds may result in the imposition of a penalty regulatory capital charge on that investment or of other regulatory sanctions and remedial measures.

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Consequently, the recovery bonds may not be a suitable investment for EU Institutional Investors or UK Institutional Investors. As a result, the price and liquidity of the recovery bonds in the secondary market may be adversely affected.

Prospective investors are responsible for analyzing their own legal and regulatory position and are advised to consult with their own advisors and any relevant regulator or other authority regarding the scope, applicability and compliance requirements of the European Securitization Rules and the UK Securitization Rules, and the suitability of the recovery bonds for investment. Neither the issuing entity nor PG&E, nor any other party to the transactions described in this prospectus, make any representation as to any such matter, or have any liability to any investor (or any other Person) for any non-compliance by any such Person with the European Securitization Rules, the UK Securitization Rules or any other applicable legal, regulatory or other requirements.

If the investment of collected fixed recovery charges and other funds held by the trustee in the collection account results in investment losses or the investments become illiquid, you may receive payment of principal and interest on the recovery bonds later than you expect.

Funds held by the trustee in the collection account will be invested in eligible investments at the written direction of the servicer. Eligible investments include money market funds having a rating from Moody’s and S&P of “P-1” and “A-1”, respectively. Although investments in these money market funds have traditionally been viewed as highly liquid with a low probability of principal loss, illiquidity and principal losses have been experienced by investors in certain of these funds as a result of disruptions in the financial markets in recent years. If investment losses or illiquidity is experienced, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the recovery bonds.

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REVIEW OF RECOVERY PROPERTY

Pursuant to the rules of the SEC, PG&E, as sponsor, has performed, as described below, a review of the recovery property underlying the recovery bonds. As required by these rules, the review was designed and effected to provide reasonable assurance that disclosure regarding the recovery property is accurate in all material respects. PG&E did not engage a third party in conducting its review.

The recovery bonds will be secured under the indenture by the indenture’s trust estate. The principal asset of the indenture’s trust estate is the recovery property relating to the recovery bonds. The recovery property includes the right to impose, bill, collect and receive non-bypassable irrevocable fixed recovery charges in amounts necessary to pay principal on and interest of the recovery bonds and other required amounts and charges owing in connection with the recovery bonds, the right under the financing order to obtain true-up adjustments of fixed recovery charges under Wildfire Financing Law (with respect to adjustments, in the manner and with the effect provided in the servicing agreement) and all revenue, collections, claims, right to payments, payments, money and proceeds arising out of the rights and interests created under the financing order. Under the Wildfire Financing Law and the financing order, the fixed recovery charges are payable by any existing or future individual, governmental body, trust, business entity, or nonprofit organization located in the service territory of PG&E as such territory existed on the date of the financing order, except Exempted Consumers, that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, PG&E, or any other party.

The recovery property is not a receivable, and the recovery property and other collateral held by the trustee securing the recovery bonds do not constitute a pool of receivables. Fixed recovery charges that relate to the recovery property are irrevocable and not subject to reduction, impairment, postponement, termination or, except for the specified true-up adjustments to correct any overcollections or undercollections, adjustment by further action of the CPUC. The rates at which fixed recovery charges are billed to consumers will be adjusted to correct any overcollections or undercollections from prior periods. These adjustments are intended to ensure the recovery of revenues sufficient to retire the principal amount of the recovery bonds in accordance with the expected sinking fund schedule, to pay all interest on the recovery bonds when due, to pay fees and expenses of servicing the recovery bonds and premiums, if any, associated with the recovery bonds and to fund any required credit enhancement for the recovery bonds. In addition to the annual true-up adjustments, the servicer (a) is required to implement quarterly true-up adjustments if there are recovery bonds outstanding following the scheduled final payment date of the latest maturing tranche of the recovery bonds, (b) is required to implement semi-annual true-up adjustments if the servicer forecasts that fixed recovery charge collections will be insufficient to make scheduled payments of principal, interest, and other financing costs on a timely basis, and (c) may request an interim true-up adjustment at any time for any reason to ensure timely payment of scheduled principal of and interest on the recovery bonds and other required amounts and charges owing in connection with the recovery bonds on the next payment date.

There is no cap on the level of fixed recovery charges that may be imposed on consumers as a result of the true-up adjustment process to pay principal of and interest on the recovery bonds when due and other required amounts and charges owing in connection with the recovery bonds. All revenues and collections resulting from fixed recovery charges provided for in the financing order are part of the recovery property. The recovery property relating to the recovery bonds is described in more detail under “The Recovery Property and the Wildfire Financing Law” in this prospectus.

In the financing order, the CPUC, among other things:

• orders that the fixed recovery charges shall be non-bypassable and recovered from existing and future consumers in PG&E’s service territory as of the date of the financing order except for Exempted Consumers, and that the fixed recovery charges shall be imposed on all consumers in accordance with the methodology approved in the financing order;

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• orders that the owner of the recovery property will be entitled to recover fixed recovery charge revenues in amounts sufficient to pay the principal and interest on the recovery bonds together with all related financing costs, all as the same become due; and

• orders that the transfer of the recovery property to the issuing entity by PG&E shall be treated as an absolute transfer of all of PG&E’s right, title, and interest, as in a true sale, and not as a pledge or other financing, of the recovery property, other than for federal income tax and state income and franchise tax purposes.

Please read “The Recovery Property and the Wildfire Financing Law” and “PG&E’s Financing Order” in this prospectus for more information.

The characteristics of recovery property are unlike the characteristics of assets underlying mortgage and other commercial asset-based financings because recovery property is a creature of statute and state regulatory commission proceedings. Because the nature and characteristics of recovery property and many elements of recovery bond financings are set forth in and constrained by the Wildfire Financing Law and the financing order, PG&E, as sponsor, does not select the assets to be pledged as collateral in ways common to many traditional asset-based financings. Moreover, the recovery bonds do not contain origination or underwriting elements similar to typical mortgage or other loan transactions involved in other forms of asset-backed securities. The Wildfire Financing Law and the financing order require the imposition on, and collection of fixed recovery charges from, existing and future consumers and any other consumers of electricity within PG&E’s service territory, subject to the exceptions. Please read “The Recovery Property and the Wildfire Financing Law—The Financing Order and the Recovery Property—Exemptions from Fixed Recovery Charges” in this prospectus. Since fixed recovery charges are assessed against all such consumers and the true-up mechanism adjusts for the impact of consumer defaults, the collectability of the fixed recovery charges is not ultimately dependent upon the credit quality of particular PG&E consumers, as would be the case in the absence of the true-up adjustment.

The review by PG&E of the recovery property underlying the recovery bonds has involved a number of discrete steps and elements as described in more detail below. First, PG&E has analyzed and applied the Wildfire Financing Law’s requirements for recovering recovery costs and approval of the CPUC for the issuance of the financing order and in its proposal with respect to the characteristics of the recovery property to be created pursuant to the financing order. In preparing this proposal, PG&E worked with its counsel and its structuring advisor in preparing the application for a financing order. Moreover, PG&E worked with its counsel and the underwriters in preparing the legal agreements that provide for the terms of the recovery bonds and the security for the recovery bonds. PG&E has analyzed economic issues and practical issues for the scheduled payment of principal of and interest on the recovery bonds, including the impact of economic factors, potential for disruptions due to weather or catastrophic events, including the current COVID-19 pandemic, and its own forecasts for consumer growth as well as the historic accuracy of its prior forecasts.

In light of the unique nature of the recovery property, PG&E has taken (or prior to the offering of the recovery bonds, will take) the following actions in connection with its review of the recovery property and the preparation of the disclosure for inclusion in this prospectus describing the recovery property, the recovery bonds and the proposed securitization:

• reviewed the Wildfire Financing Law, other relevant provisions of California statutes and any applicable rules, regulations and orders of the CPUC as they relate to the recovery property in connection with the preparation and filing of the application with the CPUC for the approval of the financing order in order to confirm that the application and proposed financing order satisfied applicable statutory and regulatory requirements;

• actively participated in the proceeding before the CPUC relating to the approval of the requested financing order;

• reviewed the financing order and the process by which it was adopted to confirm that the financing order satisfied the requirements of the Wildfire Financing Law;

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• compared the proposed terms of the recovery bonds to the applicable requirements in the Wildfire Financing Law, other relevant provisions of California statutes, the financing order and any applicable regulations of the CPUC to confirm that they met such requirements;

• prepared and reviewed the agreements to be entered into in connection with the issuance of the recovery bonds and compared such agreements to the applicable requirements in the Wildfire Financing Law, other relevant provisions of California statutes, the financing order and any applicable regulations of the CPUC to confirm that they met such requirements;

• reviewed the disclosure in this prospectus regarding the Wildfire Financing Law, other relevant provisions of California statutes, the financing order and the agreements to be entered into in connection with the issuance of the recovery bonds, and compared such descriptions to the relevant provisions of the Wildfire Financing Law, other relevant provisions of California statutes, the financing order and such agreements to confirm the accuracy of such descriptions;

• consulted with legal counsel to assess if there is a basis upon which the bondholders (or the trustee acting on their behalf) could successfully challenge the constitutionality of any legislative action by the State of California (including action by the CPUC or the voters by amendment to the California Constitution) that could repeal or amend the provisions of the Wildfire Financing Law in a way that could substantially impair the value of the recovery property, or substantially reduce, alter or impair the fixed recovery charges;

• reviewed the process and procedures in place for it, as servicer, to perform its obligations under the servicing agreement, including billing, collecting, receiving and posting the fixed recovery charges to be provided for under the recovery property, forecasting fixed recovery charges, and preparing and submitting advice letters for true-up adjustments to the fixed recovery charges;

• reviewed the operation of the true-up adjustment mechanism for adjusting fixed recovery charge levels to meet the scheduled payments on the recovery bonds and in this context took into account its experience with the CPUC; and

• with the assistance of its advisors, prepared financial models in order to set the initial fixed recovery charges to be provided for under the recovery property at levels sufficient to pay principal of and interest on the recovery bonds when due and other required amounts and charges owing in connection with the recovery bonds.

In connection with the preparation of such models, PG&E:

• reviewed (i) the historical electric consumption and consumer growth within its service territory and (ii) forecasts of expected energy sales and consumer growth; and

• analyzed the sensitivity of the weighted average life of the recovery bonds in relation to variances in actual energy consumption levels and related charge collections from forecasted levels and in relation to the true-up adjustment in order to assess the probability that the weighted average life of the recovery bonds may be extended as a result of such variances, and in the context of the operation of the true-up adjustment for adjustment of fixed recovery charges to address undercollections or overcollections in light of scheduled payments on the recovery bonds to prevent an event of default.

As a result of this review, PG&E has concluded that:

• the recovery property, the financing order and the agreements to be entered into in connection with the issuance of the recovery bonds meet in all material respects the applicable statutory and regulatory requirements;

• the disclosure in this prospectus regarding the Wildfire Financing Law, the financing order and the agreements to be entered into in connection with the issuance of the recovery bonds is as of its date, accurate in all material respects and fails to omit any material information;

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• the servicer has adequate processes and procedures in place to perform its obligations under the servicing agreement;

• fixed recovery charge revenues, as adjusted from time to time as provided in the Wildfire Financing Law and the financing order, are expected to be sufficient to pay on a timely basis scheduled principal and interest on the recovery bonds; and

• the design and scope of PG&E’s review of the recovery property as described above is effective to provide reasonable assurance that the disclosure regarding the recovery property in this prospectus is accurate in all material respects.

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THE RECOVERY PROPERTY AND THE WILDFIRE FINANCING LAW

The Wildfire Financing Law Generally

The Wildfire Financing Law permits electrical corporations to recover certain costs and expenses related to catastrophic wildfires through the issuance of recovery bonds pursuant to and supported by an irrevocable financing order issued by the CPUC and permits the CPUC to approve an irrevocable non-bypassable fixed recovery charge on existing and future consumers located in the service territory of the electrical corporation as of the date of the financing order, subject to certain exceptions. Please read “The Financing Order and the Recovery Property—Exemptions from Fixed Recovery Charges” below and “PG&E’s Financing Order” in this prospectus. The Wildfire Financing Law authorizes the fixed recovery charge to recover: (a) recovery costs equal to the principal amount of the recovery bonds and (b) costs of recovering, financing, or refinancing those recovery costs, including the costs of servicing and retiring such recovery bonds.

The Wildfire Financing Law provides that fixed recovery charges are non-bypassable, meaning that they are payable by any individual, governmental body, trust, business entity, or nonprofit organization, subject to the exceptions described below, that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, the electrical corporation, or any other party. In addition, under the Wildfire Financing Law, fixed recovery charges may consist of distribution, connection, disconnection and termination rates and charges and other rates and charges authorized by a financing order.

The Financing Order and the Recovery Property

The Wildfire Financing Law contains a number of provisions designed to facilitate the securitization of recovery costs, including the following:

The Wildfire Financing Law Provides for the Creation of Recovery Property

The Wildfire Financing Law authorizes the CPUC, through issuance of a financing order, to provide for the creation of recovery property to secure repayment of recovery bonds. Recovery property is defined under the Wildfire Financing Law to include, without limitation, the right, title, and interest of the electrical corporation or its transferee:

• in and to the fixed recovery charges established pursuant to a financing order, including all rights to obtain adjustments to the fixed recovery charges in accordance with the provisions of the Wildfire Financing Law and the financing order; and

• all revenues, collections, claims, payments, moneys, or proceeds of or arising from the fixed recovery charges that are the subject of a financing order described in the bullet point immediately above.

The Wildfire Financing Law provides that recovery property that is specified in a financing order shall constitute an existing, present property right, notwithstanding the fact that the imposition and collection of fixed recovery charges depend on the electrical corporation continuing to provide electricity service or continuing to perform its servicing functions relating to the collection of fixed recovery charges or on the level of future electricity consumption. The Wildfire Financing Law provides that recovery property shall exist whether or not the fixed recovery charges have been billed, have accrued, or have been collected and notwithstanding the fact that the value of the recovery property is dependent on the future provision of service to consumers. The Wildfire Financing Law further provides that all recovery property specified in a financing order shall continue to exist until the recovery bonds issued pursuant to a financing order and all associated financing costs are paid in full.

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A Financing Order is Irrevocable

The Wildfire Financing Law provides that the financing order shall be irrevocable. In addition, under the Wildfire Financing Law, the CPUC may not, either by rescinding, altering, or amending the financing order or otherwise, revalue or revise for ratemaking purposes the recovery costs or the costs of recovering, financing, or refinancing the recovery costs, or in any way reduce or impair the value of recovery property either directly or indirectly by taking fixed recovery charges into account when setting other rates for the electrical corporation. Moreover, the Wildfire Financing Law provides that the amount of revenues generated by the fixed recovery charges shall not be subject to reduction, impairment, postponement, or termination.

Fixed Recovery Charges May Be Adjusted

The Wildfire Financing Law requires the CPUC to provide, in any financing order, a procedure for periodic true-up adjustments to fixed recovery charges, which shall be made at least annually and may be made more frequently. The financing order approved the submission of routine and non-routine advice letters to the CPUC to implement any true-up adjustment. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement—True-Up Adjustment Submissions” in this prospectus. Under the Wildfire Financing Law and the financing order, there is no cap on the level of fixed recovery charges that may be imposed on consumers as a result of the true-up adjustment process to pay principal of and interest on the recovery bonds when due and other ongoing financing costs in connection with the recovery bonds.

The Wildfire Financing Law Provides for the Creation of Consensual and Statutory Liens on Recovery Property

The Wildfire Financing Law provides that consensual security interests can be granted in recovery property and that a statutory lien will be established on recovery property upon the effective date of the financing order. With respect to consensual security interests, the Wildfire Financing Law provides that a valid and enforceable security interest in recovery property attaches when (a) the CPUC has issued the related financing order, (b) the pledgee of the recovery property (such as the trustee) has given value for the recovery property, and (c) the pledgor (such as PG&E) has signed a security agreement covering the recovery property. The security interest in the recovery property is perfected when it has attached and when a financing statement has been filed with the California Secretary of State in accordance with the Wildfire Financing Law. A statutory lien on recovery property with respect to recovery bonds arises under the Wildfire Financing Law. This statutory lien arises automatically, upon the effective date of the financing order, without further action by the servicer, the issuing entity or any other person. Under the financing order, a statutory lien will exist on the recovery property then existing or thereafter arising relating to recovery bonds and will secure all obligations, then existing or subsequently arising, to the holders of those recovery bonds and the trustee for those holders. The Wildfire Financing Law provides that this statutory lien will be a first priority lien on all recovery property then in existence or that subsequently arises for that series of recovery bonds pursuant to the terms of the financing order.

Under the Wildfire Financing Law, if a default or termination occurs under the terms of the recovery bonds, the pledgees of the recovery bonds (such as the trustee) are entitled to foreclose or otherwise enforce their security interest in the recovery property. In addition, the CPUC may require in the financing order that, in the event of default by the electrical corporation in payment of recovery property revenues, the CPUC and any successor thereto, upon the application by the pledgees or transferees (such as the trustee or us), and without limiting any other remedies available to the pledgees or transferees by reason of the default, shall order the sequestration and payment to the pledgees or transferees of recovery property revenues. The Wildfire Financing Law provides that any such order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the debtor, pledgor, or transferor of the recovery property. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Recovery Property—Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect” in this prospectus.

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The Wildfire Financing Law and the Financing Order Provide that the Transfer of Recovery Property is a True Sale

The Wildfire Financing Law and the financing order provide that an electrical corporation’s transfer of recovery property is a “true sale” and shall be treated as an absolute transfer of all of the transferor’s right, title, and interest, as in a true sale, and not as a pledge or other financing, of the recovery property, other than for federal and state income and franchise tax purposes. The Wildfire Financing Law provides that the characterization of the sale, assignment, or transfer as an absolute transfer and true sale is not affected by:

• commingling of fixed recovery charge revenues with other amounts;

• the retention by the seller of either of the following:

• a partial or residual interest, including an equity interest, in the financing entity or the recovery property, whether direct or indirect, subordinate or otherwise; or

• the right to recover costs associated with taxes, franchise fees, or license fees imposed on the collection of fixed recovery charges;

• any recourse that the purchaser may have against the seller;

• any indemnification rights, obligations, or repurchase rights made or provided by the seller;

• the obligation of the seller to collect fixed recovery charges on behalf of an assignee;

• the treatment of the sale, assignment, or transfer for tax, financial reporting, or other purposes; or

• any true-up adjustment of the fixed recovery charges as provided in the financing order.

Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer” and “How A Bankruptcy May Affect Your Investment” in this prospectus.

The Wildfire Financing Law Requires the Electrical Corporation and its Successors to Service the Recovery Property

The Wildfire Financing Law requires the CPUC to authorize the electrical corporation to enter into a servicing contract with the issuer of the recovery bonds (i.e., the issuing entity) in connection with a sale, assignment or pledge of the recovery property to such issuing entity. This contract must require the electrical utility to continue to operate its system to provide service to consumers within its service territory, to collect amounts in respect of the fixed recovery charges for the benefit and account of the issuing entity and to account for and remit these amounts to or for the account of the issuing entity. The Wildfire Financing Law further provides to the extent that billing, collection, and other related services with respect to the provision of electric service are provided to a consumer by any person or entity other than the electrical corporation in whose service territory the consumer is located, that person or entity must collect the fixed recovery charges from the consumer for the benefit and account of the applicable issuing entity as a condition to the provision of electric service to that consumer.

The Wildfire Financing Law further provides that any successor to the electrical corporation, whether pursuant to any bankruptcy, reorganization, or other insolvency proceeding, or pursuant to any merger, sale, or transfer, by operation of law, or otherwise, must perform and satisfy all obligations of the electrical corporation under the Wildfire Financing Law in the same manner and to the same extent as the electrical corporation. Please read “The Servicing Agreement—Successor Servicer” in this prospectus.

State Pledge

Under the Wildfire Financing Law, the State of California has pledged that it will neither limit nor alter the fixed recovery charges, recovery property, financing orders, or any rights thereunder, except for adjustments

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discussed above and in “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” and “The Servicing Agreement—True-Up Adjustment Submissions”, until the recovery bonds, together with the interest thereon and related financing costs, are fully paid and discharged. However, the Wildfire Financing Law further provides that nothing in the State Pledge precludes the State of California from limiting or altering the fixed recovery charges, recovery property or any financing order of the CPUC, if and when adequate provision is made by law for the protection of PG&E, owners of recovery property and holders of recovery bonds.

Constitutional Matters

To date, no federal or California cases addressing the repeal or amendment of statutory provisions analogous to those contained in the Wildfire Financing Law have been decided. There have been cases in which courts applied the Contract Clause of the United States Constitution and the Contract Clause of the California Constitution to strike down legislation regarding reducing or eliminating taxes, public charges or other sources of revenues servicing other types of recovery bonds issued by public instrumentalities or private issuers (or issuing entities), or otherwise substantially impairing or eliminating the security for recovery bonds or other indebtedness. Based upon this case law, Hunton expects to deliver a reasoned opinion (the “Opinion”) based on this case law prior to the closing of the offering of the recovery bonds. Subject to Hunton’s research and analysis on the subject, as well as the assumptions stated therein, the Opinion will state to the effect that a reviewing court of competent jurisdiction, in a properly prepared and presented case, would have grounds to conclude that the State Pledge constitutes a contractual relationship between the bondholders and the State of California, and that, absent a demonstration by the State of California that any legislative action that becomes law that limits, alters, impairs or reduces the value of the recovery property or the fixed recovery charges (such action being referred to as a legislative action”) so as to impair (a) the terms of the indenture or the recovery bonds or (b) the rights and remedies of the bondholders (or the trustee acting on their behalf) (each such act, an “impairment”), the bondholders could successfully challenge under the Federal Contract Clause or the California Contract Clause the constitutionality of any legislative action that causes an impairment prior to the time that the recovery bonds are fully paid and discharged. The relevant case law also indicates that the State’s justification would be subjected to a higher degree of scrutiny, and that the State would bear a more substantial burden, if the legislative action impairs a contract to which the State is a party (which the depositor believes to be the case here), as contrasted to a contract solely between private parties. It may be possible for the California legislature to repeal or amend the Wildfire Financing Law or for the CPUC to amend or revoke the financing order notwithstanding the State Pledge, if the legislature or the CPUC acts in order to serve a significant and legitimate public purpose, such as protecting the public health and safety or responding to a national or regional catastrophe affecting PG&E, or if the legislature otherwise acts in the valid exercise of the State’s police power. The issuing entity will file a copy of the Opinion as an exhibit to an amendment to the registration statement of which this prospectus is a part, or to one of the issuing entity’s periodic filings with the SEC.

In addition, any legislative action adversely affecting the recovery property or the ability to collect fixed recovery charges may be considered a “taking” under the United States or California Constitutions. Hunton has advised the issuing entity that it is not aware of any federal or California court cases addressing the applicability of the Takings Clause of the United States or California Constitutions in a situation analogous to that which would be involved in an amendment or repeal of the Wildfire Financing Law. Hunton expects to render a reasoned opinion, prior to the closing of the offering of the recovery bonds, to the effect that under existing case law, assuming a Takings Clause analysis were applied under the United States or California Constitutions, there are sufficient legal grounds for a court to require the State of California to pay just compensation to the bondholders if the State’s repeal or amendment of the Wildfire Financing Law or taking of any other action in contravention of the State Pledge, (a) constituted a permanent appropriation of a substantial property interest of the bondholders in the recovery property or denied all economically productive use of the recovery property; (b) destroyed the recovery property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the recovery property so as to unduly interfere with the reasonable expectations

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of the bondholders arising from their investments in the recovery bonds; provided, that the court might take a more expansive view of emergency conditions under the California Takings Clause, leading to correspondingly narrower restrictions on State action under the California Takings Clause than under the Federal Takings Clause. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient for you to recover fully your investment in the recovery bonds.

In connection with the foregoing, Hunton will advise the issuing entity that issues relating to the Contract and Takings Clauses of the United States and California Constitutions are decided on a case-by-case basis and that courts’ determinations, in most cases, are strongly influenced by the facts and circumstances of the particular case, and Hunton will further advise the issuing entity that there are no reported controlling judicial precedents that are directly on point. The opinions described above will be subject to the qualifications included in them.

The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a bondholder would consider material.

For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions” in this prospectus.

Exemptions from Fixed Recovery Charges

Under the Wildfire Financing Law, consumers enrolled in the CARE or FERA programs are exempted from the payment of fixed recovery charges. See “PG&E’s Financing Order” in this prospectus.

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PG&E’S FINANCING ORDER

PG&E’s Financing Order

In January 2021, PG&E filed an application with the CPUC for a financing order seeking recovery of up to $7.5 billion of 2017 catastrophic wildfire costs and expenses (collectively, the “Authorized Amount”). In a separate regulatory preceding, in April 2021, the CPUC issued an order (the “Stress Test Order”) that determined that PG&E had satisfied the requirements that the Authorized Amount constituted catastrophic wildfire costs and expenses that may be financed through the issuance of recovery bonds pursuant to the Wildfire Financing Law, subject to the approval of a separate financing order by the CPUC. Three parties filed applications for rehearing of the Stress Test Order and the CPUC issued a decision denying the applications for rehearing.

On May 11, 2021 the CPUC issued its financing order which authorized PG&E to cause to be issued recovery bonds in up to three separate series on or prior to December 31, 2022 in an aggregate principal amount up to $7.5 billion. The final principal amount of any series of recovery bonds will be subject to the approval of the CPUC through the issuance advice letter process described below. Please read “—Issuance Advice Letter” below.

Two parties filed applications for rehearing of the financing order and the CPUC issued a decision denying the applications for rehearing. One of the parties filed a petition for writ of review of the financing order and the Stress Test Order in the Appeal Court. On February 18, 2022, the Appeal Court denied such party’s petition for writ of review. Such party did not file a further petition for review by the required deadline of February 28, 2022 and as such, the financing order became final and non-appealable.

The financing order, pursuant to the provisions of the Wildfire Financing Law, is irrevocable and is not subject to reduction, impairment or adjustment by further action of the CPUC, except as contemplated by the periodic true-up adjustments.

The issuing entity has filed the financing order with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The depositor summarized portions of the financing order below.

Fixed Recovery Charges

The Financing Order Requires the Imposition and Collection of Fixed Recovery Charges

Pursuant to the financing order, except for Exempted Consumers, the fixed recovery charge will be an equal cent per kWh charge across all consumer classes. For residential rate schedules with a tiered rate structure, total rates shall retain the rate relationships by tier determined by CPUC Decision (D.) 15-07-001 with the addition of the fixed recovery charges, any FRTAs and the Customer Credit. Such fixed recovery charges will be in amounts sufficient to retire the principal amount of the recovery bonds in accordance with the expected sinking fund schedule, to pay all interest on the recovery bonds when due, and to pay all operating expenses relating to the recovery bonds (“operating expenses”). Under the financing order, there is no limit on the amount of the fixed recovery charge.

The Financing Order Provides that Fixed Recovery Charges are Non-bypassable

As required by the Wildfire Financing Law, the financing order provides that the fixed recovery charges are “non-bypassable” and must be paid by all consumers in PG&E’s service territory, except Exempted Consumers. The financing order provides that, except in the case of municipalization, consumers that no longer take transmission and distribution retail service from PG&E after the date of the financing order, or that meet relevant criteria in the applicable tariff, shall be treated as DL consumers using applicable tariffs for DL consumers, including the Electric-Departing Customer Generation tariff, and will be subject to pay the fixed recovery charges and any FRTAs and entitled to receive the Customer Credit. Please read “The Depositor, Seller, Initial Servicer and Sponsor—Community Choice Aggregation, Direct Access and Departing Load” in this prospectus.

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The financing order specifies that any successor to an electric utility shall perform and satisfy all obligations of the electric utility pursuant to the Wildfire Financing Law, including collecting and paying to the bondholders revenues arising with respect to the recovery property. The financing order states that it is binding on PG&E and any successor to PG&E that provides electric distribution service directly to consumers of electricity within PG&E’s service territory.

In the servicing agreement, PG&E will covenant to assert in an appropriate forum that any municipality, or any other person or entity, that acquires any portion of PG&E’s electric distribution facilities must be treated as a successor to PG&E under the Wildfire Financing Law and the financing order, subject to approval by the CPUC, and that its retail consumers remain responsible for payment of fixed recovery charges. Please read “The Servicing Agreement—Servicing Standards and Covenants” in this prospectus.

In addition, under the financing order and the Wildfire Financing Law, in the event that residents of a municipality who are consumers no longer take transmission and distribution retail service after the date of the financing order, such consumers will be subject to pay the fixed recovery charges and any FRTAs. See “The Depositor, Seller, Initial Servicer And Sponsor—Municipalization; Municipal Departing Load” in this prospectus.

The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges

The financing order approves the methodology by which the fixed recovery charges will be calculated and adjusted from time to time by the servicer pursuant to the issuance advice letter and true-up advice letters submitted to the CPUC as described below. Pursuant to the financing order, except for Exempted Consumers, the fixed recovery charge will be an equal cent per kWh charge across all consumer classes. For residential rate schedules with a tiered rate structure, the fixed recovery charge rate component will be an equal cent per kWh charge and the total rates shall retain the rate relationships by tier determined by CPUC Decision (D.) 15-07-001. This means that all consumers that pay the fixed recovery charge would pay the same rate per kWh. All consumers that are required to pay the fixed recovery charge will also receive the benefit of the Customer Credit. To ensure that the fixed recovery charge and the Customer Credit will be equal when the Customer Credit revenue requirement and the fixed recovery charge revenue requirement are equal, the servicer will establish a Customer Credit rate on the same equal cent per kWh basis as the fixed recovery charge rate.

The Wildfire Financing Law and the financing order provide that the fixed recovery charges shall not be imposed on consumers that receive either the California Alternative Rates for Energy (“CARE”) or the Family Electric Rate Assistance (“FERA”) discount. The financing order provides that, except in the case of municipalization, consumers that no longer take transmission and distribution retail service from PG&E after the date of the financing order, or that meet relevant criteria in the applicable tariff, shall be treated as DL consumers using applicable tariffs for DL consumers, including the Electric-Departing Customer Generation tariff, and will be subject to pay the fixed recovery charges and any FRTAs and entitled to receive the Customer Credit. In addition, under the financing order and the Wildfire Financing Law, in the event that residents of a municipality who are consumers no longer take transmission and distribution retail service after the date of the financing order, such consumers will be subject to pay the fixed recovery charges and any FRTAs. Accordingly, after the date of the financing order, all direct access (“DA”), CCA and bundled service consumers would pay the fixed recovery charge and receive the Customer Credit unless they are participating in the CARE or FERA programs. In 2021, these exempt consumers accounted for approximately 12% of total electric deliveries and approximately 32% of deliveries to the residential domestic FRC consumer classes.

In accordance with the financing order, after the initial implementation of the fixed recovery charge, PG&E will revise the fixed recovery charge rates at least annually to collect the required fixed recovery charge revenue based on the then- current sales forecast. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” in this prospectus.

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The Financing Order Requires the Servicer to Periodically “True-Up” the Fixed Recovery Charge

The financing order requires that the servicer submit with the CPUC annually, semi-annually, if necessary, and more frequently, if necessary, an advice letter (each, an “advice letter”), applying the true-up methodology described above, to adjust the fixed recovery charges to ensure the recovery of revenues sufficient to provide for the timely payment of the periodic payment requirement. In addition to the annual true-up adjustment and, if the servicer deems necessary, the semi-annual true-up adjustment, the servicer is authorized under the financing order to make interim routine adjustments by means of an advice letter at any time the servicer deems necessary to ensure the recovery of revenues sufficient to provide for the timely payment of the periodic payment requirement.

In addition, the financing order requires that if there are recovery bonds outstanding following the scheduled final payment date of the latest maturing tranche of the recovery bonds, the servicer must submit quarterly true-up adjustments. Mandatory annual true-up adjustments, semi-annual true-up adjustments, if necessary, interim true-up adjustments, if necessary, and mandatory quarterly true-up adjustments as described above are referred to as “routine true-up adjustments”. Each such routine true-up adjustment shall utilize the methodology described above under the heading “—The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges” to determine the fixed recovery charges requested on the next adjustment date.

Routine annual true-up adjustment advice letters, routine semi-annual true-up advice letters, and routine interim true-up adjustment advice letters must be submitted at least fifty days prior to the proposed effective date of the adjustment, which in the case of annual and semi-annual true-up advice letters will be fifty days prior to the last day of February and August, respectively. In each case, the CPUC has committed in the financing order to provide a negative or affirmative response within twenty days of the submission of any routine true-up adjustment submission. Under the financing order, the CPUC’s review of any routine true-up adjustment advice letter, and any protest, will be limited solely to determining whether there is any mathematical error in such advice letter. No protest, review or required correction of mathematical errors will delay the effective date of such adjustment and, if such correction cannot be corrected prior to the effective date, such correction will be reflected in the next routine adjustment request. In the absence of a negative response from the energy division of the CPUC, PG&E’s, or a successor servicer’s, timely revision to the fixed recovery charges should automatically go into effect in accordance with the advice letter’s proposed schedule.

The servicer is also authorized under the financing order to seek a non-routine true-up at any time to revise the logic of the methodology approved in the financing order to determine the fixed recovery charges. Any such adjustment is referred to as a “non-routine true-up adjustment”. A non-routine true-up adjustment advice letter must be submitted to the CPUC at least ninety days prior to the effective date specified therein and will be acted upon by the CPUC within ninety days. In connection with a non-routine true-up adjustment, the energy division of the CPUC will have the opportunity to prepare a resolution that adopts, modifies or rejects the changes to the methodology proposed by the servicer. Absent a CPUC resolution that adopts, modifies or rejects a non-routine true-up adjustment advice letter, PG&E, or a successor servicer, may implement the fixed recovery charge adjustments proposed in such non-routine true-up adjustment advice letter on the effective date identified in the letter if that date is at least ninety days after the date of submission.

The Initial Fixed Recovery Charges

The initial fixed recovery charges will be determined and approved by the CPUC as part of the issuance advice letter process described below. Please read “PG&E’s Financing Order—Issuance Advice Letter” in this prospectus. The initial fixed recovery charge for the recovery bonds offered hereby is expected to represent approximately                 % of the total electric bill, as of December 31, 2021, received by a 500 kWh residential consumer of PG&E. However, as described below, the impact of the fixed recovery charge is designed to be neutral, on average, to consumers in conjunction with to the Customer Credit. For the avoidance doubt, the Customer Credit will not be used to pay fixed recovery charges. Please read “PG&E’s Financing Order—Customer Credit Trust” in this prospectus.

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The estimated aggregate initial fixed recovery charge for the recovery bonds offered hereby and the 2021 Wildfire Recovery Bonds is expected to represent approximately                 % of the total electric bill, as of December 31, 2021, received by a 500 kWh residential consumer of PG&E.

The fixed recovery charges will become effective on the date specified in the issuance advice letter, and will be subject to periodic true-up as described above.

Partial Payments of the Fixed Recovery Charges will be Pro-rated

The financing order requires that, if a consumer pays only a portion of its bill, a pro-rata amount of such payment will be allocated to the payment of fixed recovery charges, based on the amount of the fixed recovery charges billed to all charges billed to such consumer. The portion owed in respect of fixed recovery charges may be further allocated among different series of recovery bonds, including the recovery bonds, issued pursuant to a financing order to PG&E by the CPUC, based upon the fixed recovery charges billed with respect to each such series of additional recovery bonds or additional other recovery bonds. Please read “—Additional Recovery Bonds or Additional Other Recovery Bonds” in this prospectus.

Customer Credit Trust

The CPUC determined in an order in connection with PG&E’s emergence from bankruptcy that PG&E’s proposed $7.5 billion securitization transaction must be designed to be neutral, on average, to ratepayers, referred to as “rate neutral”. While it will not affect the collection of revenues from consumers pursuant to the financing order, this separate regulatory requirement will be accomplished by PG&E establishing a Customer Credit Trust to hold amounts to fund the Customer Credit to consumers that is designed to equal the fixed recovery charges and any FRTAs. As described below, consumers must pay the fixed recovery charge regardless of any failure by PG&E to pay the Customer Credit.

The structure, governance and funding for the Customer Credit Trust are established independently of the financing order. In the Stress Test Order, the CPUC made provisions for PG&E to fund the Customer Credit Trust with the main contributions including an Initial Shareholder Contribution, Additional Shareholder Contributions, Customer Credit Trust Returns and, if it is determined to be needed, the Contingent Supplemental Shareholder Contribution. The financing order provides that PG&E’s failure to make the Initial Shareholder Contribution, the Additional Shareholder Contributions or any voluntary or required contribution to the Customer Credit Trust or PG&E’s failure to provide the Customer Credit shall not affect or impair the issuing entity’s ownership of the recovery property as further described below.

The CPUC has determined that PG&E cannot withdraw funds from the Customer Credit Trust for any other purposes, including to satisfy the claims of its creditors. Furthermore, funds from the Customer Credit Trust may not be used to pay the principal of or interest on the recovery bonds or Ongoing Financing Costs. The financing order provides that any failure by PG&E to pay the Customer Credit or to provide the Initial Shareholder Contribution, Additional Shareholder Contributions, or any other voluntary or required contribution to the Customer Credit Trust shall neither (i) impair the characterization of the sale, assignment, or transfer of the recovery property as an absolute transfer and true sale nor (ii) impair the issuing entity’s status as an entity separate from PG&E and PG&E Corporation nor (iii) limit or alter the fixed recovery charges, the recovery property, the financing order, or any rights under the financing order. Additionally, the financing order provides that any failure by PG&E to pay the Customer Credit or any failure by PG&E to provide the Initial Shareholder Contribution, the Additional Shareholder Contributions or any voluntary or required contribution to the Customer Credit Trust shall not affect or impair the issuing entity’s ownership of the recovery property and consumers must pay the fixed recovery charge regardless of any failure by PG&E to provide the Customer Credit.

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Issuance Advice Letter

Within one business day after the pricing date of the recovery bonds, PG&E is required to submit with the CPUC an issuance advice letter, which will:

• specify the final principal amount of the recovery bonds;

• identify the recovery property to be sold to the issuing entity;

• document the final terms on which the recovery bonds will be issued;

• show the actual dollar amount of the fixed recovery charges relating to the recovery bonds;

• set forth the costs of issuance and other financing costs associated with the issuance of the recovery bonds, including the servicing fee and administration fee payable to PG&E; and

• identify the issuing entity.

The financing order provides that the issuance advice letter will be automatically approved and become effective at noon on the fourth business day after pricing unless before noon on the fourth business day after pricing the CPUC staff rejects the issuance advice letter.

Servicing Agreement

In the financing order, the CPUC authorized PG&E, as the servicer, to enter into the servicing agreement described under “The Servicing Agreement” in this prospectus. The servicing agreement provides that PG&E may not resign from its obligations and duties as servicer thereunder, except if (a) PG&E determines that the performance of its duties under the servicing agreement is no longer permissible under applicable law or (b) satisfaction of the following: (i) the rating agency condition shall have been satisfied and (ii) the CPUC shall have approved such resignation. No resignation by PG&E as servicer will become effective until a successor servicer has assumed PG&E’s servicing obligations and duties under the servicing agreement. Please read “The Servicing Agreement—Matters Regarding the Servicer” in this prospectus.

Fixed recovery charges will be collected by PG&E from consumers as part of its normal collection activities. Fixed recovery charges will be deposited by PG&E into the collection account under the terms of the indenture, the series supplement and the servicing agreement. Estimated fixed recovery charge collections will be remitted to the trustee on each business day. The estimated daily remittances made by PG&E will use a monthly collections curve that is expressed as a percentage measured at each of six consecutive 30-day intervals and represents the ratio of accumulative daily collections to the total amount billed to a sample customer population. Semi-annually, estimated fixed recovery charge collections will be reconciled with actual fixed recovery charge collections, which may be determined using a six month collections curve for the applicable reconciliation period. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Additional Recovery Bonds or Additional Other Recovery Bonds

PG&E is authorized to issue up to $7.5 billion of recovery bonds under the financing order from the CPUC under the Wildfire Financing Law in up to three series on or prior to December 31, 2022. The Wildfire Financing Law permits PG&E, upon receipt of an additional financing order, to finance certain costs and expenses related to catastrophic wildfires through the issuance of additional other recovery bonds pursuant to a separate financing order and secured by separate recovery property. In a separate proceeding, PG&E filed an application on March 11, 2022, requesting the CPUC approve a separate financing order permitting PG&E to issue additional other recovery bonds in an amount up to approximately $1.7 billion to finance a second portion of PG&E’s wildfire risk mitigation and capital expenditures under the Wildfire Financing Law.

Any such additional other recovery bonds would be secured by separate recovery property created by a separate financing order or orders. The issuing entity’s organizational documents, as well as the basic documents,

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give it the authority and flexibility to issue one or more series of additional recovery bonds or additional other recovery bonds authorized by additional financing orders and to acquire additional recovery property or additional other recovery property which will be pledged to such additional recovery bonds or additional other recovery bonds, subject to satisfaction of the rating agency condition. Please read “PG&E Wildfire Recovery Funding LLC, The Issuing Entity” in this prospectus.

The financing order provides that, in the event additional recovery bonds or additional other recovery bonds are issued, the fixed recovery charges should be allocated ratably between the trustee and other trustees for each series of additional recovery bonds or additional other recovery bonds.

Please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—PG&E may cause the issuance of additional recovery bonds or additional other recovery bonds secured by additional recovery property or additional other recovery property that includes a non-bypassable charge on consumers, which may cause a delay in the payment of the recovery bonds and potential conflicts of interest among bondholders” in this prospectus. In addition, PG&E has covenanted in the sale agreement that it will not sell recovery property or property comparable to the recovery property unless, among other conditions, the rating agency condition is satisfied and until it has entered into a joinder to the intercreditor agreement described in “Security for the Recovery Bonds—Intercreditor Agreement” in this prospectus. Please read “The Sale Agreement—Covenants of the Seller” in this prospectus.

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THE DEPOSITOR, SELLER, INITIAL SERVICER AND SPONSOR

General

PG&E will be the depositor, seller and initial servicer of the recovery property securing the recovery bonds, and will be the sponsor of the securitization in which recovery bonds covered by this prospectus are issued.

PG&E is a public utility operating in northern and central California and is one of the largest combination natural gas and electric utilities in the United States. PG&E was incorporated in California in 1905 and is a subsidiary of PG&E Corporation. PG&E provides natural gas and electric service to approximately 10 million consumers (including 5.6 million electric service consumers) throughout a 70,000-square-mile service area in northern and central California. PG&E generates revenues mainly through the sale and delivery of electricity and natural gas to consumers.

During the year ended December 31, 2021, PG&E sold or delivered electricity to an average of 5,623,301 consumers and, for the twelve months ended December 31, 2021, its total electric operating revenue was derived as follows: 43% Residential; 12% Small Commercial; 10% Medium Commercial; 13% E/B-19; 0.4% Streetlights; 0.5% Standby; 11% Agriculture and 10% E/B-20. During 2021, Exempted Consumers accounted for 12% of PG&E’s total electric deliveries and approximately 32% of deliveries to the residential domestic FRC consumer classes. The recovery bonds do not constitute a debt, liability or other legal obligation of PG&E or PG&E Corporation.

Community Choice Aggregation, Direct Access and Departing Load

Consumers within PG&E’s service territory may purchase their energy from certain other energy suppliers. In 2002, California Assembly Bill 117 was signed into law, allowing cities and counties to form Community Choice Aggregators (“CCAs”). Community Choice Aggregation, or “CCA”, is a program that allows cities, counties, other California public agencies and Joint Power Authorities to procure electricity for consumers located within the city or county or public agency’s jurisdictional area, including within PG&E’s service territory. Consumers not wishing to participate must opt out. As of year-end 2021, PG&E had twelve CCAs serving consumers in its service territory that represent over 44% of PG&E’s total service load. Since 2019, there has been steady growth with CCA expansion increasing CCA consumers served from approximately 2.3 million in 2019 to 3.4 million at the end of 2021. In 2021, direct access and CCA load was more than half (approximately 61%) of its total service load. When consumers are served by a CCA, PG&E continues to be responsible for the transmission and distribution of the electricity, as well as metering and billing and consumers must pay the fixed recovery charges on all electricity consumption.

California law also provides limited opportunities for consumers in PG&E’s service territory to choose to purchase power directly from an Electric Service Provider (which do not include CCAs). A limited, phased-in partial reopening of direct access for nonresidential consumers was authorized in 2010, and an additional limited partial reopening of direct access was authorized in 2018. On June 24, 2021, the CPUC adopted a decision further implementing the 2018 legislation. In that decision, the CPUC recommended against further legislative expansion of DA at this time. The CPUC considered recent reliability events and the current integrated resource planning forecasted needs for additional generation to conclude that there was not a need for further DA reopening. As of year end 2021, about 14,270 consumers, consuming approximately 9,840 gigawatt hours of electricity, took service on direct access. PG&E’s forecast reflects an approximate 14% increase to the existing direct access cap (“DA cap”) of 11,393 gigawatt hours in 2022 and 2023. California may decide to further increase the DA cap in the future. Please read “The Depositor, Seller, Initial Servicer and Sponsor—Forecasting Electricity Consumption” in this prospectus. As with the CCAs, when a consumer who previously took bundled service from PG&E converts to taking procurement service from an ESP or Community Aggregator, PG&E remains that consumer’s transmission and distribution provider and consumers must pay the fixed recovery charges on all electric consumption.

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Other forms of departing load (“DL”) include consumer generation, and load that departs PG&E service entirely to take electricity service from a publicly owned utility. Please read “—Municipalization; Municipal Departing Load” in this prospectus.

Under PG&E’s current tariffs, consumers who self-generate using generation facilities which interconnect to and operate in parallel with PG&E’s electric system must also pay the fixed recovery charges based on metered consumption, or if metered consumption is not available, then estimated based on historical load, and also pay the fixed recovery charges on electric service they receive from PG&E when the consumer’s load is not served by the consumer’s generation facility (i.e., in a partial or complete outage of the generation facility).

Under PG&E’s existing tariff applicable to consumer generation departing load, consumers are not subject to a departing load charge in certain circumstances, including when the consumer physically disconnects from PG&E’s grid, when consumers experience changes in usage in the normal course of business, and consumers whose load is served from a back-up unit during certain emergency conditions.

Pursuant to the financing order, PG&E is required to utilize DL tariffs existing as of the effective date of the financing order to determine the consumption on which fixed recovery charges will be imposed on DL consumers. Current departing load tariffs apply to consumers who disconnect entirely from PG&E’s grid after the date of the issuance of the financing order. The financing order requires that the fixed recovery charges be paid by such disconnected consumers using the same methodology as that applied to other DL consumers under existing DL tariffs.

PG&E Retail Consumer Base and Electric Energy Consumption

PG&E’s retail consumer base currently consists of eight revenue reporting rate classes, referred to herein as FRC consumer classes: Residential; Small Commercial; Medium Commercial; E/B-19; Streetlights; Standby; Agriculture and E/B-20. Under the Wildfire Financing Law, the Residential Domestic (FERA), Non-Residential (CARE) and Residential/Domestic Income Qualified (CARE) are exempt from paying the fixed recovery charges and the costs associated with these groups is allocated to the remaining FRC consumer classes.

The following tables show the electricity delivered to retail consumers, electric delivery revenues and number of retail consumers for each of the eight revenue reporting rate classes for 2021 and each of the four preceding years. There can be no assurances that the retail electricity sales, retail electric revenues and number of retail consumers or the composition of any of the foregoing will remain at or near the levels reflected in the following tables.

Electricity Delivered to Retail Consumers, Electric Delivery Revenues and Retail Consumers Retail Electric Usage (As Measured by Billed GWh Sales) by FRC Consumer Class

and Percentage Composition⁽¹⁾

FRC Consumer Class	2017				2018				2019				2020				2021
Residential		29,409	35.6	%		27,485	34.3	%		27,514	35.1	%		29,814	37.8	%		28,660	36	%
Residential (Excludes CARE & FERA)		21,425	26.0	%		20,125	25.1	%		20,144	25.7	%		21,070	26.7	%		19,407	25	%
Residential (CARE & FERA Only)		7,983	9.7	%		7,366	9.2	%		7,370	9.4	%		8,744	11.1	%		9,253	12	%
Small Commercial		8,450	10.2	%		8,173	10.2	%		8,174	10.4	%		7,343	9.3	%		7,452	9	%
Medium Commercial		8.791	10.7	%		8,476	10.6	%		8,355	10.7	%		7,499	9.5	%		7,603	10	%
E/B-19		14,476	17.5	%		13,582	17.0	%		13,555	17.3	%		12,561	15.9	%		13,032	17	%
Streetlight		299	0.4	%		277	0.3	%		266	0.3	%		258	0.3	%		249	0	%
Standby		450	0.5	%		443	0.6	%		449	0.6	%		340	0.4	%		465	1	%
Agriculture		5,238	6.3	%		6,270	7.8	%		5,093	6.5	%		6,657	8.4	%		7,438	9	%
E/B-20		15,402	18.7	%		15,360	19.2	%		14,967	19.1	%		14,322	18.2	%		13,959	18	%
Total		82,514	100.0	%		80,066	100.0	%		78,372	100.0	%		78,793	100.0	%		78,857	100	%

⁽¹⁾  Amounts may not recalculate due to rounding.

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Revenue by FRC Consumer Class ⁽¹⁾

(dollars in thousands)

FRC Consumer Class	2017		2018		2019		2020		2021
Residential	$	5,692,974	$	5,051,434	$	4,846,918	$	5,522,636	$	6,088,969
Residential (Excludes CARE & FERA)		4,615,558		4,115,124		3,934,653		4,327,821	$	4,633,494
Residential (CARE & FERA Only)		1,077,416		936,310		912,265		1,194,815	$	1,455,475
Small Commercial		1,783,931		1,651,434		1,631,443		1,586,135	$	1,699,903
Medium Commercial		1,590,035		1,457,849		1,380,540		1,362,035	$	1,442,265
E/B-19		2,069,610		1,809,587		1,756,375		1,785,519	$	1,914,824
Streetlight		64,776		58,891		53,306		56,118	$	57,173
Standby		76,166		76,905		82,314		77,739	$	64,544
Agriculture		1,068,812		1,233,848		1,106,296		1,471,223	$	1,564,755
E/B-20		1,573,308		1,503,478		1,462,460		1,504,973	$	1,475,074
Total		13,919,612		12,843,425		12,319,652		13,366,378		14,307,507

⁽¹⁾  Amounts may not recalculate due to rounding.

Number of Average Metered Retail Electric Consumers ⁽¹⁾

FRC Consumer Class	2017		2018		2019		2020		2021
Residential		4,808,739		4,798,717		4,845,470		4,910,753		4,947,951
Residential (Excludes CARE & FERA)		3,602,908		3,626,243		3,667,341		3,621,849		3,553,281
Residential (CARE & FERA Only)		1,205,831		1,172,474		1,178,129		1,288,904		1,394,670
Small Commercial		470,517		472,365		477,344		477,888		475,768
Medium Commercial		43,970		43,361		43,201		42,768		41,961
E/B-19		27,572		28,124		28,668		29,568		30,143
Streetlight		37,214		37,055		36,948		36,920		36,985
Standby		657		660		667		638		680
Agriculture		90,089		90,364		90,667		90,908		88,757
E/B-20		1,131		1,131		1,116		1,119		1,056
Total		5,479,889		5,471,777		5,524,081		5,590,562		5,623,301

⁽¹⁾  Amounts may not recalculate due to rounding.

Forecasting Electricity Consumption

PG&E develops retail electricity sales forecasts each year for approval by the CPUC for rate setting in the following year. These updates reflect bundled load migration along with other minor changes, and most recently, to account for the impacts of the COVID-19 pandemic. PG&E is forecasting a decrease in bundled sales of approximately 10% in calendar year 2022 compared to 2021, due largely to CCA departures and other economic conditions (such as COVID-19).

PG&E develops econometric models to forecast electricity sales for the residential, commercial, industrial, and agricultural market segments. These forecasts will be used to calculate the fixed recovery charges for any given period, in order to determine the revenue required to meet the expected sinking fund schedules for the recovery bonds.

For the residential sector, electricity consumption is modeled as a function of population, housing, and heating and cooling degree days. The commercial sector is modeled as a function of residential accounts, cooling

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degree days, and regional employment components for PG&E’s service territory. Electricity usage for the industrial sector is modeled as a function of cooling degree days and regional GDP. Finally, agricultural usage is projected using a drought indicator based on river runoff and regional agricultural economic output for PG&E’s service territory. Forecasted weather-related drivers assume normal weather conditions. Thirty-year averages for such weather drivers as heating and cooling degree-days, and rainfall are employed in developing the sales forecast.

PG&E’s electricity demand forecast models have been in use in their current form for more than five years and have undergone extensive review by the CPUC and the California Energy Commission, respectively. Each year PG&E updates these models with the most recent recorded data, and conducts testing to ensure that model statistics indicate that drivers are relevant and significant.

As discussed above, various CCAs have formed and become operational in PG&E’s service territory, which resulted in customers departing bundled service starting in 2010. In 2013, CCAs served about 1% of the system load. The most recent short term CCA load forecast, which is expected to be about 48% of the system load in 2022, was developed in coordination with the CCAs through a meet and confer process. A new meet and confer process is in progress for the 2023 short term CCA forecast. For the long-term CCA load forecast, PG&E utilizes a probabilistic model to account for the uncertainty of future CCA formations and expansions. Given the current size of the CCA load, forecasted incremental departure will be relatively small compared to the overall size of existing CCA load. PG&E has incorporated its best estimate of the departing CCA load to this forecast based on the best information PG&E had received at the time that this forecast was made. PG&E’s forecast also reflects the limited expansion of DA starting in 2021. Once such expansion is reached, DA is expected to serve 15% of system load by the end of 2022.

The table below shows electricity forecasts and variances from the forecast for the five years 2017-2021.

PG&E updated its sales forecast model in 2020 to account for the impacts of the COVID-19 pandemic and estimates that 2022 deliveries will be lower than otherwise forecasted by approximately 1.6% due to COVID-19 impacts. Adjustments for COVID-19 are expected to decrease in 2023.

Annual Forecast Variance For Ultimate Electric Delivery (GWh)
	2017			2018			2019			2020			2021
Forecast (1)		82,039			81,134			81,371			79,860			76,601
Actual		82,514			80,066			78,372			78,793			78,857
Variance		0.58	%		-1.32	%		-3.69	%		-1.34	%		2.95	%

⁽¹⁾ Annual Electric Delivery Forecast (GWh) inclusive of public transit rate class (E/B-20).

Variances among the FRC consumer classes, which are used to allocate payment responsibility for the recovery bonds, may differ from the variances shown above, as the classifications relate to distribution voltage only.

Billing and Collections

In 2021, PG&E received approximately 76.6% of total bill payments electronically, through means such as electronic funds transfer, electronic data interchange, pay by phone, and web-based payments. Approximately 20.4% of bill payments were received via U.S. Mail and the remaining 3.0% were received through Authorized Payment Agencies (walk-in payments). Regardless of payment type, if a consumer currently has delinquent debt, the delinquent balance is paid first followed by any current outstanding debt for the billing period. Payment allocation rules are the same for all consumers, where delinquent debt is satisfied first, followed by current debt. An account’s debt is broken into delinquent vs. current debt. Delinquent debt is debt aged greater than the due date of the bill. Current debt is debt aged less than the due date of the bill. Accounts are due upon presentment.

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PG&E’s billing system automatically calculates monthly charges based on each consumer’s usage, rate schedule and any special programs they may be participating in. Consumers with a third-party provider, such as CCA, may require PG&E to send usage files so that the third-party can calculate their charges. The third-party provider has 4 business days to send their charges back to PG&E to ensure they are added onto the monthly billing statement.

Residential consumer accounts are considered past due 21 days from the bill date and non-residential consumer accounts are considered past due 17 days from the bill date. For residential consumers, PG&E mails a 15-day overdue notice and a subsequent 48-hour disconnect notice. PG&E makes a reasonable attempt to contact an adult person residing at the consumer’s residence at least 24 hours prior to termination of service. Non-residential accounts receive a seven-day overdue notice and although not required, these non-residential consumers may also be provided with a 24-hour disconnect notice prior to disconnection of service.

For residential and non-residential consumers, a closing bill including all unpaid amounts is generally issued within three to ten days of service termination. If amounts remain outstanding after 27 days, for residential consumers and 21 days for non-residential consumers, a phone call will be made, and a letter of non-payment will be sent to the consumer. Unpaid residential accounts will be referred to third-party collection agencies approximately 42 days after the closing bill and listed with major credit bureaus by the agencies approximately 3 months thereafter. Unpaid non-residential accounts will be referred to third party collection agencies and listed with the major credit bureaus, if applicable, approximately 50 days after the closing bill. Active collections on unpaid accounts will continue up to the statutory limit of 3 years. Under current policies, unpaid closed account balances are written off 180 days after the final bill is issued.

Generally, service may be disconnected if payment is not received after all notifications have been provided. Please read “—COVID-19 Consumer Protections” below for current measure restricting PG&E’s ability to disconnect consumers for non-payment. The CPUC adopted certain additional regulations relating to disconnection that would make permanent certain of the provisions of the temporary protections enacted in connection with the COVID-19 pandemic which may extend the time it takes to complete the process of disconnecting consumers for nonpayment.

Before restoring service that has been shut-off for non-payment, PG&E has the right to require the payment of the past due amount, a reconnection fee, and a deposit, if applicable.

Credit Policy

Under California law and CPUC regulatory guidelines, PG&E is obligated to provide service to electricity consumers in its service territory regardless of their creditworthiness.

Certain accounts are secured with deposits or guarantees to reduce losses. Since the vast majority of consumers pay their bills within the allotted time, it is not necessary to require deposits from all consumers. Specific criteria have been developed for establishing credit. These criteria are based on multiple factors, including prior service, payment history, or external credit score.

In June 2020, the CPUC issued a decision that prohibits investor-owned utilities, such as PG&E, from collecting deposits from residential consumers for the establishment and reestablishment of service. Therefore, PG&E will not secure any new residential consumer accounts, or those reconnected after June 11, 2020 after a service disconnection for non-payment. Credit policies are managed within the Credit Policy team and are updated and/or reviewed as needed in accordance with regulatory requirements or business adjustments/strategies. Policies and Procedures developed through committee reviews and approved at the Manager or Director level.

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Non-residential consumers may establish credit by depositing cash equal to twice the highest monthly electric charge or furnishing a satisfactory guarantor, or other credit support such as a surety bond, a certificate of deposit or an irrevocable letter of credit.

PG&E may change its credit and collections policies from time to time.

COVID-19 Consumer Protections

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, resulting in significant disruptions to manufacturing, supply chain, markets, and travel world-wide. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the COVID-19 outbreak a public health emergency of international concern and on March 12, 2020, announced the outbreak was a pandemic. In response to the California Governor’s emergency proclamation on March 4, 2020, PG&E extended a disconnection moratorium to residential and small business consumers. On April 16, 2020, the CPUC approved a resolution requiring utilities to extend this disconnection moratorium through April 16, 2021. The resolution also authorizes utilities to establish memorandum accounts to track incremental costs associated with complying with the resolution. On June 11, 2020, the CPUC issued a final decision as part of the Order Instituting Rulemaking to Consider New Approaches to Disconnections and Reconnections to Improve Energy Access and Contain Costs that permanently eliminated deposit requirements for residential consumers. On February 11, 2021, the CPUC approved a resolution extending the moratorium on service disconnections for residential and small business consumers to June 30, 2021.

In addition, on April 19, 2021, the CPUC issued a final decision to implement a temporary moratorium on service disconnection for medium and large commercial and industrial consumers (which include Medium Commercial, E/B-19 and E/B-20 FRC consumer classes) through June 30, 2021. The final decision authorized PG&E to submit an advice letter to establish a memorandum account to track incremental costs for the period of December 30, 2020 to June 30, 2021 for this moratorium. On June 30, 2021, the CPUC issued a final decision on bill debt relief, which suspended disconnections through September 30, 2021 for residential and small business consumers (which was extended to medium and large commercial and industrial consumers as well by existing final decision language). Although the moratorium on service disconnections ended on September 30, 2021, PG&E does not anticipate resuming service disconnections for residential customers until no earlier than mid-2022 based on the requirements outlined in Assembly Bill 135.

On July 16, 2021, the California governor approved Assembly Bill 135, which established the California Arrearage Payment Program (“CAPP”). CAPP enables California investor-owned utilities to apply for a statewide total of approximately $695 million to offset customer arrearages incurred during the COVID-19 pandemic. PG&E received approximately $300 million in January 2022 to reduce the amounts owed by customer accounts in arrears. The amount of funding was determined by the California Department of Community Services and Development, which is the agency responsible for administering the CAPP.

Loss Experience

The following table sets forth information relating to PG&E’s annual net write-offs as a percentage of billed revenue for its electric retail consumers for the five years ending December 31, 2017 through 2021:

Net Write-Offs as a Percentage of Billed Revenues (dollars in thousands)
	2017			2018			2019			2020			2021
Billed Electric Revenues	$	13,919,612		$	12,843,425		$	12,319,652		$	13,366,379			14,307,507
Net Write-Offs	$	32,535		$	32,414		$	29,108		$	27,891		$	49,277
Percentage of Billed Revenue		0.2337	%		0.2524	%		0.2363	%		0.2087	%		0.3444	%

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Average Days Sales Outstanding

The following table sets forth information relating to the average number of days retail consumer electricity bills remained outstanding beyond 31 days from the bill date for the five years ending December 31, 2017 through 2021:

Average Days Sales Outstanding
	2017		2018		2019		2020		2021
Average Days Sales Outstanding		22.34		21.76		22.99		28.23		37.72

The average days sales outstanding for December 2020 compared to the average days sales outstanding for December 2021 increased from 28.23 days to 37.72 days, or a 33% increase reflecting the impact of COVID-19, including consumer impacts and implementation of the CPUC disconnection policies.

Delinquencies

The following table sets forth information relating to the delinquencies as a percentage of total annual billed revenues for all classes of electric consumers as of December 31st for the years 2017 to 2021. Balances are aged when the following month’s bill is rendered.

Delinquencies as a Percentage of Total Billed Electric Revenues
	2017			2018			2019			2020			2021
31-60 days		0.77	%		0.78	%		0.67	%		1.15	%		1.29	%
61-90 days		0.35	%		0.33	%		0.38	%		0.83	%		0.87	%
91+ days		0.40	%		0.41	%		0.53	%		2.29	%		4.03	%
Total		1.53	%		1.52	%		1.58	%		4.28	%		6.19	%

Municipalization; Municipal Departing Load

California law may authorize certain local municipalities to seek to acquire portions of PG&E’s electric distribution facilities through the power of eminent domain for use as part of municipally-owned utility systems and serve consumers with those facilities. Additionally, local municipalities may extend their own facilities to take over service of consumers located within their jurisdictional areas which overlap with PG&E’s service territory. These circumstances involve what is referred to in the tariffs as “Municipal DL”, where the affected consumers are no longer interconnected with PG&E’s electric facilities.

The Wildfire Financing Law and the financing order provide that the fixed recovery charges must be paid by all existing and future consumers, except Exempted Consumers, within PG&E’s service territory as it existed on the date of the financing order. The financing order provides that, except in the case of municipalization (which is discussed in the next two paragraphs below), consumers that no longer take transmission and distribution retail service from PG&E after the date of the financing order, or that meet relevant criteria in the applicable tariff, shall be treated as DL consumers using applicable tariffs for DL consumers, including the Electric-Departing Customer Generation tariff, and will be subject to pay the fixed recovery charges and any FRTAs and entitled to receive the Customer Credit. In addition, under the financing order and the Wildfire Financing Law, in the event that residents of a municipality who are consumers no longer take transmission and distribution retail service after the date of the financing order as a result of a municipalization proceeding, such consumers will be subject to pay the fixed recovery charges and any FRTAs; the determination of the Customer Credit applicable to such consumers will be determined by the CPUC in a future proceeding, if any, regarding municipalization.

The Wildfire Financing Law also specifies that any successor to an electric utility shall perform and satisfy all obligations of the electric utility pursuant to the Wildfire Financing Law, including collecting and paying to the bondholders revenues arising with respect to the recovery property. In the servicing agreement, PG&E will

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covenant to assert in an appropriate forum that any municipality that acquires any portion of PG&E’s electric distribution facilities must be treated as a successor to PG&E under the Wildfire Financing Law and the financing order, subject to approval by the CPUC, and that retail consumers in such municipalities remain responsible for payment of fixed recovery charges.

In the financing order, the CPUC has committed, in furtherance of the State Pledge, in connection with any Commission proceeding to authorize the voluntary or involuntary change in ownership of PG&E facilities by a public entity, to ensure the new asset owner either (a) will continue to bill and collect fixed recovery charges from consumers and remit such collections to PG&E or a new servicer for the recovery bonds or (b) ensure the upfront funding of the fixed recovery charges that would otherwise be paid by consumers where rate payment would be affected by the ownership change. Any such upfront funding would constitute recovery property pledged to the payment of the recovery bonds.

Successors

California law also provides the merger, acquisition or control of PG&E, either directly or indirectly, by any person or corporation must be approved by the CPUC. The Wildfire Financing Law specifies that any successor to an electric utility shall perform and satisfy all obligations of the electric utility pursuant to the Wildfire Financing Law, including collecting and paying to the bondholders revenues arising with respect to the recovery property. Further, the financing order states that it is binding on PG&E and any successor to PG&E that provides electric distribution service directly to consumers of electricity within PG&E’s service territory. In the servicing agreement, PG&E has covenanted to assert in an appropriate forum that any person or corporation that merges with, acquires or controls PG&E directly or indirectly must be treated as a successor to PG&E under the Wildfire Financing Law and the financing order, subject to approval by the CPUC, and that consumers remain responsible for payment of fixed recovery charges.

Prior Securitizations

PG&E has previously served as sponsor and servicer in the issuance of (i) the 2021 Wildfire Recovery Bonds, (ii) $2,901,000,000 original aggregate principal amount of rate reduction certificates by the California Infrastructure and Economic Development Bank, issued on December 11, 1997 (the “1997 rate reduction certificates”), issued to permit PG&E to recover certain stranded costs associated with the restructuring of the electric utility industry in California, (iii) $1,887,864,000 original aggregate principal amount of energy recovery bonds by PG&E Energy Recovery Funding LLC, issued on February 10, 2005 (the “Series 2005-1 recovery bonds”), issued to permit PG&E to reduce outstanding debt and retire common equity, or to finance future capital expenditures, and (iv) $844,461,000 original aggregate principal amount of energy recovery bonds by PG&E Energy Recovery Funding LLC, issued on November 9, 2005 (the “Series 2005-2 recovery bonds”, together with the 2021 Wildfire Recovery Bonds, the 1997 rate reduction certificates and the Series 2005-1 recovery bonds, the “prior transactions”), issued to permit PG&E to reduce outstanding debt and retire common equity, or to finance future capital expenditures.

The underlying structure of the prior transactions is comparable to the underlying structure of the recovery bonds, with the exception of the use in 1997 of an issuing entity created by the State of California, in that PG&E, pursuant to the authority granted by the CPUC in a financing order that created property, namely, the right to impose, bill and receive the charges to another entity, and each such entity financed the purchase of the property through the issuance of indebtedness. The charges were included on the bills of PG&E’s consumers, collected via PG&E’s bills, and the revenues related to such charges were remitted to the trustee for such rate reduction certificates to make payments on the certificates.

In each of the prior transactions, PG&E serviced the charges authorized by an order of the CPUC that were subject to regular and periodic true-up adjustments following similar processes as in the current transaction, including submissions with and review and approval by the CPUC. In addition, PG&E services “non-bypassable

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charges” on behalf of the issuing entity of each transaction to support recovery bonds issued to (i) finance power purchase costs during the State of California’s energy crisis in 2000 and 2001 (for the 1997 rate reduction certificates) and (ii) reduce outstanding debt and retire common equity, or to finance future capital expenditures (for both the Series 2005-1 recovery bonds and the Series 2005-2 recovery bonds). In servicing the recovery property, PG&E will draw upon its prior servicing experience with the prior transactions and the charges it collects on behalf of each of the issuing entities of each transaction, each similar to the fixed recovery charges, and in calculating and implementing rates and charges under various cost recovery clauses and billing those amounts to consumers as a result of the prior transactions.

Beyond its experience serving stranded cost recovery charges in connection with the prior transactions, PG&E has a long history of collecting charges from its consumers and allocating them accordingly. PG&E has over 100 years of experience in collecting charges from its consumers, which it will be doing on the issuing entity’s behalf, as initial servicer of the recovery property.

Future Securitizations

In a separate proceeding, PG&E filed an application on March 11, 2022, requesting the CPUC approve a separate financing order permitting PG&E to issue additional other recovery bonds in an amount up to approximately $1.7 billion to finance a second portion of PG&E’s wildfire risk mitigation and capital expenditures under the Wildfire Financing Law. Any such additional other recovery bonds issued pursuant to the financing order described in this paragraph would be secured by separate property created by a separate financing order or orders. Please read Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—PG&E may cause the issuance of additional recovery bonds or additional other recovery bonds secured by additional recovery property or additional other recovery property that includes a non-bypassable charge on consumers, which may cause a delay in the payment of the recovery bonds and potential conflicts of interest among bondholders”, “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

PG&E, in its sole discretion, may sell recovery property or property similar to recovery property, created by one or more separate financing orders in connection with the issuance of additional other recovery bonds or obligations similar to the recovery bonds without your prior review or approval.

Any new issuance would be offered pursuant to a separate registration statement and may include terms and provisions that would be unique to that particular issuance. PG&E has covenanted in the sale agreement that the satisfaction of the rating agency condition and the execution and delivery of a joinder to the intercreditor agreement are condition precedents to the sale of additional recovery property or similar property consisting of non-bypassable charges payable by consumers comparable to the recovery property to another entity. Please read “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

Where to Find Information About PG&E

PG&E routinely provides links to PG&E’s principal regulatory proceedings before the CPUC at http://investor.pgecorp.com, under the “Regulatory Filings” tab, so that such filings are available to investors upon filing with the relevant agency. PG&E also routinely post or provide direct links to presentations, documents, and other information that may be of interest to investors at http://investor.pgecorp.com, under the “PG&E Progress,” “Chapter 11,” “Wildfire and Safety Updates” and “News & Events: Events & Presentations” tabs, respectively, in order to publicly disseminate such information. The information contained on such website (other than the materials specifically incorporated by reference herein) is not part of this registration statement or any report that PG&E files with, or furnishes to, the SEC. PG&E and the issuing entity are providing the address to this website solely for the information of investors and does not intend the address to be an active link.

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PG&E WILDFIRE RECOVERY FUNDING LLC, THE ISSUING ENTITY

The issuing entity is a special purpose limited liability company formed under the Delaware Limited Liability Company Act pursuant to a limited liability company agreement executed by the issuing entity’s sole member, PG&E, and the filing of a certificate of formation with the Secretary of the State of Delaware. The issuing entity was formed on March 8, 2022.

The issuing entity has been organized as a special purpose subsidiary of PG&E for the limited purpose of holding recovery property and issuing recovery bonds, including the recovery bonds, secured by recovery property and other collateral pledged to secure such recovery bonds. The issuing entity’s organizational documents, as well as the basic documents supporting the recovery bonds, give the issuing entity the authority and flexibility to issue additional recovery bonds authorized by the financing order or additional other recovery bonds authorized by additional financing orders and to acquire recovery property created by the financing order or such additional financing orders, which will be pledged solely to the payment of such additional recovery bonds or additional other recovery bonds, subject to satisfaction of the rating agency condition. As a result, the issuing entity may acquire additional recovery property and issue one or more series of additional recovery bonds or additional other recovery bonds that are supported by such additional recovery property or other collateral to finance the recovery costs approved by an additional financing order. Please read “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated—Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds” and “—Allocations as Between Series of Recovery Bonds” in this prospectus.

The issuing entity’s limited liability company agreement restricts it from engaging in activities other than those described in this section. The issuing entity does not have any employees, but it will pay its member for out-of-pocket expenses incurred by the member in connection with its services to the issuing entity in accordance with the issuing entity’s limited liability company agreement. The issuing entity has summarized selected provisions of its limited liability company agreement below, a copy of which has been filed as an exhibit to the registration statement of which this prospectus is a part. On the date of issuance of the recovery bonds, the issuing entity’s capital will be equal to 0.50% of the principal amount of such recovery bonds issued or such other amount as may allow the recovery bonds to achieve the desired security rating and treat the recovery bonds as debt under applicable guidance issued by the Internal Revenue Service, which the issuing entity also refers to as the “IRS”.

At the time of the issuance of the recovery bonds, the issuing entity’s assets will consist primarily of the recovery property and the other collateral held under the indenture and the series supplement for the recovery bonds.

Restricted Purpose

The issuing entity has been created for the sole purpose of:

• acquiring, owning, holding, disposing of, administering, servicing or entering into agreements regarding the receipt and servicing of the recovery property, and any recovery property created by the financing order or an additional financing order, and the other collateral;

• issuing the recovery bonds and one or more series of additional recovery bonds or additional other recovery bonds;

• making payment on the recovery bonds and any series of additional recovery bonds or additional other recovery bonds;

• distributing amounts released to the issuing entity;

• managing, selling, assigning, pledging, collecting amounts due on, or otherwise dealing with the recovery property and the other recovery bond collateral and related assets;

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• negotiating, executing, assuming and performing the issuing entity’s obligations under the basic documents;

• pledging the issuing entity’s interest in recovery property and other collateral to an indenture trustee under one or more indentures and one or more series supplements in order to secure a series of recovery bonds, including the recovery bonds and any additional recovery bonds or additional other recovery bonds; and

• performing other activities that are necessary, suitable or convenient to accomplish these purposes.

The issuing entity’s limited liability company agreement does not permit the issuing entity to engage in any activities not directly related to these purposes, including issuing securities (other than the recovery bonds, any additional recovery bonds and any additional other recovery bonds), borrowing money or making loans to other persons. The list of permitted activities set forth in the issuing entity’s limited liability company agreement may not be altered, amended or repealed without the affirmative vote of a majority of the issuing entity’s managers, which vote must include the affirmative vote of the issuing entity’s independent manager. The issuing entity’s limited liability company agreement and the indenture will prohibit it from issuing any recovery bonds (as such term is defined in the Wildfire Financing Law), other than the recovery bonds that the issuing entity will offer pursuant to this prospectus and any additional recovery bonds or additional other recovery bonds issued by the issuing entity pursuant to a separate financing order and secured by additional recovery property or additional other recovery property, as the case may be. Please read “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated—Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds” and “—Allocations as Between Series of Recovery Bonds” in this prospectus.

The Issuing Entity’s Relationship with PG&E

On the issue date for the recovery bonds, PG&E will sell recovery property to the issuing entity pursuant to a sale agreement between the issuing entity and PG&E. PG&E will service the recovery property pursuant to a servicing agreement between the issuing entity and PG&E and will provide administrative services to the issuing entity pursuant to an administration agreement between the issuing entity and PG&E.

The Issuing Entity’s Management

Pursuant to the issuing entity’s limited liability company agreement, the issuing entity’s business will be managed by three or more managers, at least one of whom will be an independent manager, in each case appointed from time to time by PG&E or, in the event that PG&E transfers its interest in the issuing entity, by the issuing entity’s owner or owners. Following the initial issuance of recovery bonds, the issuing entity will have at least one independent manager, who among other things, must be a natural person who, for the five-year period prior to his or her appointment as an independent manager has not been and during the continuation of his or her service as independent manager is not:

• an employee, director, stockholder, manager, partner, agent, consultant, attorney, accountant, advisor or officer or an employee, director, manager, stockholder, partner, agent, consultant, attorney, accountant, advisor or officer of the issuing entity, PG&E or any of their respective affiliates, other than his or her service as independent manager;

• a creditor or supplier, or a creditor, service provider or supplier of the issuing entity, PG&E or any their respective affiliates, except that an independent manager may be an employee of a supplier of corporate related services to the issuing entity or any of our affiliates; or

• any member of the immediate family of a person described in either of the above bullets.

PG&E, as the issuing entity’s sole member, will appoint the independent manager prior to the issuance of the recovery bonds. None of the issuing entity’s managers or officers has been involved in any legal proceedings which are specified in Item 401(f) of the SEC’s Regulation S-K. None of the issuing entity’s managers or officers beneficially own any equity interest in the issuing entity.

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The following is a list of our managers as of the date of this prospectus:

Name	Age	Title	Background
Margaret K. Becker	40	Manager and President	Manager and President of the issuing entity since its inception in 2022. Ms. Becker has served as Vice President and Treasurer of PG&E since April 2021. From 2016 to March 2020, Ms. Becker served as Assistant Treasurer and Director of Banking and Economic Analysis at PG&E. From March 2020 to April 2021, Ms. Becker served as Senior Director and Treasurer at PG&E.
Monica Klemann	38	Manager, Treasurer and Secretary	Manager, Treasurer and Secretary of the issuing entity since its inception in 2022. Ms. Klemann has served as Assistant Treasurer and Director of PG&E since April 2021. From April 2015 to March 2020, Ms. Klemann served as Manager of the Banking and Money Management team at PG&E. From March 2020 to April 2021, she served as Senior Manager of PG&E.
Orlando Figueroa	61	Independent Manager	Independent Manager of the issuing entity since its inception in 2022. With over 21 years’ US and global capital markets experience, Mr. Figueroa currently serves as Senior Managing Director and is primarily responsible for leading the business development efforts of Citadel SPV, which he co-founded in November 2014. Prior to forming Citadel SPV, Mr. Figueroa served as Managing Director - Corporate Governance and New Business Development of Lord Securities Corporation, a TMF Group Company from March 2002 to October 2014. Mr. Figueroa’s responsibilities at Lord Securities included business development, senior oversight of Lord Securities’ corporate governance practice, and managing all daily aspects of document review and execution, including legal response and transaction management. Mr. Figueroa also was a member of TMF Group’s Structured Finance Global Strategy Board and served as TMF Group’s Regional Director for Structured Finance in the Americas from January 2010 to October 2014. During his career, Mr. Figueroa has served as a director on the boards of over 1,000 special purpose vehicles spanning various asset classes. He also served on the Executive Board of Directors of the American Securitization Forum (the “ASF”) and acted as Chairman of the ASF’s Membership Committee from 2008 to 2010. Mr. Figueroa currently serves on the Board of Directors of The Cameron Kravitt Foundation, a not-for-profit charitable foundation, which he has served on since 2010.

Manager Fees and Limitation on Liabilities

The issuing entity has not paid any compensation to any manager since it was formed. The issuing entity will not compensate its managers, other than the independent manager, for their services on the behalf of the

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issuing entity. The issuing entity will pay the annual fees of the independent manager from its revenues and will reimburse them for reasonable expenses. These expenses include the reasonable compensation, expenses and disbursements of the agents, representatives, experts and counsel that the independent managers may employ in connection with the exercise and performance of his or her rights and duties under the issuing entity’s limited liability company agreement. In the event that one or more series of additional recovery bonds or additional other recovery bonds is issued by the issuing entity, the administration fees, independent manager fees and other operating expenses payable by the issuing entity on a payment date will be assessed to each series on a pro rata basis, based upon the respective outstanding principal amounts of each series.

The issuing entity’s limited liability company agreement provides that to the extent permitted by law, the managers will not be personally liable for any of the issuing entity’s debts, obligations or liabilities. The issuing entity’s limited liability company agreement further provides that, except as described below, to the fullest extent permitted by law, the issuing entity will indemnify the managers against any liability incurred in connection with their services as managers for us if they acted in good faith and in a manner which they reasonably believed to be in or not opposed to the issuing entity’s best interests. With respect to a criminal action, the managers will be indemnified unless they had reasonable cause to believe their conduct was unlawful. The issuing entity will not indemnify the manager for any judgment, penalty, fine or other expense directly caused by their fraud, gross negligence or willful misconduct. In addition, unless ordered by a court, the issuing entity will not indemnify the managers if a final adjudication establishes that their acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action. The issuing entity will pay any indemnification amounts owed to the managers out of funds in the collection accounts, subject to the priority of payments described under “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

The Issuing Entity is a Separate and Distinct Legal Entity from PG&E

Under the issuing entity’s limited liability company agreement, the issuing entity may not file a voluntary bankruptcy petition for relief under the Bankruptcy Code or any other state, local, federal, foreign or other law relating to bankruptcy, without the affirmative vote of PG&E, the sole member of the issuing entity, and the affirmative vote of all of its managers, including the independent manager. PG&E has agreed that it will not cause the issuing entity to file a voluntary petition for relief under the Bankruptcy Code. The issuing entity’s limited liability company agreement requires the issuing entity, except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes, and, to the extent consistent with applicable state law, state income and franchise tax purposes, to maintain its existence separate from PG&E including:

• taking all necessary steps to continue its identity as a separate legal entity;

• making it apparent to third persons that the issuing entity is an entity with assets and liabilities distinct from those of PG&E, other affiliates of PG&E, the managers or any other person; and

• making it apparent to third persons that, except for federal and certain other tax purposes, the issuing entity is not a division of PG&E or any of its affiliated entities or any other person.

Administration Agreement

PG&E will, pursuant to an administration agreement between PG&E and the issuing entity, provide administrative services to the issuing entity, including, among others, services relating to the preparation of financial statements, required filings with the SEC, any tax returns the issuing entity might be required to file under applicable law, qualifications to do business, and minutes of the issuing entity’s managers’ meetings. The issuing entity will pay PG&E a fixed fee of $100,000 per series of recovery bonds per annum, payable in installments of $50,000 on each payment date for performing these services, plus out of pocket expenses; provided, that the first payment may be adjusted for a longer or shorter first payment period. The issuing entity

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may amend the administration agreement between PG&E and the issuing entity that relates to the recovery bonds offered hereby such that PG&E will provide administrative services to the issuing entity with respect to the recovery bonds offered hereby and additional recovery bonds or additional other recovery bonds issued in connection with an additional financing order. In connection with any such amendments to the administration agreement, the issuing entity will pay PG&E a fixed fee that will be paid pro rata as between the recovery bonds issued hereby and such additional recovery bonds or additional other recovery bonds issued in connection with an additional financing order.

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DESCRIPTION OF THE RECOVERY BONDS

General

The depositor has summarized below selected provisions of the indenture and the recovery bonds. A form of the indenture and series supplement are filed as exhibits to the registration statement of which this prospectus forms a part. Please read “Where You Can Find More Information” in this prospectus.

The recovery bonds are not a debt, liability or other obligation of the State of California, the CPUC or of any political subdivision, governmental agency, authority or instrumentality of the State or California and do not represent an interest in or legal obligation of PG&E or any of its affiliates, other than the issuing entity. Neither PG&E nor any of its affiliates will guarantee or insure the recovery bonds. The financing order authorizing the issuance of the recovery bonds does not constitute a pledge of the full faith and credit of the State of California or of any of its political subdivisions. The issuance of the recovery bonds under the Wildfire Financing Law will not directly, indirectly or contingently obligate the State of California or any of its political subdivisions to levy or to pledge any form of taxation for the recovery bonds or to make any appropriation for their payment.

The issuing entity will issue the recovery bonds and secure their payment under an indenture that the issuing entity will enter into with The Bank of New York Mellon Trust Company, National Association, as trustee, referred to in this prospectus as the “trustee”. The issuing entity will issue the recovery bonds in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof, except that the issuing entity may issue one recovery bond in each tranche in a smaller denomination. The initial principal balance, scheduled final payment date, final maturity date and interest rate for each tranche of the recovery bonds are stated in the table below:

Tranche	Expected Weighted Average Life (Years)	Principal Amount Offered		Scheduled Final Payment Date	Final Maturity Date	Interest Rate
A-1		$	450,000,000
A-2		$	450,000,000
A-3		$	300,000,000
A-4		$	1,050,000,000
A-5		$	750,000,000

The scheduled final payment date for each tranche of the recovery bonds is the date when the outstanding principal balance of that tranche will be reduced to zero if the issuing entity makes payments according to the expected sinking fund schedule for that tranche. The final maturity date for each tranche of recovery bonds is the date when the issuing entity is required to pay the entire remaining unpaid principal balance, if any, of all outstanding recovery bonds of that tranche. The failure to pay principal of any tranche of recovery bonds by the final maturity date for that tranche is an event of default, but the failure to pay principal of any tranche of recovery bonds by the respective scheduled final payment date will not be an event of default. Please read “—Interest Payments” and “—Principal Payments” and “—Events of Default; Rights Upon Event of Default” in this prospectus.

Payment and Record Dates and Payment Sources

Beginning                 , the issuing entity will make payments of principal and interest on the recovery bonds semi-annually on                 and                  of each year, or, if that day is not a business day, the following business day (each, a “payment date”). So long as the recovery bonds are in book-entry form, on each payment date, the issuing entity will make interest and principal payments to the persons who are the holders of record as of the business day immediately prior to that payment date, which is referred to herein as the “record date”. If the issuing entity issues certificated recovery bonds to beneficial owners of the recovery bonds, the record date will be the last business day of the calendar month immediately preceding the payment date. On each payment date, the issuing entity will pay amounts on outstanding recovery bonds from amounts available in the collection account and the

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related subaccounts held by the trustee in the priority set forth under “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. These available amounts, which will include amounts collected by the servicer for the issuing entity with respect to the fixed recovery charges, are described in greater detail under “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” and “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Interest Payments

Interest on each tranche of recovery bonds will accrue from and including the issue date to but excluding the first payment date, and thereafter from and including the previous payment date to but excluding the applicable payment date until the recovery bonds have been paid in full, at the interest rate indicated on the cover of this prospectus and in the table above. Each of those periods is referred to as an “interest accrual period”. The issuing entity will calculate interest on tranches of the recovery bonds on the basis of a 360-day year of twelve 30-day months.

On each payment date, the issuing entity will pay interest on each tranche of the recovery bonds equal to the following amounts:

• if there has been a payment default, any interest payable but unpaid on any prior payment date, together with interest on such unpaid interest, if any; and

• accrued interest on the principal balance of each tranche of the recovery bonds as of the close of business on the preceding payment date (or with respect to the initial payment date, the date of the original issuance of the recovery bonds) after giving effect to all payments of principal made on the preceding payment date, if any.

The issuing entity will pay interest on the recovery bonds before the issuing entity pays principal on the recovery bonds. Interest payments will be made from collections of fixed recovery charges, including amounts available in the excess funds subaccount and, if necessary, the amounts available in the capital subaccount.

If there is a shortfall in the amounts available in the collection account to make interest payments on the recovery bonds, the trustee will distribute interest pro rata to each tranche of recovery bonds based on the amount of interest payable on each such outstanding tranche. Please read “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

Principal Payments

On each payment date, the issuing entity will pay principal of the recovery bonds to the bondholders equal to the sum, without duplication, of:

• the unpaid principal amount of any recovery bond whose final maturity date is on that payment date, plus

• the unpaid principal amount of any recovery bond upon acceleration following an event of default relating to the recovery bonds, plus

• any overdue payments of principal, plus

• any unpaid and previously scheduled payments of principal, plus

• the principal scheduled to be paid on any recovery bond on that payment date,

but only to the extent funds are available in the collection account after payment of certain of the issuing entity’s fees and expenses and after payment of interest as described above under “—Interest Payments” in this prospectus. If the trustee receives insufficient collections of fixed recovery charges for any payment date, and

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amounts in the collection account (and the applicable subaccounts of the collection account) are not sufficient to make up the shortfall, principal of any tranche of recovery bonds may be payable later than expected. Please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds” in this prospectus. To the extent funds are so available, the issuing entity will make scheduled payments of principal of the recovery bonds in the following order:

(1) to the holders of the tranche A-1 recovery bonds, until the principal balance of that tranche has been reduced to zero,

(2) to the holders of the tranche A-2 recovery bonds, until the principal balance of that tranche has been reduced to zero,

(3) to the holders of the tranche A-3 recovery bonds, until the principal balance of that tranche has been reduced to zero,

(4) to the holders of the tranche A-4 recovery bonds, until the principal balance of that tranche has been reduced to zero, and

(5) to the holders of the tranche A-5 recovery bonds, until the principal balance of that tranche has been reduced to zero.

However, on any payment date, unless an event of default has occurred and is continuing and the recovery bonds have been declared due and payable, the trustee will make principal payments on the recovery bonds only until the outstanding principal balances of those recovery bonds have been reduced to the principal balances specified in the applicable expected sinking fund schedule for that payment date. Accordingly, principal of the recovery bonds may be paid later, but not sooner, than reflected in the expected sinking fund schedule, except in the case of an acceleration. The entire unpaid principal balance of each tranche of the recovery bonds will be due and payable on the final maturity date for that tranche. The failure to make a scheduled payment of principal on the recovery bonds because there are not sufficient funds in the collection account does not constitute a default or an event of default under the indenture, except for the failure to pay in full the unpaid balance of any tranche upon the final maturity date for such tranche.

Unless the recovery bonds have been accelerated following an event of default, any excess funds remaining in the collection account after payment of principal, interest, applicable fees and expenses and payments to the applicable subaccounts of the collection account will be retained in the excess funds subaccount until applied on a subsequent payment date.

If an event of default (other than a breach by the State of California of the State Pledge) has occurred and is continuing, then the trustee or the holders of not less than a majority in principal amount of the recovery bonds then outstanding may declare the recovery bonds to be immediately due and payable, in which event the entire unpaid principal amount of the recovery bonds will become due and payable. Please read “—Events of Default; Rights Upon Event of Default” in this prospectus. However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the recovery bonds being made as funds become available.

Please read “Risk Factors—Risks Associated With the Unusual Nature of the Recovery Property—Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the recovery bonds because the source of funds for payment is limited” in this prospectus.

If there is a shortfall in the amounts available to make principal payments on the recovery bonds that are due and payable, including upon an acceleration following an event of default, the trustee will distribute principal from the collection account pro rata to each tranche of recovery bonds based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal

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payments on the recovery bonds that are scheduled to be paid, the trustee will distribute principal from the collection account pro rata to each tranche of recovery bonds based on the principal amount then scheduled to be paid on the payment date.

The expected sinking fund schedule below sets forth the corresponding principal payment that is scheduled to be made on each payment date for each tranche of the recovery bonds from the issuance date to the scheduled final payment date. Similarly, the expected sinking fund schedule below sets forth the principal balance that is scheduled to remain outstanding on each payment date for each tranche of the recovery bonds from the issuance date to the scheduled final payment date.

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EXPECTED SINKING FUND SCHEDULE

Semi-Annual Payment Date	Tranche A-1 Principal	Tranche A-2 Principal	Tranche A-3 Principal	Tranche A-4 Principal	Tranche A-5 Principal
	$	$	$	$	$
Total Payments (1)

⁽¹⁾ Totals may not add up due to rounding.

The issuing entity cannot assure you that the principal balance of any tranche of the recovery bonds will be reduced at the rate indicated in the table above. The actual reduction in tranche principal balances may occur more slowly. The actual reduction in tranche principal balances will not occur more quickly than indicated in the above table, except in the case of acceleration due to an event of default under the indenture. The recovery bonds will not be in default if principal is not paid as specified in the schedule above unless the principal of any tranche is not paid in full on or before the final maturity date of that tranche.

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EXPECTED OUTSTANDING PRINCIPAL BALANCE PER TRANCHE

Semi-Annual Payment Date	Tranche A-1 Principal	Tranche A-2 Principal	Tranche A-3 Principal	Tranche A-4 Principal	Tranche A-5 Principal
Closing Date	$	$	$	$	$

⁽¹⁾ Totals may not add up due to rounding.

On each payment date, the trustee will make principal payments to the extent the principal balance of each tranche of the recovery bonds exceeds the amount indicated for that payment date in the table above and to the extent of funds available in the collection account after payment of certain of the issuing entity’s fees and expenses and after payment of interest.

Distribution Following Acceleration

Upon an acceleration of the maturity of the recovery bonds, the total outstanding principal balance of and interest accrued on the recovery bonds will be payable, without regard to tranche. Although principal will be due and payable upon acceleration, the nature of the issuing entity’s business will result in principal being paid as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Recovery Property—Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the recovery bonds because the source of funds for payment is limited” in this prospectus.

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Optional Redemption

The issuing entity may not voluntarily redeem any tranche of the recovery bonds.

Payments on the Recovery Bonds

The trustee will pay on each payment date to the holders of each tranche of recovery bonds, to the extent of available funds in the collection account, all payments of principal and interest then due. The trustee will make each payment other than the final payment with respect to any recovery bonds to the holders of record of the recovery bonds of the applicable tranche on the record date for that payment date. The trustee will make the final payment for each tranche of recovery bonds, however, only upon presentation and surrender of the recovery bonds of that tranche at the office or agency of the trustee specified in the notice given by the trustee of the final payment. The trustee will mail notice of the final payment to the bondholders no later than five days prior to the final payment date, specifying the date set for the final payment and the amount of the payment.

The failure to pay accrued interest on any payment date (even if the failure is caused by a shortfall in fixed recovery charges received) will result in an event of default for the recovery bonds unless such failure is cured within five business days. Please read “—Events of Default; Rights Upon Event of Default” in this prospectus. Any interest not paid when due (plus interest on the defaulted interest at the applicable interest rate to the extent lawful) will be payable to the bondholders on a special record date. The special record date will be at least fifteen business days prior to the date on which the trustee is to make such special payment (a “special payment date”). The issuing entity will fix any special record date and special payment date. At least 10 days before any special record date, the trustee will mail to each affected bondholder a notice that states the special record date, the special payment date and the amount of defaulted interest (plus interest on the defaulted interest) to be paid.

The entire unpaid principal amount of the recovery bonds will be due and payable:

• on the final maturity date; or

• if an event of default under the indenture occurs and is continuing and the trustee or the holders of a majority in principal amount of the recovery bonds have declared the recovery bonds to be immediately due and payable.

However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the recovery bonds being made as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Recovery Property—Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the recovery bonds because the source of funds for payment is limited” in this prospectus.

At the time, if any, the issuing entity issues the recovery bonds in the form of definitive recovery bonds and not to DTC or its nominee, the trustee will make payments with respect to that tranche on a payment date or a special payment date by wire transfer to each holder of a definitive recovery bond of the tranche of record on the applicable record date to an account maintained by the payee.

If any special payment date or other date specified for any payments to bondholders is not a business day, the trustee will make payments scheduled to be made on that special payment date or other date on the next succeeding business day and no interest will accrue upon the payment during the intervening period.

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Fees and Expenses

As set forth in the table below, the issuing entity is obligated to pay fees to the servicer, the trustee, its independent managers and PG&E as administrator. The following table illustrates this arrangement.

Recipient	Source of Payment	Fees and Expenses Payable
Servicer	Fixed recovery charge collections and investment earnings	$            (0.05% of the initial aggregate principal amount of the recovery bonds) per annum (so long as servicer is PG&E or an affiliate), plus out of pocket expenses
Trustee	Fixed recovery charge collections and investment earnings	$17,000 per annum plus expenses
Independent Manager	Fixed recovery charge collections and investment earnings	$3,000 per annum plus expenses
Administration Fee	Fixed recovery charge collections and investment earnings	$100,000 per series of recovery bonds per annum plus expenses

The annual servicing fee for the recovery bonds payable to any other servicer not affiliated with PG&E must be approved by the CPUC. The CPUC will not approve the appointment of a successor servicer unless the rating agency condition for the recovery bonds is satisfied.

Recovery Bonds Will Be Issued in Book-Entry Form

The recovery bonds will be available to investors only in the form of book-entry recovery bonds. You may hold your recovery bonds through DTC in the United States, Clearstream Banking, Luxembourg, S.A., referred to as Clearstream, or Euroclear in Europe. You may hold your recovery bonds directly with one of these systems if you are a participant in the system or indirectly through organizations that are participants.

The Role of DTC, Clearstream and Euroclear

Cede & Co., as nominee for DTC, will hold the global recovery bond or recovery bonds representing the recovery bonds. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream consumers and Euroclear participants, respectively, through consumers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in consumers’ securities accounts in the depositaries’ names on the books of DTC.

The Function of DTC

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“direct participants”) deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The

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Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies.

DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participants, either directly or indirectly (“indirect participants”). The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at www.dtcc.com and www.dtc.org.

The Function of Clearstream

Clearstream holds securities for its consumers and facilitates the clearance and settlement of securities transactions between Clearstream consumers through electronic book-entry changes in accounts of Clearstream consumers, thereby eliminating the need for physical movement of securities. Transactions may be settled by Clearstream in any of various currencies, including United States dollars. Clearstream provides to its consumers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream also deals with domestic securities markets in various countries through established depositary and custodial relationships. Clearstream is registered as a bank in Luxembourg and therefore is subject to regulation by the Luxembourg Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream’s consumers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations, among others, and may include the underwriters of the recovery bonds. Clearstream’s U.S. consumers are limited to securities brokers and dealers and banks. Clearstream has consumers located in various countries. Indirect access to Clearstream is also available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream and Euroclear.

The Function of Euroclear

The Euroclear System was created in 1968 in Brussels. Euroclear holds securities and book-entry interests in securities for Euroclear participants and facilitates the clearance and settlement of securities transactions between Euroclear participants, and between Euroclear participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of securities and any risk from lack of simultaneous transfers of securities and cash. Such transactions may be settled in any of various currencies, including United States dollars. The Euroclear System includes various other services, including, among other things, safekeeping, administration, clearance and settlement, securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below. The Euroclear System is operated by Euroclear Bank SA/NV. Euroclear participants include central banks and other banks, securities brokers and dealers and other professional financial intermediaries and may include the underwriters of the recovery bonds. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

Terms and Conditions of Euroclear

Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the “Terms and Conditions”). These Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in Euroclear are held

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on a fungible basis without attribution of specific securities to specific securities clearance accounts. Euroclear acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

The Rules for Transfers Among DTC, Clearstream or Euroclear Participants

Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream consumers or Euroclear participants will occur in the ordinary way in accordance with their applicable rules and operating procedures and will be settled using procedures applicable to conventional securities held in registered form.

Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream consumers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines, which will be based on European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving recovery bonds in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream consumers and Euroclear participants may not deliver instructions directly to Clearstream’s and Euroclear’s depositaries.

Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and those credits or any transactions in those securities settled during that processing will be reported to the relevant Clearstream consumer or Euroclear participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream consumer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

DTC Will Be the Holder of the Recovery Bonds

Bondholders that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, recovery bonds may do so only through direct participants and indirect participants. In addition, bondholders will receive all payments of principal of and interest on the recovery bonds from the trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, bondholders may experience some delay in their receipt of payments because payments will be forwarded by the trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its participants, who thereafter will forward them to indirect participants or bondholders. It is anticipated that the only “bondholder” will be Cede & Co., as nominee of DTC. The trustee will not recognize bondholders as bondholders, as that term is used in the indenture, and bondholders will be permitted to exercise the rights of bondholders only indirectly through the participants, who in turn will exercise the rights of bondholders through DTC.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers of book-entry certificates among participants on whose behalf it acts with respect to the recovery bonds and is required to receive and transmit payments of principal and interest on the recovery bonds. Direct participants and indirect participants with whom bondholders have accounts with respect to the recovery bonds similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective bondholders. Accordingly, although bondholders will not possess recovery bonds, bondholders will receive payments and will be able to transfer their interests.

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Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a bondholder to pledge recovery bonds to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of those recovery bonds, may be limited due to the lack of a physical certificate for those recovery bonds.

DTC has advised the issuing entity that it will take any action permitted to be taken by a bondholder under the indenture only at the direction of one or more participants to whose account with DTC the recovery bonds are credited. Additionally, DTC has advised the issuing entity that it will take those actions with respect to specified percentages of the collateral amount only at the direction of and on behalf of participants whose holdings include interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other interests to the extent that those actions are taken on behalf of participants whose holdings include those interests.

Except as required by law, none of any underwriter, the servicer, PG&E, the trustee, the issuing entity or any other party will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the certificates held by Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any records relating to such beneficial interests.

How Recovery Bond Payments Will Be Credited by Clearstream and Euroclear

Payments with respect to recovery bonds held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream consumers or Euroclear participants in accordance with the applicable system’s rules and operating procedures, to the extent received by its depositary. Those payments will be subject to tax reporting in accordance with relevant United States tax laws and regulations. Please read “Material U.S. Federal Income Tax Consequences” in this prospectus. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a bondholder under the indenture on behalf of a Clearstream consumer or Euroclear participant only in accordance with its applicable rules and operating procedures and subject to its depositary’s ability to effect those actions on its behalf through DTC.

Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the recovery bonds among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform those procedures, and those procedures may be discontinued at any time.

Definitive Recovery Bonds

The issuing entity will issue recovery bonds in registered, certificated form to bondholders, or their nominees, rather than to DTC, only under the circumstances provided in the indenture, which will include: (1) the issuing entity advising the trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities as nominee and depositary with respect to the book-entry recovery bonds and that the issuing entity is unable to locate a recovery successor, (2) the issuing entity electing to terminate the book-entry system through DTC, with written notice to the trustee, or (3) after the occurrence of an event of default under the indenture, holders of recovery bonds aggregating not less than a majority of the aggregate outstanding principal amount of the recovery bonds maintained as book-entry recovery bonds advising the issuing entity, the trustee, and DTC in writing that the continuation of a book-entry system through DTC (or a successor) is no longer in the best interests of those bondholders. Upon issuance of definitive recovery bonds, the recovery bonds evidenced by such definitive recovery bonds will be transferable directly (and not exclusively on a book-entry basis) and registered holders will deal directly with the trustee with respect to transfers, notices and payments.

Upon surrender by DTC of the definitive securities representing the recovery bonds and instructions for registration, the issuing entity will sign and the trustee will authenticate and deliver the recovery bonds in the form of definitive recovery bonds, and thereafter the trustee will recognize the registered holders of the definitive recovery bonds as bondholders under the indenture.

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The trustee will make payment of principal of and interest on the recovery bonds directly to bondholders in accordance with the procedures set forth herein and in the indenture. The trustee will make interest payments and principal payments to bondholders in whose names the definitive recovery bonds were registered at the close of business on the related record date. The trustee will make payments by wire transfer to the bondholder as described in the indenture or in such other manner as may be provided in the series supplement. The trustee will make the final payment on any recovery bond (whether definitive recovery bonds or notes registered in the name of Cede & Co.), however, only upon presentation and surrender of the recovery bond on the final payment date at the office or agency that is specified in the notice of final payment to bondholders. The trustee will provide the notice to registered bondholders not later than the fifth day prior to the final payment date.

Definitive bonds will be transferable and exchangeable at the offices of the transfer agent and registrar, which initially will be the trustee. There will be no service charge for any registration of transfer or exchange, but the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.

Access of Bondholders

Upon written request of any bondholder or group of bondholders of recovery bonds evidencing not less than 10 percent of the aggregate outstanding principal amount of the recovery bonds, the trustee will afford the bondholder or bondholders making such request a copy of a current list of bondholders for purposes of communicating with other bondholders with respect to their rights under the indenture.

The indenture does not provide for any annual or other meetings of bondholders.

Reports to Bondholders

On or prior to each payment date, special payment date or any other date specified in the indenture for payments with respect to any tranche of recovery bonds, the servicer will deliver to the trustee, and the trustee will make available on its website (currently located at https://gctinvestorreporting.bnymellon.com), a statement prepared by the servicer with respect to the payment to be made on the payment date, special payment date or other date, as the case may be, setting forth the following information:

• the amount of the payment to bondholders allocable to (1) principal and (2) interest,

• the aggregate outstanding principal balance of the recovery bonds, before and after giving effect to payments allocated to principal reported immediately above,

• the difference, if any, between the amount specified immediately above and the principal amount scheduled to be outstanding on that date according to the related expected sinking fund schedule,

• any other transfers and payments to be made on such payment date, including amounts paid to the trustee and the servicer, and

• the amounts on deposit in the capital subaccount and the excess funds subaccount, after giving effect to the foregoing payments.

Unless and until recovery bonds are no longer issued in book-entry form, the reports will be provided to the depository for the recovery bonds, or its nominee, as sole beneficial owner of the recovery bonds. The reports will be available to bondholders upon written request to the trustee or the servicer. Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. The financial information provided to bondholders will not be examined and reported upon by an independent public accountant. In addition, an independent public accountant will not provide an opinion on the financial information.

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Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the recovery bonds, the trustee, so long as it is acting as paying agent and transfer agent and registrar for the recovery bonds, will, upon written request by the issuing entity or any bondholder, mail to persons who at any time during the calendar year were bondholders and received any payment on the recovery bonds, a statement containing certain information for the purposes of the bondholder’s preparation of United States federal and state income tax returns.

SEC Filings; Website Disclosure

Neither the issuing entity nor the depositor is an asset-backed issuer and the recovery bonds are not asset- backed securities as such terms are defined by the SEC in governing regulations Item 1101 of Regulation AB. However, the issuing entity will file documents and plan to file with the SEC reports related to the recovery bonds consistent with the disclosure and regulatory regime established by Regulation AB. Such reports will be filed under the name of one or more issuing entities and will include reports on Form 10-D, Form 10-K and Form 8-K. Please read “The Servicing Agreement—Evidence as to Compliance” in this prospectus.

The issuing entity will, to the extent permitted by and consistent with the issuing entity’s legal obligations under applicable law, cause to be posted on a website associated with PG&E, currently located at https://investor.pgecorp.com/investors/default.aspx, periodic reports containing to the extent such information is reasonably available to it:

• the final prospectus for the recovery bonds;

• a statement of fixed recovery charge remittances made to the trustee;

• a statement reporting the balances in the collection account and in each subaccount of the collection account as of the end of each quarter or the most recent date available;

• a statement showing the balance of outstanding recovery bonds that reflects the actual periodic payments made on the recovery bonds during the applicable period;

• the servicer’s certificate delivered for the recovery bonds pursuant to the servicing agreement;

• the monthly servicer’s certificate delivered for the recovery bonds pursuant to the servicing agreement;

• the reconciliation certificate as required to be submitted pursuant to the servicing agreement;

• the text (or a link to the website where a reader can find the text) of each true-up submission in respect of the outstanding recovery bonds and the results of each such true-up submission;

• any change in the long-term or short-term credit ratings of the servicer assigned by the rating agencies;

• material legislative or regulatory developments directly relevant to the recovery bonds; and

• any reports and other information that the issuing entity is required to file with the SEC under the Exchange Act.

Information contained on such website (other than the materials specifically incorporated by reference herein) is not part of this registration statement or any report that PG&E files with, or furnishes to, the SEC. PG&E and the issuing entity are providing the address to this website solely for the information of investors and does not intend to address to be an active link.

Conditions of Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds

After the initial issuance of recovery bonds pursuant to this prospectus, the issuing entity’s acquisition of recovery property created by the financing order or an additional financing order and its issuance of additional

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recovery bonds or additional other recovery bonds with respect thereto after the acquisition and issuance described in this prospectus is subject to the following conditions, among others:

• PG&E, in the case of additional other recovery bonds, requests and receives an additional financing order from the CPUC;

• PG&E must serve as initial servicer and administrator for such series of the additional recovery bonds or additional other recovery bonds and that the servicer and the administrator cannot be replaced without the requisite approval of the holders of all series of recovery bonds then-outstanding;

• satisfaction of the rating agency condition and such additional recovery bonds or additional other recovery bonds shall receive the rating required by any subsequent financing order;

• each series of the additional recovery bonds or additional other recovery bonds has recourse only to the assets pledged in connection with such additional recovery bonds or additional other recovery bonds, is nonrecourse to the issuing entity’s other assets and does not constitute a claim against the issuing entity if revenue from the fixed recovery charges and funds on deposit in the trust accounts with respect to that series are insufficient to pay such other series in full;

• the issuing entity has provided to the trustee and the rating agencies then rating any series of our outstanding recovery bonds an opinion of a nationally recognized law firm experienced in such matters to the effect that such issuance would not result in the issuing entity’s substantive consolidation with PG&E and that there has been a true sale of the recovery property for such series, subject to the customary exceptions, qualifications and assumptions contained therein;

• transaction documentation for the other series provides that the trustee on behalf of holders of the recovery bonds of the other series will not file or join in filing of any bankruptcy petition against the issuing entity;

• if holders of such other series are deemed to have any interest in any of the collateral dedicated to the recovery bonds, holders of such additional recovery bonds or additional other recovery bonds must agree that their interest in the collateral dedicated to the additional recovery bonds or additional other recovery bonds is only a first priority perfected interest in the assets relating to the additional recovery bonds or additional other recovery bonds, as the case may be, in accordance with the related intercreditor agreement;

• each series of additional recovery bonds or additional other recovery bonds under any separate indenture will have a separate collection account;

• no series of additional recovery bonds or additional other recovery bonds will be issued under the indenture governing the recovery bonds offered hereby; and

• each series will bear its own trustee fees, servicer fees and administration fees.

The acquisition by any issuing entity (other than us) of recovery property created by the financing order or an additional financing order and issuance of additional recovery bonds or additional other recovery bonds with respect thereto after the acquisition and issuance described in this prospectus is subject to the issuing entity’s satisfaction of the rating agency condition.

In addition, PG&E has covenanted under the sale agreement that the execution of a joinder to the intercreditor agreement is a condition precedent to the sale of property by PG&E consisting of non-bypassable charges payable by consumers comparable to the recovery property sold by PG&E pursuant to the sale agreement. Please read “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated—Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds”, “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

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Allocations as Between Series of Recovery Bonds

Although each series of additional recovery bonds or additional other recovery bonds will have its own recovery property reflecting the right in and to a separate fixed recovery charge, fixed recovery charges relating to the recovery bonds and fixed recovery charges relating to any additional recovery bonds or additional other recovery bonds, as the case may be, will be collected through single periodic bills to each consumer, and all fixed recovery charges might be combined into a single line item on those periodic bills. The fixed recovery charges for each series of recovery bonds may not be separately identified on consumer electricity bills, although consumer electricity bills will state that a portion of the electricity bill consists of the rights to the fixed recovery charges that have been sold to the financing entity created to issue such additional recovery bonds or additional other recovery bonds. In the event a consumer does not pay in full all amounts owed under any bill including fixed recovery charges, the servicer is required to allocate any resulting shortfalls in fixed recovery charges ratably based on the amounts of fixed recovery charges owing in respect of each series of recovery bonds, including the recovery bonds of any series. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

The Issuing Entity and the Trustee May Modify the Indenture

Modifications of the Indenture that do not Require Consent of Bondholders

From time to time, and without the consent of the bondholders (but with prior notice to the rating agencies and when authorized by an issuing entity order), the issuing entity and the trustee may enter into one or more agreements supplemental to the indenture for various purposes described in the indenture, including:

• to correct or amplify the description of any property including, without limitation, the collateral subject to the indenture, or to better convey, assure and confirm to the trustee the property subject to the indenture, or to add additional property;

• to evidence the succession of another person to us in accordance with the terms of the indenture and the assumption by any such successor of the covenants in the indenture and in the recovery bonds;

• to add to the covenants for the benefit of the bondholders and the trustee, or surrender any right or power conferred to the issuing entity with the indenture;

• to convey, transfer, assign, mortgage or pledge any property to or with the trustee;

• to cure any ambiguity or mistake or correct or supplement any provision in the indenture or in any supplemental indenture which may be inconsistent with any other provision in the indenture or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under the indenture or in any supplemental indenture; provided, however, that (i) such action will not, as evidenced by an opinion of counsel, adversely affect in any material respect the interests of the bondholders and (ii) the rating agency condition shall have been satisfied with respect thereto;

• to evidence and provide for the acceptance of the appointment under the indenture of a successor trustee with respect to the recovery bonds and to add or change any of the provisions of the indenture as shall be necessary to facilitate the administration of the trusts thereunder by more than one trustee;

• to modify, eliminate or add to the provisions of the indenture to such extent as shall be necessary to effect qualification under the Trust Indenture Act of 1939, as amended (the Trust Indenture Act), or under any similar or successor federal statute hereafter enacted;

• to qualify the recovery bonds for registration with a clearing agency;

• to satisfy any rating agency requirements;

• to make any amendment to the indenture or the recovery bonds relating to the transfer and legending of the recovery bonds to comply with applicable securities laws; and

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• to conform the text of the indenture or the recovery bonds to any provision of the registration statement filed by the issuing entity with the SEC with respect to the issuance of the recovery bonds to the extent that such provision was intended to be a verbatim recitation of a provision of the indenture or the recovery bonds.

The issuing entity may also, without the consent of the bondholders, enter into one or more other agreements supplemental to the indenture so long as (i) the supplemental agreement does not, as evidenced by an opinion of counsel experienced in structured finance transactions, adversely affect the interests of any holders of recovery bonds then outstanding in any material respect and (ii) the rating agency condition shall have been satisfied with respect thereto.

Modifications of the Indenture that Require the Approval of Bondholders

The issuing entity may, with the consent of bondholders holding not less than a majority of the aggregate outstanding principal amount of the recovery bonds (and with prior notice to the rating agencies), enter into one or more indentures supplemental to the indenture for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture. In determining whether a majority of holders have consented, recovery bonds owned by the issuing entity, PG&E or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any recovery bonds it actually knows to be so owned. No supplement, however, may, without the consent of each bondholder of each tranche affected thereby, take certain actions enumerated in the indenture, including:

• change the date of payment of any installment of principal of or premium, if any, or interest on any recovery bond of such tranche, or reduce in any manner the principal amount thereof, the interest rate thereon or the premium, if any, with respect thereto;

• change the provisions of the indenture and any applicable supplemental indenture relating to the application of collections on, or the proceeds of the sale of, the collateral to payment of principal of or premium, if any, or interest on the recovery bonds or tranche, or change the coin or currency in which any recovery bond or any interest thereon is payable;

• reduce the percentage of the aggregate amount of the outstanding recovery bonds, or of a tranche thereof, the consent of the bondholders of which is required for any supplemental indenture, or the consent of the bondholders of which is required for any waiver of compliance with those provisions of the indenture specified therein or of defaults specified therein and their consequences provided for in the indenture or modify certain aspects of the definition of the term “outstanding”;

• reduce the percentage of the outstanding amount of the recovery bonds or tranche the holders of which are required to consent to direct the trustee to sell or liquidate the collateral;

• modify any of the provisions of the indenture in a manner so as to affect the amount of any payment of interest, principal or premium, if any, payable on any recovery bond of such tranche on any payment date or change the expected sinking fund schedules or final maturity dates of any recovery bonds of such tranche;

• decrease the required capital amount;

• permit the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any of the collateral for the recovery bonds or tranche or, except as otherwise permitted or contemplated in the indenture, terminate the lien of the indenture on any property at any time subject thereto or deprive the holder of any recovery bond of the security provided by the lien of the indenture;

• cause any material adverse federal income tax consequence to the seller, the issuing entity, the manager, the trustee or the beneficial owners of the recovery bonds; or

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• impair the right to institute suit for the enforcement of those provisions of the indenture specified therein regarding payment or application of funds.

Promptly following the execution of any supplement to the indenture requiring the approval of the bondholders, the issuing entity will furnish either a copy of such supplement or written notice of the substance of the supplement to each bondholder, and a copy of such supplement to each rating agency.

Notification of the Rating Agencies, the Trustee and the Bondholders of Any Modification

If the issuing entity, PG&E or the servicer or any other party to the applicable agreement:

• proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any other amendment, modification, waiver, supplement, termination or surrender of, the terms of the sale agreement, the administration agreement or the servicing agreement; or

• waives timely performance or observance by PG&E or the servicer under the sale agreement, the administration agreement or the servicing agreement;

in each case in a way which would materially and adversely affect the interests of bondholders, the issuing entity must first notify the rating agencies of the proposed amendment and satisfy the rating agency condition. Upon satisfaction of the rating agency condition, the issuing entity must thereafter notify the trustee in writing, and the trustee will be required to notify the bondholders of the proposed amendment and whether the rating agency condition has been satisfied with respect thereto. The trustee will consent to this proposed amendment, modification, supplement or waiver only with the written consent of the holders of a majority of the outstanding principal amount of the recovery bonds of the tranches materially and adversely affected thereby. In determining whether a majority of holders have consented, recovery bonds owned by the issuing entity, PG&E or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any recovery bonds it actually knows to be so owned.

Modifications to the Sale Agreement, the Administration Agreement and the Servicing Agreement

With the prior written consent of the trustee, the sale agreement, the administration agreement and the servicing agreement may be amended, so long as the rating agency condition is satisfied in connection therewith, at any time and from time to time, without the consent of the bondholders. However, any such amendment may not adversely affect the interest of any bondholder in any material respect without the consent of the holders of a majority of the outstanding principal amount of the recovery bonds. In determining whether a majority of holders have consented, recovery bonds owned by the issuing entity, PG&E or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any recovery bonds it actually knows to be so owned.

In addition, the sale agreement, the administration agreement and the servicing agreement may be amended with ten business days’ prior written notice given to the rating agencies, with the prior written consent of the trustee (other than with respect to the sale agreement and the administration agreement, and which consent shall be given in reliance on an opinion of counsel and an officer’s certificate stating that such amendment is permitted or authorized under and adopted in accordance with the provisions of the applicable agreement and that all conditions precedent have been satisfied, upon which the trustee may conclusively rely), but without the consent of the bondholders, (i) to cure any ambiguity, to correct or supplement any provisions in the applicable agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in such agreement or of modifying in any manner the rights of the bondholders; provided, however, that such action shall not, as evidenced by an officer’s certificate delivered to the issuing entity and the trustee, adversely affect in any material respect the interests of any bondholder or (ii) to conform the provisions of the applicable agreement to the description of such agreement in this prospectus. Promptly after the execution of any such amendment or consent, the issuing entity shall furnish copies of such amendment or consent to each of the rating agencies.

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Enforcement of the Sale Agreement, the Administration Agreement, the Servicing Agreement and the Intercreditor Agreement

The indenture provides that the issuing entity will take all lawful actions to enforce the issuing entity’s rights under the sale agreement, the administration agreement and the servicing agreement; provided, that such action shall not adversely affect the interests of bondholders in any material respect. The indenture also provides that the issuing entity will take all lawful actions to compel or secure the performance and observance by PG&E, the administrator and the servicer of their respective obligations to the issuing entity under or in connection with the sale agreement, the administration agreement, the servicing agreement and any intercreditor agreement. So long as no event of default occurs and is continuing, the issuing entity may exercise any and all rights, remedies, powers and privileges lawfully available to the issuing entity under or in connection with the sale agreement, the administration agreement, the servicing agreement and any intercreditor agreement. However, if the issuing entity or the servicer propose to amend, modify, waive, supplement, terminate or surrender in any material respect, or agree to any material amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the fixed recovery charges, the issuing entity must notify the trustee in writing and the trustee must notify the bondholders of this proposal. The intercreditor agreement provides that PG&E will allocate and remit funds from the collection account (i) in the case of collections relating to the collateral pledged to secure the recovery bonds to the securitization collection account at the times and in the manner specified in the basic documents; and (ii) in the case of collections relating to the receivables, to the receivables account at the times and in the manner specified in the basic documents; provided, that if a remittance of collections by a consumer is less than the aggregate amount due and payable by each consumer. In addition, the trustee may consent to this proposal only with the written consent of the holders of a majority of the principal amount of the outstanding recovery bonds of the tranches materially and adversely affected thereby and only if the rating agency condition is satisfied. In determining whether a majority of holders have consented, recovery bonds owned by the issuing entity, PG&E or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any recovery bonds it actually knows to be so owned.

If an event of default occurs and is continuing, the trustee may, and, at the written direction of the holders of a majority of the outstanding amount of all affected tranches of recovery bonds, will, exercise all of the issuing entity’s rights, remedies, powers, privileges and claims against PG&E, the seller, the administrator and servicer, under or in connection with the sale agreement, administration agreement and servicing agreement, and any right of the issuing entity to take this action shall be suspended.

The Issuing Entity’s Covenants

The issuing entity may not consolidate with or merge into any other entity, unless:

• the entity formed by or surviving the consolidation or merger is organized under the laws of the United States or any state;

• the entity expressly assumes, by a supplemental indenture, the performance or observance of all of the issuing entity’s agreements and covenants under the indenture and the series supplement;

• the entity expressly assumes all of the issuing entity’s obligations and succeeds to all of the issuing entity’s rights under the sale agreement, servicing agreement and any other basic document to which the issuing entity is a party;

• no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the merger or consolidation;

• the rating agency condition will have been satisfied with respect to the merger or consolidation;

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• the issuing entity has delivered to PG&E, the trustee and the rating agencies an opinion or opinions of outside tax counsel (as selected by the issuing entity, in form and substance reasonably satisfactory to PG&E, and which may be based on a ruling from the IRS) to the effect that the consolidation or merger will not result in a material adverse federal or state income tax consequence to the issuing entity, PG&E, the trustee or the then-existing bondholders;

• any action as is necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and the series supplement has been taken, as evidenced by an opinion of counsel of external counsel; and

• the issuing entity has delivered to the trustee an officer’s certificate and an opinion of counsel of external counsel, each stating that all conditions precedent in the indenture provided for relating to the transaction have been complied with.

The issuing entity may not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the collateral to any person or entity, unless:

• the person or entity acquiring the properties and assets:

• is a United States citizen or an entity organized under the laws of the United States or any state;

• expressly assumes, by a supplemental indenture, the performance or observance of all of the issuing entity’s agreements and covenants under the indenture and the series supplement;

• expressly agrees by the supplemental indenture that all right, title and interest so conveyed or transferred will be subject and subordinate to the rights of bondholders;

• unless otherwise specified in the supplemental indenture referred to above, expressly agrees to indemnify, defend and hold the issuing entity and the trustee harmless against and from any loss, liability or expense arising under or related to the indenture, the series supplement and the recovery bonds (including the enforcement cost of such indemnity);

• expressly agrees by means of the supplemental indenture that the person (or if a group of persons, then one specified person) will make all filings with the SEC (and any other appropriate person) required by the Exchange Act in connection with the recovery bonds; and

• if such sale, conveyance, exchange, transfer or disposal relates to the issuing entity’s rights and obligations under the sale agreement or the servicing agreement, such person or entity assumes all obligations and succeeds to all of the issuing entity’s rights under the sale agreement and the servicing agreement, as applicable;

• no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the transactions;

• the rating agency condition has been satisfied with respect to such transaction;

• it has delivered to PG&E, the trustee and the rating agencies an opinion or opinions of outside tax counsel (as selected by the issuing entity, in form and substance reasonably satisfactory to PG&E, and which may be based on a ruling from the IRS) to the effect that the disposition will not result in a material adverse federal or state income tax consequence to the issuing entity, PG&E, the trustee or the then-existing bondholders;

• any action as is necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and the series supplement has been taken as evidenced by an opinion of counsel of external counsel; and

• the issuing entity has delivered to the trustee an officer’s certificate and an opinion of counsel of external counsel, each stating that the conveyance or transfer complies with the indenture and the series supplement and all conditions precedent therein provided for relating to the transaction have been complied with.

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The issuing entity will not, among other things, for so long as any recovery bonds are outstanding:

• except as expressly permitted by the indenture, sell, transfer, exchange or otherwise dispose of any of its assets unless directed to do so by the trustee;

• claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the recovery bonds (other than amounts properly withheld from such payments under the Internal Revenue Code or other tax laws) or assert any claim against any present or former bondholder by reason of the payment of the taxes levied or assessed upon any part of the collateral;

• terminate its existence, or dissolve or liquidate in whole or in part, except as permitted above,

• permit the validity or effectiveness of the indenture or the series supplement to be impaired;

• permit the lien of the indenture and the series supplement to be amended, hypothecated, subordinated, terminated or discharged or permit any person to be released from any covenants or obligations with respect to the recovery bonds except as may be expressly permitted by the indenture;

• permit any lien, charge, claim, security interest, mortgage, pledge, equity or other encumbrance, other than the lien and security interest granted under the indenture or the series supplement, to be created on or extend to or otherwise arise upon or burden the collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due);

• permit the lien granted under the indenture or the series supplement not to constitute a valid first priority perfected security interest in the related collateral;

• elect to be classified as an association taxable as a corporation for federal tax purposes, file any tax return, make any election or take any other action inconsistent with the issuing entity’s treatment, for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the issuing entity’s sole member;

• change its name, identity or structure or the location of the issuing entity’s chief executive office, unless at least ten (10) business days prior to the effective date of any such change, the issuing entity delivers to the trustee (with copies to each rating agency) such documents, instruments or agreements, executed by the issuing entity, as are necessary to reflect such change and to continue the perfection of the security interest of the indenture or the series supplement;

• take any action which is subject to the rating agency condition if such action would result in a downgrade, suspension or withdrawal of the then-current ratings assigned to the recovery bonds; or

• issue any recovery bonds (other than the recovery bonds offered hereby and additional recovery bonds or additional other recovery bonds issued in connection with an additional financing order).

The issuing entity may not engage in any business other than financing, purchasing, owning and managing recovery property and the other collateral and the issuance of the recovery bonds in the manner contemplated by the financing order and the basic documents, and financing, purchasing owning and managing recovery property and related assets and the issuance of additional recovery bonds or additional other recovery bonds in the manner contemplated in an additional financing order and the related basic documents, or certain related activities incidental thereto.

The issuing entity will not issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the recovery bonds and additional recovery bonds or additional other recovery bonds issued in connection with an additional financing order. Also, the issuing entity will not, except as contemplated by the recovery bonds and the basic documents, make any loan or advance or credit to, or guarantee, endorse or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own,

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purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person. The issuing entity will not, except for the acquisition of recovery property as contemplated by the recovery bonds and the basic documents (or as contemplated by an additional financing order), make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

The issuing entity will not make any payments, distributions, dividends or redemptions to any holder of the issuing entity’s equity interests in respect of that interest except in accordance with the indenture.

The issuing entity will cause the servicer to deliver to the trustee the annual accountant’s certificates, compliance certificates, reports regarding distributions and statements to bondholders required by the servicing agreement.

Events of Default; Rights Upon Event of Default

An “event of default” with respect to the recovery bonds is defined in the indenture as any one of the following events:

• a default for five business days in the payment of any interest on any recovery bond (whether such failure to pay interest is caused by a shortfall in fixed recovery charges received or otherwise);

• a default in the payment of the then unpaid principal of any recovery bond of any tranche on the final maturity date for that tranche;

• a default in the observance or performance of any of the issuing entity’s covenants or agreements made in the indenture (other than defaults described above) and the continuation of any default for a period of 30 days after the earlier of (i) the date that written notice of the default is given to the issuing entity by the trustee or to the issuing entity and the trustee by the holders of at least 25% in principal amount of the recovery bonds then-outstanding or (ii) the date that the issuing entity had actual knowledge of the default;

• any representation or warranty made by the issuing entity in the indenture or in any certificate delivered pursuant to the indenture or in connection with the indenture having been incorrect in any material respect as of the time made, and such breach not having been cured within 30 days after the earlier of (i) the date that notice of the breach is given to the issuing entity by the trustee or to the issuing entity and the trustee by the holders of at least 25% in principal amount of the recovery bonds then-outstanding or (ii) the date that the issuing entity had actual knowledge of the default;

• certain events of bankruptcy, insolvency, receivership or liquidation of the issuing entity; or

• a breach by the State of California or any of its agencies (including the CPUC), officers or employers that violates or is not in accordance with the State Pledge.

If an event of default (other than as specified in the sixth bullet point above) should occur and be continuing with respect to the recovery bonds, the trustee or holders of not less than a majority in principal amount of the recovery bonds then-outstanding may declare the unpaid principal of the recovery bonds and all accrued and unpaid interest thereon to be immediately due and payable. However, the nature of the issuing entity’s business will result in payment of principal upon an acceleration of the recovery bonds being made as funds become available. Please read “Risk Factors—Risks Associated with the Unusual Nature of the Recovery Property— Foreclosure of the trustee’s lien on the recovery property for the recovery bonds might not be practical, and acceleration of the recovery bonds before maturity might have little practical effect” and “Risk Factors—You may experience material payment delays or incur a loss on your investment in the recovery bonds because the source of funds for payment is limited” in this prospectus. The holders of a majority in principal amount of the recovery bonds may rescind that declaration under certain circumstances set forth in the indenture. Additionally, the trustee may exercise all of the issuing entity’s rights, remedies, powers, privileges and claims against the

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seller or the servicer under or in connection with the sale agreement, the servicing agreement and the administration agreement (at the direction of a majority of bondholders of the outstanding amount of the recovery bonds). If an event of default as specified in the sixth bullet above has occurred, the servicer will be obligated to institute (and the trustee, for the benefit of the bondholders, will be entitled and empowered to institute) any suits, actions or proceedings at law, in equity or otherwise, to enforce the State Pledge and to collect any monetary damages as a result of a breach thereof, and each of the servicer and the trustee may prosecute any suit, action or proceeding to final judgment or decree. The costs of any such action will be payable from fixed recovery charge collections as an operating expense in accordance with the priorities described in “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus. The servicer will have no obligations to undertake such action if it is not being reimbursed on a current basis for its costs and expenses in taking such actions, and shall not be required to advance its own funds to satisfy its obligations hereunder. The costs of any such action would be payable by the seller pursuant to the sale agreement. Except for an event of default specified in the first two bullet points above, the trustee will not be deemed to have knowledge of any event of default or a breach of representation or warranty unless a responsible officer of the trustee has actual knowledge of the default or the trustee has received written notice of the default in accordance with the indenture.

If the recovery bonds have been declared to be due and payable following an event of default, the trustee may elect to have the issuing entity maintain possession of all or a portion of such recovery property and continue to apply fixed recovery charge collections as if there had been no declaration of acceleration. There is likely to be a limited market, if any, for the recovery property following a foreclosure, in light of the event of default, the unique nature of the recovery property as an asset and other factors discussed in this prospectus. In addition, the trustee is prohibited from selling the recovery property following an event of default, other than a default in the payment of any principal or a default for five business days or more in the payment of any interest on any recovery bond, which requires the direction of holders of a majority in principal amount of the recovery bonds, unless:

• the holders of all the outstanding recovery bonds consent to the sale;

• the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on the outstanding recovery bonds; or

• the trustee determines that the proceeds of the collateral would not be sufficient on an ongoing basis to make all payments on the recovery bonds as those payments would have become due if the recovery bonds had not been declared due and payable, and the trustee obtains the written consent of the holders of 66 2/3% of the aggregate outstanding amount of the recovery bonds.

Subject to the provisions of the indenture relating to the duties of the trustee (please read “The Trustee” in this prospectus), if an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the recovery bonds at the request or direction of any of the holders of recovery bonds if the trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in complying with the request. Subject to the provisions for indemnification and certain limitations contained in the indenture (please read “The Trustee” in this prospectus):

• the holders of not less than a majority in principal amount of the outstanding recovery bonds of an affected tranche will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee; and

• the holders of not less than a majority in principal amount of the recovery bonds may, in certain cases, waive any default with respect thereto, except a default in the payment of principal or interest or a default in respect of a covenant or provision of the indenture that cannot be modified without the consent of all of the holders of the outstanding recovery bonds of all tranches affected thereby.

No holder of any recovery bond will have the right to institute any proceeding, to avail itself of any remedies provided in the Wildfire Financing Law or of the right to foreclose on the collateral, or otherwise to

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enforce the lien and security interest on the collateral or to seek the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:

• the holder previously has given to the trustee written notice of a continuing event of default;

• the holders of not less than a majority in principal amount of the outstanding recovery bonds have made written request of the trustee to institute the proceeding in its own name as trustee;

• the holder or holders have offered the trustee satisfactory indemnity;

• the trustee has for 60 days failed to institute the proceeding; and

• no direction inconsistent with the written request has been given to the trustee during the 60-day period by the holders of a majority in principal amount of the outstanding recovery bonds.

In addition, the trustee and the servicer will covenant and each bondholder will be deemed to covenant that it will not, prior to the date which is one year and one day after the termination of the indenture, institute against the issuing entity or against the issuing entity’s managers or the issuing entity’s member or members any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law, subject to the right of the CPUC or a court of competent jurisdiction to order sequestration and payment of revenues arising with respect to the recovery property.

Neither any manager nor the trustee in its individual capacity, nor any holder of any ownership interest in the issuing entity, nor any of their respective owners, beneficiaries, agents, officers, directors, employees, successors or assigns will, in the absence of an express agreement to the contrary, be personally liable for the payment of the principal of or interest on the recovery bonds or for the issuing entity’s agreements contained in the indenture.

Actions by Bondholders

Subject to certain exceptions, the holders of not less than a majority of the aggregate outstanding amount of the recovery bonds of the affected tranche or tranches will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, of exercising any trust or power conferred on the trustee under the indenture; provided, that:

• the direction is not in conflict with any rule of law or with the indenture and would not involve the trustee in personal liability or expense;

• subject to the other conditions described above under “—Events of Default; Rights Upon Event of Default” in this prospectus, the consent of 100% of the bondholders is required to direct the trustee to sell the collateral (other than an event of default for failure to pay interest or principal at maturity);

• if the trustee elects to retain the collateral in accordance with the indenture, then any direction to the trustee by less than 100% of the bondholders will be of no force and effect; and

• the trustee may take any other action deemed proper by the trustee which is not inconsistent with the direction.

In circumstances under which the trustee is required to seek instructions from the holders of the recovery bonds of any tranche with respect to any action or vote, the trustee will take the action or vote for or against any proposal in proportion to the principal amount of the corresponding tranche, as applicable, of recovery bonds taking the corresponding position. Notwithstanding the foregoing, the indenture allows each bondholder to institute suit for the nonpayment of (1) the interest, if any, on its recovery bonds which remains unpaid as of the applicable due date and (2) the unpaid principal, if any, of its recovery bonds on the final maturity date therefor.

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Annual Report of Trustee

If required by the Trust Indenture Act, the trustee will be required to mail each year to all bondholders a brief report. The report must state, among other things:

• the trustee’s eligibility and qualification to continue as the trustee under the indenture;

• any amounts advanced by it under the indenture;

• the amount, interest rate and maturity date of specific indebtedness owing by the issuing entity to the trustee in the trustee’s individual capacity;

• the property and funds physically held by the trustee;

• any additional issue of the recovery bonds not previously reported; and

• any action taken by it that materially affects the recovery bonds and that has not been previously reported.

Annual Compliance Statement

The issuing entity will file annually with the trustee and the rating agencies a written statement as to whether it has fulfilled its obligations under the indenture.

Satisfaction and Discharge of Indenture

The indenture will cease to be of further effect with respect to the recovery bonds and the trustee, on the issuing entity’s written demand and at its expense, will execute instruments acknowledging satisfaction and discharge of the indenture with respect to the recovery bonds, when:

• either (a) all recovery bonds which have already been authenticated or delivered, with certain exceptions set forth in the indenture, have been delivered to the trustee for cancellation or (b) either (i) the scheduled final payment date has occurred with respect to all recovery bonds not previously delivered to the trustee for cancellation or (ii) the issuing entity has irrevocably deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premiums, if any, on the recovery bonds and all other sums payable by the issuing entity with respect to the recovery bonds when scheduled to be paid and to discharge the entire indebtedness on such recovery bonds when due;

• the issuing entity has paid all other sums payable by it under the indenture with respect to the recovery bonds; and

• the issuing entity has delivered to the trustee an officer’s certificate, an opinion of external counsel, and if required by the Trust Indenture Act or the trustee, a certificate from a firm of independent registered public accountants, each stating that there has been compliance with the conditions precedent in the indenture relating to the satisfaction and discharge of the indenture.

The Issuing Entity’s Legal and Covenant Defeasance Options

The issuing entity may, at any time, terminate all of its obligations under the indenture, referred to herein as the “legal defeasance option”, or terminate its obligations to comply with some of the covenants in the indenture, including some of the covenants described under “—The Issuing Entity’s Covenants” above and referred to herein as the issuing entity’s “covenant defeasance option”.

The issuing entity may exercise the legal defeasance option of the recovery bonds notwithstanding its prior exercise of the covenant defeasance option. If the issuing entity exercises the legal defeasance option, the recovery bonds will be entitled to payment only from the funds or other obligations set aside under the indenture

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for payment thereof on the scheduled final payment date or redemption date therefor as described below. The recovery bonds will not be subject to payment through redemption or acceleration prior to the scheduled final payment date or redemption date, as applicable. If the issuing entity exercises the legal defeasance option, the final payment of the recovery bonds may not be accelerated because of an event of default. If the issuing entity exercises the covenant defeasance option, the final payment of the recovery bonds may not be accelerated because of an event of default relating to a default in the observance or performance of any of the issuing entity’s covenants or agreements made in the indenture.

The indenture provides that the issuing entity may exercise its legal defeasance option or its covenant defeasance option of recovery bonds only if:

• the issuing entity irrevocably deposits or causes to be irrevocably deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premium, if any, on the recovery bonds other sums payable by the issuing entity under the indenture with respect to the recovery bonds when scheduled to be paid and to discharge the entire indebtedness on the recovery bonds when due;

• the issuing entity delivers to the trustee a certificate from a nationally recognized firm of independent registered public accountants expressing its opinion that the payments of principal and interest on the U.S. government obligations when due and without reinvestment plus any deposited cash will provide cash at times and in sufficient amounts to pay in respect of the recovery bonds:

• principal in accordance with the expected sinking fund schedule therefor;

• interest when due; and

• all other sums payable by the issuing entity under the indenture with respect to the recovery bonds,

• in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of the issuing entity’s bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period;

• no default has occurred and is continuing on the day of this deposit and after giving effect thereto;

• in the case of the legal defeasance option, the issuing entity delivers to the trustee an opinion of external counsel stating that: the issuing entity has received from, or there has been published by, the IRS a ruling, or since the date of execution of the indenture, there has been a change in the applicable federal income tax law, and in either case confirming that the holders of the recovery bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred;

• in the case of the covenant defeasance option, the issuing entity delivers to the trustee an opinion of external counsel to the effect that the holders of the recovery bonds will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred;

• the issuing entity delivers to the trustee a certificate of one of its officers and an opinion of external counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the indenture;

• the issuing entity delivers to the trustee an opinion of external counsel to the effect that (a) in a case under the Bankruptcy Code in which PG&E (or any of its affiliates, other than the issuing entity) is the debtor, the court would hold that the deposited cash or U.S. government obligations would not be in the bankruptcy estate of PG&E (or any of its affiliates, other than the issuing entity, that deposited the cash

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or U.S. government obligations); and (b) in the event PG&E (or any of its affiliates, other than the issuing entity, that deposited the cash or U.S. government obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its affiliates, other than the issuing entity, that deposited the cash or U.S. government obligations) and the issuing entity so as to order substantive consolidation under the Bankruptcy Code of the issuing entity’s assets and liabilities with the assets and liabilities of PG&E or such other affiliate; and

• the rating agency condition has been satisfied with respect to the exercise of any legal defeasance option or covenant defeasance option.

No Recourse to Others

No recourse may be taken directly or indirectly, by the holders with respect to the issuing entity’s obligations on the recovery bonds, under the indenture or any supplement thereto or any certificate or other writing delivered in connection therewith, against (1) any owner of a beneficial interest in the issuing entity (including PG&E) or (2) any shareholder, partner, owner, beneficiary, agent, officer, director or employee of the trustee, the managers or any owner of a beneficial interest in the issuing entity (including PG&E) in its individual capacity, or of any successor or assign or any of them in their respective individual or corporate capacities, except as any such person may have expressly agreed in writing. Each holder by accepting a recovery bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the recovery bonds.

Notwithstanding any provision of the indenture or the series supplement to the contrary, bondholders shall look only to the collateral with respect to any amounts due to the bondholders under the indenture and the recovery bonds, and, in the event such collateral is insufficient to pay in full the amounts owed on the recovery bonds, shall have no recourse against the issuing entity in respect of such insufficiency.

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THE TRUSTEE

The Bank of New York Mellon Trust Company, National Association, a national banking association, will act as the trustee, the paying agent and the registrar for the recovery bonds. The Bank of New York Mellon Trust Company, National Association has acted as trustee on numerous electric utility sponsored bond transactions. The indenture and series supplement will be administered from The Bank of New York Mellon Trust Company, National Association, Corporate Trust Department located at 2 N. LaSalle Street, Suite 700, Chicago, IL 60602 Attn: ABS Corporate Trust Administration.

The trustee (or any other eligible institution in any capacity under the indenture) may resign at any time upon not less than 30 days’ prior written notice to the issuing entity. The holders of a majority in principal amount of the outstanding amount of the recovery bonds under the indenture may remove the trustee (or any other eligible institution in any capacity under the indenture) upon not less than 30 days’ prior written notice by so notifying the trustee (or such other eligible institution) and may appoint a successor trustee (or successor eligible institution in the applicable capacity). The issuing entity will remove the trustee if the trustee: (i) ceases to be eligible under the Trust Indenture Act; (ii) ceases to satisfy certain credit standards set forth in the indenture and the series supplement; (iii) becomes a debtor in a bankruptcy proceeding or is adjudicated insolvent or a receiver or other public officer takes charge of the trustee or its property; (iv) becomes incapable of acting; or (v) fails to provide to the issuing entity certain information pertaining to the trustee that it reasonably requests that is necessary for it to satisfy its reporting obligations under the securities laws. The issuing entity will remove any person who maintains the collection account or any other account established under the Indenture and fails to constitute an eligible institution with 30 days’ prior notice. If the trustee resigns or is removed or a vacancy exists in the office of trustee for any reason, the issuing entity will be obligated promptly to appoint a successor trustee eligible under the indenture, and notice of such appointment is required to be promptly given to each rating agency by the successor trustee. If any person (other than the trustee) acting in any capacity under the indenture as an eligible institution is removed, fails to constitute an eligible institution or if a vacancy exists in any such capacity for any reason, the issuing entity will promptly appoint a successor to such capacity that constitutes an eligible institution. No resignation or removal of the trustee (or any other person acting as an eligible institution) will become effective until acceptance of the appointment by a successor trustee (or a successor eligible institution). The issuing entity is responsible for payment of the expenses associated with any such removal or resignation.

The trustee will at all times satisfy the requirements of the Trust Indenture Act and Rule 3a-7 of the Investment Company Act of 1940 and have a combined capital and surplus of at least $50,000,000 and a long- term debt rating of BBB– (or the equivalent thereof) or better by all of the rating agencies rating the recovery bonds and from which a rating is available. If the trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association will without any further action be the successor trustee.

The trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers; provided, that its conduct does not constitute willful misconduct, negligence or bad faith. The issuing entity has agreed to indemnify the trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability or expense (including attorney’s fees and expenses) incurred by it in connection with the administration of the trust and the performance of its duties under the indenture; provided, that the issuing entity is not required to pay any expense or indemnify against any loss, liability or expense incurred by the trustee through the trustee’s own willful misconduct, negligence or bad faith. Please read “Security for the Recovery Bonds—How Funds in the Collection Account will be Allocated” in this prospectus.

In the ordinary course of business, The Bank of New York Mellon, an affiliate of the trustee, is named as a defendant in legal actions. In connection with its role as trustee of certain residential mortgage-backed securitizations, or RMBS transactions, The Bank of New York Mellon has been named as a defendant in a

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number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.

The issuing entity, PG&E and their respective affiliates may from time to time enter into normal banking and trustee relationships with The Bank of New York Mellon Trust Company, National Association and its affiliates. The Bank of New York Mellon, National Association, and certain of its affiliates act as trustees for PG&E’s first mortgage bonds and certain pollution control bonds issued on PG&E’s behalf. The Bank of New York Mellon Trust Company, National Association, also is the trustee under an indenture under which PG&E’s parent, PG&E Corporation, may issue debt securities in the future. PG&E maintains bank deposits with The Bank of New York Mellon and may borrow money from the bank from time to time.

No relationships currently exist or existed during the past two years between PG&E, the issuing entity and each of their respective affiliates, on the one hand, and The Bank of New York Mellon Trust Company, National Association and its affiliates, on the other hand, that would be outside the ordinary course of business or on terms other than would be obtained in an arm’s length transaction with an unrelated third party.

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SECURITY FOR THE RECOVERY BONDS

General

The recovery bonds issued under the indenture will be non-recourse obligations and are payable solely from and secured solely by a pledge of and lien on the recovery property and the other collateral as provided in the indenture. If and to the extent the recovery property and the other assets of the trust estate are insufficient to pay all amounts owing with respect to the recovery bonds, then the bondholders will generally have no claim in respect of such insufficiency against the issuing entity or any other person. By the acceptance of the recovery bonds, the bondholders waive any such claim.

Pledge of Collateral

To secure the payment of principal of and interest on the recovery bonds, the issuing entity will grant to the trustee a security interest in all of the issuing entity’s right, title and interest (whether now owned or hereafter acquired or arising) in and to the following property:

• the recovery property and all related fixed recovery charges;

• the issuing entity’s rights under the true-up mechanism;

• the issuing entity’s rights under a sale agreement pursuant to which it will acquire the recovery property;

• the issuing entity’s rights under the servicing agreement and any subservicing, agency, or collection agreements executed in connection with the servicing agreement;

• the issuing entity’s rights under the administration agreement (or its allocable rights, if one or more series of additional recovery bonds or additional other recovery bonds are issued);

• the collection account for the recovery bonds and all subaccounts of the collection account, and all amounts of cash instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto;

• all of the issuing entity’s other property related to the recovery bonds, other than any amounts released to PG&E by the trustee on any payment date relating to its return on capital of its capital contribution;

• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing; and

• all proceeds in respect of any or all of the foregoing.

The security interest does not extend to:

• amounts released to PG&E by the trustee on any payment date relating to its return on capital of its capital contribution;

• amounts deposited in the capital subaccount or any other subaccount that have been released to the issuing entity or as it directs following retirement of recovery bonds; and

• amounts deposited with the issuing entity on the issuance date required for payment of costs of issuance with respect to the recovery bonds (together with any interest earnings thereon).

The depositor refers to the foregoing assets in which the issuing entity, as assignee of the seller, will grant the trustee a security interest as the “collateral”.

Furthermore, the Customer Credit and the Customer Credit Trust are not collateral for the recovery bonds, and any shortfalls or alterations of the Customer Credit or Customer Credit Trust shall not affect the fixed recovery charges or the obligations under the recovery bonds.

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Security Interest in the Collateral

The Wildfire Financing Law provides that consensual security interests can be granted in recovery property and that a statutory lien will be established on recovery property. With respect to consensual security interests, the Wildfire Financing Law provides that a valid and enforceable security interest in recovery property attaches when (a) the CPUC has issued the financing order authorizing fixed recovery charges included in the recovery property, (b) the pledgee of the recovery property has given value for the recovery property, and (c) the pledgor (i.e., the issuing entity or the issuing entity’s successor) has signed a security agreement covering the recovery property. The security interest in the recovery property is perfected when it has attached and when a financing statement has been filed with the California Secretary of State, with a copy filed with the CPUC, in accordance with the Wildfire Financing Law.

In addition, a statutory lien on recovery property with respect to the recovery bonds arises under the Wildfire Financing Law. This statutory lien arises automatically, without further action by the servicer, the issuing entity or any other person. Under the financing order, a statutory lien will exist on the recovery property then existing or thereafter arising and will secure all obligations, then existing or subsequently arising, to the holders of the recovery bonds and the trustee for those holders. This statutory lien will be a first priority lien on all recovery property then in existence or that subsequently arises.

Right of Foreclosure

The Wildfire Financing Law provides that if an event of default occurs under the recovery bonds, the holders of the recovery bonds or their representatives, as secured parties, may foreclose or otherwise enforce the lien and security interest in the recovery property securing the recovery bonds as if they were secured parties under Article 9 of the UCC. In addition, the CPUC has an independent right under the Wildfire Financing Law may order the sequestration and payment of fixed recovery charge collections to pledgees and transferees of recovery property.

Description of Indenture Accounts

Collection Account

Pursuant to the indenture, the issuing entity will establish a segregated trust account in the name of the trustee with an eligible institution, for the recovery bonds called the “collection account”. The collection account will be under the sole dominion and exclusive control of the trustee. The trustee will hold the collection account for the issuing entity’s benefit as well as for the benefit of the bondholders. The collection account for the recovery bonds will consist of three subaccounts: a “general subaccount”, an “excess funds subaccount”, and a “capital subaccount”, which need not be separate bank accounts. For administrative purposes, the subaccounts may be established by the trustee as separate accounts which will be recognized individually as subaccounts and collectively as the collection account. All amounts in the collection account not allocated to any other subaccount will be allocated to the general subaccount. Unless the context indicates otherwise, references in this prospectus to the collection account include the collection account and each of the subaccounts contained therein.

The following institutions are eligible institutions for the establishment of the collection account:

• the corporate trust department of the trustee, so long as any of the securities of the trustee have (i) either a short-term credit rating from Moody’s of at least “P-1” or a long-term unsecured debt rating from Moody’s of at least “A2” and (ii) a credit rating from S&P of at least “A”; or

• a depository institution organized under the laws of the United States of America or any state (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s, or (B) a short-term issuer rating of “A-1” or higher by S&P and “P-1” or higher by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

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Eligible Investments for Funds in the Collection Account

Funds in the collection account may be invested only in such investments as meet the criteria described below and which mature on or before the business day preceding the next payment date:

• direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

• demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of or bankers’ acceptances issued by, any depository institution (including the trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any state thereof and subject to the supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated as least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s, or such lower rating as will not result in the downgrading or withdrawal of the recovery bonds;

• commercial paper (including commercial paper of the trustee, acting in its commercial capacity, and other than commercial paper issued by PG&E or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating of at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s or such lower rating as will not result in the downgrading or withdrawal of the ratings of the recovery bonds;

• investments in money market funds which have a rating in the highest investment category granted thereby (including funds for which the trustee or any of its affiliates is investment manager or advisor) from Moody’s and S&P;

• repurchase obligations with respect to any security that is a direct obligations of, or fully guaranteed by, the United States of America or certain of its agencies or instrumentalities, entered into with eligible institutions; or

• repurchase obligations with respect to any security or whole loan entered into with an eligible institution or with a registered broker-dealer acting as principal and that meets certain ratings criteria.

The trustee will have access to the collection account for the purpose of making deposits in and withdrawals from the collection account in accordance with the indenture. The servicer will select the eligible investments in which funds will be invested, unless otherwise directed by the issuing entity.

The servicer will remit fixed recovery charge payments to the collection account in the manner described under “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

General Subaccount

The general subaccount will hold all funds held in the collection account that are not held in the other two subaccounts. The servicer will remit all fixed recovery charge payments to the general subaccount. On each payment date, the trustee will draw on amounts in the general subaccount to pay the issuing entity’s expenses and to pay interest and make scheduled payments on the recovery bonds, and to make other payments and transfers in accordance with the terms of the indenture. Funds in the general subaccount will be invested in the eligible investments described above.

Excess Funds Subaccount

The trustee, at the written direction of the servicer, will allocate to the excess funds subaccount fixed recovery charge collections available with respect to any payment date in excess of amounts necessary to make the payments specified on such payment date. The excess funds subaccount will also hold all investment earnings on the collection account (other than investment earnings on the capital subaccount) in excess of such amounts.

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Capital Subaccount

In connection with the issuance of the recovery bonds, the seller, in its capacity as the issuing entity’s sole owner, will contribute capital to the issuing entity in an amount equal to the “required capital level”, which will be not less than 0.50% of the principal amount of the recovery bonds issued. This amount will be funded by the seller and not from the proceeds of the sale of the recovery bonds, and will be deposited into the capital subaccount on the issuance date. In the event that amounts on deposit in the general subaccount and the excess funds subaccount are insufficient to make scheduled payments of principal and interest on the recovery bonds and payments of fees and expenses contemplated by the first nine bullets under “—How Funds in the Collection Account will be Allocated” in this prospectus, the trustee will draw on amounts in the capital subaccount to make such payments up to the lesser of the amount of such insufficiency and the amounts on deposit in the capital subaccount. In the event of any such withdrawal, collected fixed recovery charges available on any subsequent payment date that are not necessary to pay scheduled payments of principal and interest on the recovery bonds and payments of fees and expenses will be used to replenish any amounts drawn from the capital subaccount. If the recovery bonds have been retired as of any payment date, the amounts on deposit in the capital subaccount will be released to the issuing entity, free of the lien of the indenture.

How Funds in the Collection Account will be Allocated

On each payment date for the recovery bonds (or any other date as directed by the servicer with respect to operating expenses in clause (4) below payable prior to the next payment date), the trustee will with respect to the recovery bonds, pay or allocate, solely at the written direction of the servicer, all amounts on deposit in the collection account (including investment earnings thereon) to pay the following amounts in the following priority:

(1) amounts owed by the issuing entity to the trustee, the trustee’s fees and expenses and any outstanding indemnity amounts owed to the trustee in an amount not to exceed $200,000 per annum (the “Trustee Cap”); provided, however, that the Trustee Cap shall be disregarded and inapplicable upon the acceleration of the recovery bonds following the occurrence of an event of default;

(2) the servicing fee and any unpaid servicing fees from prior payment dates to the servicer as described under “The Servicing Agreement—Servicing Compensation” in this prospectus;

(3) the administration fee and the fees owed to the issuing entity’s independent manager;

(4) all of the issuing entity’s other ordinary periodic operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the administrator under the administration agreement and of the servicer under the servicing agreement;

(5) interest then due on the recovery bonds, including any past-due interest;

(6) principal then due and payable on the recovery bonds as a result of an event of default or on the final maturity date for the recovery bonds;

(7) scheduled principal payments of recovery bonds according to its expected sinking fund schedule, together with any overdue scheduled principal payments, paid pro rata among the recovery bonds if there is a deficiency;

(8) any remaining unpaid fees, expenses and indemnity amounts owed to the trustee;

(9) any other unpaid operating expenses and any remaining amounts owed pursuant to the basic documents;

(10) replenishment of any amounts drawn from the capital subaccount;

(11) provided that no event of default has occurred and is continuing, release to PG&E an amount representing a return on capital of its capital contribution calculated at an annual rate per annum equal to the weighted average interest rate on the recovery bonds;

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(12) the remainder, if any, to the excess funds subaccount for distribution on subsequent payment dates; and

(13) after principal of and premium, if any, and interest on all recovery bonds and all of the other foregoing amounts have been paid in full, the balance (including all amounts then held in the applicable capital subaccount and the applicable excess funds subaccount), if any, shall be paid to PG&E free and clear from the lien of the indenture and the series supplement and credited to consumers through normal ratemaking processes.

If on any payment date funds on deposit in the general subaccount are insufficient to make the payments contemplated by clauses (1) through (9) above, the trustee will first, draw from amounts on deposit in the excess funds subaccount, and second, draw from amounts on deposit in the capital subaccount, up to the amount of the shortfall, in order to make those payments in full. If the trustee uses amounts on deposit in the capital subaccount to pay those amounts or make those transfers, as the case may be, subsequent adjustments to the fixed recovery charges will take into account, among other things, the need to replenish those amounts. In addition, if on any payment date funds on deposit in the general subaccount are insufficient to make the transfer described in clause (10) above, the trustee will draw from amounts on deposit in the excess funds subaccount to make such transfer. Please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—PG&E’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the recovery bonds” in this prospectus.

If, on any payment date, available collections of the fixed recovery charges, together with available amounts in the subaccounts, are not sufficient to pay interest due on all outstanding recovery bonds on that payment date, amounts available will be allocated pro rata based on the amount of interest payable. If, on any payment date, remaining collections of the fixed recovery charges, together with available amounts in the subaccounts, are not sufficient to pay principal due and payable on all outstanding recovery bonds on that payment date, amounts available will be allocated pro rata based on the principal amount then due and payable. If, on any payment date, remaining collections of the fixed recovery charges, together with available amounts in the subaccounts, are not sufficient to pay principal scheduled to be paid on all outstanding recovery bonds, amounts available will be allocated pro rata based on the principal amounts then scheduled to be paid on the payment date.

Issuance of Additional Recovery Bonds or Additional Other Recovery Bonds

The issuing entity has been organized as a special purpose subsidiary of PG&E for the limited purpose of holding recovery property and issuing recovery bonds, including the recovery bonds and any additional recovery bonds or additional other recovery bonds, secured by recovery property and other collateral pledged to secure such recovery bonds. As a result, the issuing entity may acquire additional recovery property and issue one or more series of additional recovery bonds or additional other recovery bonds that are supported by such additional and separate recovery property or other collateral to finance the recovery costs approved by an additional financing order.

The issuing entity may issue additional recovery bonds or additional other recovery bonds and acquire additional recovery property after the acquisition and issuance described in this prospectus, subject to satisfaction of the following conditions, among others:

• PG&E has existing authority under the financing order to issue additional recovery bonds or PG&E requests and receives an additional financing order from the CPUC to recover additional recovery costs through the issuance of additional other recovery bonds;

• PG&E must serve as initial servicer and administrator for such series of the additional recovery bonds or additional other recovery bonds and that the servicer and the administrator cannot be replaced without the requisite approval of the holders of all series of recovery bonds then-outstanding;

• satisfaction of the rating agency condition;

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• each series of the additional recovery bonds or additional other recovery bonds has recourse only to the recovery property created by the financing order or any additional financing order and funds on deposit in the trust accounts held by the trustee with respect to that series, is nonrecourse to the recovery property securing the recovery bonds and does not constitute a claim against the issuing entity if revenue from the fixed recovery charges and funds on deposit in the trust accounts with respect to that series are insufficient to pay such other series in full;

• the issuing entity has provided to the trustee and the rating agencies then rating any series of the issuing entity’s outstanding recovery bonds an opinion of a nationally recognized law firm experienced in such matters to the effect that such issuance would not result in the issuing entity’s substantive consolidation with PG&E and that there has been a true sale of the recovery property for such series, subject to the customary exceptions, qualifications and assumptions contained therein;

• transaction documentation for the other series provides that the trustee on behalf of holders of the recovery bonds of the other series will not file or join in filing of any bankruptcy petition against the issuing entity;

• if holders of such other series are deemed to have any interest in any of the collateral dedicated to the recovery bonds, holders of such additional recovery bonds or additional other recovery bonds must agree that their interest in the collateral dedicated to the additional recovery bonds or additional other recovery bonds is only a first priority perfected interest in the assets relating to the additional recovery bonds or additional other recovery bonds, as the case may be, in accordance with the related intercreditor agreement;

• each series of additional recovery bonds or additional other recovery bonds will have its own bank accounts or trust accounts and funds for each series of recovery bonds shall be remitted in accordance with the related servicing agreement and related intercreditor agreement;

• no series of additional recovery bonds or additional other recovery bonds will be issued under the indenture governing the recovery bonds offered hereby; and

• each series will bear its own trustee fees, servicer fees and administration fees.

The issuance of any additional recovery bonds or additional other recovery bonds, whether issued by the issuing entity or any affiliated entity, is subject to satisfaction of the rating agency condition. In addition, PG&E has covenanted under the sale agreement that the execution of a joinder to the intercreditor agreement is a condition precedent to the sale of property by PG&E consisting of non-bypassable charges payable by consumers comparable to the recovery property sold by PG&E pursuant to the sale agreement. Please read “Security for the Recovery Bonds—Intercreditor Agreement” and “Sale Agreement—Covenants of the Seller” in this prospectus.

Each series of recovery bonds that may be issued, whether issued by the issuing entity or any affiliated entity, will be backed by separate recovery property the issuing entity acquires for the separate purpose of repaying that series of additional recovery bonds or additional other recovery bonds. Each series of additional recovery bonds or additional other recovery bonds that may be issued will have the same true-up mechanism as required by the financing order.

Any series of additional recovery bonds may include terms and provisions that would be unique to that particular series of recovery bonds

Allocations as Between Series of Recovery Bonds

The recovery bonds will not be subordinated in right of payment to any series of additional recovery bonds or additional other recovery bonds. Each series of recovery bonds will be secured by its own separate recovery property, which will include the right to impose, bill, collect and receive fixed recovery charges calculated in respect of that series, and the right to implement the true-up mechanism to correct overcollections or

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undercollections in respect of that series. Each series will also have its own collection account, including any related subaccounts, into which revenue from the fixed recovery charges relating to that series will be deposited and from which amounts will be withdrawn to pay the related series of recovery bonds. Holders of one series of recovery bonds will have no recourse to collateral for a different series. The administration fees, independent manager fees and other operating expenses payable by the issuing entity on a payment date will be assessed to each series of recovery bonds on a pro rata basis, based upon the respective outstanding principal amounts of each series. Please read “—Description of Indenture Accounts” and “—How Funds in the Collection Account will be Allocated” in this prospectus.

Although each series of additional recovery bonds or additional other recovery bonds will have its own recovery property reflecting the right in and to a separate fixed recovery charge, fixed recovery charges relating to the recovery bonds and fixed recovery charges relating to any additional recovery bonds or additional other recovery bonds, as the case may be, will be collected through single periodic bills to each consumer, and all fixed recovery charges might be combined into a single line item on those periodic bills. The fixed recovery charges for each series of recovery bonds may not be separately identified on consumer electricity bills, although consumer electricity bills will state that a portion of the electricity bill consists of the rights to the fixed recovery charges that have been sold to the financing entity created to issue such additional recovery bonds or additional other recovery bonds. In the event a consumer does not pay in full all amounts owed under any bill including fixed recovery charges, the servicer is required to allocate any resulting shortfalls in fixed recovery charges ratably based on the amounts of fixed recovery charges owing in respect of each series of fixed recovery bonds, including the recovery bonds of any series. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

Intercreditor Agreement

PG&E currently has a trade receivable program under which it sells substantially all its accounts receivable (other than the fixed recovery charges, which are entitlements of the issuing entity and not the servicer, and which are excluded from this arrangement). In accordance with the intercreditor agreement, as amended, among PG&E, the issuing entity, the trustee, the parties to PG&E’s accounts receivable program, (i) the fixed recovery charges are excluded from the assets sold under the accounts receivable sales program and (ii) replacement of the servicer will require the agreement of the trustee and the administrative agent under the accounts receivable sales program. In the sale agreement, PG&E has covenanted that it will not enter into any future sale of charges owing by electric consumers to the issuing entity or other issuing entities for the purpose of issuing additional recovery bonds or additional other recovery bonds without entering into a joinder to the intercreditor agreement. Please read “The Sale Agreement—Covenants of the Seller” in this prospectus.

If the trustees are unable to agree on a replacement servicer, no trustee would be able to replace PG&E or any successor as servicer; the parties must cooperate to appoint a replacement servicer within ten business days of the date of notice that the servicer shall be replaced. Please read “The Servicing Agreement—Remittances to Collection Account” in this prospectus.

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WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE RECOVERY BONDS

The rate of principal payments, the amount of each interest payment and the actual final payment date of each tranche of the recovery bonds and the weighted average life thereof will depend primarily on the timing of receipt of collected fixed recovery charges by the trustee and the statutory true-up mechanism. The aggregate amount of collected fixed recovery charges and the rate of principal amortization on the recovery bonds will depend, in part, on actual energy usage and energy demands, and the rate of delinquencies and write-offs. The fixed recovery charges are required to be adjusted from time to time based in part on the actual rate of collected fixed recovery charges. However, the issuing entity can give no assurance that the servicer will be able to forecast accurately actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the fixed recovery charges that will cause collected fixed recovery charges to be received at any particular rate. Please read “Risk Factors—Servicing Forecasting Risks—Inaccurate consumption or collection forecasting might reduce scheduled payments on the recovery bonds” and “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” in this prospectus.

The recovery bonds may be retired later than expected. Except in the event of an acceleration of the final payment date of the recovery bonds after an event of default, however, the recovery bonds will not be paid at a rate faster than that contemplated in the expected sinking fund schedule for each tranche of the recovery bonds even if the receipt of collected fixed recovery charges is accelerated. Instead, receipts in excess of the amounts necessary to amortize the recovery bonds in accordance with the applicable expected sinking fund schedules, to pay interest and related fees and expenses and to fund subaccounts of the collection account will be allocated to the excess funds subaccount. Amounts on deposit in the excess funds subaccount will be taken into consideration in calculating the next true-up adjustment. Acceleration of the final maturity date after an event of default in accordance with the terms thereof will result in payment of principal earlier than the related scheduled final payment dates. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a date that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the recovery bonds is received in later years, the recovery bonds may have a longer weighted average life.

Weighted Average Life Sensitivity

Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments on each tranche of recovery bonds, the aggregate amount of each interest payment on each tranche of recovery bonds and the actual final payment date of each tranche of recovery bonds will depend on the timing of the servicer’s receipt of fixed recovery charges from ESPs. Changes in the expected weighted average lives of the tranches of the recovery bonds in relation to variances in actual energy consumption levels (retail electric sales) from forecast levels are shown below.

			Weighted Average Life Sensitivity
		-5% (         Standard Deviations from Mean)		-15% (         Standard Deviations from Mean)
Tranche	Expected Weighted Average Life (Years)	WAL (yrs)	Change (days)*	WAL (yrs)	Change (days)*
A-1
A-2
A-3
A-4
A-5

* Number is rounded to whole days

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Assumptions

For the purposes of preparing the above chart, the following assumptions, among others, have been made: (i) in relation to the initial forecast, the forecast error stays constant over the life of the recovery bonds and is equal to an overestimate of electricity consumption of 5% (             standard deviations from mean) or 15% (             standard deviations from mean), (ii) the servicer makes timely and accurate submissions to true-up the fixed recovery charges annually, (iii) consumer write-off rates are held constant at 0.42% and 0.08% for residential and non-residential, (iv) PG&E remits all fixed recovery charges on average 47 days and 34 days after such charges are billed to residential and non-residential consumers, respectively, (v) operating expenses are equal to projections, (vi) there is no acceleration of the final maturity date of the recovery bonds, (vii) a permanent loss of all consumers has not occurred, and (viii) the issuance date of the recovery bonds is             , 2022. There can be no assurance that the weighted average lives of the recovery bonds will be as shown.

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THE SALE AGREEMENT

The following summary describes particular material terms and provisions of the sale agreement pursuant to which the issuing entity will purchase recovery property from the seller. The depositor has filed the form of the sale agreement as an exhibit to the registration statement of which this prospectus forms a part.

Sale and Assignment of the Recovery Property

On the issuance date, pursuant to a sale agreement, the seller will sell, transfer and assign recovery property to the issuing entity, without recourse, except as provided in such sale agreement. The recovery property acquired on that date represents all irrevocable right, title and interest in and to non-bypassable rates and other charges established by the financing order to be collected from existing and future consumers in PG&E’s service territory in amounts sufficient to repay bond principal, interest and related financing costs and all rights to obtain adjustments to such fixed recovery charges in accordance with the Wildfire Financing Law and the financing order. The issuing entity will apply the net proceeds that the issuing entity receives from the sale of the recovery bonds to the purchase of the recovery property acquired on that date.

In accordance with the Wildfire Financing Law, the transfer by PG&E to the issuing entity of recovery property will be deemed perfected as against third persons when the CPUC has issued the financing order authorizing the fixed recovery charges included in the recovery property and PG&E executes and delivers to the issuing entity a written assignment of that recovery property.

Conditions to the Sale of Recovery Property

The issuing entity’s obligation to purchase and the seller’s obligation to sell recovery property on the issuance date will be subject to the satisfaction of each of the following conditions:

• on or prior to the issuance date, the seller must duly execute and deliver the sale agreement to the issuing entity;

• on or prior to the issuance date, the seller must have received the financing order from the CPUC authorizing the creation of the recovery property;

• on or prior to the issuance date, the seller must have filed the issuance advice letter with the CPUC and such letter must be effective;

• as of the issuance date, the seller may not be insolvent and may not be made insolvent by the sale of recovery property to the issuing entity, and the seller may not be aware of any pending insolvency with respect to itself;

• as of the issuance date, the representations and warranties of the seller in the sale agreement must be true and correct (except to the extent they relate to an earlier date), the seller may not have breached any of its covenants in the sale agreement, and the servicer may not be in default under the servicing agreement;

• as of the issuance date, the issuing entity must have sufficient funds available to pay the purchase price for recovery property to be conveyed and all conditions to the issuance of the recovery bonds intended to provide the funds to purchase that recovery property set forth in the indenture must have been satisfied or waived;

• on or prior to the issuance date, the seller must have taken all action required to transfer ownership of recovery property to be conveyed to the issuing entity on the issuance date, free and clear of all liens other than liens created by the issuing entity pursuant to the basic documents and to perfect such transfer including, without limitation, filing any statements or filings under the Wildfire Financing Law or the UCC; and the issuing entity or the servicer, on the issuing entity’s behalf, must have taken any action required for the issuing entity to grant the trustee a lien and first priority perfected security interest in the collateral and maintain that security interest as of the issuance date;

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• the seller must receive and deliver to the issuing entity and the trustee an opinion or opinions of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to the issuing entity and the underwriters),

• to the effect that: (i) the issuing entity will not be subject to United States federal income tax as an entity separate from the issuing entity’s sole owner and that the recovery bonds will be treated as debt of the issuing entity’s sole owner for U.S. federal income tax purposes and (ii) for U.S. federal income tax purposes, the issuance of the recovery bonds will not result in gross income to the seller;

• on and as of the issuance date, the issuing entity’s limited liability company agreement, the servicing agreement, the sale agreement, the indenture, the Wildfire Financing Law, the financing order and any tariff authorizing the collection of fixed recovery charges must be in full force and effect; and

• the seller must deliver to the issuing entity and to the trustee an officers’ certificate confirming the satisfaction of each of these conditions.

Seller Representations and Warranties

In the sale agreement, the seller will represent and warrant to the issuing entity, as of the issuance date, to the effect, among other things, that:

• no portion of the recovery property has been sold, transferred, assigned or pledged or otherwise conveyed by the seller to any person other than the issuing entity and immediately prior to the sale of the recovery property, the seller owns the recovery property free and clear of all liens and rights of any other person, and no offsets, defenses or counterclaims exist or have been asserted with respect to the recovery property;

• on the issuance date, immediately upon the sale under the sale agreement, the recovery property transferred on the issuance date will be validly transferred and sold to the issuing entity, the issuing entity will own the recovery property free and clear of all liens (except for liens created in your favor by the Wildfire Financing Law and the basic documents) and all filings and action to be made or taken by the seller (including filings with the Secretary of State of California under the Wildfire Financing Law) necessary in any jurisdiction to give the issuing entity a perfected ownership interest (subject to any lien created by the issuing entity or by the Wildfire Financing Law in your favor under the basic documents or the Wildfire Financing Law) in the recovery property will have been made or taken;

• subject to the clause below regarding assumptions used in calculating the fixed recovery charges as of the issuance date, all written information, as amended or supplemented from time to time, provided by the seller to the issuing entity with respect to the recovery property (including the expected sinking fund schedule, the financing order and the issuance advice letter relating to the recovery property) is true and correct in all material respects;

• under the laws of the State of California (including the Wildfire Financing Law) and the United States in effect on the issuance date:

• the financing order and issuance advice letter pursuant to which the rights and interests of the seller in the recovery property have been created, including the right to impose, collect and receive the fixed recovery charges and, the interest in and to the recovery property, has become final and non-appealable and is in full force and effect, and the seller has validly and irrevocably consented to the terms of the financing order;

• the recovery bonds are entitled to the protection provided in specific sections of the Wildfire Financing Law, subject to the limitations specified therein (please read “The Recovery Property and the Wildfire Financing Law” in this prospectus);

• the process by which the financing order was approved and the financing order, issuance advice letter and tariff comply with all applicable laws and regulations;

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• no other approval, authorization, consent, order or other action of, or filing with any governmental authority is required on the part of the seller in connection with the creation of the recovery property, except those that have been obtained or made;

• the issuance advice letter and the tariff have been filed in accordance with the financing order and an officer of the seller has provided the certification to the CPUC required by the issuance advice letter; and

• the State of California has pledged that it will neither limit nor alter, except as provided with respect to the true-up mechanism, the fixed recovery charges, the recovery property, the financing order, or any rights under the financing order until the recovery bonds, together with the interest on the recovery bonds and associated financing costs related to the recovery bonds, are fully paid and discharged, the State of California could not constitutionally take any action of a legislative character, including the repeal or amendment of the Wildfire Financing Law, which would substantially limit or alter the fixed recovery charges, the recovery property or other rights vested in the bondholders pursuant to the financing order, the financing order or any rights under the financing order, absent adequate provision for the protection of PG&E and bondholders, and, under the takings clauses of the California and United States Constitutions, the State of California could not repeal or amend the Wildfire Financing Law or take any other action in contravention of its pledge and agreement quoted above without paying just compensation to the bondholders, as determined by a court of competent jurisdiction, if, for a public use the law (a) constituted a permanent appropriation of a substantial property interest of the bondholders in the recovery property or denied all economically productive use of the recovery property; (b) destroyed the recovery property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the recovery property so as to unduly interfere with the reasonable expectations of the bondholders arising from their investments in the recovery bonds, however, there is no assurance that, even if a court were to award just compensation, it would be sufficient to pay the full amount of principal and interest on the recovery bonds;

• based on information available to the seller on the issuance date, the assumptions used in calculating the fixed recovery charges as of the issuance date are reasonable and are made in good faith; however, notwithstanding the foregoing, PG&E makes no representation or warranty, express or implied, that amounts actually collected arising from those fixed recovery charges will in fact be sufficient to meet the payment obligations on the related recovery bonds or that the assumptions used in calculating such fixed recovery charges will in fact be realized;

• upon the effectiveness of the financing order, the issuance advice letter and the tariff with respect to the transferred recovery property and the transfer of such recovery property to us:

• the right and interest of the seller under the financing order in and to the fixed recovery charges established by provisions of the Wildfire Financing Law and the financing order, including all rights to obtain true-up adjustments, become recovery property;

• the recovery property constitutes an existing present property right vested in us;

• the recovery property includes (i) the right, title and interest in and to the fixed recovery charges, including the right to obtain adjustments of such charges as authorized in the financing order and (ii) the right to be paid the fixed recovery charges, as well as all revenues, collections, claims, payments, moneys or proceeds of or arising from the fixed recovery charges;

• the owner of the recovery property is legally entitled to bill fixed recovery charges and collect payments in respect of the fixed recovery charges in the aggregate sufficient to pay the interest on and principal of the related recovery bonds in accordance with the indenture, to pay the fees and expenses of servicing the recovery bonds, and to replenish the capital subaccount to the required capital level until the recovery bonds are paid in full; and

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• the recovery property is not subject to any lien other than the lien created by the basic documents or pursuant to the Wildfire Financing Law;

• the seller is a corporation duly organized and in good standing under the laws of the State of California, with the requisite corporate power and authority to own its properties and conduct its business as currently owned or conducted;

• the seller has the requisite corporate power and authority to obtain the financing order and to own the rights and interests under the financing order relating to the recovery bonds, to sell and transfer those rights and interests to the issuing entity, whereupon (subject to the effectiveness of the related issuance advice letter) such rights and interests will become recovery property;

• the seller is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on the seller’s business, operations, assets, revenues or properties).

• the seller has the requisite corporate power and authority to execute and deliver the sale agreement and to carry out its terms, and the execution, delivery and performance of the sale agreement have been duly authorized by the seller by all necessary corporate action;

• the sale agreement constitutes a legal, valid and binding obligation of the seller, enforceable against it in accordance with its terms, subject to customary exceptions relating to bankruptcy, creditor’s rights and equitable principles;

• the consummation of the transactions contemplated by the sale agreement and the fulfillment of its terms do not (a) conflict with the seller’s organizational documents or any indenture or other agreement or instrument to which the seller is a party or by which it or any of its property is bound, (b) result in the creation or imposition of any lien upon the seller’s properties pursuant to the terms of any such indenture, agreement or other instrument (other than any liens that may be granted in favor of the trustee for the benefit of the bondholders or any liens created by the issuing entity pursuant to the Wildfire Financing Law and the financing order or the basic documents), (c) violate any existing law or any existing order, rule or regulation applicable to the seller and (d) is consistent with the Wildfire Financing Law and the financing order;

• no proceeding is pending and, to the seller’s knowledge, no proceeding is threatened and, to the seller’s knowledge, no investigation is pending or threatened before any governmental authority having jurisdiction over the seller or its properties involving or relating to the seller or to the issuing entity or, to the seller’s knowledge, any other person:

• asserting the invalidity of the Wildfire Financing Law, the financing order, the issuance advice letter, the sale agreement, the recovery bonds and the basic documents;

• seeking to prevent the issuance of the recovery bonds or the consummation of any of the transactions contemplated by the sale agreement or any of the other basic documents;

• seeking any determination that could reasonably be expected to materially and adversely affect the performance by the seller of its obligations under, or the validity or enforceability of, the Wildfire Financing Law, the financing order, the recovery bonds, the issuance advice letter, the sale agreement or the other basic documents; or

• seeking to adversely affect the federal income tax or state income or franchise tax classification of the recovery bonds as debt;

• except for financing statements under the UCC and other filings under the Wildfire Financing Law, no governmental approvals, authorizations, consents, orders or other actions or filings with any governmental authority are required for the seller to execute, deliver and perform its obligations under the sale agreement except those which have previously been obtained or made or are required to be made by the servicer in the future pursuant to the servicing agreement;

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• the information describing the seller under the caption “The Depositor, Seller, Initial Servicer and Sponsor” in this prospectus is true and correct in all material respects;

• there is no order by any court providing for the revocation, alteration, limitation or other impairment of the Wildfire Financing Law, the financing order, the issuance advice letter, the recovery property or the fixed recovery charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the financing order; and

• after giving effect to the sale of the recovery property under the sale agreement, PG&E:

• is solvent and expects to remain solvent;

• is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes;

• is not engaged and does not expect to engage in a business for which its remaining property represents an unreasonably small portion of its capital;

• reasonably believes that it will be able to pay its debts as they become due; and

• is able to pay its debts as they mature and does not intend to incur, or believes that it will not incur, indebtedness that it will not be able to repay at its maturity.

The seller will not make any representation or warranty, express or implied, that billed fixed recovery charges will be actually collected from consumers.

Certain of the representations and warranties that the seller makes in the sale agreement involve conclusions of law. The seller makes those representations and warranties in order to reflect the understanding of the basis on which the issuing entity is issuing the recovery bonds and to reflect the agreement that if this understanding proves to be incorrect, the seller will be obligated to indemnify the issuing entity.

The representations and warranties made by the seller will survive the execution and delivery of the sale agreement, and the issuing entity’s pledge of the recovery property to the trustee. The seller will not be in breach of any representation or warranty as a result of any change in law occurring after the issuance date including by means of any legislative enactment, constitutional amendment or voter initiative that renders any of the representations or warranties untrue.

Covenants of the Seller

In the sale agreement, the seller makes the following covenants:

• Subject to its right to assign its rights and obligations to a successor utility under the sale agreement, so long as any of the recovery bonds are outstanding, the seller will (a) keep in full force and effect its existence and remain in good standing under the laws of the jurisdiction of its organization, (b) obtain and preserve its qualifications to do business in those jurisdictions necessary to protect the validity and enforceability of the sale agreement and the other basic documents or to the extent necessary to perform its obligations under the sale agreement and the other basic documents and (c) continue to operate its distribution system to provide service to its consumers.

• Except for the conveyances under the sale agreement or any lien under the Wildfire Financing Law for the benefit of the issuing entity, the bondholders or the trustee, the seller will not sell, pledge, assign or transfer, or grant, create, incur, assume or suffer to exist any lien on, any of the recovery property, or any interest therein, and the seller will defend the right, title and interest of the issuing entity and of the trustee on behalf of the bondholders, in, to and under the recovery property against all claims of third parties claiming through or under the seller. The seller also covenants that, in its capacity as seller, it will not at any time assert any lien against, or with respect to, any of the recovery property.

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• If the seller receives any payments in respect of the fixed recovery charges or the proceeds thereof other than in its capacity as the servicer, the seller agrees to pay all those payments to the servicer, on behalf of the issuing entity, and to hold such amounts in trust for the issuing entity and the trustee prior to such payment.

• The seller shall not continue as or become a party to any trade receivables purchase and sale agreement or similar arrangement under which it sells all or any portion of its accounts receivables owing from consumers who are obligated to pay the fixed recovery charge, unless the trustee, the seller and the other parties to such additional arrangement shall have entered into a joinder to its existing intercreditor agreement in connection therewith and the terms of the documentation evidencing such new or amended trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude recovery property (including fixed recovery charges) from any receivables or other assets pledged or sold under such arrangement.

• If the seller enters into a sale agreement selling to any other affiliate recovery property or similar property, consisting of non-bypassable charges payable by consumers comparable to those sold by the seller pursuant to the sale agreement, the rating agency condition must be satisfied with respect to the recovery bonds prior to or coincident with such sale and the seller will enter into a joinder agreement to the intercreditor agreement with the issuing entity, the trustee for the recovery bonds, the issuing entity of any such additional recovery bonds or additional other recovery bonds and the trustee for such additional recovery bonds or additional other recovery bonds described in “Security for the Recovery Bonds—Intercreditor Agreement”.

• The seller will notify the issuing entity and the trustee promptly after becoming aware of any lien on any of the recovery property, other than the conveyances under the sale agreement, or any lien under the basic documents or under the Wildfire Financing Law or the UCC in favor of the trustee for the benefit of the bondholders.

• The seller agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any governmental authority applicable to it, except to the extent that failure to so comply would not materially adversely affect the issuing entity’s or the trustee’s interests in the recovery property or under the basic documents to which the seller is a party or the seller’s performance of its obligations under the basic documents to which the seller is a party.

• So long as any of the recovery bonds are outstanding, the seller will:

• treat the recovery property as the issuing entity’s property for all purposes other than for financial reporting, state or federal regulatory or tax purposes;

• treat the recovery bonds as debt of the issuing entity, other than for financial reporting, state or federal regulatory or tax purposes;

• treat the recovery bonds as indebtedness of the seller secured by the recovery bond collateral solely for the purposes of federal taxes;

• disclose in its financial statements that the issuing entity and not the seller are the owner of the recovery property and that the issuing entity’s assets are not available to pay creditors of the seller or its affiliates (other than us);

• not own or purchase any recovery bonds; and

• disclose the effects of all transactions between the issuing entity and the seller in accordance with generally accepted accounting principles.

• The seller agrees that, upon the sale by the seller of recovery property to the issuing entity pursuant to the sale agreement, to the fullest extent permitted by law, the issuing entity will have all of the rights originally held by the seller with respect to the recovery property, including the right to exercise any

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and all rights and remedies to collect any amounts payable by any consumer in respect of the transferred recovery property, notwithstanding any objection or direction to the contrary by the seller, and any payment by any consumer to the issuing entity will discharge that consumer’s obligations in respect of that recovery property to the extent of that payment, notwithstanding any objection or direction to the contrary by the seller;

• So long as any of the recovery bonds are outstanding:

• In all proceedings relating directly or indirectly to the recovery property, the seller will affirmatively certify and confirm that it has sold all of its rights and interests in and to such property (other than for financial reporting or tax purposes), and will not make any statement or reference in respect of the recovery property that is inconsistent with the issuing entity’s ownership interest (other than for financial accounting, state or regulatory or tax purposes).

• The seller will not take any action in respect of the recovery property except solely in its capacity as servicer pursuant to the servicing agreement or as otherwise contemplated by the basic documents.

• Neither the seller nor the issuing entity will file any tax return, or make any election inconsistent with the treatment of the issuing entity, for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the seller (or, if relevant, from another sole owner of the issuing entity, as the issuing entity).

• The seller will execute and file the filings required by law to fully preserve, maintain, protect and perfect the issuing entity’s ownership interest in and the trustee’s lien on the recovery property, including all filings required under the Wildfire Financing Law and the UCC relating to the transfer of the ownership of the rights and interests related to the recovery bonds under the financing order by the seller to the issuing entity and the pledge of the recovery property to the trustee. The seller will institute any action or proceeding necessary to compel performance by the CPUC, the State of California or any of their respective agents of any of their obligations or duties under the Wildfire Financing Law, the financing order or any issuance advice letter. The seller also will take those legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, in each case, as may be reasonably necessary (i) to protect the issuing entity, the bondholders and the trustee from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty of the seller in the sale agreement and (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Wildfire Financing Law, the financing order, any issuance advice letter or the rights of holders by legislative enactment or constitutional amendment that would be materially adverse to the issuing entity, the trustee or the bondholder or which would otherwise cause an impairment of the issuing entity’s rights or those of the bondholders and the trustee, and the seller will pay the costs of any such actions or proceedings.

• Even if the sale agreement or the indenture is terminated, the seller will not, prior to the date which is one year and one day after the termination of the indenture and payment in full of the recovery bonds or any other amounts owed under the indenture, petition or otherwise invoke or cause the issuing entity to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the issuing entity under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official or any substantial part of the issuing entity’s property, or ordering the winding up or liquidation of the issuing entity’s affairs.

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• So long as any of the recovery bonds are outstanding, the seller will, and will cause each of its subsidiaries to, pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the transferred recovery property; provided, that no such tax need be paid if the seller or any of its affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the seller or such affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

• The seller will not withdraw the submission of any issuance advice letter with the CPUC.

• The seller will make all reasonable efforts to keep each tariff in full force and effect at all times.

• Promptly after obtaining knowledge of any breach in any material respect of its representations and warranties in the sale agreement, the seller will notify the issuing entity, the CPUC and the rating agencies of the breach.

• The seller will use the proceeds of the sale of the recovery property in accordance with the financing order and the Wildfire Financing Law.

• Upon the issuing entity’s request, the seller will execute and deliver such further instruments and do such further acts as may be necessary to carry out the provisions and purposes of the sale agreement.

Indemnification

The seller will indemnify, defend and hold harmless the issuing entity, the trustee (for itself and for the benefit of the bondholders) and any of the issuing entity’s and the trustee’s officers, directors, employees and agents against:

• any and all amounts of principal and interest on the recovery bonds not paid when due or when scheduled to be paid in accordance with their terms;

• any other amounts payable to any person in connection with the recovery bonds or in connection with the recovery property, including but not limited to trustee’s fees and expenses, that are not paid when due or when scheduled to be paid pursuant to the applicable indenture;

• the amount of any other deposits to the collection account required to have been made in accordance with the terms of the basic documents and retained in the capital subaccount, in the excess funds subaccount or released to the issuing entity free of the lien of the applicable indenture, which are not made when so required;

• any taxes payable by bondholders resulting in a breach of a specific tax representation of the seller; and

• any reasonable costs and expenses incurred by such person that are not recoverable pursuant to the applicable indenture,

in each case to the extent resulting from the seller’s breach of any of its representations, warranties or covenants contained in the sale agreement, except to the extent of losses either resulting from the willful misconduct, bad faith or gross negligence of such indemnified persons or resulting from a breach of representation or warranty in any of the basic documents of the party seeking indemnification.

The seller’s indemnification obligations survive the resignation or removal of the trustee and the termination of the sale agreement. The seller will be liable in accordance with the sale agreement only to the extent of the obligations specifically undertaken by the seller in the sale agreement.

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Successors to the Seller

Any person (a) into which the seller may be merged, converted or consolidated and that succeeds to all or substantially all of the electric distribution business of the seller, (b) that results from the division of the seller into two or more persons and that succeeds to all or substantially all of the electric distribution business of the seller, (c) that results from any merger or consolidation to which the seller shall be a party and that succeeds to all or substantially all of the electric distribution business of the seller, (d) that succeeds to the properties and assets of the seller substantially as a whole, or succeeds to all or substantially all of the electric distribution business of the seller, or (e) that otherwise succeeds to all or substantially all of the electric distribution business of the seller, shall be the successor to the seller under the sale agreement without further act on the part of any of the parties to the sale agreement; provided, that the following conditions are met:

• immediately after giving effect to any transaction referred to in this paragraph, no representation or warranty made in the sale agreement will have been breached, and no servicer default, and no event that, after notice or lapse of time, or both, would become a servicer default will have occurred and be continuing;

• the successor must execute an agreement of assumption to perform every obligation of the seller under the sale agreement;

• officers’ certificates and opinions of counsel specified in the sale agreement will have been delivered to the issuing entity and the trustee; and

• the rating agencies will have received prior written notice of the transaction.

Amendment

The sale agreement may be amended in writing by the seller and the issuing entity, if a copy of the amendment is provided by the issuing entity to each rating agency and the rating agency condition is satisfied, with the consent of the trustee. If any such amendment would adversely affect the interest of any bondholder in any material respect, the consent of the holders of a majority of each affected tranche of recovery bonds is also required. In determining whether a majority of holders have consented, recovery bonds owned by the issuing entity, PG&E or any affiliate of the issuing entity shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any recovery bonds it actually knows to be so owned.

In addition, the sale agreement may be amended in writing by the seller and the issuing entity with ten business days’ prior written notice given to the rating agencies, but without the consent of any of the bondholders, (i) to cure any ambiguity, to correct or supplement any provisions in the sale agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in the sale agreement or of modifying in any manner the rights of the bondholders; provided, however, that such action shall not, as evidenced by an officer’s certificate delivered to the issuing entity and the trustee, adversely affect in any material respect the interests of any bondholder or (ii) to conform the provisions of the sale agreement to the description of the sale agreement in this prospectus. Promptly after the execution of any such amendment or consent, the issuing entity will furnish copies of such amendment or consent to each of the rating agencies.

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THE SERVICING AGREEMENT

The following summary describes the material terms and provisions of the servicing agreement pursuant to which the servicer is undertaking to service the recovery property. The depositor has filed the form of the servicing agreement as an exhibit to the registration statement of which this prospectus forms a part.

Servicing Procedures

The servicer will manage, service and administer, bill, collect and post all payments in respect of, the recovery property according to the terms of the servicing agreement. The servicer’s duties will include:

• calculating consumption, billing the fixed recovery charges, collecting the fixed recovery charges from consumers and posting all collections;

• responding to inquiries of consumers, the CPUC or any other governmental authority regarding the recovery property or fixed recovery charges;

• investigating and handling delinquencies (and furnishing reports with respect to such delinquencies to the issuing entity);

• processing and depositing collections and making periodic remittances;

• furnishing periodic and current reports and statements to the issuing entity, the CPUC, the rating agencies and the trustee;

• making all filings with the CPUC and taking all other actions necessary to perfect the issuing entity’s ownership interests in and the trustee’s lien on the recovery property;

• making all filings and taking such other action as may be necessary to perfect the trustee’s lien on and security interest in all collateral;

• selling, as the issuing entity’s agent, as the issuing entity’s interests may appear, defaulted or written off accounts;

• taking all necessary action in connection with true-up adjustments; and

• performing other duties specified under the financing order.

The servicer will be required to notify the issuing entity, the trustee and the rating agencies in writing if it becomes aware of any laws or commission regulations promulgated after the execution of the servicing agreement that have a material adverse effect on the servicer’s ability to perform its duties under the servicing agreement. The servicer is also authorized to execute and deliver documents and to make filings and participate in proceedings on the issuing entity’s behalf.

In addition, upon the issuing entity’s reasonable request or the reasonable request of the trustee or any rating agency, the servicer will provide to the issuing entity, the trustee or any rating agency public financial information about the servicer and any material information about the recovery property that is reasonably available, as may be reasonably necessary and permitted by law to enable the issuing entity, the trustee or any rating agency to monitor the servicer’s performance; provided, however, that any such request by the trustee shall not create any obligation for the trustee to monitor the performance of the servicer. In addition, so long as any recovery bonds are outstanding, the servicer will provide within a reasonable time after written request thereof, any information available to the servicer or reasonably obtainable by it that is necessary to calculate the fixed recovery charges. The servicer will also prepare any reports required to be filed by the issuing entity with the SEC, as further described below, and will cause to be delivered required opinions of counsel to the effect that all filings with the State of California necessary to preserve and protect the interests of the trustee in the recovery property have been made.

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Servicing Standards and Covenants

The servicing agreement will require the servicer to (i) manage, service, administer, bill, collect and calculate fixed recovery charges in accordance with the Wildfire Financing Law and post collections in respect of the recovery property with reasonable care and in material compliance with applicable requirements of law, including all applicable regulations of the CPUC and guidelines, using the same degree of care and diligence that the servicer exercises with respect to similar assets for its own account, (ii) follow customary standards, policies and procedures for the industry in California in performing its duties as servicer, (iii) use all reasonable efforts, consistent with its customary servicing procedures, to enforce, and maintain rights in respect of, the recovery property and to bill and collect the fixed recovery charges, (iv) comply with all requirements of law, including all applicable regulations and guidelines of the CPUC applicable to and binding on it relating to the recovery property, (v) file all CPUC notices described in the Wildfire Financing Law and file and maintain the effectiveness of UCC financing statements with respect to the property transferred to the issuing entity under the sale agreement and (vi) take such other action on the issuing entity’s behalf to ensure that the lien of the trustee on the collateral remains perfected and of first priority. The servicer shall follow customary and usual practices and procedures as it deems necessary or advisable in servicing the recovery property, which, in the servicer’s judgment, may include taking legal action at the issuing entity’s expense but subject to the priority of payments set forth in the indenture or in the series supplement.

Notwithstanding anything to the contrary in the servicing agreement, the duties of the servicer set forth in the servicing agreement shall be qualified and limited in their entirety by the Wildfire Financing Law, the financing order, any CPUC regulation and U.S. federal securities laws and the rules and regulations promulgated thereunder as in effect at the time such duties are to be performed.

The servicing agreement will also require the servicer to provide various reports regarding the fixed recovery charges and allocation of the fixed recovery charges among various classes of consumers and payments to the bondholders, in each case as are necessary to effect collection, allocation and remittance of payments in respect of fixed recovery charges and other collected funds as required under the basic documents.

The servicer will be responsible for instituting any action or proceeding to compel performance by the State of California or the CPUC of their respective obligations under the Wildfire Financing Law, the financing order and any true-up adjustment. The servicer will take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary to attempt to block or overturn any attempts to cause a repeal of, modification of or supplement to the Wildfire Financing Law, the financing order or the rights of holders of recovery property by legislative enactment, constitutional amendment or other means that would be adverse to bondholders. Any costs associated with such legal or administrative action will be borne by the issuing entity as an operating expense; provided, however, that the servicer will be obligated to institute and maintain such action or proceedings only if it is being reimbursed on a current basis for its costs and expenses in taking such actions in accordance with the related indenture or series supplement, and is not required to advance its own funds to satisfy these obligations.

True-Up Adjustment Submissions

The servicing agreement requires the servicer to submit routine true-up mechanism advice letters to secure annual and interim true-up adjustments to the fixed recovery charges. The servicing agreement also requires the servicer to submit advice letters for interim true-up adjustments at any time for any reason if the servicer forecasts that projected fixed recovery charge collections will be insufficient to pay principal of and interest on the recovery bonds and other related financing costs to otherwise satisfy the current or next succeeding payment period requirement or to replenish any draws upon the capital subaccount.

In addition, the financing order permits the servicer to submit a request for a non-routine true-up adjustment 90 days before the date when the proposed changes to revise the logic of the methodology used to determine the fixed recovery charges approved in the financing order would become effective. For more information on the

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true-up adjustment process, please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” in this prospectus.

Each true-up adjustment will allocate the revenue requirement among the FRC consumer classes in accordance with the methodology used to determine the fixed recovery charges approved in the financing order, including as the methodology as the same may be modified by a non-routine true-up adjustment submission described in the prior paragraphs. Please read “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Approves the Methodology used to Calculate the Fixed Recovery Charges” in this prospectus.

Remittances to Collection Account

The servicer will remit estimated fixed recovery charge collections directly to the trustee on a daily basis. The servicer will remit estimated fixed recovery charges based on PG&E’s historic consumer payment patterns using a monthly collections curve that is expressed as a percentage measured at each of six consecutive 30-day intervals and represents the ratio of accumulative daily collections to the total amount billed to a sample customer population. Fixed recovery charge collections remitted will represent the charges estimated to be received for any period based upon the daily billed amounts.

The servicer will prepare a monthly report for the trustee showing the estimated fixed recovery charge revenues by month over the life of the recovery bonds, including estimated fixed recovery charge collections based on historic consumer payment patterns. Every six months, the servicer will compare actual fixed recovery charges against the estimated fixed recovery charge revenues that have been remitted to the trustee during the intervening six month period. Any differences between estimated and actual collections will be netted against the following month’s remittance to the trustee. The trustee will have the legal right to only the amount of actual fixed recovery charge cash collections.

The servicing agreement and the financing order require that, in the event a consumer does not pay in full all amounts owed under any bill, including fixed recovery charges, any resulting shortfalls in fixed recovery charges will be allocated ratably among the fixed recovery charges, fixed recovery tax amounts and other charges.

The servicer has agreed and acknowledged that it holds all fixed recovery charge collections received by it and any other proceeds for the recovery bond collateral received by it for the benefit of the trustee and the bondholders and that all such amounts will be remitted by the servicer without any surcharge, fee, offset, charge or other deduction. The servicer has further agreed not to make any claim to reduce its obligation to remit all fixed recovery charge payments collected by it in accordance with this servicing agreement.

Servicing Compensation

The servicer will be entitled to receive an annual servicing fee in an amount equal to:

• $             per annum (0.05% of the initial aggregate principal amount of the recovery bonds) for so long as the servicer remains PG&E or an affiliate, plus out of pocket expenses; or

• if PG&E or any of its affiliates is not the servicer, an amount agreed upon by the successor servicer and the trustee, and approved by the CPUC.

The servicing fee shall be paid semi-annually, with half of the servicing fee being paid on each payment date, except for the amount of the servicing fee to be paid on the first payment date in which the servicing fee then due will be calculated based on the number of days the servicing agreement has been in effect. The trustee will pay the servicing fee on each payment date (together with any portion of the servicing fee that remains unpaid from prior payment dates) to the extent of available funds prior to the distribution of any interest on and principal of the recovery bonds.

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Servicer Representations and Warranties; Indemnification

In the servicing agreement, the servicer will represent and warrant to the issuing entity, as of the issuance date of the recovery bonds, among other things, that:

• the servicer is duly organized, validly existing and is in good standing under the laws of the state of its organization (which is California, when PG&E is the servicer), with requisite corporate or other power and authority to own its properties, to conduct its business as such properties are currently owned and such business is presently conducted by it, and to service the recovery property and hold the records related to the recovery property, and to execute, deliver and carry out the terms of the servicing agreement, and had at all relevant times, and has, the requisite power, authority and legal right to service the recovery property and to hold the recovery property records as custodian;

• the servicer is duly qualified to do business, is in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the recovery property as required under the servicing agreement) requires such qualifications, licenses or approvals (except where a failure to qualify would not be reasonably likely to have a material adverse effect on the servicer’s business, operations, assets, revenues or properties or to its servicing of the recovery property);

• the execution, delivery and performance of the terms of the servicing agreement have been duly authorized by all necessary action on the part of the servicer under its organizational or governing documents and laws;

• the servicing agreement constitutes a legal, valid and binding obligation of the servicer, enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity, regardless of whether considered in a proceeding in equity or at law (including concepts of materiality, reasonableness, good faith and fair dealing);

• the consummation of the transactions contemplated by the servicing agreement do not conflict with, result in any breach of, nor constitute a material default under the servicer’s organizational documents or any indenture or material agreement or other instrument to which the servicer is a party or by which it or any of its property is bound, result in the creation or imposition of any lien upon the servicer’s properties pursuant to the terms of any such indenture or agreement or other instrument (other than any lien that may be granted in favor of the trustee for the benefit of bondholders under the basic documents or any lien created pursuant to the Wildfire Financing Law) or violate any existing law or any existing order, rule or regulation applicable to the servicer of any governmental authority having jurisdiction over the servicer or its properties;

• each report or certificate delivered in connection with the issuance advice letter or delivered in connection with any submission made to the CPUC by the issuing entity with respect to the fixed recovery charges or true-up adjustments will be true and correct in all material respects, or, if based in part on or containing assumptions, forecasts or other predictions of future events, such assumptions, forecasts or predictions are reasonable based on historical performance (and facts known to the servicer on the date such report or certificate is delivered);

• no approval, authorization, consent, order or other action of, or filing with any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required in connection with the execution and delivery by the servicer of the servicing agreement, the performance by the servicer of the transactions contemplated by the servicing agreement or the fulfillment by the servicer of the terms of the servicing agreement, except those that have been obtained or made and those that the servicer is required to make in the future pursuant to the servicing agreement; and

• no proceeding or, to the servicer’s knowledge, investigation is pending and, to the servicer’s knowledge, no proceeding or investigation is threatened before any governmental authority having jurisdiction over the servicer or its properties involving or relating to the servicer or the issuing entity

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or, to the servicer’s knowledge, any other person, asserting the invalidity of the servicing agreement or the other basic documents, seeking to prevent issuance of the recovery bonds or the consummation of the transactions contemplated by the servicing agreement or other basic documents, seeking a determination that could reasonably be expected to materially and adversely affect the performance by the servicer of its obligations under or the validity or enforceability of, the servicing agreement, the other basic documents or the recovery bonds or seeking to adversely affect the federal income tax or state income or franchise tax classification of recovery bonds as debt.

The Servicer Will Indemnify the Issuing Entity and Other Entities in Limited Circumstances

Under the servicing agreement, the servicer will agree to indemnify the issuing entity, the trustee, for itself and on behalf of those holders, the independent manager and any of the issuing entity’s and the trustee’s respective trustees, officers, directors, employees and agents against any losses that may be imposed upon, incurred by or asserted against any of those persons as a result of:

• the servicer’s willful misconduct, bad faith or gross negligence in the performance of its duties or observance of its covenants under the applicable servicing agreement or the servicer’s reckless disregard of its obligations and duties under the applicable servicing agreement; or

• the servicer’s material breach of any of its representations and warranties that results in a servicer default under the applicable servicing agreement.

The servicer will not be liable, however, for any losses resulting from the willful misconduct, bad faith or negligence or breach of a representation or warranty in any of the basic documents of the party seeking indemnification.

Furthermore, the servicer is not responsible for any action, decision, ruling, action or delay of the CPUC, other than any delay resulting from the servicer’s failure to submit required advice letters in a timely and correct manner or other breach of its duties under the servicing agreement. The servicer also is not liable for the calculation of the fixed recovery charges and true-up adjustments, including any inaccuracy in the assumptions made in the calculation, so long as the servicer has acted in good faith and has not acted in a grossly negligent manner.

Notwithstanding the servicer’s election to assume the defense of any action, proceeding or investigation, the issuing entity shall have the right to employ separate counsel (including local counsel), and the servicer shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the defendants in any such action include both the issuing entity and the servicer and the issuing entity shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the servicer, (ii) the servicer shall not have employed counsel reasonably satisfactory to the issuing entity to represent the issuing entity within a reasonable time after notice of the institution of such action, (iii) the servicer shall authorize the issuing entity to employ separate counsel at the expense of the servicer or (iv) in the case of the trustee, such action exposes the trustee to a material risk of criminal liability or forfeiture or a servicer default has occurred and is continuing. Notwithstanding the foregoing, the servicer shall not be obligated to pay for the fees, costs and expenses of more than one separate counsel for the issuing entity other than one local counsel, if appropriate. The servicer will not, without the prior written consent of the issuing entity, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought (whether or not the issuing entity is an actual or potential party to such claim or action) unless such settlement, compromise or consent includes an unconditional release of the issuing entity from all liability arising out of such claim, action, suit or proceeding.

Evidence as to Compliance

The servicing agreement will provide that the servicer will furnish annually to the issuing entity, the trustee and the rating agencies, on or before March 31 of each year, beginning March 31, 2023 or, if earlier, on the date on which the annual report relating to the recovery bonds is required to be filed with the SEC, a report on its

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assessment of compliance with specified servicing criteria as required by Item 1122(a) of Regulation AB, during the preceding 12 months ended December 31 (or preceding period since the issuance date of the recovery bonds in the case of the first statement), together with a certificate by an officer of the servicer certifying the statements set forth therein.

The servicing agreement also provides that a firm of independent certified public accountants, at the servicer’s expense, will furnish annually to the issuing entity, the trustee and the rating agencies on or before March 31 of each year, beginning March 31, 2023 or, if earlier, on the date on which the annual report relating to the recovery bonds is required to be filed with the SEC, an annual accountant’s report, which will include any required attestation report that attests to and reports on the servicer’s assessment report described in the immediately preceding paragraph, to the effect that the accounting firm has performed agreed upon procedures in connection with the servicer’s compliance with its obligations under the servicing agreement during the preceding 12 months, identifying the results of the procedures and including any exceptions noted.

Copies of the above reports will be filed with the SEC. You may also obtain copies of the above statements and certificates by sending a written request addressed to the trustee.

The servicer will also be required to deliver to the issuing entity, the trustee and the rating agencies monthly reports setting forth certain information relating to collections of fixed recovery charges received during the preceding calendar month and, shortly before each payment date, a semi-annual report setting forth the amount of principal and interest payable to bondholders on such date, the difference between the principal outstanding on the recovery bonds and the amounts specified in the related expected sinking fund schedule after giving effect to any such payments, and the amounts on deposit in the capital subaccount and excess funds subaccount after giving effect to all transfers and payments to be made on such payment date. The servicer is required to file copies of the semi-annual payment date reports with the SEC.

In addition, the servicer is required to send copies of each submission or notice evidencing a true-up adjustment to the issuing entity, the trustee and the rating agencies. The servicer is also required to prepare and deliver certain disclosures to its consumers and to ESPs, and to provide to the rating agencies any non-confidential and non-proprietary information about the ESPs as is reasonably requested by the rating agencies.

Matters Regarding the Servicer

The servicing agreement provides that PG&E may not resign from its obligations and duties as servicer thereunder, except if (a) PG&E determines that the performance of its duties under the servicing agreement is no longer permissible under applicable law or (b) satisfaction of the following: (i) the rating agency condition shall have been satisfied and (ii) the CPUC shall have approved such resignation. No resignation by PG&E as servicer will become effective until a successor servicer has assumed PG&E’s servicing obligations and duties under the servicing agreement.

The servicing agreement further provides that neither the servicer nor any of its directors, officers, employees, and agents will be liable to the issuing entity or to the trustee, the issuing entity’s managers, you or any other person or entity, except as provided under the servicing agreement, for taking any action or for refraining from taking any action under the servicing agreement or for good faith errors in judgment. However, neither the servicer nor any person or entity will be protected against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of its duties. The servicer and any of director, officer, employee or agent of the servicer may rely in good faith on the advice of counsel or on any document of any kind, prima facie property executed and submitted by any person respecting any matters under the servicing agreement. In addition, the servicing agreement will provide that the servicer is under no obligation to appear in, prosecute, or defend any legal action, except as provided in the servicing agreement at the issuing entity’s expense.

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Any person (a) into which the servicer may be merged or consolidated and that succeeds to all or substantially all of the electric distribution business of the servicer, (b) that results from the division of the servicer into two or more entities and succeeds to all or substantially all of the electric distribution business of the servicer, (c) that may result from any merger or consolidation to which the servicer shall be a party and succeeds to all or substantially all of the electric distribution business of the servicer, or (d) that may otherwise succeed to all or substantially all of the electric distribution business of the servicer, shall be the successor to the servicer under this Agreement; provided the following conditions are met:

• the successor to the servicer must execute an agreement of assumption to perform every obligation of the servicer under the servicing agreement;

• immediately after giving effect to the transaction, no servicer default and no event that, after notice or lapse of time, or both, would become a servicer default shall have occurred and be continuing;

• the servicer has delivered to the issuing entity, the trustee and the rating agencies an officer’s certificate and an opinion of counsel stating that the transfer complies with the servicing agreement and all conditions to the transfer under the servicing agreement have been complied with; and

• the servicer has given prior written notice to the rating agencies.

So long as the conditions of any such assumptions are met, then the prior servicer will automatically be released from its obligations under the servicing agreement.

The servicing agreement permits the servicer to appoint any person to perform any or all of its obligations.

However, unless the appointed person is an affiliate of PG&E, appointment must satisfy the rating agency condition. In all cases, the servicer must remain obligated and liable under the servicing agreement.

Servicer Defaults

Servicer defaults under the servicing agreement will include (each, a servicer default):

• any failure by the servicer to remit any amount, including payments arising from the fixed recovery charges into the collection account as required under the servicing agreement, which failure continues unremedied for five business days after written notice from the issuing entity or the trustee is received by the servicer or after discovery of the failure by an officer of the servicer;

• any failure by the servicer to duly perform its obligations to make fixed recovery charge adjustment submissions in the time and manner set forth in the servicing agreement, which failure continues unremedied for a period of five days;

• any failure by the servicer or, if the servicer is PG&E or an affiliate of PG&E, by PG&E to observe or perform in any material respect any covenants or agreements in the servicing agreement or the other basic documents to which it is a party, which failure materially and adversely affects the rights of bondholders and which continues unremedied for 60 days after written notice of this failure has been given to the servicer or, if the servicer is PG&E or an affiliate of PG&E, by the issuing entity or by the trustee or after such failure is discovered by an officer of the servicer;

• any representation or warranty made by the servicer in the servicing agreement or any basic document proves to have been incorrect in a material respect when made, which has a material adverse effect on the bondholders and which material adverse effect continues unremedied for a period of 60 days after the giving of written notice to the servicer by the issuing entity or the trustee after such failure is discovered by an officer of the servicer; and

• events of bankruptcy, insolvency, receivership or liquidation of the servicer.

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Rights Upon a Servicer Default

As long as a default under a servicing agreement remains unremedied, either the trustee for the recovery bonds or the holders of a majority of the outstanding principal amount of the recovery bonds may terminate all the rights and obligations of the servicer under that servicing agreement. However, the servicer’s obligation to continue performing its functions as servicer may not be terminated until a successor servicer is appointed. After the termination, removal or resignation of the servicer, the issuing entity, with the prior written consent of the trustee, will appoint a successor servicer who will succeed to all the responsibilities, duties and liabilities of the servicer under that servicing agreement. Any successor servicer must also be approved by the CPUC.

The issuing entity, with the prior written consent of the trustee, may appoint, or petition the CPUC or a court of competent jurisdiction for the appointment of, a successor servicer, subject to satisfaction of the rating agency condition and all CPUC regulations.

In no event shall the trustee be liable for its or the issuing entity’s appointment of a successor servicer. The trustee’s expenses incurred to appoint a successor shall be at the sole expense of the issuing entity and payable from the collection account as provided in the indenture.

In addition, if the servicer defaults in any obligation to remit required amounts to the trustee, the financing order allows holders of recovery bonds and the trustees and representatives of those holders, the issuing entity or the issuing entity’s assignees, and pledgees and transferees of the recovery property for the related series of recovery bonds to petition the CPUC to order the sequestration and payment to the trustee of revenues arising from the related recovery property. If, however, the servicer is in bankruptcy, the holders of the recovery bonds and their trustees and representatives, the issuing entity, the issuing entity’s assignees and the pledgees and transferees of the recovery property, and the CPUC may be prohibited from obtaining or enforcing such an order. Furthermore, the issuing entity, the trustee, the holders of the recovery bonds, and the CPUC may be prohibited from replacing the servicer if it is in bankruptcy. Please read “Risk Factors—Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer” and “How a Bankruptcy May Affect Your Investment” in this prospectus.

Waiver of Past Defaults

Holders of a series of recovery bonds evidencing not less than a majority in principal amount of the then outstanding recovery bonds, on behalf of all holders, may direct the trustee to waive in writing any default by the servicer in the performance of its obligations under the applicable servicing agreement and its consequences, except a default in making any required remittances to the trustee for deposit into the collection account for that series under the applicable servicing agreement.

Successor Servicer

Under the servicing agreement, if for any reason a third party assumes the role of the servicer under the servicing agreements, the servicer must cooperate with the issuing entity and with the trustee and the successor servicer in terminating the servicer’s rights and responsibilities under the servicing agreements, including the transfer to the successor servicer of all cash amounts then held by the servicer for remittance or subsequently acquired.

Furthermore, even if the issuing entity appoints a successor servicer, a successor servicer may encounter difficulties in collecting the fixed recovery charges and determining appropriate true-up adjustments to the fixed recover charges. Any successor servicer may have less experience than PG&E and less capable systems than those that PG&E uses. The appointment of any successor servicer must also be approved by the CPUC. Please read “Risk Factors—Servicing Forecasting Risks—Your investment in the recovery bonds depends on PG&E or its successor or assignee, acting as servicer of the recovery property” and “Risk Factors—Servicing Forecasting Risks—It might be difficult for successor servicers to collect the fixed recovery charges from PG&E’s consumers” in this prospectus.

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Enhanced Oversight and Enforcement Process

The EOEP was adopted by the CPUC in its decision approving PG&E Corporation’s and the servicer’s Plan and imposed additional reporting requirements on the servicer. The EOEP is a six-step process with potentially escalating CPUC oversight and enforcement measures based on specific “triggering events” identified for each of the six steps. If the servicer is placed into the EOEP, it will be subject to additional reporting requirements and additional monitoring and oversight by the CPUC. Higher steps of the process (steps 3 through 6) also contemplate additional enforcement mechanisms, including appointment of an independent third-party monitor, appointment of a chief restructuring officer, pursuit of the receivership remedy, and review of the servicer’s Certificate of Public Convenience and Necessity (i.e., its license to operate as a utility). The process contains provisions for the servicer to cure and exit the process if it can satisfy specific criteria. The EOEP states that the servicer should presumptively move through the steps of the process sequentially, but the CPUC may place the servicer into the appropriate step of the process upon occurrence of a specified triggering event. On April 15, 2021, the CPUC placed the servicer into step 1 of the EOEP for failing to sufficiently prioritize clearing vegetation on its highest risk power lines as part of the 2020 wildfire mitigation plan. There can be no assurance regarding if or when the servicer will exit the EOEP, or whether the CPUC will initiate another step 1 proceeding or whether the CPUC will seek to move the servicer into a higher step of the process. Please read “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—PG&E is subject to the Enhanced Oversight and Enforcement Process and may be subject to additional fines, penalties, or other regulatory actions in the future which could impact the servicer’s ability to service the recovery property” in this prospectus.

Amendment

The servicing agreement may be amended by the servicer and the issuing entity with prior written notice given to the rating agencies and the prior written consent of the trustee, but without the consent of any of the holders of recovery bonds, to cure any ambiguity, to correct or supplement any provisions in the servicing agreement, to add recovery property subject to the servicing agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in the servicing agreement or of modifying in any manner the rights of the holders of recovery bonds; provided, however, that such action shall not adversely affect in any material respect the interests of any holder of recovery bonds. For purposes of an amendment described in this paragraph, any amendment that increases the servicing fee payable to a successor servicer shall not be treated as adversely affecting the interests of any bondholder so long as the servicing fee is within the range approved in the financing order.

The servicing agreement may also be amended by the servicer and the issuing entity with prior written notice given to the rating agencies, the trustee and holders of recovery bonds evidencing not less than a majority of the outstanding amount of the recovery bonds, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the servicing agreement or of modifying in any manner the rights of the holders of recovery bonds; provided, however, that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of collections of fixed recovery charges or (b) reduce the percentage of the outstanding amount of the recovery bonds, the holders of which are required to consent to any such amendment, without the consent of the holders of all the outstanding recovery bonds.

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HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT

Challenge to True Sale Treatment

PG&E will represent and warrant that the transfer of the recovery property in accordance with the sale agreement constitutes a true and valid sale and assignment of that recovery property by PG&E to the issuing entity. It will be a condition of closing for the sale of the recovery property pursuant to the sale agreement that PG&E will take the appropriate actions under the Wildfire Financing Law to perfect this sale. The Wildfire Financing Law provides that a transfer of recovery property by an electrical corporation to an affiliate or a financing entity (as defined in the Wildfire Financing Law) which the parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in a financing order, shall be treated as an absolute transfer of all the transferor’s right, title and interest, as in a “true sale”, and not as a pledge or other financing, of the relevant recovery property, other than for federal and state income and franchise tax purposes. The issuing entity and PG&E will treat such a transaction as a sale under applicable law. However, the issuing entity will expect that recovery bonds will be reflected as debt on PG&E’s consolidated financial statements. In addition, the issuing entity will anticipate that the recovery bonds will be treated as debt of PG&E for federal income tax purposes. Please read “Material U.S. Federal Income Tax Consequences” in this prospectus. In the event of a bankruptcy of a party to a sale agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the recovery property to the issuing entity pursuant to that sale agreement was a financing transaction and not a true sale under applicable creditors’ rights principles, there can be no assurance that a court would not adopt this position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of PG&E and the attendant possible uncertainty surrounding the treatment of the transaction could result in delays in payments on the recovery bonds.

In that regard, the issuing entity will note that the bankruptcy court in In re LTV Steel Company, Inc., et al., 274 B.R. 278 (Bankr. N. D. Oh. 2001) issued an interim order that observed that a debtor, LTV Steel Company, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable may have “at least some equitable interest in the inventory and receivables, and that this interest is property of the Debtor’s estate sufficient to support the entry of” an interim order permitting the debtor to use proceeds of the property sold in the securitization. 274 B.R. at 285. The court based its decision in large part on its view of the equities of the case.

LTV and the securitization investors subsequently settled their dispute over the terms of the interim order and the bankruptcy court entered a final order in which the parties admitted and the court found that the pre-petition transactions constituted “true sales.” The court did not otherwise overrule its earlier ruling. The LTV memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where the assets sold are integral to the ongoing operation of the debtor’s business.

Even if creditors did not challenge the sale of recovery property as a true sale, a bankruptcy filing by PG&E could trigger a bankruptcy filing by the issuing entity with similar negative consequences for bondholders. In a recent bankruptcy case, In re General Growth Properties, Inc., 406 B.R. 171, (Bankr. S.D.N.Y. 2009), General Growth Properties, Inc. filed for bankruptcy together with many of its direct and indirect subsidiaries, including many subsidiaries that were organized as special purpose vehicles. The bankruptcy court upheld the validity of the filings of these special purpose subsidiaries and allowed the subsidiaries, over the objections of their creditors, to use the lenders’ cash collateral to make loans to the parent for general corporate purposes. The creditors received adequate protection in the form of current interest payments and replacement liens to mitigate any diminution in value resulting from the use of the cash collateral, but the opinion serves as a reminder that bankruptcy courts may subordinate legal rights of creditors to the interests of helping debtors reorganize.

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The issuing entity and PG&E will have attempted to mitigate the impact of a possible recharacterization of the sale of recovery property from PG&E to the issuing entity as a financing transaction under applicable creditors’ rights principles. The sale agreement will provide that if the transfer of the applicable recovery property is thereafter recharacterized by a court as a financing transaction and not a true sale, PG&E will be deemed to have granted to the issuing entity on behalf of the issuing entity and the trustee a first priority security interest in all of PG&E’s right, title and interest in and to the recovery property and all proceeds thereof. In addition, the sale agreement will require the filing of a financing statement naming PG&E as the debtor and the issuing entity as the secured party and identifying the recovery property and the proceeds thereof as collateral in accordance with the Wildfire Financing Law. As a result of this filing, the issuing entity would be a secured creditor of PG&E and entitled to recover against the collateral or its value. This does not, however, eliminate the risk of payment delays or reductions and other adverse effects caused by a PG&E bankruptcy.

The Wildfire Financing Law provides that the creation, granting, perfection and enforcement of liens and security interests in recovery property are governed by Wildfire Financing Law and not by the California UCC. Under the Wildfire Financing Law, a valid and enforceable lien and security interest in recovery property arises when all of the following have taken place: the CPUC has issued a financing order authorizing the fixed recovery charges included in the recovery property; value has been given by the pledgees of the recovery property and the pledgor has signed a security agreement covering the recovery property. Upon perfection through the filing of a financing statement with the Secretary of State of California pursuant to rules established by the Secretary of State of California in accordance with the California UCC, the security interest shall be a continuously perfected lien and security interest in the recovery property, with priority in the order of filing and taking precedence over any subsequent judicial or other lien creditor. None of this, however, eliminates the risk of payment delays and other adverse effects caused by a PG&E bankruptcy.

If for any reason, a financing statement is not filed under the Wildfire Financing Law or the issuing entity fails to otherwise perfect the issuing entity’s interest in the recovery property sold pursuant to the sale agreement, and the transfer is thereafter deemed not to constitute a true sale, the issuing entity would be an unsecured creditor of PG&E. Notwithstanding any failure on the issuing entity’s part to perfect the issuing entity’s interest in the recovery property, under the Wildfire Financing Law and the financing order, a statutory lien on the recovery property and the proceeds thereof arises by operation of law automatically without any action on the part of PG&E, the issuing entity or any other person. This statutory lien secures all obligations, then existing or thereafter arising, to the holders and the trustee of the holders of the recovery bonds issued pursuant to the financing order. Under the Wildfire Financing Law, this statutory lien is valid, perfected and enforceable against the owner of the recovery property and all third parties upon the effectiveness of the financing order without any further public notice (although protective filings (including the filing by the issuing entity of financing statements as described above) is permitted under the Wildfire Financing Law). If PG&E were to become a debtor in a bankruptcy case and a bankruptcy court determined that the issuing entity was an unsecured creditor, there can be no assurance that the court would be made aware of the statutory lien described above or, if the court was aware of the statutory lien arising under the Wildfire Financing Law and the financing order, that the court would determine that trustee and the holders of the recovery bonds have a first priority statutory lien or are secured creditors of PG&E.

Consolidation of the Issuing Entity and PG&E

If PG&E were to become a debtor in a bankruptcy case, a party in interest might attempt to substantively consolidate the assets and liabilities of PG&E and the issuing entity. The issuing entity and PG&E will have taken steps to attempt to minimize this risk. Please read “PG&E Wildfire Recovery Funding LLC, The Issuing Entity” in this prospectus. However, no assurance can be given that if PG&E were to become a debtor in a bankruptcy case, a court would not order that the issuing entity’s assets and liabilities be substantively consolidated with the assets and liabilities of PG&E. Substantive consolidation would result in payment of the claims of the beneficial owners of the recovery bonds to be subject to substantial delay and to adjustment in timing and amount under a plan of reorganization in the bankruptcy case.

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Status of Recovery Property as Current Property

PG&E will represent in the sale agreement, and the Wildfire Financing Law provides, that the recovery property sold pursuant to such sale agreement constitutes a current property right on the date that the recovery property is first transferred or pledged in connection with the issuance of recovery bonds. Nevertheless, no assurance can be given that, in the event of a bankruptcy of PG&E, a court would not rule that the applicable recovery property comes into existence only as retail electric consumers use electricity.

If a court were to accept the argument that the applicable recovery property comes into existence only as retail electric consumers use electricity, no assurance can be given that a security interest in favor of the bondholders would attach to the fixed recovery charges in respect of electricity consumed after the commencement of the bankruptcy case or that the recovery property has been sold to the issuing entity. If it were determined that the recovery property had not been sold to the issuing entity, and the security interest in favor of the bondholders did not attach to the applicable fixed recovery charges in respect of electricity consumed after the commencement of the bankruptcy case, then the issuing entity would have an unsecured claim against PG&E. In connection with any such court determination, there would be delays and/or reductions in payments on the recovery bonds. Whether or not a court determined that recovery property had been sold to the issuing entity pursuant to a sale agreement, no assurances can be given that a court would not rule that any fixed recovery charges relating to electricity consumed after the commencement of the bankruptcy could not be transferred to the issuing entity or the trustee.

In addition, in the event of a bankruptcy of PG&E, a party in interest in the bankruptcy could assert that the issuing entity should pay, or that the issuing entity should be charged for, a portion of PG&E’s costs associated with the transmission or distribution of the electricity, consumption of which gave rise to the fixed recovery charge receipts used to make payments on the recovery bonds.

Regardless of whether PG&E is the debtor in a bankruptcy case, if a court were to accept the argument that recovery property sold pursuant to the sale agreement comes into existence only as consumers use electricity, a tax or government lien or other nonconsensual lien on property of PG&E arising before that recovery property came into existence could have priority over the issuing entity’s interest in that recovery property. Adjustments to the fixed recovery charges may be available to mitigate this exposure, although there may be delays in implementing these adjustments.

Estimation of Claims; Challenges to Indemnity Claims

If PG&E were to become a debtor in a bankruptcy case, to the extent the issuing entity does not have secured claims as discussed above, claims, including indemnity claims, by the issuing entity or the trustee against PG&E as seller under the sale agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that the issuing entity or the trustee have against PG&E. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, the issuing entity would be left with a claim for actual damages against PG&E based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court.

No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving PG&E.

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Enforcement of Rights by the Trustee

Upon an event of default under the indenture, the Wildfire Financing Law permits the trustee to enforce the security interest in the recovery property sold pursuant to the sale agreement in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the CPUC or a court of competent jurisdiction to order the sequestration and payment to holders of recovery bonds of all revenues arising from the applicable fixed recovery charges. There can be no assurance, however, that the CPUC or a district court judge would issue this order after a seller bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee may under the indenture seek an order from the bankruptcy court lifting the automatic stay with respect to this action by the CPUC or a district court judge and an order requiring an accounting and segregation of the revenues arising from the recovery property sold pursuant to the sale agreement. There can be no assurance that a court would grant either order.

Bankruptcy of the Servicer

The servicer is entitled to commingle the fixed recovery charges that it receives with its own funds until each date on which the servicer is required to remit funds to the trustee as specified in the servicing agreement. The Wildfire Financing Law provides that the relative priority of a lien created under the Wildfire Financing Law is not defeated or adversely affected by the commingling of fixed recovery charges arising with respect to the recovery property with funds of the electric utility. In the event of a bankruptcy of the servicer, a party in interest in the bankruptcy might assert, and a court might rule, that the fixed recovery charges commingled by the servicer with its own funds and held by the servicer, prior to and as of the date of bankruptcy were property of the servicer as of that date, and are therefore property of the servicer’s bankruptcy estate, rather than the issuing entity’s property. If the court so rules, then the court would likely rule that the trustee has only a general unsecured claim against the servicer for the amount of commingled fixed recovery charges held as of that date and could not recover the commingled fixed recovery charges held as of the date of the bankruptcy.

However, if the court were to rule on the ownership of the commingled fixed recovery charges, the automatic stay arising upon the bankruptcy of the servicer could delay the trustee from receiving the commingled fixed recovery charges held by the servicer as of the date of the bankruptcy until the court grants relief from the stay. A court ruling on any request for relief from the stay could be delayed pending the court’s resolution of whether the commingled fixed recovery charges are the issuing entity’s property or are property of the servicer, including resolution of any tracing of proceeds issues.

The servicing agreement will provide that the trustee, as the issuing entity’s assignee, together with the other persons specified therein, may vote to appoint a successor servicer that satisfies the rating agency condition. The servicing agreement will also provide that the trustee, together with the other persons specified therein, may petition the CPUC or a court of competent jurisdiction to appoint a successor servicer that meets this criterion. However, the automatic stay in effect during a servicer bankruptcy might delay or prevent a successor servicer’s replacement of the servicer. Even if a successor servicer may be appointed and may replace the servicer, a successor servicer may be difficult to obtain and may not be capable of performing all of the duties that PG&E as servicer was capable of performing. Furthermore, should the servicer enter into bankruptcy, it may be permitted to stop acting as servicer.

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USE OF PROCEEDS

The net proceeds of this offering are estimated to be approximately $            , after deducting underwriting discounts and commissions and upfront financing costs. Proceeds will be used to pay expenses of issuance and to purchase the recovery property from PG&E and to pay financing costs relating to the recovery bonds. In accordance with the financing order, PG&E will use the ultimate proceeds it receives from the sale of the recovery property to reimburse itself for previously incurred recovery costs, including the retirement of a portion of the $6.0 billion of related “Temporary Debt” currently outstanding (described below).

The “Temporary Debt” consists of (1) $2,500,000,000 aggregate principal amount of PG&E’s 1.75% First Mortgage Bonds due 2022 (the “1.75% FMBs”), (2) $500,000,000 aggregate principal amount of PG&E’s Floating Rate First Mortgage Bonds due 2022 (the “Floating Rate FMBs”), (3) $1,500,000,000 aggregate principal amount of PG&E’s 1.367% First Mortgage Bonds due 2023 (the “1.367% FMBs”), (4) $1,000,000,000 aggregate principal amount of PG&E’s 3.25% First Mortgage Bonds due 2024 (the “3.25% FMBs”), and (5) the loans outstanding under the Utility Term Loan Credit Agreement.

PG&E will use the ultimate proceeds it receives from the sale of the recovery property for (1) the proposed redemption of all or a portion of the 1.75% FMBs and (2) the proposed redemption of all or a portion of the Floating Rate FMBs. This prospectus does not constitute a notice of redemption with respect to 1.75% FMBs or the Floating Rate FMBs.

At April 18, 2022, the 1.75% FMBs had an interest rate of 1.75% per annum and the Floating Rate FMBs had an interest rate of 2.36% per annum.

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PLAN OF DISTRIBUTION

Subject to the terms and conditions in the underwriting agreement among the issuing entity, PG&E and the underwriters, for whom Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as representatives, the issuing entity has agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the recovery bonds listed opposite each underwriter’s name below:

Underwriter	Tranche A-1		Tranche A-2		Tranche A-3		Tranche A-4		Tranche A-5
Citigroup Global Markets Inc.	$		$		$		$		$
Goldman Sachs & Co. LLC
J.P. Morgan Securities LLC
Total	$	450,000,000	$	450,000,000	$	300,000,000	$	1,050,000,000	$	750,000,000

Under the underwriting agreement, the underwriters will take and pay for all of the recovery bonds the issuing entity will offer, if any is taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

The Underwriters’ Sales Price for the Recovery Bonds

The recovery bonds sold by the underwriters to the public will be initially offered at the prices to the public set forth on the cover of this prospectus. The underwriters propose initially to offer the recovery bonds to dealers at such prices, less a selling concession not to exceed the percentage listed below for each tranche. The underwriters may allow, and dealers may re-allow, a discount not to exceed the percentage listed below for each tranche.

	Selling Concession		Reallowance Discount
Tranche A-1		%		%
Tranche A-2		%		%
Tranche A-3		%		%
Tranche A-4		%		%
Tranche A-5		%		%

After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

No Assurance as to Resale Price or Resale Liquidity for the Recovery Bonds

The recovery bonds are a new issue of securities with no established trading market. They will not be listed on any securities exchange. The underwriters will have advised the issuing entity that they intend to make a market in the recovery bonds, but they are not obligated to do so and may discontinue market making at any time without notice. The issuing entity will not be able to assure you that a liquid trading market will develop for the recovery bonds.

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Various Types of Underwriter Transactions that May Affect the Price of the Recovery Bonds

The underwriters may engage in overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the recovery bonds in accordance with Regulation M under the Exchange Act. Overallotment transactions involve syndicate sales in excess of the offering size, which create a syndicate short position. Stabilizing transactions are bids to purchase the recovery bonds, which are permitted, so long as the stabilizing bids do not exceed a specific maximum price. Syndicate covering transactions involve purchases of the recovery bonds in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the recovery bonds originally sold by the syndicate member are purchased in a syndicate covering transaction. These overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the recovery bonds to be higher than they would otherwise be. Neither the issuing entity, PG&E, the trustee, the issuing entity’s managers nor any of the underwriters will represent that the underwriters will engage in any of these transactions or that these transactions, if commenced, will not be discontinued without notice at any time.

Certain of the underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and general financing and banking services to PG&E and its affiliates for which they have in the past received, and in the future may receive, customary fees. In addition, each underwriter may from time to time take positions in the recovery bonds.

The depositor estimates that the issuing entity’s share of the total expenses of the offering will be $            .

The issuing entity and PG&E will have agreed to indemnify the underwriters against some liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the recovery bonds, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters, including the validity of the recovery bonds and other conditions contained in the underwriting agreement, such as receipt of ratings confirmations, officers’ certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject offers in whole or in part.

The issuing entity will expect to deliver the recovery bonds against payment for the recovery bonds on or about the date specified in the last paragraph of the cover page of this prospectus, which will be the fifth business day following the date of pricing of the recovery bonds. Since trades in the secondary market generally settle in two business days, purchasers who wish to trade recovery bonds on the date of pricing or the succeeding two business days will be required, by virtue of the fact that the recovery bonds initially will settle in T+5, to specify alternative settlement arrangements to prevent a failed settlement.

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AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The issuing entity is a wholly-owned subsidiary of PG&E. PG&E is a wholly-owned operating subsidiary of PG&E Corporation. Each of the sponsor, the initial servicer and the depositor may maintain other banking relationships in the ordinary course with The Bank of New York Mellon Trust Company, National Association.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

General

The following is a general discussion of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the recovery bonds. Except as specifically provided below with respect to Non-U.S. Holders (as defined below), this discussion does not address the tax consequences to persons other than initial purchasers who are U.S. Holders (as defined below) that hold their recovery bonds as capital assets within the meaning of Section 1221 of the Internal Revenue Code, and it does not address all of the tax consequences relevant to investors that are subject to special treatment under the U.S. federal income tax laws (such as financial institutions, life insurance companies, retirement plans, regulated investment companies, persons who hold recovery bonds as part of a “straddle,” a “hedge” or a “conversion transaction,” persons that have a “functional currency” other than the U.S. dollar, investors in pass-through entities and tax-exempt organizations). This summary also does not address the consequences to holders of the recovery bonds under state, local or foreign tax laws. However, by acquiring a recovery bond, a bondholder agrees to treat the recovery bond as a debt of PG&E to the extent consistent with applicable state, local and other tax law unless otherwise required by appropriate taxing authorities.

This summary is based on current provisions of the Internal Revenue Code, the Treasury Regulations promulgated and proposed thereunder, judicial decisions and published administrative rulings and pronouncements of the IRS and interpretations thereof. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion.

U.S. Holder and Non-U.S. Holder Defined

A “U.S. Holder” means a beneficial owner of a recovery bond that, for U.S. federal income tax purposes, is (i) a citizen or individual resident of the U.S., (ii) a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (iv) a trust if (A) a court in the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) it has a valid election in place to be treated as a U.S. person. A “Non-U.S. Holder” means a beneficial owner of a recovery bond that is not a U.S. Holder but does not include (i) an entity or arrangement treated as a partnership for U.S. federal income tax purposes, (ii) a former citizen of the U.S. or (iii) a former resident of the U.S.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes is a holder of a recovery bond, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences applicable to them. Similarly, former citizens and former residents of the U.S. are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences that may be applicable to them.

ALL PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF RECOVERY BONDS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER LAWS.

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Taxation of the Issuing Entity and Characterization of the Recovery Bonds

Based on Revenue Procedure 2005-62, 2005-2 CB 507, it is the opinion of Hunton, as tax counsel, that for U.S. federal income tax purposes, (1) the issuance of the recovery bonds will be a “qualifying securitization” within the meaning of Revenue Procedure 2005-62, (2) the issuing entity will not be treated as a taxable entity separate and apart from PG&E, (3) the recovery bonds will be treated as debt of PG&E and (4) PG&E will not be treated as recognizing gross income upon the issuance of the recovery bonds. By acquiring a recovery bond, a beneficial owner agrees to treat the recovery bond as debt of PG&E for U.S. federal income tax purposes. This opinion is based on certain representations made by the issuing entity and PG&E, on the application of current law to the facts as established by the indenture and other relevant documents and assumes compliance with the indenture and such other documents as in effect on the date of issuance of the recovery bonds.

Tax Consequences to U.S. Holders

Interest

Interest income on the recovery bonds, payable at a fixed rate, will be includible in income by a U.S. Holder when it is received, in the case of a U.S. Holder using the cash receipts and disbursements method of tax accounting, or as it accrues, in the case of a U.S. Holder using the accrual method of tax accounting.

Original Issue Discount

One or more classes of recovery bonds may be issued with original issue discount (“OID”). Notwithstanding a U.S. Holder’s usual method of tax accounting, any OID on a class of recovery bond will be includible in the U.S. Holder’s income when it accrues in accordance with the constant yield method, which takes into account the compounding of interest, in advance of receipt of the cash attributable to such income. In general, a class of recovery bond will be treated as issued with OID if the “stated redemption price at maturity” of that class of recovery bond (ordinarily, the initial principal amount of that class of recovery bonds) exceeds the “issue price” of that class of recovery bond (ordinarily, the price at which a substantial amount of that class of recovery bond is sold to the public) by more than a statutorily defined “de minimis” amount.

Sale or Retirement of Recovery Bonds

On a sale, exchange or retirement of a recovery bond, a U.S. Holder will have taxable gain or loss equal to the difference between the amount received by the U.S. Holder and the U.S. Holder’s tax basis in the recovery bond. A U.S. Holder’s tax basis in a recovery bond is the U.S. Holder’s cost, subject to adjustments such as increases in basis for any OID previously included in income and reductions in basis for principal payments received previously. Gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if the recovery bond was held for more than one year at the time of disposition. If a U.S. Holder sells the recovery bond between interest payment dates, a portion of the amount received will reflect interest that has accrued on the recovery bond but that has not yet been paid by the sale date. To the extent that amount has not already been included in the U.S. Holder’s income, it will be treated as ordinary interest income and not as capital gain.

3.8% Tax on “Net Investment Income”

Certain non-corporate U.S. holders will be subject to an additional 3.8% tax on all or a portion of their “net investment income,” which may include the interest payments and any gain realized with respect to the recovery bonds, to the extent of their net investment income that, when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), or $125,000 for a married individual filing a separate return. The 3.8% tax is determined in a manner different from the regular income tax.

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Tax Consequences to Non-U.S. Holders

Withholding Tax on Interest

Payments of interest income on the recovery bonds received by a Non-U.S. Holder that does not hold its recovery bonds in connection with the conduct of a trade or business in the U.S. will generally not be subject to U.S. federal withholding tax, provided that the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of PG&E Corporation entitled to vote, is not a controlled foreign corporation for U.S. federal income tax purposes directly or indirectly related to PG&E Corporation within the meaning of Section 881(c)(3)(C) of the Internal Revenue Code, is not a bank whose receipt of interest on the recovery bonds is described in Section 881(c)(3)(A) of the Internal Revenue Code, is not an individual who ceased being a U.S. citizen or long-term resident for tax avoidance purposes, and the withholding agent receives:

• from a Non-U.S. Holder appropriate documentation to treat the payment as made to a foreign beneficial owner under Treasury Regulations issued under Section 1441 of the Internal Revenue Code;

• a withholding certificate from a person claiming to be a foreign partnership and the foreign partnership has received appropriate documentation to treat the payment as made to a foreign beneficial owner in accordance with these Treasury Regulations;

• a withholding certificate from a person representing to be a “intermediary” that has assumed primary withholding responsibility under these Treasury Regulations and the intermediary has received appropriate documentation from a foreign beneficial owner in accordance with its agreement with the IRS; or

• a statement, under penalties of perjury from an authorized representative of a financial institution, stating that the financial institution has received from the beneficial owner a withholding certificate described in these Treasury Regulations or that it has received a similar statement from another financial institution acting on behalf of the foreign beneficial owner and a copy of such withholding certificate.

In general, it will not be necessary for a Non-U.S. Holder to obtain or furnish a U.S. taxpayer identification number to PG&E or its paying agent in order to claim the foregoing exemption from U.S. withholding tax on payments of interest. Interest paid to a Non-U.S. Holder will be subject to a U.S. withholding tax of 30% upon the actual payment of interest income, except as described above and except where an applicable income tax treaty provides for the reduction or elimination of the withholding tax and the Non-U.S. Holder provides a withholding certificate properly establishing such reduction or elimination. A Non-U.S. Holder generally will be taxable in the same manner as a U.S. corporation or resident with respect to interest income if the income is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the U.S. (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.). Effectively connected income received by a Non-U.S. Holder that is a corporation may in some circumstances be subject to an additional “branch profits tax” at a 30% rate, or if applicable, a lower rate provided by an income tax treaty. To avoid having the 30% withholding tax imposed on effectively connected interest income, the Non-U.S. Holder must provide a withholding certificate on which the Non-U.S. Holder certifies, among other facts, that payments on the recovery bonds are effectively connected with the conduct of a trade or business in the U.S.

Capital Gains Tax Issues

Subject to the discussion of backup withholding below, a Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on gain realized on the sale or exchange of recovery bonds, unless:

• the Non-U.S. Holder is an individual who is present in the U.S. for 183 days or more during the taxable year and this gain is from U.S. sources; or

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• the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the U.S. (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the U.S.).

FATCA

Under the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax is generally imposed on certain payments, including payments of U.S.-source interest made to “foreign financial institutions” and certain other foreign financial entities if those foreign entities fail to comply with the requirements of FATCA. The withholding agent will be required to withhold amounts under FATCA on payments made to Non-U.S. Holders that are subject to the FATCA requirements but fail to provide the withholding agent with proof that they have complied with such requirements.

Backup Withholding

Backup withholding of U.S. federal income tax may apply to payments made in respect of the recovery bonds to registered owners who are not “exempt recipients” and who fail to provide certain identifying information (such as the registered owner’s taxpayer identification number) in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Payments made in respect of the recovery bonds to a U.S. Holder must be reported to the IRS, unless the U.S. Holder is an exempt recipient or establishes an exemption. A U.S. Holder can obtain a complete exemption from the backup withholding tax by providing a properly completed Form W-9 (Request for Taxpayer Identification Number and Certification). Compliance with the identification procedures described above under “—Tax Consequences to Non-U.S. Holders—Withholding Tax on Interest” in this prospectus would establish an exemption from backup withholding for those Non-U.S. Holders who are not exempt recipients.

In addition, backup withholding of U.S. federal income tax may apply upon the sale of a recovery bond to (or through) a broker, unless either (1) the broker determines that the seller is an exempt recipient or (2) the seller provides, in the required manner, certain identifying information and, in the case of a Non-U.S. Holder, certifies that the seller is a Non-U.S. Holder (and certain other conditions are met). The sale may also be reported by the broker to the IRS, unless either (a) the broker determines that the seller is an exempt recipient or (b) the seller certifies its non-U.S. status (and certain other conditions are met). Certification of the seller’s non-U.S. status would be made normally on an IRS Form W-8BEN signed under penalty of perjury, although in certain cases it may be possible to submit other documentary evidence. A sale of a recovery bond to (or through) a non-U.S. office of a broker generally will not be subject to information reporting or backup withholding unless the broker is a U.S. person or has certain connections to the U.S.

Any amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or a credit against such beneficial owner’s U.S. federal income tax provided the required information is timely furnished to the IRS.

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STATE AND OTHER TAX CONSEQUENCES

In addition to the federal income tax consequences described in “Material U.S. Federal Income Tax Consequences” in this prospectus, potential investors should consider the state and local tax consequences of the acquisition, ownership, and disposition of the energy recovery bonds offered by this prospectus. State tax law may differ substantially from the corresponding federal tax law, and the discussion above does not purport to describe any aspect of the tax laws of any state or other jurisdiction. Therefore, prospective investors should consult their tax advisors about the various tax consequences of investments in the recovery bonds offered by this prospectus.

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ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the acquisition, holding and disposition of the recovery bonds by, on behalf of, or using assets of, employee benefit plans and other arrangements that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), and Section 4975 of the Internal Revenue Code. For purposes of this discussion, “plans” include (1) an “employee benefit plan” as defined in Section 3(3) of ERISA that subject to Title I of ERISA, including, but not limited to, a profit sharing plan or a pension plan, (2) a “plan” as defined in Section 4975(e)(1) of the Internal Revenue Code that is subject to Section 4975 of the Internal Revenue Code, including, but not limited to, an individual retirement account and annuity or a Keogh plan, and (3) an entity that is deemed to hold assets of any of the foregoing by virtue of such employee benefit plan’s or plan’s investment in the entity, including, but not limited to, a collective investment fund or an insurance company general or separate account.

General Fiduciary Matters

ERISA and the Internal Revenue Code impose certain duties on persons who are fiduciaries with respect to a plan. A fiduciary is any person who in connection with the assets of the plan:

• has discretionary authority or control over the management or disposition of such assets, or

• provides investment advice for a fee with respect to such assets.

ERISA imposes certain general fiduciary requirements on fiduciaries, including, but not limited to:

• investment prudence and diversification, and

• the investment of the assets of the plan in accordance with the documents governing the plan.

In considering an investment in the recovery bonds, the fiduciary of a plan should determine whether the investment is in accordance with the documents and instruments governing the plan and the applicable provisions of ERISA or the Internal Revenue Code relating to the fiduciary’s duties to the plan, including, but not limited to, the duties of investment prudence and diversification, and delegation of control under ERISA, and the prohibited transaction provisions of ERISA and the Internal Revenue Code.

Prohibited Transaction Issues

Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit a broad range of transactions involving the assets of a plan and persons who have certain specified relationships to the plan, referred to as “parties in interest,” as defined under ERISA or “disinterested persons” as defined under Section 4975 of the Internal Revenue Code unless a statutory or administrative exemption is available. The types of transactions that are prohibited include but are not limited to:

• sales, exchanges or leases of property;

• loans or other extensions of credit; and

• the furnishing of goods or services.

Certain persons that participate in a prohibited transaction may be subject to an excise tax under Section 4975 of the Internal Revenue Code or a penalty imposed under Section 501(i) of ERISA, unless a statutory or administrative exemption is available. In addition, the persons involved in the prohibited transaction may have to cancel or unwind the transaction and/or may have to pay an amount to the plan for any losses realized by the plan or profits realized by these persons. In addition, individual retirement accounts involved in the prohibited transaction may be impacted which would result in adverse tax consequences to the owner of the account.

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Plan Asset Issues

A fiduciary’s investment of the assets of a plan in the recovery bonds may cause the issuing entity’s assets to be deemed assets of the plan. United States Department of Labor has issued regulations at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA (collectively, the “plan asset regulations”) concerning the definition of what constitutes the assets of a plan for purposes of the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA and the prohibited transaction provisions of Section 4975 of the Internal Revenue Code. Under the plan asset regulations, generally when a plan acquires an “equity interest” in an entity that is neither a “publicly offered security” (within the meaning of the plan asset regulations) nor a security issued by an investment company registered under the Investment Company Act of 1940, as amended, the plan’s assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that an exception set forth in the plan asset regulation is applicable. The plan’s assets generally will not include the underlying assets of the entity, if less than 25% of the total value of each class of equity interests in the entity is held by “benefit plan investors” or the entity is an “operating company,” (as each of those terms is defined in the plan asset regulations). An equity interest is defined in the plan asset regulations as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is no authority directly on point, it is anticipated that the recovery bonds should not be treated as equity interests in the issuing entity for purposes of the plan asset regulations.

If the recovery bonds were deemed to be equity interests in the issuing entity and none of the exceptions contained in the plan asset regulations were applicable, then the issuing entity’s assets would be considered to be assets of any plans that purchase the recovery bonds. If the issuing entity’s assets were deemed to constitute “plan assets” pursuant to the plan asset regulations, transactions the issuing entity might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA and or Section 4975 of the Internal Revenue Code. Each prospective plan investor should make its own assessment as to whether or not the recovery bonds will be treated as equity interests in the issuing entity for purposes of the plan asset regulations, and should consult with its own legal advisors concerning the potential consequences of the application of the plan asset regulations, the fiduciary responsibility provisions of ERISA and the prohibited transaction provisions of Title I of ERISA and Section 4975 of the Internal Revenue Code to an investment in the recovery bonds with assets of a plan.

Prohibited Transaction Exemptions

Without regard to whether the recovery bonds are characterized as indebtedness or equity for purposes of the plan asset regulations, the acquisition, holding or disposition of the recovery bonds by or on behalf of a plan could give rise to a prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code if the issuing entity or the trustee, PG&E, any other servicer, PG&E Corporation, any underwriter or certain of their affiliates is or becomes a party in interest or disqualified person with respect to an investing plan.

If you are a fiduciary of a plan, before acquiring any recovery bonds, you should consider the availability of one of the Department of Labor’s prohibited transaction class exemptions, referred to as PTCEs, or one of the statutory exemptions provided by ERISA or Section 4975 of the Internal Revenue Code, which include:

• PTCE 75-1, which exempts certain transactions between a plan and certain broker-dealers, reporting dealers and banks;

• PTCE 84-14, which exempts certain transactions effected on behalf of a plan by a “qualified professional asset manager”;

• PTCE 90-1, which exempts certain transactions between insurance company separate accounts and parties in interest;

• PTCE 91-38, which exempts certain transactions between bank collective investment funds and parties in interest;

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• PTCE 95-60, which exempts certain transactions between insurance company general accounts and parties in interest;

• PTCE 96-23, which exempts certain transactions effected on behalf of a plan by an “in-house asset manager”; and

• the statutory service provider exemption provided by Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Internal Revenue Code, which exempts certain transactions between plans and parties in interest that are not fiduciaries with respect to the transaction.

The issuing entity cannot provide any assurance that any of these class exemptions or statutory exemptions or any other prohibited transaction exemptions will apply with respect to any particular investment in the recovery bonds by, on behalf of, or using assets of, a plan or, even if it were deemed to apply, that any exemption would apply to all transactions that may occur in connection with the investment. Even if one of these class exemptions or the statutory exemption were deemed to apply, recovery bonds may not be purchased with assets of any plan if the issuing entity or the trustee, PG&E, any other servicer, PG&E Corporation, any underwriter or any of their affiliates:

• has investment discretion over the assets of the plan used to purchase the recovery bonds;

• has authority or responsibility to give, or regularly gives, investment advice regarding the assets of the plan used to acquire the recovery bonds, for a fee and under an agreement or understanding that the advice will serve as a primary basis for investment decisions for the assets of the plan, and will be based on the particular investment needs of the plan.

Before purchasing any recovery bonds by or on behalf of, or using assets of, a plan, you should consider whether the acquiring, holding or disposition of recovery bonds might constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code and, if so, whether any prohibited transaction exemption might apply to the acquisition, holding and disposition of the recovery bonds.

Other Plans

Some plans, such as governmental plans, and certain church plans, and the fiduciaries of those plans, are not subject to requirements of ERISA or Section 4975 of the Internal Revenue Code (“non-ERISA plans”); provided, however such non-ERISA plans may be subject to federal, state, local or other laws that are substantially similar to Title I of ERISA or Section 4975 of the Internal Revenue Code (“similar law”). Accordingly, assets of these plans may be invested in the recovery bonds without regard to the ERISA considerations described above, subject to the application of similar law and the provisions of other applicable federal, including, for example, the prohibited transaction rules in Section 503 of the Internal Revenue Code.

Representation

By acquiring any interest in the recovery bonds, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (1) it is not a plan or non-ERISA plan subject to similar law and is not acting on behalf of, or using assets of, a plan or non-ERISA plan subject to similar law to acquire or hold the recovery bonds or (2) its acquisition, holding and disposition of the recovery bonds will not, in the case of a plan, constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code or, in the case of non-ERISA plan subject to similar law, will not constitute or result in a violation of applicable similar law.

Consultation with Counsel

The sale of the recovery bonds to a plan or a non-ERISA plan subject to similar law will not constitute a representation by the issuing entity or the trustee, PG&E, any other servicer, PG&E Corporation, any underwriter or any of their affiliates that such an investment meets all relevant legal requirements relating to investments by

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such plans or non-ERISA plans generally or by any particular plan or non-ERISA plan, or that such an investment is appropriate for such plans or non-ERISA plans generally or for a particular plan or non-ERISA plan.

The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the recovery bonds on behalf of, or with the assets of, any plan or non-ERISA plan, should consider the general fiduciary obligations under ERISA, the prohibited transaction provisions under ERISA and the Internal Revenue Code or the provisions of applicable similar law and should consult with legal counsel as to the potential applicability of ERISA, any regulations thereto, the Internal Revenue Code or similar law to any investment and, in the case of plan, the availability of any prohibited transaction exemption in connection with any such investment.

This summary is based on current provisions of ERISA, the Internal Revenue Code, the regulations and other related guidance. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion.

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LEGAL PROCEEDINGS

There are no legal or governmental proceedings pending against the issuing entity, the sponsor, seller, trustee, or servicer, or of which any property of the foregoing is subject, that is material to the holders of the recovery bonds.

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RATINGS FOR THE RECOVERY BONDS

The issuing entity expects that the recovery bonds will receive credit ratings from at least two NRSROs. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning NRSRO. Each rating should be evaluated independently of any other rating. No person is obligated to maintain the rating on any recovery bonds and, accordingly, the issuing entity can give no assurance that the ratings assigned to any tranche of the recovery bonds upon initial issuance will not be lowered or withdrawn by a NRSRO at any time thereafter. If a rating of any tranche of recovery bonds is lowered or withdrawn, the liquidity of this tranche of the recovery bonds may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular rate of principal payments on the recovery bonds other than the payment in full of each tranche of the recovery bonds by the final maturity date or tranche final maturity date, as well as the timely payment of interest.

Under Rule 17g-5 of the Exchange Act, NRSROs providing the sponsor with the requisite certification will have access to all information posted on a website by the sponsor for the purpose of determining the initial rating and monitoring the rating after the closing date in respect of the recovery bonds. As a result, an NRSRO other than the NRSROs hired by a sponsor (a “hired NRSRO”) may issue unsolicited ratings on the recovery bonds, which may be lower, and could be significantly lower, than the ratings assigned by a hired NRSROs. The unsolicited ratings may be issued prior to, or after, the closing date in respect of the recovery bonds. Issuance of any unsolicited rating will not affect the issuance of the recovery bonds. Issuance of an unsolicited rating lower than the ratings assigned by a hired NRSRO on the recovery bonds might adversely affect the value of the recovery bonds and, for regulated entities, could affect the status of the recovery bonds as a legal investment or the capital treatment of the recovery bonds. Investors in the recovery bonds should consult with their legal counsel regarding the effect of the issuance of a rating by a non-hired NRSRO that is lower than the rating of a hired NRSRO.

A portion of the fees paid by PG&E to a NRSRO which is hired to assign a rating on the recovery bonds is contingent upon the issuance of the recovery bonds. In addition to the fees paid by PG&E to a NRSRO at closing, PG&E will pay a fee to a NRSRO for ongoing surveillance for so long as the recovery bonds are outstanding. However, no NRSRO is under any obligation to continue to monitor or provide a rating on the recovery bonds.

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WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement the issuing entity and PG&E have filed with the SEC relating to the recovery bonds. This prospectus describes the material terms of some of the documents that have been filed or will be filed as exhibits to the registration statement. However, this prospectus does not contain all of the information contained in the registration statement and the exhibits.

Information filed with the SEC can be inspected at the SEC’s Internet site located at http://www.sec.gov, or on a website associated with PG&E, currently located at https://investor.pgecorp.com/investors/default.aspx. The information contained on such website is not part of this registration statement or any report that PG&E files with, or furnishes to, the SEC. PG&E and the issuing entity are providing the address to this website solely for the information of investors and does not intend the address to be an active link. You may also obtain a copy of the issuing entity’s filings with the SEC at no cost, by writing to or telephoning the issuing entity at the following address:

PG&E Wildfire Recovery Funding LLC

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

The depositor’s SEC Securities Act file number is 001-02348.

The issuing entity or PG&E as depositor will also file with the SEC all of the periodic reports the issuing entity or the depositor are required to file under the Securities Exchange Act and the rules, regulations or orders of the SEC thereunder; however, neither the issuing entity nor PG&E as depositor will intend to file any such reports relating to the recovery bonds following completion of the reporting period required by Rule 15d-1 or Regulation 15D under the Exchange Act, unless required by law. Unless specifically stated in the report, the reports and any information included in the report will neither be examined nor reported on by an independent public accountant. A more detailed description of the information to be included in these periodic reports, please read “Description of the Recovery Bonds—SEC Filings; Website Disclosure” in this prospectus.

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INCORPORATION BY REFERENCE

The SEC allows the issuing entity to “incorporate by reference” into this prospectus information the issuing entity or the depositor file with the SEC. This means the issuing entity can disclose important information to you by referring you to the documents containing the information. The information incorporated by reference is considered to be part of this prospectus, unless the issuing entity update or supersedes that information with information that the issuing entity or the depositor file subsequently that is incorporated by reference into this prospectus.

To the extent that the issuing entity is required by law to file such reports and information with the SEC under the Exchange Act, the issuing entity will file annual and current reports and other information with the SEC. The issuing entity is incorporating by reference any future filings the issuing entity or the sponsor, but solely in its capacity as the issuing entity’s sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering, excluding any information that is furnished to, and not filed with, the SEC. These reports will be filed under the issuing entity’s own name as issuing entity. Under the Indenture, the issuing entity may voluntarily suspend or terminate the filing obligations as issuing entity (under the SEC rules) with the SEC, to the extent permitted by applicable law.

The issuing entity is incorporating into this prospectus any future distribution report on Form 10-D, current report on Form 8-K or any amendment to any such report which the issuing entity or PG&E, solely in its capacity as the issuing entity’s depositor, make with the SEC until the offering of the recovery bonds is completed. These reports will be filed under the issuing entity’s own name as issuing entity. In addition, these reports will be posted on a website associated with PG&E, currently located at https://investor.pgecorp.com/investors/default.aspx. These reports will be filed under the issuing entity’s own name as issuing entity. Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus.

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INVESTMENT COMPANY ACT OF 1940 AND VOLCKER RULE MATTERS

The issuing entity will be relying on an exclusion from the definition of “investment company” under the Investment Company Act of 1940, as amended, or the “1940 Act”, contained in Section 3(c)(5) of the 1940 Act, although there may be additional exclusions or exemptions available to the issuing entity. As a result of such exclusion, the issuing entity will not be subject to regulation as an “investment company” under the 1940 Act.

In addition, the issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule, or the “Volcker Rule”, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the “Dodd-Frank Act”. As part of the Dodd-Frank Act, federal law prohibits a “banking entity”—which is broadly defined to include banks, bank holding companies and affiliates thereof—from engaging in proprietary trading or holding ownership interests in certain private funds. The definition of “covered fund” in the regulations adopted to implement the Volcker Rule includes (generally) any entity that would be an investment company under the 1940 Act but for the exclusion provided under Sections 3(c)(1) or 3(c)(7) thereunder. Because the issuing entity will rely on Section 3(c)(5) of the 1940 Act, it will not be considered a “covered fund” within the meaning of the Volcker Rule regulations.

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RISK RETENTION

This offering of recovery bonds is a public utility securitization exempt from the risk retention requirements imposed by Section 15G of the Exchange Act due to the exemption provided in Rule 19(b)(8) of Regulation RR.

For information regarding the requirements of the European Union Securitization Regulation as to risk retention and other matters, please read “Risk Factors—Other Risks Associated with an Investment in the Recovery Bonds—Regulatory provisions affecting certain investors could adversely affect the price and liquidity of the recovery bonds” in this prospectus.

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LEGAL MATTERS

Certain legal matters relating to the recovery bonds, including certain federal income tax matters, will be passed on by Hunton Andrews Kurth LLP, counsel to PG&E and the issuing entity. Certain other legal matters relating to the recovery bonds and as to Delaware law will be passed on by Richards, Layton & Finger, P.A., special Delaware counsel to the issuing entity. Certain other legal matters relating to the recovery bonds will be passed on by Munger, Tolles & Olson LLP, Los Angeles, California, regulatory counsel to PG&E, and by Norton Rose Fulbright US LLP, counsel to the underwriters.

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OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

THE RECOVERY BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO, AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO, ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA (EEA). FOR THESE PURPOSES, THE EXPRESSION RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF THE FOLLOWING: (1) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, MIFID II); (2) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97 (AS AMENDED), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II; OR (3) NOT A QUALIFIED INVESTOR (QUALIFIED INVESTOR) WITHIN THE MEANING OF REGULATION 2017/1129 (AS AMENDED, THE PROSPECTUS REGULATION). CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (AS AMENDED, THE PRIIPS REGULATION) FOR OFFERING OR SELLING THE RECOVERY BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED; AND THEREFORE OFFERING OR SELLING THE RECOVERY BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

THIS PROSPECTUS IS NOT A PROSPECTUS FOR PURPOSES OF THE PROSPECTUS REGULATION. THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF RECOVERY BONDS IN ANY MEMBER STATE OF THE EEA (EACH, A RELEVANT STATE) WILL BE MADE ONLY PURSUANT TO AN EXEMPTION UNDER THE PROSPECTUS REGULATION FROM THE REQUIREMENT TO PUBLISH A PROSPECTUS FOR OFFERS OF RECOVERY BONDS. ACCORDINGLY ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THAT RELEVANT STATE OF RECOVERY BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY ONLY DO SO IN CIRCUMSTANCES IN WHICH NO OBLIGATION ARISES FOR THE ISSUING ENTITY OR ANY OF THE UNDERWRITERS TO PUBLISH A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS REGULATION, IN RELATION TO SUCH OFFER. NEITHER THE ISSUING ENTITY NOR ANY UNDERWRITER HAVE AUTHORISED, NOR WILL THEY AUTHORISE, THE MAKING OF ANY OFFER OF RECOVERY BONDS IN CIRCUMSTANCES IN WHICH AN OBLIGATION ARISES FOR THE ISSUING ENTITY OR ANY OF THE UNDERWRITERS TO PUBLISH A PROSPECTUS FOR SUCH OFFER.

ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE AN OFFER IN THAT RELEVANT MEMBER STATE OF RECOVERY BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED IN THIS PROSPECTUS MAY DO SO ONLY WITH RESPECT TO QUALIFIED INVESTORS. NEITHER WE NOR ANY UNDERWRITER HAS AUTHORIZED, NOR DO WE OR THEY AUTHORIZE, THE MAKING OF ANY OFFER OF RECOVERY BONDS OTHER THAN TO QUALIFIED INVESTORS.

ANY DISTRIBUTOR SUBJECT TO MIFID II THAT IS OFFERING, SELLING OR RECOMMENDING THE RECOVERY BONDS IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE RECOVERY BONDS AND DETERMINING ITS OWN DISTRIBUTION CHANNELS FOR THE PURPOSES OF THE MIFID II PRODUCT GOVERNANCE RULES UNDER COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 (AS AMENDED, THE DELEGATED DIRECTIVE). NONE OF PG&E, THE ISSUING ENTITY OR ANY OF THE UNDERWRITERS MAKES ANY REPRESENTATIONS OR WARRANTIES AS TO A DISTRIBUTOR’S COMPLIANCE WITH THE DELEGATED DIRECTIVE.

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EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT IT HAS NOT OFFERED, SOLD OR OTHERWISE MADE AVAILABLE, AND WILL NOT OFFER, SELL OR OTHERWISE MAKE AVAILABLE, ANY RECOVERY BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS PROSPECTUS TO ANY RETAIL INVESTOR (AS DEFINED ABOVE) IN THE EEA. FOR THIS PURPOSE, THE EXPRESSION “OFFER” INCLUDES THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE RECOVERY BONDS SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE RECOVERY BONDS.

NOTICE TO RESIDENTS OF UNITED KINGDOM

THE RECOVERY BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE UNITED KINGDOM (UK). FOR THESE PURPOSES OF THIS PROVISION:

(A) THE EXPRESSION “RETAIL INVESTOR” MEANS A PERSON WHO IS ONE (OR MORE) OF THE FOLLOWING:

(I) A RETAIL CLIENT AS DEFINED IN POINT (8) OF ARTICLE 2 OF REGULATION (EU) NO 2017/565 AS AMENDED BY ARTICLE 39(3) OF THE MARKETS IN FINANCIAL INSTRUMENTS (AMENDMENT) (EU EXIT) REGULATIONS 2018 AND AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (EUWA); OR

(II) A CUSTOMER WITHIN THE MEANING OF THE PROVISIONS OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (AS AMENDED, THE FSMA) OF THE UNITED KINGDOM AND ANY RULES OR REGULATIONS MADE UNDER THE FSMA TO IMPLEMENT DIRECTIVE (EU) 2016/97, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA; OR

(III) NOT A QUALIFIED INVESTOR AS DEFINED IN ARTICLE 2 OF THE PROSPECTUS REGULATION AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA (THE UK PROSPECTUS REGULATION); AND

(B) THE EXPRESSION “OFFER” INCLUDES THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE RECOVERY BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE FOR THE RECOVERY BONDS.

CONSEQUENTLY NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA, AS AMENDED (THE UK PRIIPS REGULATION) FOR OFFERING OR SELLING THE RECOVERY BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE UK HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE RECOVERY BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE UK MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.

THIS PROSPECTUS HAS BEEN PREPARED ON THE BASIS THAT ANY OFFER OF RECOVERY BONDS IN THE UK WILL BE MADE PURSUANT TO AN EXEMPTION UNDER THE UK PROSPECTUS REGULATION FROM THE REQUIREMENT TO PUBLISH A PROSPECTUS FOR OFFERS OF RECOVERY BONDS. THIS IS NOT A PROSPECTUS FOR THE PURPOSES OF THE UK PROSPECTUS REGULATION.

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THIS PROSPECTUS AND ANY OTHER MATERIAL IN RELATION TO THE RECOVERY BONDS IS ONLY BEING DISTRIBUTED TO, AND IS DIRECTED ONLY AT, PERSONS IN THE UK WHO ARE “QUALIFIED INVESTORS” (AS DEFINED IN THE UK PROSPECTUS REGULATION) WHO ARE ALSO (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS AMENDED, THE ORDER), OR (II) HIGH NET WORTH ENTITIES OR OTHER PERSONS FALLING WITHIN ARTICLES 49(2)(A) TO (D) OF THE ORDER, OR (III) PERSONS TO WHOM IT WOULD OTHERWISE BE LAWFUL TO DISTRIBUTE IT, ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS RELEVANT PERSONS. THE RECOVERY BONDS ARE ONLY AVAILABLE TO, AND ANY INVITATION, OFFER OR AGREEMENT TO SUBSCRIBE, PURCHASE OR OTHERWISE ACQUIRE SUCH RECOVERY BONDS WILL BE ENGAGED IN ONLY WITH, RELEVANT PERSONS. ANY PERSON IN THE UK THAT IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS PROSPECTUS OR ITS CONTENTS. THE RECOVERY BONDS ARE NOT BEING OFFERED TO THE PUBLIC IN THE UK.

ANY DISTRIBUTOR SUBJECT TO THE FCA HANDBOOK PRODUCT INTERVENTION AND PRODUCT GOVERNANCE SOURCEBOOK (THE UK MIFIR PRODUCT GOVERNANCE RULES) IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE RECOVERY BONDS AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS. NONE OF THE ISSUING ENTITY, PG&E OR ANY OF THE UNDERWRITERS MAKES ANY REPRESENTATIONS OR WARRANTIES AS TO A DISTRIBUTOR’S COMPLIANCE WITH THE UK MIFIR PRODUCT GOVERNANCE RULES.

IN ADDITION, IN THE UK, EACH UNDERWRITER HAS REPRESENTED AND AGREED IN THE UNDERWRITING AGREEMENT THAT THE RECOVERY BONDS MAY NOT BE OFFERED OTHER THAN BY AN UNDERWRITER THAT:

• HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FSMA) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE RECOVERY BONDS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO US; AND

• HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE RECOVERY BONDS IN, FROM OR OTHERWISE INVOLVING THE UK.

NOTICE TO RESIDENTS OF CANADA

THE RECOVERY BONDS MAY BE SOLD IN THE PROVINCES OF ALBERTA, BRITISH COLUMBIA AND ONTARIO ONLY TO PURCHASERS PURCHASING, OR DEEMED TO BE PURCHASING, AS PRINCIPAL THAT ARE ACCREDITED INVESTORS, AS DEFINED IN NATIONAL INSTRUMENT 45-106 PROSPECTUS EXEMPTIONS OR SUBSECTION 73.3(1) OF THE SECURITIES ACT (ONTARIO), AND ARE PERMITTED CLIENTS, AS DEFINED IN NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS. ANY RESALE OF THE RECOVERY BONDS MUST BE MADE IN ACCORDANCE WITH AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE PROSPECTUS REQUIREMENTS OF APPLICABLE SECURITIES LAWS.

SECURITIES LEGISLATION IN CERTAIN PROVINCES OR TERRITORIES OF CANADA MAY PROVIDE A PURCHASER WITH REMEDIES FOR RESCISSION OR DAMAGES IF THIS PROSPECTUS (INCLUDING ANY AMENDMENT THERETO) CONTAINS A MISREPRESENTATION, PROVIDED

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THAT THE REMEDIES FOR RESCISSION OR DAMAGES ARE EXERCISED BY THE PURCHASER WITHIN THE TIME LIMIT PRESCRIBED BY THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY. THE PURCHASER SHOULD REFER TO ANY APPLICABLE PROVISIONS OF THE SECURITIES LEGISLATION OF THE PURCHASER’S PROVINCE OR TERRITORY FOR PARTICULARS OF THESE RIGHTS OR CONSULT WITH A LEGAL ADVISOR.

PURSUANT TO SECTION 3A.3 OF NATIONAL INSTRUMENT 33-105 UNDERWRITING CONFLICTS (NI 33-105), THE UNDERWRITERS ARE NOT REQUIRED TO COMPLY WITH THE DISCLOSURE REQUIREMENTS OF NI 33-105 REGARDING UNDERWRITER CONFLICTS OF INTEREST IN CONNECTION WITH THIS OFFERING.

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GLOSSARY OF DEFINED TERMS

Set forth below is a list of the defined terms used in this prospectus:

“2017 Wildfires” means the catastrophic wildfires with an ignition date in the 2017 calendar year that occurred in PG&E’s service territory.

“2021 Wildfire Recovery Bonds” means the $860.4 million aggregate principal amount of senior secured recovery bonds issued in November 2021 by PG&E Recovery Funding LLC pursuant to the Wildfire Financing Law.

“Actual fixed recovery charge collections” means, if no servicer default has occurred and is continuing, the calculation of the collections of the estimated fixed recovery charge collections, with regard to ADO; provided, that if a servicer default has occurred and is continuing, a calculation of the collections of the fixed recovery charges by the Servicer, without regard to ADO.

“Additional recovery bonds” means additional “recovery bonds” (as defined in the Wildfire Financing Law) issued pursuant to the financing order, to recover additional recovery costs that are eligible to be financed under the Wildfire Financing Law.

“Additional other recovery bonds” means additional “recovery bonds” (as defined in the Wildfire Financing Law) and any other recovery bonds described in any similar securitization statute issued pursuant to another financing order, to recover additional other recovery costs that are eligible to be financed under the Wildfire Financing Law or such other securitization statute and as determined reasonable by the CPUC.

“Additional Shareholder Contributions” means additional shareholder contributions to the Customer Credit Trust using the shareholder tax benefits not to exceed $7.59 billion.

“Administration agreement” means the administration agreement to be entered into between the issuing entity and PG&E, as the same may be amended and supplemented from time to time.

“Administrator” means PG&E, as administrator under the administration agreement, or any successor Administrator to the extent permitted under the administration agreement.

“Advice letter” means any submission made to the CPUC by the servicer on behalf of the issuing entity with respect to the fixed recovery charges or any true-up adjustment in the form of an advice letter.

“Affiliate” means, with respect to any specified person, any other person controlling or controlled by or under common control with such specified person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Appeal Court” means the Court of Appeal of the State of California, First Appellate District.

“Authorized Amount” has the meaning specified under “PG&E’s Financing Order—Stress Test Order” in this prospectus.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Basic documents” means the indenture, the administration agreement, the sale agreement, the issuing entity’s certificate of formation, the limited liability company agreement, the servicing agreement, the series supplement, the intercreditor agreement, any underwriting agreement and all other documents and certificates delivered in connection therewith.

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“Bondholder” or “holder” means any holder of the recovery bonds offered pursuant to this prospectus.

“Business day” means any day other than a Saturday, a Sunday or a day on which banking institutions in Los Angeles, California, San Francisco, California, Chicago, Illinois or New York, New York are, or DTC or the corporate trust office of the trustee is, authorized or obligated by law, regulation or executive order to remain closed.

“Capital contribution” means the amount of cash contributed to the issuing entity by PG&E as specified in the limited liability company agreement.

“Capital subaccount” means the capital subaccount, a subaccount of the collection account created by the indenture and held by the trustee under the indenture.

“CARE” means the California Alternative Rates for Energy program under the Public Utilities Code.

“CAISO” means California independent system operator.

“CCAs” or “CCA” means Community Choice Aggregators which are cities, counties and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses.

“Certificate of formation” means the issuing entity’s certificate of formation filed with the Secretary of State of the State of Delaware on March 8, 2022.

“Clearstream” means Clearstream Banking, Luxembourg, S.A.

“Collateral” means all of the issuing entity’s assets pledged to the trustee for the benefit of the holders of the recovery bonds specified in the series supplement, which includes the recovery property, all rights of the issuing entity under the sale agreement, the servicing agreement and the other documents entered into in connection with the recovery bonds, all rights to the collection account and the subaccounts of the collection account, and all other property of the issuing entity relating to the recovery bonds, except amounts deposited with the issuing entity on the closing date required for payment of costs of issuance of the recovery bonds.

“Collection account” means the segregated trust account relating to the recovery bonds designated the collection account and held by the trustee under the indenture.

“Commission regulations” means the regulations, including proposed or temporary regulations, promulgated under the Public Utilities Code.

“COVID-19” means the novel coronavirus which has caused the ongoing global pandemic.

“Consumer” means “consumer” within the meaning of the Wildfire Financing Law, and means any existing or future individual, governmental body, trust, business entity, or nonprofit organization located in the service territory of PG&E as such territory existed on the date of the financing order that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, PG&E, or any other party.

“CPUC” means the California Public Utilities Commission.

“Contingent Supplemental Shareholder Contribution” means the supplemental shareholder contribution, if needed, of up to a limit of $775 million that PG&E may be required to contribute to the Customer Credit Trust in 2040.

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“Customer Credit” means a credit to a consumer in an amount designed to equal the fixed recovery charges paid by such consumer.

“Customer Credit Trust” means a trust established by PG&E to pay the Customer Credits.

“Customer Credit Trust Returns” means the expected returns on the investment of the assets in the Customer Credit Trust.

“DA” means direct access.

“DL” means departing load.

“DL consumer” has the meaning specified under “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Actions—A municipal entity might assert the right to acquire portions of PG&E’s electric facilities and/or serve the load of consumers within their jurisdictional areas and avoid or reduce the affected consumers’ payment of the fixed recovery charges”.

“Depositor” means PG&E.

“DTC” means the Depository Trust Company, New York, New York, and its nominee holder, Cede & Co.

“Eligible institution” means (a) the corporate trust department of the trustee, so long as any of the securities of the trustee have (i) either a short-term credit rating from Moody’s of at least “P-1” or a long-term unsecured debt rating from Moody’s of at least “A2” and (ii) a credit rating from S&P of at least “A”; or (b) a depository institution organized under the laws of the United States of America or any state (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s, or (B) a short-term issuer rating of “A-1” or higher by S&P and “P1” or higher by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies, and (ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

“Eligible investments” mean instruments or investment property which evidence:

(a) direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

(b) demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of or bankers’ acceptances issued by, any depository institution (including the trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any state thereof and subject to the supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s, or such lower rating as will not result in the downgrading or withdrawal of the recovery bonds;

(c) commercial paper (including commercial paper of the trustee, acting in its commercial capacity, and other than commercial paper issued by PG&E or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating of at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s and Fitch or such lower rating as will not result in the downgrading or withdrawal of the ratings of the recovery bonds;

(d) investments in money market funds which have a rating in the highest investment category granted thereby (including funds for which the trustee or any of its affiliates is investment manager or advisor) from Moody’s and S&P;

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(e) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or certain of its agencies or instrumentalities, entered into with eligible institutions; or

(f) repurchase obligations with respect to any security or whole loan entered into with an eligible institution or with a registered broker-dealer acting as principal and that meets certain ratings criteria.

“EOEP” means the Enhanced Oversight and Enforcement Process of the CPUC.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ESP” means an alternative electric provider who has entered into an ESP service agreement with PG&E.

“ESP service agreement” means an agreement between an ESP and PG&E for the provision of “direct access” service to consumers in accordance with CPUC Decision 97-10-087 and subsequent decisions.

“Estimated fixed recovery charge collections” means the payments in respect of fixed recovery charges which are deemed to have been received by the servicer, directly or indirectly (including through a ESP), from or on behalf of consumers, calculated in accordance with the servicing agreement.

“Euroclear” means the Euroclear System.

“Excess funds subaccount” means that subaccount of the collection account into which funds collected by the servicer in excess of amounts necessary to make the payments specified on a given payment date.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exempted Consumers” means consumers who participate in the CARE program and/or the FERA program.

“Expected sinking fund schedule” means, with respect to any tranche of the recovery bonds, the expected sinking fund schedule related thereto set forth in the series supplement.

“FERA” means the Family Electric Rate Assistance program under the Public Utilities Code.

“Final maturity date” means, with respect to each tranche of recovery bonds, the final maturity date therefor as specified in the series supplement.

“Financing costs” means principal and interest on the recovery bonds, costs relating to the issuance of the recovery bonds and operating expenses.

“Financing order” means, unless the context indicates otherwise, the irrevocable financing order issued by the CPUC as Decision 21-05-015, on May 11, 2021.

“Fire Victim Trust” means the trust established pursuant to the Plan for the benefit of holders of the Fire Victim Claims (as defined in the Plan) into which the Aggregate Fire Victim Consideration (as defined in the Plan) has been, and will continue to be funded.

“Fixed recovery charges” means the fixed recovery charges authorized by the financing order.

“Fixed recovery charge collections” means fixed recovery charges revenues received by the servicer to be remitted to the collection account.

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“FRC consumer class” means each class of consumers identified as a separate rate class in GRC or related proceeding of the servicer.

“FRTAs” means fixed recovery tax amounts.

“General subaccount” means the general subaccount, a subaccount of the collection account created by the indenture and held by the trustee under the indenture.

“GRC” means a general rate case of the servicer brought before the CPUC.

“Holder” or “Bondholder ”means a registered holder of the recovery bonds.

“Hunton” means Hunton Andrews Kurth LLP, counsel to PG&E and the issuing entity.

“Indenture” means the indenture to be entered into between the issuing entity and the trustee, providing for the issuance of recovery bonds, as the same may be amended and supplemented from time to time.

“Independent manager” means each person appointed as an “independent manager” of the issuing entity pursuant to the limited liability company agreement.

“Independent manager fee” means the fee payable to the independent manager pursuant to the limited liability company agreement.

“Initial Shareholder Contribution” means, collectively, the initial shareholder contribution of $1 billion in 2022 and a second shareholder contribution of $1 billion in 2024.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Issuing entity” means PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company.

“kW” means kilowatt.

“kWh” means kilowatt-hour.

“Limited liability company agreement” means the Limited Liability Company Agreement of PG&E Wildfire Recovery Funding LLC, dated as of March 8, 2022.

“LPC” means any late payment charge that is or is permitted to be charged to consumers by PG&E.

“Moody’s” means Moody’s Investors Service, Inc. or any successor in interest. References to Moody’s are effective so long as Moody’s is a rating agency.

“Municipal DL” has the meaning specified under “Risk Factors—Risks Associated with Potential Judicial, Legislative or Regulatory Decisions—A municipal entity might assert the right to acquire portions of PG&E’s electric facilities and/or serve the load of consumers within their jurisdictional areas and avoid or reduce the affected consumers’ payment of the fixed recovery charges” in this prospectus.

“MW” means megawatt.

“MWh” means megawatt-hour.

“Non-bypassable” means that the right to collect these fixed recovery charges from all existing and future electricity consumers within PG&E’s service territory as such territory existed on the date of the financing order (May 6, 2021), subject only to exceptions specified in the Wildfire Financing Law and the financing order.

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“Non-routine true-up adjustment” has the meaning specified under “PG&E’s Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” in this prospectus.

“Non-U.S. Holder” means a holder of recovery bonds that is neither a U.S. Holder nor subject to rules applicable to former citizens and residents of the United States.

“NRSRO” means a nationally recognized statistical rating organization.

“Operating expenses” means all unreimbursed fees, costs and expenses incurred by or on behalf of the issuing entity, including all amounts owed by the issuing entity to the trustee, any manager of the issuing entity, the servicing fee, the administration fee, legal and accounting fees, rating agency fees, costs and expenses of the issuing entity and PG&E, the return on equity due PG&E for its capital contribution and any franchise taxes owed on investment income in the collection account.

“Outstanding” means, as of the date of determination, all recovery bonds theretofore authenticated and delivered under the Indenture except:

(a) recovery bonds theretofore canceled by the recovery bond registrar or delivered to the recovery bond registrar for cancellation;

(b) recovery bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the trustee or any paying agent in trust for the holders of such recovery bonds; and

(c) recovery bonds in exchange for or in lieu of other recovery bonds which have been issued pursuant to this Indenture unless proof satisfactory to the trustee is presented that any such recovery bonds are held by a protected purchaser (as defined in Section 8-303 of the UCC);

provided, that in determining whether the holders of the requisite outstanding amount of the recovery bonds or any tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any basic document, recovery bonds owned by the issuing entity, any other obligor upon the recovery bonds, the member, the seller, the servicer or any affiliate of any of the foregoing persons shall be disregarded and deemed not to be outstanding, except that, in determining whether the trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only recovery bonds that the trustee actually knows to be so owned shall be so disregarded. Recovery bonds so owned that have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the trustee the pledgee’s right so to act with respect to such recovery bonds and that the pledgee is not the issuing entity, any other obligor upon the recovery bonds, the member, the seller, the servicer or any affiliate of any of the foregoing persons.

“Outstanding amount” means the aggregate principal amount of all recovery bonds or, if the context requires, all recovery bonds of a tranche, outstanding at the date of determination.

“Payment date” means the date or dates on which interest and principal are to be payable on the recovery bonds.

“Periodic payment requirement” means the amount necessary to provide for the timely payment of scheduled principal of and interest on the recovery bonds and financing costs payable in connection with the recovery bonds.

“PG&E” means Pacific Gas and Electric Company, a California corporation.

“PG&E Corporation” means PG&E Corporation, a California corporation.

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“Plan” means the Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization dated March 16, 2020 [Docket 6320], as it may subsequently be amended or modified, In re PG&E Corporation, No. 19-30088 (Bankr. N.D. Cal. Mar. 16, 2020).

“Public Utilities Code ”means the California Public Utilities Code, as amended from time to time.

“PTCE” means a prohibited transaction class exemption of the United States Department of Labor

“Rating agencies” means Moody’s and S&P. If no such organization (or successor) is any longer in existence, “rating agency” shall be a NRSRO or other comparable person designated by the issuing entity, notice of which designation shall be given to the trustee and the servicer.

“Rating agency condition” means, with respect to any action, not less than ten (10) business days’ prior written notification to each rating agency of such action, and written confirmation from each of S&P and Moody’s to the servicer, the trustee and the issuing entity that such action will not result in a suspension, reduction or withdrawal of the then current rating by such rating agency of any tranche of recovery bonds issued by the issuing entity and that prior to the taking of the proposed action no other rating agency shall have provided written notice to the issuing entity that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of any such tranche of recovery bonds; provided, that if within such ten (10) business day period, any rating agency (other than S&P) has neither replied to such notification nor responded in a manner that indicates that such rating agency is reviewing and considering the notification, then (i) the issuing entity shall be required to confirm that such rating agency has received the rating agency condition request, and if it has, promptly request the related rating agency condition confirmation and (ii) if the rating agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five (5) business days following such second (2nd) request, the applicable rating agency condition requirement shall not be deemed to apply to such rating agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a rating agency’s right to review or consent).

“Reconciliation certificate” means the certificate of the servicer delivered to the trustee pursuant to the servicing agreement reconciling amounts fixed recovery charge collections delivered to the trustee for deposit to the collection account with actual fixed recovery charge collections.

“Record date” means the date or dates with respect to each payment date on which it is determined the person in whose name each recovery bond is registered will be paid on the respective payment date.

“Recovery bonds” means, unless the context requires otherwise, the recovery bonds offered pursuant to this prospectus.

“Recovery costs” means all “recovery costs” as defined in the Wildfire Financing Law.

“Recovery property” means all “recovery property” as defined in the Wildfire Financing Law created pursuant to the financing order and sold or otherwise conveyed to the issuing entity under the sale agreement, including the right to impose, collect and receive the fixed recovery charges authorized in the financing order.

“Regulation AB” means the rules of the SEC promulgated under Subpart 229.1100—Asset-Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such may be amended from time to time.

“Regulation RR” means Rule 19(b)(8) of the risk retention regulations in 17 C.F.R. Part 246 promulgated under the Exchange Act.

167

“Required capital level” means the amount required to be funded in the capital subaccount, which will equal 0.50% of the initial aggregate principal amount of recovery bonds issued by the issuing entity.

“Routine true-up adjustments” has the meaning specified under “PG&E Financing Order—Fixed Recovery Charges—The Financing Order Requires the Servicer to Periodically ‘True-Up’ the Fixed Recovery Charge” in this prospectus.

“S&P” means S&P Global Ratings, a division of S&P Global, Inc. or any successor in interest. References to S&P are effective so long as S&P is a rating agency.

“Sale agreement” means the sale agreement to be entered into between the issuing entity and PG&E, pursuant to which PG&E sells and the issuing entity buys the recovery property.

“Seller” means PG&E.

“Series supplement” means the supplement to the indenture which establishes the specific terms of the recovery bonds.

“Servicer” means PG&E, acting as the servicer, and any successor or assignee servicer, which will service the recovery property under a servicing agreement with the issuing entity.

“Servicer default” has the meaning specified under “The Servicing Agreement—Servicer Defaults” in this prospectus.

“Servicing agreement” means the servicing agreement to be entered into between the issuing entity and PG&E, as the same may be amended and supplemented from time to time, pursuant to which PG&E undertakes to service the recovery property.

“Special payment date” has the meaning specified under “Description of the Recovery Bonds—Payments on the Recovery Bonds” in this prospectus.

“Sponsor” means PG&E.

“State Pledge” has the meaning specified under “Prospectus Summary of Terms—State Pledge” in this prospectus.

“Stress Test Order” means the decision of the CPUC (D. 21-04-030) dated April 22, 2021.

“Treasury Regulations” means proposed or issued regulations promulgated from time to time under the Internal Revenue Code.

“True-up” means a mechanism required by the Wildfire Financing Law and the financing order whereby the servicer will apply to the CPUC for adjustments to the applicable fixed recovery charges based on actual collected fixed recovery charges and updated assumptions by the servicer as to future collections of fixed recovery charges.

“Trust Indenture Act ”means the Trust Indenture Act of 1939, as amended.

“Trustee” means The Bank of New York Mellon Trust Company, National Association, as trustee under the indenture, and its successors and assigns in such capacity.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

168

“Utility Term Loan Credit Agreement” means the Term Loan Credit Agreement, dated as of April 4, 2022, by and among PG&E, the several banks and other financial institutions or entities party thereto from time to time, and MUFG Bank, Ltd., as Administrative Agent, as it may be amended, supplemented, restated or otherwise modified from time to time.

“U.S. Holder” means a holder of a recovery bond that is (a) a citizen or resident of the United States, (b) a partnership or corporation (or other entity treated like a corporation for federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia, (c) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, (d) a trust with respect to which both (i) a court in the United States is able to exercise primary authority over its administration and (ii) one or more United States persons have the authority to control all of its substantial decisions or (e) a trust that has elected to be treated as a United States person under applicable Treasury Regulations.

“Wildfire Financing Law” means Article 5.8 of Chapter 4 of the California Public Utilities Code, as amended.

169

$3,000,000,000 Senior Secured Recovery Bonds,

Series 2022-A

Pacific Gas and Electric Company

Sponsor, Depositor and Initial Servicer

PG&E Wildfire Recovery Funding LLC

Issuing Entity

Joint Book-Running Managers

Citigroup

Goldman Sachs & Co. LLC

J.P. Morgan

Through and including,                 , 2022 (the 90th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and when offering an unsold allotment or subscription.

PART II

Information Not Required in Prospectus

Item 12. Other Expenses of Issuance and Distribution

The following table sets forth the various expenses expected to be incurred by the registrant in connection with the issuance and distribution of the securities being registered by this prospectus, other than underwriting discounts and commissions. All amounts are estimated.

Securities and Exchange Commission registration fee	$	278,100
Printing expenses	$	150,000
Trustee fees and expenses	$	60,000
Legal fees and expenses	$	2,396,000
Accounting fees and expenses	$	125,000
Rating Agencies’ fees and expenses	$	1,285,000
Structuring agent fees and expenses	$	750,000
Miscellaneous fees and expenses	$	250,000
Total	$	5,294,100

Item 13. Indemnification of Directors and Officers

PG&E Wildfire Recovery Funding LLC

Section 18-108 of the Delaware Limited Liability Company Act provides that subject to such standards and restrictions, if any, as are set forth in the limited liability company agreement of a limited liability company, a limited liability company may, and shall have the power to, indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever. Under the limited liability company agreement of PG&E Wildfire Recovery Funding LLC, the issuing entity will indemnify its managers to the fullest extent permitted by law against any liability incurred with respect to their services as managers under the issuing entity’s limited liability company agreement, except for liabilities arising from their own fraud, gross negligence or willful misconduct or, in the case of an independent manager, their bad faith or willful misconduct.

PACIFIC GAS AND ELECTRIC COMPANY

Section 317 of the California Corporations Code provides that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding or action by reason of the fact that he or she is or was a director, officer, employee or other agent of such corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other enterprise. Section 317 also grants authority to a corporation to include in its articles of incorporation indemnification provisions in excess of that permitted in Section 317, subject to certain limitations specified in Section 317.

Article Sixth of the Amended and Restated Articles of Incorporation of Pacific Gas and Electric Company (PG&E) authorizes PG&E to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through bylaws, resolutions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code.

Section 317 of the California Corporations Code provides for indemnification of a corporation’s directors and officers under certain circumstances. PG&E’s articles of incorporation authorize it to provide indemnification of any person who is or was a director, officer, employee or other agent PG&E, or is or was serving at PG&E’s request as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or

domestic corporation which was a predecessor corporation of PG&E or of another enterprise at the request of the predecessor corporation, through PG&E’s bylaws, board of directors resolutions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to the applicable limits set forth in Section 204 of the California Corporations Code.

PG&E’s articles of incorporation also eliminate the liability of PG&E’s directors for monetary damages to the fullest extent permissible by California law. PG&E’s board of directors has adopted a resolution regarding its policy of indemnification and PG&E maintains insurance which insures its directors and officers against certain liabilities. In addition, PG&E has entered into indemnification agreements with certain directors and officers consistent with the terms of such resolutions. PG&E has also entered into written indemnification agreements with each of its directors.

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
1.1	Form of Underwriting Agreement*
3.1	Certificate of Formation of PG&E Wildfire Recovery Funding LLC**
3.2	Form of Amended and Restated Limited Liability Company Agreement of PG&E Wildfire Recovery Funding LLC***
4.1	Form of Indenture between PG&E Wildfire Recovery Funding LLC and the Trustee (including forms of the recovery bonds)***
5.1	Opinion of Hunton Andrews Kurth LLP with respect to legality***
8.1	Opinion of Hunton Andrews Kurth LLP with respect to federal tax matters***
10.1	Form of Recovery Property Servicing Agreement between PG&E Wildfire Recovery Funding LLC and Pacific Gas and Electric Company, as Servicer***
10.2	Form of Recovery Property Purchase and Sale Agreement between PG&E Wildfire Recovery Funding LLC and Pacific Gas and Electric Company, as Seller***
10.3	Form of Administration Agreement between PG&E Wildfire Recovery Funding LLC and Pacific Gas and Electric Company, as Administrator***
21.1	List of Subsidiaries**
23.1	Consent of Hunton Andrews Kurth LLP (included as part of its Opinions filed as Exhibits 5.1 and 8.1)***
24.1	Power of Attorney of PG&E Wildfire Recovery Funding LLC**
24.2	Power of Attorney of Pacific Gas and Electric Company**
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New  York Mellon Trust Company, National Association**
99.1	Financing Order***
99.2	Form of Opinion of Hunton Andrews Kurth LLP with respect to U.S. and California constitutional matters***
99.3	Consent of Manager Nominee**
107.1	Filing Fee Table***

* To be filed as an exhibit to a Current Report on Form 8-K pursuant to Item 601(b)(1) of Regulation S-K.

** Previously filed with the Registration Statement on Form SF-1 of Pacific Gas & Electric Company and PG&E Wildfire Recovery Funding LLC (File Nos. 333-263719 and 333-263719-01) filed on March 21, 2022.

*** Filed herewith.

Item 15. Undertakings

a) The undersigned registrant hereby undertakes that:

i. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

ii. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

b) As to indemnification:

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 of a third party that is incorporated by reference in the registration statement in accordance with Item 1100(c)(1) of Regulation AB (17 CFR 229.1100(c)(1)) shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrants hereby undertake to file an application for the purpose of developing eligibility of the trustee to act under Subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Securities and Exchange Commission under Section 305(b)(2) of the Securities Act of 1933.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on the 25^th day of April, 2022.

PACIFIC GAS AND ELECTRIC COMPANY
By:	/s/ Adam L. Wright
	Name: *Adam L. Wright
	Title: Executive Vice President, Operations and Chief Operating Officer

Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Adam L. Wright * Adam L. Wright	Executive Vice President, Operations and Chief Operating Officer (Principal Executive Officer)	April 25, 2022
/s/ Marlene M. Santos * Marlene M. Santos	Executive Vice President and Chief Customer Officer (Principal Executive Officer)	April 25, 2022
/s/ Jason M. Glickman * Jason M. Glickman	Executive Vice President, Engineering, Planning, and Strategy (Principal Executive Officer)	April 25, 2022
/s/ David S. Thomason * David S. Thomason	Vice President, Chief Financial Officer and Controller (Principal Financial Officer) (Principal Accounting Officer)	April 25, 2022

Pacific Gas and Electric Company Majority of Board of Directors:

/s/ Rajat Bahri * Rajat Bahri	Director	April 25, 2022
/s/ Cheryl F. Campbell * Cheryl F. Campbell	Director	April 25, 2022
/s/ Kerry W. Cooper * Kerry W. Cooper	Director	April 25, 2022
/s/ Jessica L. Denecour * Jessica L. Denecour	Director	April 25, 2022
/s/ Mark E. Ferguson III * Mark E. Ferguson III	Director	April 25, 2022

/s/ Robert C. Flexon * Robert C. Flexon	Director	April 25, 2022
/s/ W. Craig Fugate * W. Craig Fugate	Director	April 25, 2022
/s/ Arno L. Harris * Arno L. Harris	Director	April 25, 2022
/s/ Michael R. Niggli * Michael R. Niggli	Director	April 25, 2022
/s/ Patricia K. Poppe * Patricia K. Poppe	Director	April 25, 2022
/s/ Dean L. Seavers * Dean L. Seavers	Director Chair of the Board	April 25, 2022
/s/ William L. Smith * William L. Smith	Director	April 25, 2022
/s/ Benjamin F. Wilson * Benjamin F. Wilson	Director	April 25, 2022
/s/ Adam L. Wright * Adam L. Wright	Executive Vice President, Operations, Chief Operating Officer and Director	April 25, 2022

* By:	/s/ Joseph C. Yu
Joseph C. Yu
Attorney-in fact

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form SF-1 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on the 25^th day of April, 2022.

PG&E WILDFIRE RECOVERY FUNDING LLC
By:	/s/ Margaret K. Becker
	Name: *Margaret K. Becker
	Title:   Manager and President

Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Margaret K. Becker *Margaret K. Becker	Manager and President (Principal Executive Officer)	April 25, 2022
/s/ Monica Klemann *Monica Klemann	Manager, Treasurer and Secretary (Principal Financial Officer) (Principal Accounting Officer)	April 25, 2022

* By:	/s/ Joseph C. Yu
Joseph C. Yu
Attorney-in fact

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

PG&E WILDFIRE RECOVERY FUNDING LLC

Dated as of

[    ], 2022

TABLE OF CONTENTS

		Page
	ARTICLE I
	GENERAL PROVISIONS
SECTION 1.01	Definitions		1
SECTION 1.02	Sole Member; Registered Office and Agent		2
SECTION 1.03	Other Offices		3
SECTION 1.04	Name		3
SECTION 1.05	Purpose; Nature of Business Permitted; Powers		3
SECTION 1.06	Issuance of Recovery Bonds		5
SECTION 1.07	Limited Liability Company Agreement; Certificate of Formation		6
SECTION 1.08	Separate Existence		6
SECTION 1.09	Limitation on Certain Activities		9
SECTION 1.10	No State Law Partnership		10
	ARTICLE II
	CAPITAL
SECTION 2.01	Initial Capital		10
SECTION 2.02	Additional Capital Contributions		11
SECTION 2.03	Capital Account		11
SECTION 2.04	Interest		11
	ARTICLE III
	ALLOCATIONS; BOOKS
SECTION 3.01	Allocations of Income and Loss		11
SECTION 3.02	Company to be Disregarded for Tax Purposes		12
SECTION 3.03	Books of Account		12
SECTION 3.04	Access to Accounting Records		12
SECTION 3.05	Annual Tax Information		12
SECTION 3.06	Internal Revenue Service Communications		12

- i -

	ARTICLE IV
	MEMBER
SECTION 4.01	Powers	13
SECTION 4.02	Compensation of Member	14
SECTION 4.03	Other Ventures	14
SECTION 4.04	Actions by the Member	14
	ARTICLE V
	OFFICERS
SECTION 5.01	Designation; Term; Qualifications.	15
SECTION 5.02	Removal and Resignation	16
SECTION 5.03	Vacancies	16
SECTION 5.04	Compensation	16
	ARTICLE VI
	MEMBERSHIP INTEREST
SECTION 6.01	General	16
SECTION 6.02	Distributions	16
SECTION 6.03	Rights on Liquidation, Dissolution or Winding Up	17
SECTION 6.04	Redemption	17
SECTION 6.05	Voting Rights	17
SECTION 6.06	Transfer of Membership Interests	17
SECTION 6.07	Admission of Transferee as Member	17
	ARTICLE VII
	MANAGERS
SECTION 7.01	Managers	18
SECTION 7.02	Powers of the Managers	19
SECTION 7.03	Reimbursement	20
SECTION 7.04	Removal of Managers	20
SECTION 7.05	Resignation of Manager	20
SECTION 7.06	Vacancies	20
SECTION 7.07	Meetings of the Managers	21

- ii -

SECTION 7.08	Electronic Communications	21
SECTION 7.09	Committees of Managers	21
SECTION 7.10	Limitations on Independent Manager(s)	21
	ARTICLE VIII
	EXPENSES
SECTION 8.01	Expenses	22
	ARTICLE IX
	PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP
SECTION 9.01	Existence	22
SECTION 9.02	Dissolution	23
SECTION 9.03	Accounting	24
SECTION 9.04	Certificate of Cancellation	24
SECTION 9.05	Winding Up	24
SECTION 9.06	Order of Payment of Liabilities Upon Dissolution	24
SECTION 9.07	Limitations on Payments Made in Dissolution	24
SECTION 9.08	Limitation on Liability	24
	ARTICLE X
	INDEMNIFICATION
SECTION 10.01	Indemnity	24
SECTION 10.02	Indemnity for Actions By or In the Right of the Company	25
SECTION 10.03	Indemnity If Successful	25
SECTION 10.04	Expenses	26
SECTION 10.05	Advance Payment of Expenses	26
SECTION 10.06	Other Arrangements Not Excluded	26
	ARTICLE XI
	MISCELLANEOUS PROVISIONS
SECTION 11.01	No Bankruptcy Petition; Dissolution	27
SECTION 11.02	Amendments	27
SECTION 11.03	Counterparts	28

- iii -

SECTION 11.04	Governing Law	28
SECTION 11.05	Headings	28
SECTION 11.06	Severability	28
SECTION 11.07	Assigns	29
SECTION 11.08	Enforcement by each Independent Manager	29
SECTION 11.09	Waiver of Partition; Nature of Interest	29
SECTION 11.10	Benefits of Agreement; No Third-Party Rights	29

EXHIBITS, SCHEDULES AND APPENDIX

Schedule A	Schedule of Capital Contribution of Member
Schedule B	Initial Managers
Schedule C	Initial Officers
Exhibit A	Management Agreement
Appendix A	Definitions

- iv -

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF PG&E WILDFIRE RECOVERY FUNDING LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as amended, restated or amended and restated from time to time, this “LLC Agreement”) of PG&E WILDFIRE RECOVERY FUNDING LLC, a Delaware limited liability company (the “Company”), dated as of [ ], 2022, is entered into by PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, as sole equity member of the Company (together with any additional or successor members of the Company, each in their capacity as a member of the Company, other than Special Members, the “Member”), and by Orlando Figueroa, as the Independent Manager.

RECITALS

WHEREAS, the Member has caused to be filed a Certificate of Formation of the Company with the Secretary of State of the State of Delaware to form the Company under and pursuant to the LLC Act and has entered into a Limited Liability Company Agreement of the Company, dated as of March 8, 2022 (the “Original LLC Agreement”); and

WHEREAS, in accordance with the LLC Act, the Member desires to continue the Company without dissolution and to enter into this LLC Agreement to amend and restate in its entirety the Original LLC Agreement and to set forth the rights, powers and interests of the Member with respect to the Company and its Membership Interest therein and to provide for the management of the business and operations of the Company.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby amend and restate in its entirety the Original LLC Agreement as follows:

ARTICLE I

GENERAL PROVISIONS

SECTION 1.01 Definitions.

(a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in Appendix A attached hereto.

(b) All terms defined in this LLC Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(c) The words “hereof,” “herein,” “hereunder” and words of similar import, when used in this LLC Agreement, shall refer to this LLC Agreement as a whole and not to any particular provision of this LLC Agreement; Section, Schedule, Exhibit, Annex and Attachment references contained in this LLC Agreement are references to Sections, Schedules, Exhibits, Annexes and Attachments in or to this LLC Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

(d) The definitions contained in this LLC Agreement are applicable to the singular as well as the plural forms of such terms.

SECTION 1.02 Sole Member; Registered Office and Agent.

(a) The sole Member of the Company shall be Pacific Gas and Electric Company, a California corporation, or any successor as sole member pursuant to Sections 1.02(c), 6.06 and 6.07. The registered office and registered agent of the Company in the State of Delaware as of the date hereof are Corporation Service Company, 251 Little Falls Drive, Wilmington, New Castle County, Delaware 19808. The Member may change said registered office and agent from one location to another in the State of Delaware. The Member shall provide notice of any such change to the Indenture Trustee.

(b) Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon the transfer or assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 6.06 and 6.07), each Person acting as an Independent Manager pursuant to the terms of this LLC Agreement shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this LLC Agreement, and (ii) such successor has also accepted its appointment as an Independent Manager pursuant to this LLC Agreement; provided, however, the Special Members shall automatically cease to be members of the Company upon the admission to the Company of a substitute Member. Each Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets (and no Special Member shall be treated as a member of the Company for federal income tax purposes). Pursuant to Section 18-301 of the LLC Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the LLC Act, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including the merger, consolidation, division or conversion of the Company. In order to implement the admission to the Company of each Special Member, each Person acting as an Independent Manager pursuant to this LLC Agreement shall execute a counterpart to this LLC Agreement. Prior to its admission to the Company as Special Member, each Person acting as an Independent Manager pursuant to this LLC Agreement shall not be a member of the Company. A “Special Member” means, upon such Person’s admission to the Company as a member of the Company pursuant to this Section 1.02(b), a Person acting as an Independent Manager, in such Person’s capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this LLC Agreement. For purposes of this LLC Agreement, a Special Member is not included within the defined term “Member.”

- 2 -

(c) The Company may admit additional Members with the affirmative vote of a majority of the Managers, which vote must include the affirmative vote of each Independent Manager. Notwithstanding the preceding sentence, it shall be a condition to the admission of any additional Member that the sole Member shall have received an opinion of outside tax counsel (as selected by the Member in form and substance reasonably satisfactory to the Member and the Indenture Trustee) that the admission of such additional Member shall not cause the Company to be treated, for federal income tax purposes, as having more than a “sole owner” and that the Company shall not be treated, for federal income tax purposes, as an entity separate from such “sole owner”.

SECTION 1.03 Other Offices. The Company may have an office at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, or at any other offices that may at any time be established by the Member at any place or places within or outside the State of Delaware. The Member shall provide notice to the Indenture Trustee of any change in the location of the Company’s office.

SECTION 1.04 Name. The name of the Company shall be “PG&E Wildfire Recovery Funding LLC”. The name of the Company may be changed from time to time by the Member with ten (10) days’ prior written notice to the Managers and the Indenture Trustee, and the filing of an appropriate amendment to the Certificate of Formation with the Secretary of State as required by the LLC Act.

SECTION 1.05 Purpose; Nature of Business Permitted; Powers. The purposes for which the Company is formed are limited to:

(a) acquire, own, hold, dispose of, administer, service or enter into agreements regarding the receipt and servicing of Recovery Property and the other Recovery Bond Collateral, along with certain other related assets with respect to one or more series of Recovery Bonds;

(b) manage, sell, assign, pledge, collect amounts due on or otherwise deal with the Recovery Property and the other Recovery Bond Collateral and related assets with respect to one or more series of Recovery Bonds to be so acquired in accordance with the terms of the Basic Documents relating to such series;

(c) negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in this Section 1.05 above; provided, that each party to any such agreement under which material obligations are imposed upon the Company shall covenant that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of all Recovery Bonds and any other amounts owed under any Indenture, acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company; or ordering the winding up or liquidation of the affairs of the Company; and provided, further, that the Company shall be permitted to incur additional indebtedness or other liabilities payable to service providers and trade creditors in the ordinary course of business in connection with the foregoing activities;

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(d) file with the SEC one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register one or more series of Recovery Bonds under the securities or “Blue Sky” laws of various jurisdictions;

(e) authorize, execute, deliver, issue and register one or more series of Recovery Bonds;

(f) make payments on the Recovery Bonds;

(g) pledge its interest in Recovery Property and other Recovery Bond Collateral relating to any series of Recovery Bonds to the Indenture Trustee under the related Indenture in order to secure the related series of Recovery Bonds; and

(h) engage in any lawful act or activity and exercise any powers permitted to limited liability companies formed under the laws of the State of Delaware that, in either case, are incidental to, or necessary, suitable or convenient for the accomplishment of the above-mentioned purposes.

The Company shall engage only in any activities related to the foregoing purposes or required or authorized by the terms of the Basic Documents or other agreements referenced above. The Company shall have all powers reasonably incidental, necessary, suitable or convenient to effect the foregoing purposes, including all powers granted under the LLC Act. The Company is hereby authorized to execute, deliver and perform, and the Member, any Manager (other than an Independent Manager), or any officer of the Company, acting singly or collectively, on behalf of the Company, are hereby authorized to execute and deliver, the Basic Documents and all registration statements, documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of any Member, Manager or other Person, notwithstanding any other provision of this LLC Agreement, the LLC Act, or other applicable law, rule or regulation. Notwithstanding any other provision of this LLC Agreement, the LLC Act or other applicable law, any Basic Document executed prior to the date hereof by any Member, Manager or officer on behalf of the Company is hereby ratified and approved in all respects. The authorization set forth in the preceding two sentences shall not be deemed a restriction on the power and authority of the Member or any Manager, including any Independent Manager, to enter into other agreements or documents on behalf of the Company as authorized pursuant to this LLC Agreement and the LLC Act. The Company shall possess and may exercise all the powers and privileges granted by the LLC Act or by any other law or by this LLC Agreement, together with any powers incidental thereto, insofar as such powers and privileges are incidental, necessary, suitable or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

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SECTION 1.06 Issuance of Recovery Bonds. (a) The Company may issue one or more series of Recovery Bonds pursuant to the original Financing Order or any subsequent Financing Order. Each series of Recovery Bonds will be secured by separate Recovery Property and other Recovery Bond Collateral. Recovery Property which is pledged to secure one series of Recovery Bonds shall not be pledged to secure any other series of Recovery Bonds.

(b) Following the initial issuance of Recovery Bonds, the Company shall not issue any series of Recovery Bonds (“Additional Issuances”) unless:

(i) the Rating Agency Condition set forth in the Basic Documents for any outstanding series of Recovery Bonds has been satisfied;

(ii) the Additional Issuance shall receive a rating or ratings as required by the applicable Financing Order;

(iii) each Additional Issuance shall have recourse only to the Recovery Bond Collateral pledged in connection with such Additional Issuance, shall be nonrecourse to any of the Company’s other assets and shall not constitute a claim against the Company if cash flow from the pledged Recovery Bond Collateral is insufficient to pay such Additional Issuance in full;

(iv) the Company has delivered to the Indenture Trustee an opinion of counsel of a nationally recognized firm experienced in such matters to the effect that after such issuance, in the opinion of such counsel, if the Member were to become a debtor in a case under the United States Bankruptcy Code (Title 11, U.S.C.), a federal court exercising bankruptcy jurisdiction and exercising reasonable judgment after full consideration of all relevant factors would not order substantive consolidation of the assets and liabilities of the Company with those of the bankruptcy estate of the Member, subject to the customary exceptions, qualifications and assumptions contained therein;

(v) the Company has delivered to the Indenture Trustee documentation stating that the Recovery Bonds issued pursuant to such Additional Issuance shall have the benefit of a true-up mechanism;

(vi) the transaction documentation for such Additional Issuance provides that holders of the Recovery Bonds of such Additional Issuance will not file or join in the filing of any involuntary bankruptcy petition against the Company;

(vii) if the holders of the Recovery Bonds of any Additional Issuance are deemed to have any interest in any of the Bond Collateral pledged under the applicable Indenture (other than Recovery Bond Collateral pledged with respect to such Additional Issuance), the holders of such Recovery Bonds must agree that any such interest is subordinate to the claims and rights of the Holders of such other related series of Recovery Bonds;

(viii) the Additional Issuance shall have its own bank accounts or trust accounts; and

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(ix) the Additional Issuance shall bear its own trustees fees and servicer fees, except that the allocation of such fees with respect to any Additional Issuance shall be governed by the terms of the related Indenture and the related Servicing Agreement.

SECTION 1.07 Limited Liability Company Agreement; Certificate of Formation. This LLC Agreement shall constitute a “limited liability company agreement” within the meaning of the LLC Act. Monica Klemann, as an authorized person within the meaning of the LLC Act, has caused a certificate of formation of the Company to be executed and filed in the office of the Secretary of State of the State of Delaware on March 8, 2022 (such execution and filing being hereby ratified and approved in all respects). Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, her powers as an “authorized person” ceased, and the Member thereupon became the designated “authorized person” and shall continue as the designated “authorized person” within the meaning of the LLC Act. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation of the Company as provided in the LLC Act.

SECTION 1.08 Separate Existence. Except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, the Member and the Managers shall take all steps necessary to continue the identity of the Company as a separate legal entity and to make it apparent to third Persons that the Company is an entity with assets and liabilities distinct from those of the Member, Affiliates of the Member or any other Person, and that the Company is not a division of any of the Affiliates of the Company or any other Person. In that regard, and without limiting the foregoing in any manner, the Company shall:

(a) maintain the assets of the Company in such a manner that it is not costly or difficult to segregate, identify or ascertain its individual assets from those of any other Person, including any Affiliate;

(b) conduct all transactions with Affiliates on an arm’s-length basis;

(c) not guarantee, become obligated for or pay the debts of any Affiliate or hold the credit of the Company out as being available to satisfy the obligations of any Affiliate or other Person (nor, except as contemplated in the Basic Documents, indemnify any Person for losses resulting therefrom), nor, except as contemplated in the Basic Documents, have any of its obligations guaranteed by any Affiliate or hold the Company out as responsible for the debts of any Affiliate or other Person or for the decisions or actions with respect to the business and affairs of any Affiliate, nor seek or obtain credit or incur any obligation to any third party based upon the creditworthiness or assets of any Affiliate or any other Person (i.e. other than based on the assets of the Company) nor allow any Affiliate to do such things based on the credit of the Company;

(d) except as expressly otherwise permitted hereunder or under any of the Basic Documents, not permit the commingling or pooling of the Company’s funds or other assets with the funds or other assets of any Affiliate;

(e) maintain separate deposit and other bank accounts and funds (separately identifiable from those of the Member or any other Person) to which no Affiliate has any access, which accounts shall be maintained in the name and, to the extent not inconsistent with applicable federal tax law, with the tax identification number of the Company;

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(f) maintain full books of accounts and records (financial or other) and financial statements separate from those of its Affiliates or any other Person, prepared and maintained in accordance with generally accepted accounting principles (including, all resolutions, records, agreements or instruments underlying or regarding the transactions contemplated by the Basic Documents or otherwise) and audited annually by an independent accounting firm which shall provide such audit to the Indenture Trustee;

(g) pay its own liabilities out of its own funds, including fees and expenses of the Administrator pursuant to any Administration Agreement and the Servicer pursuant to any Servicing Agreement;

(h) not hire or maintain any employees, but shall compensate (either directly or through reimbursement of the Company’s allocable share of any shared expenses) all consultants, agents and Affiliates, to the extent applicable, for services provided to the Company by such consultants, agents or Affiliates, in each case, from the Company’s own funds;

(i) allocate fairly and reasonably the salaries of and the expenses related to providing the benefits of officers or managers shared with the Member, any Special Member or any Manager;

(j) allocate fairly and reasonably any overhead shared with the Member, any Special Member or any Manager;

(k) pay from its own bank accounts for accounting and payroll services, rent, lease and other expenses (or the Company’s allocable share of any such amounts provided by one or more other Affiliates) and not have such operating expenses (or the Company’s allocable share thereof) paid by any Affiliates, provided, that the Member shall be permitted to pay the initial organization expenses of the Company and certain of the expenses related to the transactions contemplated by the Basic Documents as provided therein;

(l) maintain adequate capitalization to conduct its business and affairs considering the Company’s size and the nature of its business and intended purposes and, after giving effect to the transactions contemplated by the Basic Documents, refrain from engaging in a business for which its remaining property represents an unreasonably small capital;

(m) conduct all of the Company’s business (whether in writing or orally) solely in the name of the Company through the Member and the Company’s Managers, officers and agents and hold the Company out as an entity separate from any Affiliate;

(n) not make or declare any distributions of cash or property to the Member except in accordance with appropriate limited liability company formalities and only consistent with sound business judgment to the extent that it is permitted pursuant to the Basic Documents and not violative of any applicable law;

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(o) otherwise practice and adhere to all limited liability company procedures and formalities to the extent required by this LLC Agreement or all other appropriate constituent documents and the laws of its state of formation and all other appropriate jurisdictions;

(p) not appoint an Affiliate or any employee of an Affiliate as an agent of the Company, except as otherwise permitted in the Basic Documents (although such Persons can qualify as a Manager or as an officer of the Company);

(q) not acquire obligations or securities of or make loans or advances to or pledge its assets for the benefit of any Affiliate, the Member or any Affiliate of the Member;

(r) not permit the Member or any Affiliate to acquire obligations of or make loans or advances to the Company;

(s) except as expressly provided in the Basic Documents, not permit the Member or any Affiliate to guarantee, pay or become liable for the debts of the Company nor permit any such Person to hold out its creditworthiness as being available to pay the liabilities and expenses of the Company nor, except for the indemnities in this LLC Agreement and the Basic Documents, indemnify any Person for losses resulting therefrom;

(t) maintain separate minutes of the actions of the Member and the Managers, including the transactions contemplated by the Basic Documents;

(u) cause (i) all written and oral communications, including letters, invoices, purchase orders, and contracts, of the Company to be made solely in the name of the Company, (ii) the Company to have its own tax identification number (to the extent not inconsistent with applicable federal tax law), stationery, checks and business forms, separate from those of any Affiliate, (iii) all Affiliates not to use the stationery or business forms of the Company, and cause the Company not to use the stationery or business forms of any Affiliate, and (iv) all Affiliates not to conduct business in the name of the Company, and cause the Company not to conduct business in the name of any Affiliate;

(v) direct creditors of the Company to send invoices and other statements of account of the Company directly to the Company and not to any Affiliate and cause the Affiliates to direct their creditors not to send invoices and other statements of accounts of such Affiliates to the Company;

(w) cause the Member to maintain as official records all resolutions, agreements, and other instruments underlying or regarding the transactions contemplated by the Basic Documents;

(x) disclose, and cause the Member to disclose, in its financial statements the effects of all transactions between the Member and the Company in accordance with generally accepted accounting principles, and in a manner which makes it clear that (i) the Company is a separate legal entity, (ii) the assets of the Company (including the Recovery Property transferred to the Company pursuant to any Sale Agreement) are not assets of any Affiliate and are not available to pay creditors of any Affiliate and (iii) neither the Member nor any other Affiliate is liable or responsible for the debts of the Company;

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(y) treat and cause the Member to treat the transfer of Recovery Property from the Member to the Company as a sale under the Securitization Law;

(z) except as described herein with respect to tax purposes and financial reporting, describe and cause each Affiliate to describe the Company, and hold the Company out as a separate legal entity and not as a division or department of any Affiliate, and promptly correct any known misunderstanding regarding the Company’s identity separate from any Affiliate or any Person;

(aa) so long as any of the Recovery Bonds are Outstanding, treat the Recovery Bonds as debt for all purposes and specifically as debt of the Company, other than for financial reporting, state or federal regulatory or tax purposes;

(bb) solely for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, state, local and other taxes, so long as any of the Recovery Bonds are Outstanding, treat the Recovery Bonds as indebtedness of the Member secured by the Recovery Bond Collateral unless otherwise required by appropriate taxing authorities;

(cc) file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a division or disregarded entity for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;

(dd) maintain its valid existence in good standing under the laws of the State of Delaware and maintain its qualification to do business under the laws of such other jurisdictions as its operations require;

(ee) not form, or cause to be formed, any subsidiaries;

(ff) comply with all laws applicable to the transactions contemplated by this LLC Agreement and the Basic Documents; and

(gg) cause the Member to observe in all material respects all limited liability company procedures and formalities, if any, required by its constituent documents and the laws of its state of formation and all other appropriate jurisdictions.

Failure of the Company, or the Member or any Manager on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this LLC Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member or the Managers.

SECTION 1.09 Limitation on Certain Activities. Notwithstanding any other provisions of this LLC Agreement and any provision of law that otherwise so empowers the Company, the Member or any Manager or any other Person, the Company, and the Member or Managers or any other Person on behalf of the Company, shall not:

(a) engage in any business or activity other than as set forth in Article I hereof;

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(b) without the affirmative vote of the Member and the unanimous affirmative vote of all of the Managers, including each Independent Manager, file a voluntary bankruptcy petition for relief with respect to the Company under the Bankruptcy Code or any other state, local, federal, foreign or other law relating to bankruptcy, consent to the institution of insolvency or bankruptcy proceedings against the Company or otherwise institute insolvency or bankruptcy proceedings with respect to the Company or take any limited liability company action in furtherance of any such filing or institution of a proceeding; provided however, that neither the Member nor any Manager may authorize the taking of any of the foregoing actions unless there is at least one Independent Manager then serving in such capacity;

(c) without the affirmative vote of all Managers, including each Independent Manager, and then only to the extent permitted by the Basic Documents, convert, merge or consolidate with any other Person or sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other Person;

(d) take any action, file any tax return, or make any election inconsistent with the treatment of the Company, for purposes of federal income taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the Member;

(e) incur any indebtedness or assume or guarantee any indebtedness of any Person (other than the indebtedness incurred under the Basic Documents);

(f) issue any bonds other than the Recovery Bonds contemplated by the Basic Documents; or

(g) to the fullest extent permitted by law, without the affirmative vote of its Member and the affirmative vote of all Managers, including each Independent Manager, execute any dissolution, division, liquidation, or winding up of the Company.

So long as any of the Recovery Bonds are Outstanding, the Company and the Member shall give written notice to each applicable Rating Agency of any action described in clauses (b), (c) or (g) of this Section 1.09 which is taken by or on behalf of the Company with the required affirmative vote of the Member and all Managers as therein described.

SECTION 1.10 No State Law Partnership. No provisions of this LLC Agreement shall be deemed or construed to constitute a partnership (including a limited partnership) or joint venture, or the Member a partner or joint venturer of or with any Manager or the Company, for any purposes.

ARTICLE II

CAPITAL

SECTION 2.01 Initial Capital. The initial capital of the Company shall be the sum of cash contributed to the Company by the Member (the “Capital Contribution”) in the amount set out opposite the name of the Member on Schedule A hereto, as amended from time to time and incorporated herein by this reference.

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SECTION 2.02 Additional Capital Contributions. The assets of the Company are expected to generate a return sufficient to satisfy all obligations of the Company under this LLC Agreement and the Basic Documents and any other obligations of the Company. It is expected that no capital contributions to the Company will be necessary after the purchase of the Recovery Property. On or prior to the date of issuance of any series of Recovery Bonds, the Member shall make an additional contribution to the Company in an amount equal to at least 0.50% of the initial principal amount of such series or such greater amount as agreed to by the Member in connection with the issuance by the Company of the Recovery Bonds, which amount the Company shall deposit into the capital subaccount of the applicable Collection Account established by the Indenture Trustee as provided under the applicable Indenture relating to such series of Recovery Bonds. No capital contribution by the Member to the Company will be made for the purpose of mitigating losses on Recovery Property that has previously been transferred to the Company, and all capital contributions shall be made in accordance with all applicable limited liability company procedures and requirements, including proper record keeping by the Member and the Company. Each capital contribution will be acknowledged by a written receipt signed by any one of the Managers. The Managers acknowledge and agree that, notwithstanding anything in this LLC Agreement to the contrary, such additional contribution will be invested only in Eligible Investments, and all income earned thereon shall be allocated or paid by the Indenture Trustee in accordance with the provisions of the related Indenture under which such contribution is held.

SECTION 2.03 Capital Account. A Capital Account shall be established and maintained for the Member on the Company’s books (the “Capital Account”).

SECTION 2.04 Interest. Except as provided in the Financing Order relating to any series of Recovery Bonds, or in the Basic Documents relating to such series, no interest or return on its Capital Contribution shall be paid or credited to the Member on its Capital Account or upon any undistributed profits left on deposit with the Company. Except as provided herein, in any Financing Order, in the related Basic Documents or by law, the Member shall have no right to demand or receive the return of its Capital Contribution.

ARTICLE III

ALLOCATIONS; BOOKS

SECTION 3.01 Allocations of Income and Loss.

(a) Book Allocations. The net income and net loss of the Company shall be allocated entirely to the Member.

(b) Tax Allocations. Because the Company is not making (and will not make) an election to be treated as an association taxable as a corporation under Section 301.7701-3(a) of the Treasury Regulations, and because the Company is a business entity that has a single owner and is not a corporation, it is expected to be disregarded as an entity separate from its owner for federal income tax purposes under Section 301.7701-3(b)(1) of the Treasury Regulations. Accordingly, all items of income, gain, loss, deduction and credit of the Company for all taxable periods will be treated for federal income tax purposes, and for state and local income and other tax purposes to the extent permitted by applicable law, as realized or incurred directly by the Member. To the extent not so permitted, all items of income, gain, loss, deduction and credit of

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the Company shall be allocated entirely to the Member as permitted by applicable tax law, and the Member shall pay (or indemnify the Company, any Indenture Trustee and each of their officers, managers, employees or agents for, and defend and hold harmless each such person from and against its payment of) any taxes levied or assessed upon all or any part of the Company’s property or assets based on existing law as of the date hereof, including any sales, gross receipts, general corporation, personal property, privilege, franchise or license taxes (but excluding any taxes imposed as a result of a failure of such person to properly withhold or remit taxes imposed with respect to payments on any Recovery Bond). Each Indenture Trustee (on behalf of its related Secured Parties) shall be a third party beneficiary of the Member’s obligations set forth in this Section 3.01, it being understood that Bondholders shall be entitled to enforce their rights against the Member under this Section 3.01 solely through a cause of action brought for their benefit by the Indenture Trustee.

SECTION 3.02 Company to be Disregarded for Tax Purposes. The Company shall comply with the applicable provisions of the Code and the applicable Treasury Regulations thereunder in the manner necessary to effect the intention of the parties that the Company be treated, for federal income tax purposes, as a disregarded entity that is not separate from the Member pursuant to Treasury Regulations Section 301.7701-1 et seq. and that the Company be accorded such treatment until its dissolution pursuant to Article IX hereof and shall take all actions, and shall refrain from taking any action, required by the Code or Treasury Regulations thereunder in order to maintain such status of the Company. In addition, for federal income tax purposes, the Company may not claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Recovery Bonds (other than amounts properly withheld from such payments under the Code or other tax laws) or assert any claim against any present or former Bondholder by reason of the payment of the taxes levied or assessed upon any part of the Recovery Bond Collateral.

SECTION 3.03 Books of Account. At all times during the continuance of the Company, the Company shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles, using the fiscal year and taxable year of the Member. In addition, the Company shall keep all records required to be kept pursuant to the LLC Act.

SECTION 3.04 Access to Accounting Records. All books and records of the Company shall be maintained at any office of the Company or at the Company’s principal place of business, and the Member, and its duly authorized representative, shall have access to them at such office of the Company and the right to inspect and copy them at reasonable times.

SECTION 3.05 Annual Tax Information. The Managers shall cause the Company to deliver to the Member all information necessary for the preparation of the Member’s federal income tax return.

SECTION 3.06 Internal Revenue Service Communications. The Member shall communicate and negotiate with the Internal Revenue Service on any federal tax matter on behalf of the Member and the Company.

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ARTICLE IV

MEMBER

SECTION 4.01 Powers. Subject to the provisions of this LLC Agreement (including without limitation Sections 1.08 and 1.09), it is hereby expressly declared that the Member shall have the following powers:

(a) To select and remove the Managers, prescribe such powers and duties for them as may be consistent with the LLC Act and other applicable law and this LLC Agreement, fix their compensation, and require from them security for faithful service; provided, that, except as provided in Section 7.06, at all times during which any Recovery Bonds are Outstanding and any Indenture remains in full force and effect (and otherwise in accordance with the Indenture) the Company shall have at least one Independent Manager. Prior to issuance of any Recovery Bonds, the Member shall appoint at least one Independent Manager. An “Independent Manager” means an individual who (1) has prior experience as an independent director, independent manager or independent member, (2) is employed by a nationally-recognized company that provides professional Independent Managers and other corporate services in the ordinary course of its business, (3) is duly appointed as an Independent Manager and (4) is not and has not been for at least five years from the date of his or her or its appointment, and will not while serving as Independent Manager, be any of the following:

(i) an employee, director, manager, stockholder, partner, agent, consultant, attorney, accountant, advisor or officer of the Company or any of its equityholders or Affiliates (other than as an independent director, independent manager or special member of the Company or an Affiliate of the Company that is not in the direct chain of ownership of the Company and that is required by a creditor to be a single purpose bankruptcy remote entity); provided, that the indirect or beneficial ownership of stock of the Member or its Affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an Independent Manager;

(ii) a creditor, supplier or service provider (including provider of professional services) to the Company, the Member or any of their respective equityholders or Affiliates (other than a nationally-recognized company that routinely provides professional Independent Managers and other corporate services to the Company, the Member or any of its Affiliates in the ordinary course of its business);

(iii) a family member of any such person described in clauses (i) or (ii) above; or

(iv) a Person that controls (whether directly, indirectly or otherwise) any of clauses (i), (ii) or (iii) above.

A natural person who otherwise satisfies the foregoing definition and satisfies subparagraph (i) by reason of being the independent manager or independent director of a “special purpose entity” affiliated with the Company shall be qualified to serve as an Independent Manager of the Company, provided that the fees that such individual earns from serving as an independent

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manager or independent director of affiliates of the Company in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. For purposes of this paragraph, a “special purpose entity” is an entity, whose organizational documents contain restrictions on its activities and impose requirements intended to preserve such entity’s separateness that are substantially similar to the Special Purpose Provisions of this LLC Agreement.

The fees charged by an Independent Manager shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered an Operating Expense of the Company subject to the limitations on such expenses set forth in any related Financing Order. Each Manager, including each Independent Manager, is hereby deemed to be a “manager” within the meaning 18-101(12) of the LLC Act.

Promptly following any resignation or replacement of any Independent Manager, the Member shall give written notice to each applicable Rating Agency and to each Indenture Trustee of any such resignation or replacement.

(b) To change the registered agent and office of the Company in Delaware from one location to another and to fix and locate from time to time one or more other offices of the Company.

SECTION 4.02 Compensation of Member. To the extent permitted by applicable law, the Company shall have authority to reimburse the Member for out-of-pocket expenses incurred by the Member in connection with its service to the Company. It is understood that the compensation paid to the Member under the provisions of this Section 4.02 shall be determined without regard to the income of the Company, shall not, to the fullest extent permitted by law, be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered as an Operating Expense.

SECTION 4.03 Other Ventures. Notwithstanding any duties (including fiduciary duties) otherwise existing at law or in equity, it is expressly agreed that the Member, the Managers and any Affiliates, officers, directors, managers, stockholders, partners or employees of the Member, may engage in other business ventures of any nature and description, whether or not in competition with the Company, independently or with others, and the Company shall not have any rights in and to any independent venture or activity or the income or profits derived therefrom.

SECTION 4.04 Actions by the Member. All actions of the Member may be taken by written resolution of the Member which shall be signed on behalf of the Member by an authorized officer of the Member and filed with the records of the Company.

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ARTICLE V

OFFICERS

SECTION 5.01 Designation; Term; Qualifications.

(a) Officers. The officers of the Company as of the date hereof are identified on Schedule C (such individuals, to the extent not previously appointed, being hereby appointed to such offices). The Managers may, from time to time, designate one or more Persons to be officers of the Company. Any officer so designated shall have such title and authority and perform such duties as the Managers may, from time to time, delegate to them. Each officer shall hold office for the term for which such officer is designated and until its successor shall be duly designated and shall qualify or until its death, resignation or removal as provided in this LLC Agreement. Any Person may hold any number of offices. No officer need be a Manager, the Member, a Delaware resident, or a United States citizen.

(b) President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Managers, shall be responsible for the general and active management of the business of the Company and shall see that all orders and resolutions of the Managers are carried into effect. The President or any other officer authorized by the President or the Managers may execute all contracts, except: (i) where required or permitted by law or this LLC Agreement to be otherwise signed and executed, including Section 1.09; and (ii) where signing and execution thereof shall be expressly delegated by the Managers to some other officer or agent of the Company.

(c) Vice President. In the absence of the President or in the event of the President’s inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Managers, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

(d) Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Managers and record all the proceedings of the meetings of the Company and of the Managers in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Managers, and shall perform such other duties as may be prescribed by the Managers or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Managers (or if there be no such determination, then in order of their designation), shall, in the absence of the Secretary or in the event of the Secretary’s inability to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

(e) Treasurer and Assistant Treasurer. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Manager. The Treasurer shall disburse the funds of the Company as may be ordered by the Manager, taking proper vouchers for such disbursements, and shall render to the President and to the Managers, at its regular meetings or when the Managers so require, an account of all of the

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Treasurer’s transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Managers (or if there be no such determination, then in the order of their designation), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.

(f) Officers as Agents. The officers of the Company, to the extent their powers as set forth in this LLC Agreement or otherwise vested in them by action of the Managers are not inconsistent with this LLC Agreement, are agents of the Company for the purpose of the Company’s business and, subject to Section 1.09, the actions of the officers taken in accordance with such powers shall bind the Company.

(g) Duties of Managers and Officers. Except to the extent otherwise provided herein, each Manager (other than the Independent Managers) and officer of the Company shall have a fiduciary duty of loyalty and care similar to that of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware.

SECTION 5.02 Removal and Resignation. Any officer of the Company may be removed as such, with or without cause, by the Managers at any time. Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Managers.

SECTION 5.03 Vacancies. Any vacancy occurring in any office of the Company may be filled by the Managers.

SECTION 5.04 Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Managers. Such compensation shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered an Operating Expense.

ARTICLE VI

MEMBERSHIP INTEREST

SECTION 6.01 General. “Membership Interest” means the limited liability company interest of the Member in the Company. The Membership Interest constitutes personal property and, subject to Section 6.06, shall be freely transferable and assignable in whole but not in part upon registration of such transfer and assignment on the books of the Company in accordance with the procedures established for such purpose by the Managers of the Company.

SECTION 6.02 Distributions. The Member shall be entitled to receive, out of the assets of the Company legally available therefor, distributions payable in cash in such amounts, if any, as the Managers shall declare. Notwithstanding any provision to the contrary contained in this LLC Agreement, the Company shall not make a distribution to the Member on

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account of its interest in the Company if such distribution would violate the LLC Act or any other applicable law or any Basic Document.

SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up.

(a) In the event of any liquidation, dissolution or winding up of the Company, the Member shall be entitled to all remaining assets of the Company available for distribution to the Member after satisfaction (whether by payment or reasonable provision for payment) of all liabilities, debts and obligations of the Company.

(b) Neither the sale of all or substantially all of the property or business of the Company, nor the merger or consolidation of the Company into or with another Person or other entity, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purpose of this Section 6.03.

SECTION 6.04 Redemption. The Membership Interest shall not be redeemable.

SECTION 6.05 Voting Rights. Subject to the terms of this LLC Agreement, the Member shall have the sole right to vote on all matters as to which members of a limited liability company shall be entitled to vote pursuant to the LLC Act and other applicable law.

SECTION 6.06 Transfer of Membership Interests.

(a) The Member may transfer its Membership Interest, in whole but not in part, but the transferee shall not be admitted as a Member except in accordance with Section 6.07. Until the transferee is admitted as a Member, the Member shall continue to be the sole member of the Company (subject to Section 1.02) and to be entitled to exercise any rights or powers of a Member of the Company with respect to the Membership Interest transferred.

(b) To the fullest extent permitted by law, any purported transfer of any Membership Interest in violation of the provisions of this LLC Agreement shall be wholly void and shall not effectuate the transfer contemplated thereby. Notwithstanding anything contained herein to the contrary and to the fullest extent permitted by law, the Member may not transfer any Membership Interest in violation of any provision of this LLC Agreement or in violation of any applicable federal or state securities laws.

SECTION 6.07 Admission of Transferee as Member.

(a) A transferee of a Membership Interest desiring to be admitted as a Member must execute a counterpart of, or an agreement adopting, this LLC Agreement and, except as permitted by paragraph (b) below, shall not be admitted without unanimous affirmative vote of the Managers, which vote must include the affirmative vote of the Independent Manager(s). Upon admission of the transferee as a Member, the transferee shall have the rights, powers and duties and shall be subject to the restrictions and liabilities of the Member under this LLC Agreement and the LLC Act. The transferee shall also be liable, to the extent of the Membership Interest transferred, for the unfulfilled obligations, if any, of the transferor Member to make capital contributions to the Company, but shall not be obligated for liabilities unknown to the transferee at the time such transferee was admitted as a Member and that could not be ascertained from this LLC Agreement. Except as set forth in paragraph (b) below, whether or not the transferee of a Membership Interest is admitted to the Company as a Member, the Member transferring the Membership Interest is not released from any liability to the Company under this LLC Agreement or the LLC Act.

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(b) The approval of the Managers, including the Independent Manager(s), shall not be required for the transfer of the Membership Interest from the Member to any successor pursuant to any Sale Agreement or the admission of such Person as a Member. Once the transferee of a Membership Interest pursuant to this paragraph (b) is admitted to the Company as a Member, the prior Member shall cease to be a member of the Company and shall be released from any liability to the Company under this LLC Agreement and the LLC Act to the fullest extent permitted by law and the Company shall continue without dissolution.

ARTICLE VII

MANAGERS

SECTION 7.01 Managers.

(a) Subject to Sections 1.08 and 1.09, the business and affairs of the Company shall be managed by or under the direction of three or more Managers designated by the Member. Subject to the terms of this LLC Agreement, the Member may determine at any time in its sole and absolute discretion the number of Managers. Subject in all cases to the terms of this LLC Agreement, the authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Managers; provided, that, except as provided in Section 7.06, at all times the Company shall have at least one Independent Manager. The initial number of Managers shall be three, one of which shall be an Independent Manager. Each Manager designated by the Member shall hold office until a successor is elected and qualified or until such Manager’s earlier death, resignation, expulsion or removal. Each Manager shall execute and deliver the Management Agreement in the form attached hereto as Exhibit A. Managers need not be a Member. The Managers designated by the Member as of the date hereof are listed on Schedule B hereto.

(b) Each Manager shall be designated by the Member and shall hold office for the term for which designated and until a successor has been designated.

(c) The Managers shall be obliged to devote only as much of their time to the Company’s business as shall be reasonably required in light of the Company’s business and objectives. Except as otherwise provided in Section 7.02 with respect to an Independent Manager, a Manager shall perform his or her duties as a Manager in good faith, in a manner he or she reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent Person in a like position would use under similar circumstances.

(d) Except as otherwise provided in this LLC Agreement, the Managers shall act by the affirmative vote of a majority of the Managers. Each Manager shall have the authority to sign duly authorized agreements and other instruments on behalf of the Company without the joinder of any other Manager.

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(e) Subject to the terms of this LLC Agreement, any action may be taken by the Managers without a meeting and without prior notice if authorized by the written consent of a majority of the Managers (or such greater number as is required by this LLC Agreement), which written consent shall be filed with the records of the Company.

(f) Every Manager is an agent of the Company for the purpose of its business, and the act of every Manager, including the execution in the Company name of any instrument for carrying on the business of the Company, binds the Company, unless such act is in contravention of this LLC Agreement or unless the Manager so acting otherwise lacks the authority to act for the Company and the Person with whom he or she is dealing has knowledge of the fact that he or she has no such authority.

(g) To the extent permitted by law, the Managers shall not be personally liable for the Company’s debts, obligations or liabilities.

SECTION 7.02 Powers of the Managers. Subject to the terms of this LLC Agreement, the Managers shall have the right and authority to take all actions which the Managers deem incidental, necessary, suitable or convenient for the management and conduct of the Company’s business.

An Independent Manager may not delegate their duties, authorities or responsibilities hereunder. If an Independent Manager resigns, dies or becomes incapacitated, or such position is otherwise vacant, no action requiring the unanimous affirmative vote of the Managers shall be taken until a successor Independent Manager is appointed by the Member and qualifies and approves such action.

To the fullest extent permitted by law, including Section 18-1101(c) of the LLC Act, and notwithstanding any duty otherwise existing at law or in equity, the Independent Manager(s) shall consider only the interests of the Company, including its creditors, in acting or otherwise voting on the matters referred to in Section 1.09. Except for duties to the Company as set forth in the immediately preceding sentence (including duties to the Member and the Company’s creditors solely to the extent of their respective economic interests in the Company but excluding (i) all other interests of the Member, (ii) the interests of other Affiliates of the Company, and (iii) the interests of any group of Affiliates of which the Company is a part), the Independent Manager(s) shall not have any fiduciary duties to the Member, any Manager or any other Person bound by this LLC Agreement; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. To the fullest extent permitted by law, including Section 18-1101(e) of the LLC Act, an Independent Manager shall not be liable to the Company, the Member or any other Person bound by this LLC Agreement for breach of contract or breach of duties (including fiduciary duties), unless such Independent Manager acted in bad faith or engaged in willful misconduct.

No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

Subject to the terms of this LLC Agreement, the Managers may exercise all powers of the Company and do all such lawful acts and things as are not prohibited by the LLC Act, other applicable law or this LLC Agreement directed or required to be exercised or done by the Member.

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All duly authorized instruments, contracts, agreements and documents providing for the acquisition or disposition of property of the Company shall be valid and binding on the Company if executed by one or more of the Managers.

Notwithstanding the terms of Section 7.01, 7.07 or 7.09 or any provision of this LLC Agreement to the contrary, (x) no meeting or vote with respect to any action described in clauses (b), (c) or (g) of Section 1.09 or any amendment to any of the Special Purpose Provisions shall be conducted unless each Independent Manager is present and (y) neither the Company nor the Member, any Manager or any officer on behalf of the Company shall (i) take any action described in clauses (b), (c) or (g) of Section 1.09 unless each Independent Manager has consented thereto or (ii) adopt any amendment to any of the Special Purpose Provisions unless each Independent Manager has consented thereto. The vote or consent of an Independent Manager with respect to any such action or amendment shall not be dictated by the Member or any other Manager or officer of the Company.

SECTION 7.03 Reimbursement. To the extent permitted by applicable law, the Company may reimburse any Manager, directly or indirectly, for out-of-pocket expenses incurred by such Manager in connection with its services rendered to the Company. Such reimbursement shall be determined by the Managers without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered an Operating Expense.

SECTION 7.04 Removal of Managers.

(a) Subject to Section 4.01, the Member may remove any (i) Manager (other than an Independent Manager) with or without cause at any time, and (ii) Independent Manager with Cause at any time.

(b) Subject to Sections 4.01 and 7.05, any removal of a Manager shall become effective on such date as may be specified by the Member and in a notice delivered to any remaining Managers or the Manager designated to replace the removed Manager (except that it shall not be effective on a date earlier than the date such notice is delivered to the remaining Managers or the Manager designated to replace the removed Manager). Should a Manager be removed who is also the Member, the Member shall continue to participate in the Company as the Member and receive its share of the Company’s income, gains, losses, deductions and credits pursuant to this LLC Agreement.

SECTION 7.05 Resignation of Manager. A Manager other than an Independent Manager may resign as a Manager at any time by thirty (30) days’ prior notice to the Member. No resignation or removal of an Independent Manager, and no appointment of a successor Independent Manager, shall be effective until such successor (i) shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the Management Agreement, and (ii) shall have executed a counterpart to this LLC Agreement.

SECTION 7.06 Vacancies. Subject to Section 4.01, any vacancies among the Managers may be filled by the Member. In the event of a vacancy in the position of an Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager.

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Notwithstanding anything to the contrary contained in this LLC Agreement, no Independent Manager shall be removed or replaced unless the Company provides the Indenture Trustee with no less than two (2) Business Days’ prior written notice of (a) any proposed removal of such Independent Manager, and (b) the identity of the proposed replacement Independent Manager, together with a certification that such replacement satisfies the requirements for an Independent Manager set forth in this LLC Agreement.

SECTION 7.07 Meetings of the Managers. The Managers may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Managers may be held without notice at such time and at such place as shall from time to time be determined by the Managers. Special meetings of the Managers may be called by the President on not less than one day’s notice to each Manager by telephone, facsimile, mail, email or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Managers.

SECTION 7.08 Electronic Communications. Managers, or any committee designated by the Managers, may participate in meetings of the Managers, or any committee, by means of telephone or video conference or similar communications equipment that allows all Persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in Person at the meeting. If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.

SECTION 7.09 Committees of Managers.

(a) The Managers may, by resolution passed by a majority of the Managers, designate one or more committees, each committee to consist of one or more of the Managers. The Managers may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.

(b) In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another Manager to act at the meeting in the place of any such absent or disqualified member.

(i) Any such committee, to the extent provided in the resolution of the Managers, shall have and may exercise all the powers and authority of the Managers in the management of the business and affairs of the Company. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Managers. Each committee shall keep regular minutes of its meetings and report the same to the Managers when required.

SECTION 7.10 Limitations on Independent Manager(s). All right, power and authority of each Independent Manager shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this LLC Agreement.

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ARTICLE VIII

EXPENSES

SECTION 8.01 Expenses. Except as otherwise provided in this LLC Agreement or the Basic Documents, the Company shall be responsible for all expenses and the allocation thereof including without limitation:

(a) all expenses incurred by the Member or its Affiliates in organizing the Company;

(b) all expenses related to the business of the Company and all routine administrative expenses of the Company, including the maintenance of books and records of the Company, the preparation and dispatch to the Member of checks, financial reports, tax returns and notices required pursuant to this LLC Agreement;

(c) all expenses incurred in connection with any litigation or arbitration involving the Company (including the cost of any investigation and preparation) and the amount of any judgment or settlement paid in connection therewith;

(d) all expenses for indemnity or contribution payable by the Company to any Person;

(e) all expenses incurred in connection with the collection of amounts due to the Company from any Person;

(f) all expenses incurred in connection with the preparation of amendments to this LLC Agreement;

(g) all expenses incurred in connection with the liquidation, dissolution and winding up of the Company; and

(h) all expenses otherwise allocated in good faith to the Company by the Managers.

ARTICLE IX

PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP

SECTION 9.01 Existence.

(a) The Company shall have a perpetual existence, unless dissolved in accordance with this LLC Agreement. So long as any of the Recovery Bonds are Outstanding, to the fullest extent permitted by law, the Member shall not be entitled to consent to the dissolution of the Company.

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(b) Notwithstanding any provision of this LLC Agreement, the Bankruptcy of the Member or Special Member will not cause such Member or Special Member, respectively, to cease to be a member of the Company, and upon the occurrence of such an event, the Company shall continue without dissolution. To the fullest extent permitted by law, the dissolution of the Member will not cause the Member to cease to be a member of the Company, and upon the occurrence of such an event, the Company shall, to the fullest extent permitted by law, continue without dissolution. For purposes of this Section 9.01(b), “Bankruptcy” means, with respect to any Person (A) if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, or (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (B) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, the proceeding has not been dismissed or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set for in Sections 18-101(1) and 18-304 of the LLC Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company or that causes the Member to cease to be a member of the Company (other than upon continuation of the Company without dissolution upon an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee pursuant to Sections 6.06 and 6.07), to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company or the Member in the Company.

SECTION 9.02 Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of the earliest of the following events:

(a) subject to Section 1.08, the election to dissolve the Company made in writing by the Member and each Manager, including each Independent Manager, as permitted under the Basic Documents and after the discharge in full of all series of Recovery Bonds;

(b) the termination of the legal existence of the last remaining member of the Company or the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company unless the Company is continued without dissolution in a manner permitted by the LLC Act or this LLC Agreement; or

(c) the entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the LLC Act.

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SECTION 9.03 Accounting. In the event of the dissolution, liquidation and winding-up of the Company, a proper accounting shall be made of the Capital Account of the Member and of the net income or net loss of the Company from the date of the last previous accounting to the date of dissolution.

SECTION 9.04 Certificate of Cancellation. As soon as possible following the occurrence of any of the events specified in Section 9.02 and the completion of the winding up of the Company, the Person winding up the business and affairs of the Company, as an authorized person, shall cause to be executed a Certificate of Cancellation of the Certificate of Formation and file the Certificate of Cancellation of the Certificate of Formation as required by the LLC Act.

SECTION 9.05 Winding Up. Upon the dissolution of the Company, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Member, or if there is no Member, the Managers, shall be responsible for overseeing the winding up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 9.06.

SECTION 9.06 Order of Payment of Liabilities Upon Dissolution. After determining that all debts and liabilities of the Company, including all contingent, conditional or unmatured liabilities of the Company, in the process of winding-up, including, without limitation, debts and liabilities to the Member in the event it is a creditor of the Company to the extent otherwise permitted by law, have been paid or adequately provided for, the remaining assets shall be distributed in cash or in kind to the Member.

SECTION 9.07 Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this LLC Agreement, the Member shall only be entitled to look solely to the assets of Company for the return of its positive Capital Account balance and shall have no recourse for its Capital Contribution and/or share of net income (upon dissolution or otherwise) against any Manager.

SECTION 9.08 Limitation on Liability. Except as otherwise provided by the LLC Act and except as otherwise characterized for tax and financial reporting purposes, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or a Manager.

ARTICLE X

INDEMNIFICATION

SECTION 10.01 Indemnity. Subject to the provisions of Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the

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right of the Company, by reason of the fact that such Person is or was a Manager, Member, officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, partnership, corporation, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with the action, suit or proceeding if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such Person’s conduct was unlawful; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct or, in the case of an Independent Manager, bad faith or willful misconduct.

SECTION 10.02 Indemnity for Actions By or In the Right of the Company. Subject to the provisions of Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the rights of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager, officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by such Person in connection with the defense or settlement of the actions or suit if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person’s fraud, gross negligence or willful misconduct or, in the case of an Independent Manager, bad faith or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such Person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

SECTION 10.03 Indemnity If Successful. To the fullest extent permitted by law, the Company shall indemnify any Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise against expenses, including reasonable attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense of any action, suit or proceeding referred to in Sections 10.01 and 10.02 or in defense of any claim, issue or matter therein, to the extent that such Person has been successful on the merits.

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SECTION 10.04 Expenses. Any indemnification under Sections 10.01 and 10.02, as well as the advance payment of expenses permitted under Section 10.05 unless ordered by a court or advanced pursuant to Section 10.05 below, must be made by the Company only as authorized in the specific case upon a determination that indemnification of the Manager, Member, officer, controlling Person, legal representative or agent is proper in the circumstances. The determination must be made:

(a) by the Member if the Member was not a party to the act, suit or proceeding; or

(b) if the Member was a party to the act, suit or proceeding by independent legal counsel in a written opinion.

SECTION 10.05 Advance Payment of Expenses. To the fullest extent permitted by law, the expenses of each Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such Person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such Person is not entitled to be indemnified by the Company. The provisions of this Section 10.05 shall not affect any rights to advancement of expenses to which personnel other than the Member or the Managers (other than each Independent Manager) may be entitled under any contract or otherwise by law.

SECTION 10.06 Other Arrangements Not Excluded. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article X:

(a) does not exclude any other rights to which a Person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the Member or otherwise, for either an action of any Person who is or was a Manager, Member, officer, controlling Person, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, in the official capacity of such Person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to Section 10.05 above, may not be made to or on behalf of such Person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and

(b) continues for a Person who has ceased to be a Member, Manager, officer, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a Person.

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ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.01 No Bankruptcy Petition; Dissolution.

(a) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenant and agree (or shall be deemed to have hereby covenanted and agreed) that, prior to the date which is one year and one day after the termination of all Indentures and the payment in full of all Recovery Bonds and any other amounts owed under any Indenture, it will not acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company; provided, however, that nothing in this Section 11.01 shall constitute a waiver of any right to indemnification, reimbursement or other payment from the Company pursuant to this LLC Agreement. This Section 11.01 is not intended to apply to the filing of a voluntary bankruptcy petition on behalf of the Company which is governed by Section 1.09 of this LLC Agreement.

(b) To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenants and agrees (or shall be deemed to have hereby covenanted and agreed) that, until the termination of all Indentures and the payment in full of all Recovery Bonds and any other amounts owed under each Indenture, the Member, such Special Member and such Manager will not consent to, or make application for, or institute or maintain any action for, the dissolution of the Company under Section 18-801 or 18-802 of the LLC Act or otherwise or any division of the Company under Section 18-217 of the Act or otherwise.

(c) In the event that the Member, any Special Member or any Manager takes action in violation of this Section 11.01, the Company agrees that it shall file an answer with the court or otherwise properly contest the taking of such action and raise the defense that the Member, the Special Member or Manager, as the case may be, has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.

(d) The provisions of this Section 11.01 shall survive the termination of this LLC Agreement and the resignation, withdrawal or removal of the Member, any Special Member or any Manager. Nothing herein contained shall preclude participation by the Member, any Special Member or a Manager in assertion or defense of its claims in any such proceeding involving the Company.

SECTION 11.02 Amendments.

(a) The power to alter, amend or repeal this LLC Agreement shall be only on the consent of the Member, provided, that: the Company shall not alter, amend or repeal any provision of Sections 1.02(b) and (c), 1.05, 1.08, 1.09, 3.01(b), 3.02, 6.06, 6.07, 7.02, 7.05, 7.06, 9.01, 9.02, 11.02 and 11.07 of this LLC Agreement or the definition of “Independent Manager” contained herein or the requirement that at all times the Company have at least one Independent Manager (collectively, the “Special Purpose Provisions”) without, in each case, the affirmative vote of a majority of the Managers, which vote must include the affirmative vote of each Independent Manager; and

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So long as any of the Recovery Bonds are Outstanding, the Company and the Member shall give written notice to each applicable Rating Agency and to each Indenture Trustee of any amendment to this LLC Agreement. The effectiveness of any amendment of the Special Purpose Provisions shall be subject to the Rating Agency Condition (other than an amendment which is necessary: (i) to cure any ambiguity or (ii) to correct or supplement any such provision in a manner consistent with the intent of this LLC Agreement).

(b) The Company’s power to alter or amend the Certificate of Formation shall be vested in the Member. Upon obtaining the approval of any amendment, supplement or restatement as to the Certificate of Formation, the Member on behalf of the Company shall cause a Certificate of Amendment or Amended and Restated Certificate of Formation to be prepared, executed and filed in accordance with the LLC Act.

(c) Notwithstanding anything in this LLC Agreement to the contrary, including Sections 11.02(a) and (b), unless and until any Recovery Bonds are Outstanding, the Member may, without the need for any consent or action of, or notice to, any other Person, including any Manager, any officer, the Indenture Trustee or any Rating Agency, alter, amend or repeal this LLC Agreement in any manner.

SECTION 11.03 Counterparts. This LLC Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this LLC Agreement and all of which together shall constitute one and the same instrument.

SECTION 11.04 Governing Law. THIS LLC AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 11.05 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

SECTION 11.06 Severability. Any provision of this LLC Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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SECTION 11.07 Assigns. Each and all of the covenants, terms, provisions and agreements contained in this LLC Agreement shall be binding upon and inure to the benefit of the Member, and its permitted successors and assigns.

SECTION 11.08 Enforcement by each Independent Manager. Notwithstanding any other provision of this LLC Agreement, the Member agrees that this LLC Agreement constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by each Independent Manager in accordance with its terms.

SECTION 11.09 Waiver of Partition; Nature of Interest. Except as otherwise expressly provided in this LLC Agreement, to the fullest extent permitted by law, each of the Member and the Special Members hereby irrevocably waives any right or power that such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, division, liquidation, winding up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to this LLC Agreement.

SECTION 11.10 Benefits of Agreement; No Third-Party Rights. Except for the Indenture Trustee with respect to the Special Purpose Provisions and Persons entitled to indemnification hereunder, none of the provisions of this LLC Agreement shall be for the benefit of or enforceable by any creditor of the Company or by any creditor of the Member or Special Member. Nothing in this LLC Agreement shall be deemed to create any right in any Person (other than each Indenture Trustee with respect to the Special Purpose Provisions and Persons entitled to indemnification hereunder) not a party hereto, and this LLC Agreement shall not be construed in any respect to be a contract in whole or in part for the benefit of any third Person.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, this LLC Agreement is hereby executed by the undersigned and is effective as of the date first above written.

MEMBER:
PACIFIC GAS AND ELECTRIC COMPANY
By:
	Name:
	Title:
INDEPENDENT MANAGER:
Name: Orlando Figueroa

Signature Page to Amended and Restated Limited Liability Company Agreement of PG&E Wildfire Recovery Funding LLC

SCHEDULE A

SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER

MEMBER’S NAME	CAPITAL CONTRIBUTION		MEMBERSHIP INTEREST PERCENTAGE			CAPITAL ACCOUNT
PACIFIC GAS AND ELECTRIC COMPANY	$	100		100	%	$	100

Schedule A

SCHEDULE B

INITIAL MANAGERS

1. Margaret K. Becker

2. Monica Klemann

3. Orlando Figueroa, as Independent Manager

Schedule B

SCHEDULE C

INITIAL OFFICERS

Name	Office
Margaret K. Becker	President
Monica Klemann	Treasurer and Secretary

Schedule C

EXHIBIT A

MANAGEMENT AGREEMENT

____________ __, 2022

PG&E Wildfire Recovery Funding LLC

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

Re: Management Agreement — PG&E Wildfire Recovery Funding LLC

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned Persons, who have been designated as managers of PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Company”), in accordance with the Amended and Restated Limited Liability Company Agreement of the Company, dated as of ___________ __, 2022 (as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “A&R LLC Agreement”), hereby agree as follows:

1. Each of the undersigned accepts such Person’s rights and authority as a Manager under the A&R LLC Agreement and agrees to perform and discharge such Person’s duties and obligations as a Manager under the A&R LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the A&R LLC Agreement shall continue until such Person’s successor as a Manager is designated or until such Person’s resignation or removal as a Manager in accordance with the A&R LLC Agreement. Each of the undersigned agrees and acknowledges that it has been designated as a “manager” of the Company within the meaning of the Delaware Limited Liability Company Act.

2. Until a year and one day has passed since the date that the last obligation under the Basic Documents was paid, to the fullest extent permitted by law, each of the undersigned agrees, solely in its capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

Capitalized terms used and not otherwise defined herein have the meanings set forth in the A&R LLC Agreement.

Exhibit A-1

This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.

[Signature Pages Follow]

Exhibit A-2

IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

Margaret K. Becker, as a Manager

Monica Klemann, as a Manager

Orlando Figueroa, as an Independent Manager

Exhibit A-3

APPENDIX A

DEFINITIONS

A. Defined Terms. As used in this LLC Agreement, the following terms have the following meanings:

“Additional Issuances” is defined in Section 1.06(b) of the LLC Agreement.

“Administration Agreement” means (i) the Administration Agreement, dated as of the date the first series of Recovery Bonds are issued, by and between the Administrator and the Company, and (ii) with respect to any other series of Recovery Bonds, any administration agreement to be entered into by the Company and the Administrator in connection therewith, in each case, pursuant to which the Administrator will provide certain management services to the Company, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Administrator” means PG&E, as Administrator under any Administration Agreement, or any successor Administrator to the extent permitted under any such Administration Agreement.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Bankruptcy” has the meaning specified in Section 9.01(b) of this LLC Agreement.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.), as amended from time to time.

“Basic Documents” means any Indenture, any Administration Agreement, any Sale Agreement, any Servicing Agreement, any Series Supplement, any Letter of Representations, any Underwriting Agreement, any intercreditor agreement, and any amendments to the foregoing, and all other documents and certificates delivered in connection therewith.

“Book-Entry Form” means, with respect to any Recovery Bond, that such Recovery Bond is not certificated and the ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in the Indenture and the Series Supplement pursuant to which such Recovery Bond was issued.

“Book-Entry Recovery Bonds” means any Recovery Bonds issued in Book-Entry Form; provided, however, that after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Recovery Bonds are to be issued to the Holder of such Recovery Bonds, such Recovery Bonds shall no longer be “Book-Entry Recovery Bonds”.

Appendix A

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in Los Angeles, California or New York, New York are, or DTC or the Corporate Trust Office is, authorized or obligated by law, regulation or executive order to remain closed.

“CA UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of California.

“Cause” means, with respect to an Independent Manager, (i) acts or omissions by such Independent Manager that constitute willful disregard of, or willful misconduct, bad faith or gross negligence with respect to, such Independent Manager’s duties under or in connection with this LLC Agreement, (ii) that such Independent Manager has engaged in or has been charged with or has been indicted or convicted for any crime or crimes of fraud or other acts constituting a crime under any law applicable to such Independent Manager, (iii) that such Independent Manager has breached its fiduciary duties of loyalty or care as and to the extent of such duties in accordance with the terms of the Company’s organizational documents, (iv) there is a material increase in the fees charged by such Independent Manager or a material change to such Independent Manager’s terms of service, (v) such Independent Manager is unable to perform his or her duties as Independent Manager due to death, disability, incapacity or other cause, or (vi) such Independent Manager no longer meets the criteria specified in the definition of Independent Manager.

“Capital Contribution” has the meaning specified in Section 2.01.

“Capital Account” has the meaning specified in Section 2.03.

“Certificate of Formation” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on March 8, 2022, as amended, restated or amended and restated from time to time.

“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collection Account” means, with respect to each series of Recovery Bonds, the account established and maintained by the Indenture Trustee in accordance with the Indenture relating to such series of Recovery Bonds and any subaccounts contained therein.

“Corporate Trust Office” means the office of the Indenture Trustee at which, at any particular time, its corporate trust business shall be administered.

“CPUC” means the Public Utilities Commission of California, or any Governmental Authority succeeding to the duties of such agency.

“Definitive Recovery Bonds” means Recovery Bonds issued in definitive form in accordance with any Indenture.

“DTC” means The Depository Trust Company or any successor thereto.

Appendix A-2

“Eligible Investments”, with respect to any series of Recovery Bonds, has the meaning specified in the Indenture relating to such series.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“FDIC” means the Federal Deposit Insurance Corporation or any successor thereto.

“Federal Book-Entry Regulations” means 31 C.F.R. Part 357 et seq. (Department of Treasury).

“Financing Order” means (a) the financing order issued by the CPUC on May 11, 2021, in response to the Application filed by PG&E on January 6, 2021, requesting the creation of the Recovery Property and the issuance by the Company, as Issuer, of Recovery Bonds under the related Indenture, and (b) with respect to any other series of Recovery Bonds, any other financing order issued by the CPUC with respect to such other series of Recovery Bonds pursuant to the Securitization Law for the benefit of PG&E.

“Fixed Recovery Charge” means any fixed recovery charge as defined in Section 850(b)(7) of the Securitization Law which is authorized by any Financing Order.

“Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative function of government.

“Holder” or “Bondholder” means the Person in whose name a Recovery Bond is registered on the Recovery Bond Register.

“Indenture” means (i) the Indenture, dated as of the date the first series of Recovery Bonds are issued, by and between the Company and The Bank of New York Mellon Trust Company, N.A., and (ii) each Indenture pursuant to which the Company will issue any additional series of Recovery Bonds, to be by and between the Company, as Issuer, and the financial institution to be party thereto, as Indenture Trustee and as Securities Intermediary as originally executed and, as from time to time supplemented or amended by the Series Supplement or indentures supplemental thereto entered into pursuant to the applicable provisions of the Indenture, as so supplemented or amended, or both, and shall include the forms and terms of any series of Recovery Bonds established thereunder, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Indenture Trustee” means, with respect to any series of Recovery Bonds, the financial institution to be party to the Indenture relating to such series as indenture trustee for the benefit of the Secured Parties or any successor indenture trustee under the Indenture relating to such series.

“Independent” means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Company, any other obligor on any series of Recovery Bonds, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Company, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not connected with the Company, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director (other than as an independent director or manager) or Person performing similar functions.

Appendix A-3

“Independent Manager” has the meaning specified in Section 4.01(a) of this LLC Agreement.

“Internal Revenue Service” means the Internal Revenue Service of the United States of America.

“Issuer” means the Company in its capacity as issuer under each Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained in the Indenture and required by the TIA, each other obligor on any series of Recovery Bonds.

“Letter of Representations” means any applicable agreement between the Company, as Issuer, and the applicable Clearing Agency, with respect to such Clearing Agency’s rights and obligations (in its capacity as a Clearing Agency) with respect to any Book-Entry Recovery Bonds, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“LLC Act” means the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq., as amended from time to time.

“LLC Agreement” has the meaning specified in the preamble hereto.

“Manager” means each person selected to be a manager of the Company from time to time by the Member, including each Independent Manager, each in such person’s capacity as a “manager” of the Company. Each Manager is designated as a “manager” of the Company within the meaning of Section 18-101(12) of the LLC Act.

“Member” has the meaning specified in the preamble to this LLC Agreement.

“Membership Interest” has the meaning specified in Section 6.01 of this LLC Agreement.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto. References to Moody’s are effective so long as Moody’s is a Rating Agency.

“Operating Expenses” means all unreimbursed fees, costs and expenses of the Company, including all amounts owed by the Company to any Indenture Trustee (including indemnities, legal fees and expenses), any Manager, the Servicing Fee, the Administration Fee, legal and accounting fees, Rating Agency fees, costs and expenses of the Company and PG&E, the return on equity due PG&E for its Capital Contribution, and any franchise taxes owed on investment income in the Collection Account.

“Original LLC Agreement” has the meaning specified in the preamble to this LLC Agreement.

“Outstanding” means, as of the date of determination, all Recovery Bonds theretofore authenticated and delivered under any Indenture except:

Appendix A-4

(a) Recovery Bonds theretofore canceled by the related Recovery Bond Registrar or delivered to the Recovery Bond Registrar for cancellation;

(b) Recovery Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the related Indenture Trustee or any Paying Agent in trust for the Holders of such Recovery Bonds; and

(c) Recovery Bonds in exchange for or in lieu of other Recovery Bonds which have been issued pursuant to such Indenture unless proof satisfactory to the related Indenture Trustee is presented that any such Recovery Bonds are held by a Protected Purchaser;

provided that in determining whether the Holders of the requisite Outstanding Amount of the Recovery Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Recovery Bonds owned by the Company, any other obligor upon the Recovery Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the related Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Recovery Bonds that the related Indenture Trustee actually knows to be so owned shall be so disregarded. Recovery Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the related Indenture Trustee the pledgee’s right so to act with respect to such Recovery Bonds and that the pledgee is not the Company, any other obligor upon the Recovery Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons.

“Outstanding Amount” means the aggregate principal amount of all Recovery Bonds or, if the context requires, all Recovery Bonds of a Tranche, Outstanding at the date of determination under any Indenture.

“Paying Agent” means with respect to any Indenture, the related Indenture Trustee and any other Person appointed as a paying agent for the Recovery Bonds pursuant to such Indenture.

“Payment Date” means, with respect to any Tranche of Recovery Bonds, the dates specified in the related Series Supplement; provided that if any such date is not a Business Day, the Payment Date shall be the Business Day immediately succeeding such date.

“PG&E” means Pacific Gas and Electric Company, a California corporation, and any of its successors or permitted assigns.

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

“Protected Purchaser” has the meaning specified in Section 8-303 of the UCC.

“Public Utilities Code” means the California Public Utilities Code, as amended from time to time.

Appendix A-5

“Rating Agency” means, with respect to any Tranche of Recovery Bonds, any of Moody’s or Standard & Poor’s which provides a rating with respect to such Tranche of Recovery Bonds. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Company, notice of which designation shall be given to the Indenture Trustee and the Servicer.

“Rating Agency Condition” means, with respect to any action, not less than ten (10) Business Days’ prior written notification to each Rating Agency of such action, and written confirmation from each Rating Agency to the Servicer, the Indenture Trustee and the Company that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of Recovery Bonds and that prior to the taking of the proposed action no other Rating Agency shall have provided written notice to the Company that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of any Tranche of Recovery Bonds; provided, that if within such ten (10) Business Day period, any Rating Agency (other than Standard & Poor’s) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (i) the Company shall be required to confirm that such Rating Agency has received the Rating Agency Condition request, and if it has, promptly request the related Rating Agency Condition confirmation and (ii) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five (5) Business Days following such second (2nd) request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

“Recovery Bonds” means the Recovery Bonds authorized by any Financing Order and issued under the related Indenture.

“Recovery Bond Collateral” means, with respect to any series of Recovery Bonds, the Recovery Property created under and pursuant to a Financing Order and the Securitization Law with respect to such series, and transferred by the Seller to the Company pursuant to the related Sale Agreement, (b) all Fixed Recovery Charges related to the Recovery Property with respect to such series, (c) the Sale Agreement executed in connection with such series of Recovery Bonds and all property and interests in property transferred under the Sale Agreement with respect to such Recovery Property and such series of Recovery Bonds, (d) the Servicing Agreement, the Administration Agreement, and any intercreditor agreement, subservicing, agency, administration or collection agreements executed in connection therewith, to the extent related to the foregoing Recovery Property and such series of Recovery Bonds, (e) the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto with respect to such series of Recovery Bonds, (f) all rights to compel the Servicer with respect to such series of Recovery Bonds to file for and obtain adjustments to the Recovery Charges in accordance with the Securitization Law and the related Financing Order, (g) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute Recovery Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of

Appendix A-6

such items or any other form of property with respect to such series of Recovery Bonds, (h) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations with respect to such series of Recovery Bonds related to the foregoing and (i) all payments on or under, and all proceeds in respect of, any or all of the foregoing with respect to such series of Recovery Bonds.

“Recovery Bond Register” means the register maintained pursuant to any Indenture, providing for the registration of the related Recovery Bonds and transfers and exchanges thereof.

“Recovery Bond Registrar” means the registrar at any time of the Recovery Bond Register, appointed pursuant to any Indenture.

“Recovery Property” means all recovery property as defined in Section 850(b)(11) of the Securitization Law created pursuant to any Financing Order and sold or otherwise conveyed to the Company, as Issuer, under the related Sale Agreement, including the right to impose, collect and receive the Fixed Recovery Charges, and to obtain adjustments of such Fixed Recovery Charges, as authorized in any Financing Order. As used in the Basic Documents with respect to any series of Recovery Bonds, the term “Recovery Property” when used with respect to PG&E includes the contract rights of PG&E that exist prior to the time that such rights are first transferred in connection with the issuance of such series of Recovery Bonds, at which time they become recovery property in accordance with Section 850.1(g) of the Securitization Law.

“Sale Agreement” means (i) the Recovery Property Purchase and Sale Agreement, dated as of the date the first series of Recovery Bonds are issued, between the Company and PG&E, and acknowledged and accepted by The Bank of New York Mellon Trust Company, N.A., and (ii), with respect to any series of Recovery Bonds, the Recovery Property Purchase and Sale Agreement for such series to be by and between PG&E, as seller, and the Company, as purchaser, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

“SEC” means the U.S. Securities and Exchange Commission.

“Secretary of State” means the Secretary of State of the State of Delaware or the Secretary of State of the State of California, as the case may be, or any Governmental Authority succeeding to the duties of such offices.

“Secured Parties” means, with respect to any series of Recovery Bonds, the Indenture Trustee, the Bondholders and any credit enhancer described in the Series Supplement for such series.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Intermediary” means any Indenture Trustee or any other eligible financial institution, solely in the capacity of a “securities intermediary” as defined in the CA UCC and Federal Book-Entry Regulations or any successor securities intermediary under the related Indenture.

Appendix A-7

“Securitization Law” means Division 1, Part 1, Chapter 4, Article 5.8 of the California Public Utilities Code, §§ 850 – 850.8, as amended from time to time.

“Seller” has the meaning specified in the preamble to the Sale Agreement.

“Series Supplement” means (i) the Series Supplement, dated as of the date the first series of Recovery Bonds are issued, between the Company and The Bank of New York Mellon Trust Company, N.A., and (ii), with respect to any series of Recovery Bonds, the indenture supplemental to the Indenture for such series in the form attached as an exhibit to such Indenture that authorizes the issuance of such series of Recovery Bonds.

“Servicer” means PG&E, as Servicer under the relevant Servicing Agreement, or any successor Servicer to the extent permitted under the relevant Servicing Agreement.

“Servicing Agreement” means (i) the Recovery Property Servicing Agreement, dated as of the date the first series of Recovery Bonds are issued, between the Company and PG&E, and acknowledged and accepted by The Bank of New York Mellon Trust Company, N.A., and (ii), with respect to any series of Recovery Bonds, the Recovery Property Servicing Agreement for such series to be by and between the Company and PG&E, in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Servicing Fee” means the fee payable to the Servicer on each Payment Date for services rendered during the period from, but not including, the preceding Payment Date (or from the closing date of the Indenture in the case of the first Payment Date) to and including the current Payment Date, determined pursuant to any Servicing Agreement.

“Special Member” has the meaning specified in Section 1.02(b) of this LLC Agreement.

“Special Purpose Provisions” has the meaning specified in Section 11.02(a) of this LLC Agreement.

“Standard & Poor’s” or “S&P” means S&P Global Ratings, a division of S&P Global Inc., or any successor thereto. References to S&P are effective so long as S&P is a Rating Agency.

“State” means any one of the fifty states of the United States of America or the District of Columbia.

“TIA” means the Trust Indenture Act of 1939, as amended from time to time.

“Tranche” means any one of the tranches of Recovery Bonds of a series.

“Treasury Regulations” means the regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

Appendix A-8

“Underwriting Agreement” means, with respect to any series of Recovery Bonds, the Underwriting Agreement for such series to be entered into by and among the Company, PG&E and the representatives of the several underwriters named therein, as the same may be amended, supplemented or modified from time to time, with respect to the issuance of such series of Recovery Bonds.

B. Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with United States generally accepted accounting principles. To the extent that the definitions of accounting terms in any Basic Document are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in such Basic Document shall control. As used in the Basic Documents, the term “including” means “including without limitation,” and other forms of the verb “to include” have correlative meanings. All references to any Person shall include such Person’s permitted successors.

C. Computation of Time Periods. Unless otherwise stated in any of the Basic Documents, as the case may be, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

D. Reference; Captions. The words “hereof”, “herein” and “hereunder” and words of similar import when used in any Basic Document shall refer to such Basic Document as a whole and not to any particular provision of such Basic Document; and references to “Section”, “subsection”, “Schedule” and “Exhibit” in any Basic Document are references to Sections, subsections, Schedules and Exhibits in or to such Basic Document unless otherwise specified in such Basic Document. The various captions (including the tables of contents) in each Basic Document are provided solely for convenience of reference and shall not affect the meaning or interpretation of any Basic Document.

E. Terms Generally. The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter forms of such terms.

Appendix A-9

EX-4.1

Exhibit 4.1

PG&E WILDFIRE RECOVERY FUNDING LLC,

Issuer,

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Indenture Trustee and Securities Intermediary

INDENTURE

Dated as of [            ], 2022

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE		2
SECTION 1.01.	Definitions.	2
SECTION 1.02.	Incorporation by Reference of Trust Indenture Act.	2
SECTION 1.03.	Rules of Construction.	2
ARTICLE II THE RECOVERY BONDS		3
SECTION 2.01.	Form.	3
SECTION 2.02.	Denominations of Recovery Bonds.	3
SECTION 2.03.	Execution, Authentication and Delivery.	5
SECTION 2.04.	Temporary Recovery Bonds.	5
SECTION 2.05.	Registration; Registration of Transfer and Exchange of Recovery Bonds.	6
SECTION 2.06.	Mutilated, Destroyed, Lost or Stolen Recovery Bonds.	7
SECTION 2.07.	Persons Deemed Owner.	8
SECTION 2.08.	Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.	8
SECTION 2.09.	Cancellation.	9
SECTION 2.10.	Outstanding Amount; Authentication and Delivery of Recovery Bonds.	9
SECTION 2.11.	Book-Entry Recovery Bonds.	13
SECTION 2.12.	Notices to Clearing Agency.	14
SECTION 2.13.	Definitive Recovery Bonds.	14
SECTION 2.14.	CUSIP Number.	15
SECTION 2.15.	Letter of Representations.	15
SECTION 2.16.	Tax Treatment.	15
SECTION 2.17.	State Pledge.	15
SECTION 2.18.	Security Interests.	16
SECTION 2.19.	Payment by Issuer is Nonrecourse.	18
ARTICLE III COVENANTS		19
SECTION 3.01.	Payment of Principal, Premium, if any, and Interest.	19
SECTION 3.02.	Maintenance of Office or Agency.	19
SECTION 3.03.	Money for Payments To Be Held in Trust.	19
SECTION 3.04.	Existence.	21
SECTION 3.05.	Protection of Recovery Bond Collateral.	21
SECTION 3.06.	Opinions as to Recovery Bond Collateral.	22
SECTION 3.07.	Performance of Obligations; Servicing; SEC Filings.	22
SECTION 3.08.	Certain Negative Covenants.	25
SECTION 3.09.	Annual Statement as to Compliance.	26
SECTION 3.10.	Issuer May Consolidate, etc., Only on Certain Terms.	26
SECTION 3.11.	Successor or Transferee.	28

SECTION 3.12.	No Other Business.	29
SECTION 3.13.	No Borrowing.	29
SECTION 3.14.	Servicer’s Obligations.	29
SECTION 3.15.	Guarantees, Loans, Advances and Other Liabilities.	29
SECTION 3.16.	Capital Expenditures.	29
SECTION 3.17.	Restricted Payments.	29
SECTION 3.18.	Notice of Events of Default.	30
SECTION 3.19.	Further Instruments and Acts.	30
SECTION 3.20.	Notice of Events of Default.	30
SECTION 3.21.	Sale Agreement, Servicing Agreement and Administration Agreement Covenants.	30
SECTION 3.22.	Taxes.	32
SECTION 3.23.	Additional Recovery Bonds or Additional Other Recovery Bonds.	32
ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE		34
SECTION 4.01.	Satisfaction and Discharge of Indenture; Defeasance.	34
SECTION 4.02.	Conditions to Defeasance.	36
SECTION 4.03.	Application of Trust Money.	37
SECTION 4.04.	Repayment of Moneys Held by Paying Agent.	37
ARTICLE V REMEDIES		38
SECTION 5.01.	Events of Default.	38
SECTION 5.02.	Acceleration of Maturity; Rescission and Annulment.	39
SECTION 5.03.	Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.	40
SECTION 5.04.	Remedies; Priorities.	42
SECTION 5.05.	Optional Preservation of the Recovery Bond Collateral.	43
SECTION 5.06.	Limitation of Suits.	44
SECTION 5.07.	Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest.	44
SECTION 5.08.	Restoration of Rights and Remedies.	45
SECTION 5.09.	Rights and Remedies Cumulative.	45
SECTION 5.10.	Delay or Omission Not a Waiver.	45
SECTION 5.11.	Control by Holders.	45
SECTION 5.12.	Waiver of Past Defaults.	46
SECTION 5.13.	Undertaking for Costs.	46
SECTION 5.14.	Waiver of Stay or Extension Laws.	47
SECTION 5.15.	Action on Recovery Bonds.	47
SECTION 5.16.	Performance and Enforcement of Certain Obligations.	47
ARTICLE VI THE INDENTURE TRUSTEE		48
SECTION 6.01.	Duties of Indenture Trustee.	48
SECTION 6.02.	Rights of Indenture Trustee.	50
SECTION 6.03.	Individual Rights of Indenture Trustee.	52

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SECTION 6.04.	Indenture Trustee’s Disclaimer.	52
SECTION 6.05.	Notice of Defaults.	53
SECTION 6.06.	Reports by Indenture Trustee to Holders.	53
SECTION 6.07.	Compensation and Indemnity.	54
SECTION 6.08.	Replacement of Indenture Trustee and Securities Intermediary.	55
SECTION 6.09.	Successor Indenture Trustee by Merger.	56
SECTION 6.10.	Appointment of Co-Trustee or Separate Trustee.	57
SECTION 6.11.	Eligibility; Disqualification.	58
SECTION 6.12.	Preferential Collection of Claims Against Issuer.	58
SECTION 6.13.	Representations and Warranties of Indenture Trustee.	58
SECTION 6.14.	Annual Report by Independent Registered Public Accountants.	58
SECTION 6.15.	Custody of Recovery Bond Collateral.	59
SECTION 6.16	FATCA.	59
ARTICLE VII HOLDERS’ LISTS AND REPORTS		60
SECTION 7.01.	Issuer To Furnish Indenture Trustee Names and Addresses of Holders.	60
SECTION 7.02.	Preservation of Information; Communications to Holders.	60
SECTION 7.03.	Reports by Issuer.	60
SECTION 7.04.	Reports by Indenture Trustee.	61
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES		61
SECTION 8.01.	Collection of Money.	61
SECTION 8.02.	Collection Account.	62
SECTION 8.03.	General Provisions Regarding the Collection Account.	65
SECTION 8.04.	Release of Recovery Bond Collateral.	66
SECTION 8.05.	Opinion of Counsel.	67
SECTION 8.06.	Reports by Independent Registered Public Accountants.	67
ARTICLE IX SUPPLEMENTAL INDENTURES		68
SECTION 9.01.	Supplemental Indentures Without Consent of Holders.	68
SECTION 9.02.	Supplemental Indentures with Consent of Holders.	70
SECTION 9.03.	Reserved.	71
SECTION 9.04.	Execution of Supplemental Indentures.	71
SECTION 9.05.	Effect of Supplemental Indenture.	71
SECTION 9.06.	Conformity with Trust Indenture Act.	72
SECTION 9.07.	Reference in Recovery Bonds to Supplemental Indentures.	72
ARTICLE X MISCELLANEOUS		72
SECTION 10.01.	Compliance Certificates and Opinions, etc.	72
SECTION 10.02.	Form of Documents Delivered to Indenture Trustee.	74
SECTION 10.03.	Acts of Holders.	75
SECTION 10.04.	Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.	75
SECTION 10.05.	Notices to Holders; Waiver.	76

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SECTION 10.06.	Rule 17g-5 Compliance.	77
SECTION 10.07.	Conflict with Trust Indenture Act.	77
SECTION 10.08.	Effect of Headings and Table of Contents.	77
SECTION 10.09.	Successors and Assigns.	78
SECTION 10.10.	Severability.	78
SECTION 10.11.	Benefits of Indenture.	78
SECTION 10.12.	Legal Holidays.	78
SECTION 10.13.	GOVERNING LAW; WAIVER OF JURY TRIAL.	78
SECTION 10.14.	Counterparts.	78
SECTION 10.15.	Recording of Indenture.	79
SECTION 10.16.	Issuer Obligation.	79
SECTION 10.17.	Inspection.	79
SECTION 10.18.	No Petition.	80
SECTION 10.19.	Securities Intermediary.	80

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EXHIBITS AND SCHEDULES

EXHIBIT A	Form of Recovery Bonds
EXHIBIT B	Form of Series Supplement
EXHIBIT C	Servicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance
APPENDIX
APPENDIX A	Definitions

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TRUST INDENTURE ACT CROSS REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)	6.11
	(a)(2)	6.11
	(a)(3)	6.10(b)(i)
	(a)(4)	N.A.
	(a)(5)	6.11
	(b)	6.11
311	(a)	6.12
	(b)	6.12
312	(a)	7.01 and 7.02
	(b)	7.02(b)
	(c)	7.02(c)
313	(a)	7.04
	(b)(1)	7.04
	(b)(2)	7.04
	(c)	7.04
	(d)	N/A
314	(a)	3.09, 4.01, and 7.03(a)
	(b)	3.06 and 4.01
	(c)(1)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(2)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(3)	2.10, 4.01 and 10.01(a)
	(d)	8.04(b) and 10.01(a)
	(e)	10.01(a)
	(f)	10.01(a)
315	(a)	6.01(b)(i) and (ii)
	(b)	6.05

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TIA Section		Indenture Section
	(c)	6.01 (a)
	(d)	6.01(c)(i)-(iii)
	(e)	5.13
316	(a) (last sentence)	Appendix A – definition of “Outstanding”
	(a)(1)(A)	5.11
	(a)(1)(B)	5.12
	(a)(2)	N/A
	(b)	5.07
	(c)	Appendix A – definition of “Record Date”
317	(a)(1)	5.03(a)
	(a)(2)	5.03(c)(iv)
	(b)	3.03
318	(a)	10.07
	(b)	10.07
	(c)	10.07

** “N/A” shall mean “not applicable.”

THIS CROSS REFERENCE TABLE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE PART OF THIS INDENTURE.

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This INDENTURE dated as of [                    ], 2022 (this “Indenture”), by and between PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Issuer”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties (as defined herein) and in its separate capacity as a securities intermediary and account bank (the “Securities Intermediary”).

RECITALS

WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of the Recovery Bonds issuable hereunder, which will be of substantially the tenor set forth herein and in the Series Supplement;

WHEREAS, the Recovery Bonds shall be non-recourse obligations and shall be secured by and payable solely out of the proceeds of the Recovery Property and the other Recovery Bond Collateral;

WHEREAS, if and to the extent that such proceeds of Recovery Property and the other Recovery Bond Collateral are insufficient to pay all amounts owing with respect to the Recovery Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Recovery Bonds, waive any such Claim; and

WHEREAS, all things necessary to (a) make the Recovery Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party hereto hereby agrees as follows for the benefit of the other party hereto and each of the Holders:

GRANTING CLAUSE

IT IS HEREBY COVENANTED, DECLARED AND AGREED that the Issuer, in consideration of the premises herein contained and of the purchase of the Recovery Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the payment of the Recovery Bonds, the payment of all other amounts due under or in connection with this Indenture (including, without limitation, all fees, expenses, counsel fees and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in the Recovery Bonds, has hereby executed and delivered this Indenture and by these presents does hereby, and under the Series Supplement will grant a lien on and a security interest in and to, and otherwise convey, assign, transfer and pledge, in each case unto, the Indenture

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Trustee, its successors and assigns, for the benefit of the Secured Parties, all of the Issuer’s right, title and interest in, to and under any and all of the property constituting Recovery Bond Collateral described in the Series Supplement (such property hereinafter referred to as the “Recovery Bond Collateral”). The Series Supplement will more particularly describe the obligations of the Issuer secured by the Recovery Bond Collateral.

AND IT IS HEREBY FURTHER COVENANTED, DECLARED AND AGREED between the parties hereto that all Recovery Bonds are to be issued, countersigned and delivered and that all of the Recovery Bond Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Secured Parties, as follows:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

Except as otherwise specified herein or as the context may otherwise require, the capitalized terms used herein shall have the respective meanings set forth in Appendix A attached hereto and made a part hereof for all purposes of this Indenture.

SECTION 1.02. Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Recovery Bonds.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Indenture Trustee.

“obligor” on the indenture securities means the Issuer and any other obligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

SECTION 1.03. Rules of Construction.

(a) Unless the context otherwise requires:

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(i) a term has the meaning assigned to it;

(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in the United States of America as in effect from time to time;

(iii) “or” is not exclusive;

(iv) “including” means including without limitation;

(v) words in the singular include the plural and words in the plural include the singular; and

(vi) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

ARTICLE II

THE RECOVERY BONDS

SECTION 2.01. Form.

(a)    The Recovery Bonds and the Indenture Trustee’s certificate of authentication shall be in substantially the forms set forth in Exhibit A attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange or depository institution, or as may, consistently herewith, be determined by the officers executing the Recovery Bonds, as evidenced by their execution of the Recovery Bonds. Any portion of the text of any Recovery Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Recovery Bond.

(b)    The Recovery Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing the Recovery Bonds, as evidenced by their execution of the Recovery Bonds.

(c)    Each Recovery Bond shall be dated the date of its authentication. The terms of the Recovery Bonds set forth in Exhibit A attached hereto are part of the terms of this Indenture.

SECTION 2.02. Denominations of Recovery Bonds.

(a)    The Recovery Bonds shall be issuable in the Minimum Denomination specified in the Series Supplement and, except as otherwise provided in the Series Supplement, in integral multiples of $1,000 in excess thereof.

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(b)    The Recovery Bonds may, at the election of and as authorized by a Responsible Officer of the Issuer, be issued in one or more Tranches, and shall be designated generally as the “Recovery Bonds” of the Issuer, with such further particular designations added or incorporated in such title for the Recovery Bonds of any particular Tranche as a Responsible Officer of the Issuer may determine. Each Recovery Bond shall bear upon its face the designation so selected for the Tranche to which it belongs. All Recovery Bonds shall be identical in all respects except for the denominations thereof, unless the Recovery Bonds are comprised of one or more Tranches, in which case all Recovery Bonds of the same Tranche shall be identical in all respects except for the denominations thereof. All Recovery Bonds of a particular Tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority, or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.

(c)    The Recovery Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer which shall establish the terms and provisions thereof. The several Tranches thereof may differ as between Tranches, in respect of any of the following matters:

(i) designation of the Tranches thereof;

(ii) the principal amount (and, if more than one Tranche is issued, the respective principal amounts of such Tranches);

(iii) the Recovery Bond Interest Rate;

(iv) the Payment Dates;

(v) the Scheduled Final Payment Date;

(vi) the Final Maturity Date;

(vii) the place or places for the payment of interest, principal and premium, if any;

(viii) the Minimum Denominations;

(ix) the Expected Amortization Schedule;

(x) provisions with respect to the definitions set forth in Appendix A hereto;

(xi) whether or not the Recovery Bonds are to be Book-Entry Recovery Bonds and the extent to which Section 2.11 should apply; and

(xii) any other provisions expressing or referring to the terms and conditions upon which the Recovery Bonds of any Tranche are to be issued under this Indenture that are not in conflict with the provisions of this Indenture and as to which the Rating Agency Condition is satisfied.

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SECTION 2.03. Execution, Authentication and Delivery.

(a)    The Recovery Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers. The signature of any such Responsible Officer on the Recovery Bonds may be manual, electronic or facsimile.

(b)    Recovery Bonds bearing the manual, electronic or facsimile signature of individuals who were at any time Responsible Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Recovery Bonds or did not hold such offices at the date of the Recovery Bonds.

(c)    At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Recovery Bonds executed by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver the Recovery Bonds as in this Indenture provided and not otherwise.

(d)    No Recovery Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Recovery Bond a certificate of authentication substantially in the form provided for therein executed by the Indenture Trustee by the manual, electronic or facsimile signature of one of its authorized signatories, and such certificate upon any Recovery Bond shall be conclusive evidence, and the only evidence, that such Recovery Bond has been duly authenticated and delivered hereunder.

SECTION 2.04. Temporary Recovery Bonds.

(a)    Pending the preparation of Definitive Recovery Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, Temporary Recovery Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Recovery Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing the Recovery Bonds may determine, as evidenced by their execution of the Recovery Bonds.

(b)    If Temporary Recovery Bonds are issued, the Issuer will cause Definitive Recovery Bonds to be prepared without unreasonable delay. After the preparation of Definitive Recovery Bonds, the Temporary Recovery Bonds shall be exchangeable for Definitive Recovery Bonds upon surrender of the Temporary Recovery Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more Temporary Recovery Bonds, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Recovery Bonds of authorized denominations. Until so exchanged, the Temporary Recovery Bonds shall in all respects be entitled to the same benefits under this Indenture as Definitive Recovery Bonds.

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SECTION 2.05. Registration; Registration of Transfer and Exchange of Recovery Bonds.

(a)    The Issuer shall cause to be kept a register (the “Recovery Bond Register”) in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Recovery Bonds and the registration of transfers of Recovery Bonds. The Indenture Trustee shall be “Recovery Bond Registrar” for the purpose of registering Recovery Bonds and transfers of Recovery Bonds as herein provided. Upon any resignation of any Recovery Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Recovery Bond Registrar.

(b)    If a Person other than the Indenture Trustee is appointed by the Issuer as Recovery Bond Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Recovery Bond Registrar and of the location, and any change in the location, of the Recovery Bond Register, and the Indenture Trustee shall have the right to inspect the Recovery Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Recovery Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of the Recovery Bonds (separately stated by Tranche).

(c)    Upon surrender for registration of transfer of any Recovery Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, provided that the requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Recovery Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount.

(d)    At the option of the Holder, Recovery Bonds may be exchanged for other Recovery Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount, upon surrender of the Recovery Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Recovery Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon any such execution, the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, the Recovery Bonds which the Holder making the exchange is entitled to receive.

(e)    All Recovery Bonds issued upon any registration of transfer or exchange of other Recovery Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Recovery Bonds surrendered upon such registration of transfer or exchange.

(f)    Every Recovery Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by (A) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other guarantee program acceptable to the Indenture Trustee, and (B) such other documents as the Indenture Trustee may require.

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(g)    No service charge shall be made to a Holder for any registration of transfer or exchange of Recovery Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Recovery Bonds, other than exchanges pursuant to Sections 2.04 or 2.06 not involving any transfer.

(h)    The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Recovery Bond Registrar need not register transfers or exchanges of any Recovery Bond that has been submitted within fifteen (15) days preceding the due date for any payment with respect to such Recovery Bond until after such due date has occurred.

SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Recovery Bonds.

(a)    If (i) any mutilated Recovery Bond is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Recovery Bond and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Recovery Bond Registrar or the Indenture Trustee that such Recovery Bond has been acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon the Issuer’s written request, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Recovery Bond, a replacement Recovery Bond of like Tranche, tenor and principal amount, bearing a number not contemporaneously outstanding; provided, however, that if any such destroyed, lost or stolen Recovery Bond, but not a mutilated Recovery Bond, shall have become or within seven (7) days shall be due and payable, instead of issuing a replacement Recovery Bond, the Issuer may pay such destroyed, lost or stolen Recovery Bond when so due or payable without surrender thereof. If, after the delivery of such replacement Recovery Bond or payment of a destroyed, lost or stolen Recovery Bond pursuant to the proviso to the preceding sentence, a Protected Purchaser of the original Recovery Bond in lieu of which such replacement Recovery Bond was issued presents for payment such original Recovery Bond, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Recovery Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Recovery Bond from such Person to whom such replacement Recovery Bond was delivered or any assignee of such Person, except a Protected Purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

(b)    Upon the issuance of any replacement Recovery Bond under this Section 2.06, the Issuer and/or the Indenture Trustee may require the payment by the Holder of such Recovery Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Recovery Bond Registrar) connected therewith.

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(c)    Every replacement Recovery Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Recovery Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Recovery Bond shall be found at any time or enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Recovery Bonds duly issued hereunder.

(d)    The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Recovery Bonds.

SECTION 2.07. Persons Deemed Owner.

Prior to due presentment for registration of transfer of any Recovery Bond, the Issuer, the Indenture Trustee, the Recovery Bond Registrar and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Recovery Bond is registered (as of the day of determination) as the owner of such Recovery Bond for the purpose of receiving payments of principal of and premium, if any, and interest on such Recovery Bond and for all other purposes whatsoever, whether or not such Recovery Bond be overdue, and neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.

SECTION 2.08. Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.

(a)    The Recovery Bonds shall accrue interest as provided in the Series Supplement at the applicable Recovery Bond Interest Rate, and such interest shall be payable on each applicable Payment Date. Any installment of interest, principal or premium, if any, payable on any Recovery Bond which is punctually paid or duly provided for on the applicable Payment Date shall be paid to the Person in whose name such Recovery Bond (or one or more Predecessor Recovery Bonds) is registered on the Record Date for such Payment Date by wire transfer to an account maintained by such Holder in accordance with payment instructions delivered to the Indenture Trustee by such Holder, except that with respect to Book-Entry Recovery Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Recovery Bond unless and until such Global Recovery Bond is exchanged for Definitive Recovery Bonds (in which event payments shall be made as provided above), and except for the final installment of principal and premium, if any, payable with respect to such Recovery Bond on a Payment Date which shall be payable as provided below.

(b)    The principal of each Recovery Bond of each Tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date as specified in the Series Supplement; provided that installments of principal not paid when scheduled to be paid in accordance with the Expected Amortization Schedule shall be paid upon receipt of money available for such purpose, in the order set forth in Section 8.02(e). Failure to pay principal in accordance with such Expected Amortization Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however, that failure to pay the entire unpaid principal amount of

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the Recovery Bonds of a Tranche upon the Final Maturity Date for the Recovery Bonds shall constitute a Default or Event of Default under this Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of the Recovery Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of the Recovery Bonds representing not less than a majority of the Outstanding Amount of the Recovery Bonds have declared the Recovery Bonds to be immediately due and payable in the manner provided in Section 5.02. All payments of principal and premium, if any, on the Recovery Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement. Upon written notice from the Issuer, the Indenture Trustee shall notify the Person in whose name a Recovery Bond is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final installment of principal of and premium, if any, and interest on such Recovery Bond will be paid. Such notice shall be mailed no later than five (5) days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Recovery Bond and shall specify the place where such Recovery Bond may be presented and surrendered for payment of such installment.

(c)    If interest on the Recovery Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Recovery Bond Interest Rate to the extent lawful) to the Persons who are Holders on a subsequent Special Record Date, which date shall be at least fifteen (15) Business Days prior to the Special Payment Date. The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten (10) days before any such Special Record Date, the Issuer shall mail to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.

SECTION 2.09. Cancellation.

All Recovery Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Recovery Bonds previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Recovery Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Recovery Bonds shall be authenticated in lieu of or in exchange for any Recovery Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Recovery Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.

SECTION 2.10. Outstanding Amount; Authentication and Delivery of Recovery Bonds.

(a)    The aggregate Outstanding Amount of Recovery Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate of the amounts of Recovery Bonds that are authorized in the Financing Order but otherwise shall be unlimited.

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(b)    Recovery Bonds created and established by the Series Supplement may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee, and receipt by the Indenture Trustee, or the causing to occur by the Issuer, of the following; provided, however, that compliance with such conditions and delivery of such documents shall only be required in connection with the original issuance of the Recovery Bonds:

(i) Issuer Action. An Issuer Order authorizing and directing the authentication and delivery of the Recovery Bonds by the Indenture Trustee and specifying the principal amount of Recovery Bonds to be authenticated.

(ii) Authorizations. Copies of (X) the Financing Order which shall be in full force and effect and be Final, including the filing of PG&E’s written consent to all terms and conditions of the Financing Order with the CPUC in accordance with Section 850.1(d) of the Wildfire Financing Law, (Y) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of the Recovery Bonds and (Z) a duly executed Series Supplement.

(iii) Opinions. An opinion or opinions, portions of which may be delivered by one or more Independent counsel for the Issuer, portions of which may be delivered by one or more Independent counsel for the Servicer, and portions of which may be delivered by one or more Independent counsel for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, stating that (A) all conditions precedent provided for in this Indenture relating to (I) the authentication and delivery of the Issuer’s Recovery Bonds and (II) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture, have been complied with, and (B) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture is authorized or permitted by this Indenture.

(iv) Authorizing Certificate. An Officer’s Certificate, dated the Closing Date, of the Issuer certifying that (A) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Recovery Bonds and (B) that the Series Supplement is in the form attached thereto, and it shall comply with the requirements of Section 2.02.

(v) The Recovery Bond Collateral. The Issuer shall have made or caused to be made all filings with the CPUC and the California Secretary of State pursuant to the Financing Order and the Wildfire Financing Law and all other filings necessary to perfect the Grant of the Recovery Bond Collateral to the Indenture Trustee and the Lien of this Indenture.

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(vi) Certificates of the Issuer and the Seller.

(A) An Officer’s Certificate from the Issuer, dated as of the Closing Date:

(I) to the effect that a. the Issuer is not in Default under this Indenture and that the issuance of the Recovery Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Financing Order or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its property may be bound or to which it or its property may be subject and b. that all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Recovery Bonds have been complied with;

(II) to the effect that the Issuer has not assigned any interest or participation in the Recovery Bond Collateral except for the Grant contained in the Indenture and the Series Supplement; the Issuer has the power and right to Grant the Recovery Bond Collateral to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a first priority perfected security interest in all of its right, title and interest in and to such Recovery Bond Collateral free and clear of any Lien, mortgage, pledge, charge, security interest, adverse claim or other encumbrance arising as a result of actions of the Issuer or through the Issuer, except Permitted Liens;

(III) to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;

(IV) to the effect that attached thereto are duly executed, true and complete copies of the Sale Agreement, the Servicing Agreement and the Administration Agreement, which are, to the knowledge of the Issuer, in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements;

(V) stating that all filings with the CPUC, the California Secretary of State and the Delaware Secretary of State pursuant to the Wildfire Financing Law, the UCC and the

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Financing Order and all UCC financing statements with respect to the Recovery Bond Collateral which are required to be filed by the terms of the Financing Order, the Wildfire Financing Law, the Sale Agreement, the Servicing Agreement and this Indenture have been filed as required; and

(VI) stating that (A) all conditions precedent provided for in this Indenture relating to (I) the authentication and delivery of the Issuer’s Recovery Bonds, and (II) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture, have been complied with, (B) the execution of the Series Supplement to this Indenture dated as of the date of this Indenture is authorized or permitted by this Indenture, and (C) the Issuer has delivered the documents required under this Section 2.10 and has otherwise satisfied the requirements set out in this Section 2.10, including, but not limited to, complying with Section 2.10(a) hereof.

(B) An officer’s certificate from the Seller, dated as of the Closing Date, to the effect that, in the case of the Recovery Property identified in the Sale Agreement, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement:

(I) the Seller was the original and the sole owner of such Recovery Property, free and clear of any Lien; the Seller had not assigned any interest or participation in such Recovery Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such Recovery Property and the proceeds thereof to the Issuer; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in and to such Recovery Property and the proceeds thereof, free and clear of any Lien (other than Permitted Liens) and such sale and assignment is absolute and irrevocable and has been perfected;

(II) the attached copy of the Financing Order creating such Recovery Property is true and complete and is in full force and effect; and

(III) an amount equal to the Required Capital Level has been deposited or caused to be deposited by the Seller with the Indenture Trustee for crediting to the Capital Subaccount.

(C) [Reserved].

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(D) Rating Agency Condition. The Indenture Trustee shall receive evidence reasonably satisfactory to it that the Recovery Bonds have received the ratings from the Rating Agencies required by the Underwriting Agreement as a condition to the issuance of the Recovery Bonds.

(E) Requirements of Series Supplement. Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.

(F) Required Capital Level. Evidence satisfactory to the Indenture Trustee that the Required Capital Level has been credited to the Capital Subaccount.

(G) Other Requirements. Such other documents, certificates, agreements, instruments or opinions as the Indenture Trustee may reasonably require.

SECTION 2.11. Book-Entry Recovery Bonds.

(a)    Unless the Series Supplement provides otherwise, all of the Recovery Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Recovery Bonds, evidencing the Recovery Bonds which (i) shall be an aggregate original principal amount equal to the aggregate original principal amount of the Recovery Bonds to be issued pursuant to the Issuer Order, (ii) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (iii) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency’s or such nominee’s instructions, and (iv) shall bear a legend substantially to the effect set forth in Exhibit A attached hereto.

(b)    Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a “clearing agency” registered under the Exchange Act and any other applicable statute or regulation.

(c)    No Holder of Recovery Bonds issued in Book-Entry Form shall receive a Definitive Recovery Bond representing such Holder’s interest in any of the Recovery Bonds, except as provided in Section 2.13. Unless (and until) certificated, fully registered Recovery Bonds (the “Definitive Recovery Bonds”) have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:

(i) the provisions of this Section 2.11 shall be in full force and effect;

(ii) the Issuer, the Servicer, the Paying Agent, the Recovery Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Recovery Bonds and the giving of instructions or directions hereunder) as the authorized representative of the Holders;

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(iii) to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;

(iv) the rights of Holders shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Letter of Representations, unless and until Definitive Recovery Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Book-Entry Recovery Bonds to such Clearing Agency Participants; and

(v) whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of Recovery Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Recovery Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.

SECTION 2.12. Notices to Clearing Agency.

Unless and until Definitive Recovery Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment, or other communications to the holders of Book-Entry Recovery Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall make all such payments to, and give all such notices and communications specified herein, to the Clearing Agency.

SECTION 2.13. Definitive Recovery Bonds.

(a)    If (x)(i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (y) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (z) after the occurrence of an Event of Default hereunder, Holders holding Recovery Bonds aggregating not less than a majority of the aggregate Outstanding Amount of Recovery Bonds maintained as Book-Entry Recovery Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Recovery Bonds to the Holders requesting the same. Upon surrender to the Indenture Trustee of the Global Recovery Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture

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Trustee shall authenticate and deliver, Definitive Recovery Bonds in accordance with the instructions of the Clearing Agency. None of the Issuer, the Recovery Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. Upon the issuance of Definitive Recovery Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Recovery Bonds as Holders hereunder.

(b)    Definitive Recovery Bonds will be transferable and exchangeable at the offices of the Recovery Bonds Registrar. With respect to any transfer of such listed Recovery Bonds, the new Definitive Recovery Bonds registered in the names specified by the transferee and the original transferor shall be available at the offices of such transfer agent.

SECTION 2.14. CUSIP Number.

The Issuer in issuing any Recovery Bonds may use a “CUSIP” number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Recovery Bonds and that reliance may be placed only on the other identification numbers printed on the Recovery Bonds. The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Recovery Bond.

SECTION 2.15. Letter of Representations.

Notwithstanding anything to the contrary in this Indenture or the Series Supplement, the parties hereto shall comply with the terms of each Letter of Representations applicable to such party.

SECTION 2.16. Tax Treatment.

The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Recovery Bond, by acquiring any Recovery Bond or interest therein, (a) express their intention that, solely for the purposes of federal taxes and, to the extent consistent with applicable State, local and other tax law, solely for the purposes of State, local and other taxes, the Recovery Bonds qualify under applicable tax law as indebtedness of the Member secured by the Recovery Bond Collateral and (b) solely for the purposes of federal taxes and, to the extent consistent with applicable State, local and other tax law, solely for purposes of State, local and other taxes, so long as any of the Recovery Bonds are outstanding, agree to treat the Recovery Bonds as indebtedness of the Member secured by the Recovery Bond Collateral unless otherwise required by appropriate taxing authorities.

SECTION 2.17. State Pledge.

(a)    Recovery Bonds are “recovery bonds” as such term is defined in the Wildfire Financing Law. Principal and interest due and payable on the Recovery Bonds are payable from and secured primarily by Recovery Property created and established by the Financing Order obtained from the Public Utilities Commission of California pursuant to the Wildfire Financing Law. Recovery Property consists of the rights and interests of the Seller in the relevant Financing

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Order, including the right to impose, collect and receive certain charges (defined in the Wildfire Financing Law as “fixed recovery charges,” to be included in regular electric utility bills of existing and future electric service Consumers within the service territory of PG&E, or its successors or assigns, as more fully described in the Financing Order. Under the laws of the State of California in effect on the Closing Date, the State of California has agreed for the benefit of the Holders, pursuant to Section 850.1(e) of the Wildfire Financing Law, as follows:

“The State of California does hereby pledge and agree with the electrical corporation, owners of recovery property, financing entities, and holders of recovery bonds that the state shall neither limit nor alter, except as otherwise provided with respect to the true-up adjustment of the fixed recovery charges pursuant to subdivision [(g)] [of Section 850.1], the fixed recovery charges, any associated fixed recovery tax amounts, recovery property, financing orders, or any rights under a financing order until the recovery bonds, together with the interest on the recovery bonds and associated financing costs, are fully paid and discharged, and any associated fixed recovery tax amounts have been satisfied or, in the alternative, have been refinanced through an additional issue of recovery bonds, provided that nothing contained in this section shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the electrical corporation and of owners and holders of the recovery bonds. The financing entity is authorized to include this pledge and undertaking for the state in these recovery bonds.”

“Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond. The issuance of recovery bonds under this article [of the Wildfire Financing Law] shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment.”

The Issuer hereby acknowledges that the purchase of any Recovery Bond by a Holder or the purchase of any beneficial interest in a Recovery Bond by any Person and the Indenture Trustee’s obligations to perform hereunder are made in reliance on such agreement and pledge by the State of California.

SECTION 2.18. Security Interests.

(a)    Representations and Warranties. The Issuer hereby makes the following representations and warranties:

(i) other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the Recovery Bond Collateral and no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the Recovery Bond Collateral is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Secured Parties in connection with this Indenture;

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(ii) this Indenture constitutes a valid and continuing lien on, and first priority perfected security interest in, the Recovery Bond Collateral in favor of the Indenture Trustee on behalf of the Secured Parties, which lien and security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing;

(iii) with respect to all Recovery Bond Collateral, this Indenture, together with the Series Supplement, creates a valid and continuing first priority perfected security interest (as defined in the UCC and as such term is used in the Wildfire Financing Law) in such Recovery Bond Collateral, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing;

(iv) the Issuer has good and marketable title to the Recovery Bond Collateral free and clear of any Lien, claim or encumbrance of any Person other than Permitted Liens;

(v) all of the Recovery Bond Collateral constitutes either Recovery Property or accounts, deposit accounts, investment property or general intangibles (as each such term is defined in the UCC) except that proceeds of the Recovery Bond Collateral may also take the form of instruments or money;

(vi) the Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the Recovery Bond Collateral granted to the Indenture Trustee, for the benefit of the Secured Parties;

(vii) the Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Recovery Bond Collateral granted to the Indenture Trustee;

(viii) the Issuer has not authorized the filing of and is not aware, after due inquiry, of any financing statements against the Issuer that include a description of the Recovery Bond Collateral other than those filed in favor of the Indenture Trustee;

(ix) the Issuer is not aware of any judgment or tax Lien filings against the Issuer;

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(x) (I) the Collection Account (including all subaccounts thereof, other than the Cash Subaccount) constitutes a “securities account” within the meaning of the UCC and (II) the Cash Subaccount constitutes a “deposit account” within the meaning of the UCC;

(xi) the Issuer has taken all steps necessary to cause the Securities Intermediary of each such Securities Account to identify in its records the Indenture Trustee as the Person having a Security Entitlement against the Securities Intermediary in such Securities Account, no Collection Account is in the name of any Person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary of the Collection Account and the Indenture Trustee acting as “bank” with respect to the Cash Subaccount to comply with entitlement orders of any Person other than the Indenture Trustee; and

(xii) all of the Recovery Bond Collateral constituting investment property has been and will have been credited to the Collection Account or a subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account (other than cash) as Financial Assets and all cash will be allocated to the applicable Cash Subaccount. Accordingly, the Indenture Trustee has a first priority perfected security interest in the Collection Account, all funds and Financial Assets on deposit therein, and all securities entitlements relating thereto.

(b)    Survival. The representations and warranties set forth in this Section 2.18 shall survive the execution and delivery of this Indenture and the issuance of any Recovery Bonds, shall be deemed re-made on each date on which any funds in the Collection Account are distributed to Issuer or otherwise released from the Lien of the Indenture and may not be waived by any party hereto except pursuant to a supplemental indenture executed in accordance with Article IX and as to which the Rating Agency Condition has been satisfied.

SECTION 2.19. Payment by Issuer is Nonrecourse.

Any amounts due hereunder from the Issuer with respect to the Recovery Bonds shall be paid solely from the Recovery Bond Collateral. In the event the Recovery Bond Collateral pledged to secure the Recovery Bonds has been exhausted and the Recovery Bonds have not been paid in full, then any and all amounts remaining due on the Recovery Bonds shall be extinguished and the Recovery Bonds cancelled. To the extent that under any applicable law the Holder of a Recovery Bond or any owner of a security entitlement to a Bond is deemed to have an interest in assets of the Issuer other than the Recovery Bond Collateral (“Other Issuer Assets”), such Holder or owner is deemed to have agreed that its interest in such Other Issuer Assets is fully subordinate to the claim against such Other Issuer Assets of the pledgees or grantees to which such Other Issuer Assets are pledged or granted and is further deemed to have agreed that this agreement shall constitute a subordination agreement for purpose of Section 510(a) of the United States Bankruptcy Code.

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ARTICLE III

COVENANTS

SECTION 3.01. Payment of Principal, Premium, if any, and Interest.

The principal of and premium, if any, and interest on the Recovery Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Recovery Bonds and this Indenture; provided that except on a Final Maturity Date or upon the acceleration of the Recovery Bonds following the occurrence of an Event of Default, the Issuer shall only be obligated to pay the principal of the Recovery Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.

SECTION 3.02. Maintenance of Office or Agency.

The Issuer shall initially maintain in Chicago, an office or agency where Recovery Bonds may be surrendered for registration of transfer or exchange. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes and the Corporate Trust Office of the Indenture Trustee shall serve as the offices provided in the prior sentence. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.

SECTION 3.03. Money for Payments To Be Held in Trust.

(a)    As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Recovery Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from such Collection Account for payments with respect to any Recovery Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.

(b)    Each Paying Agent shall meet the eligibility criteria set forth for any Indenture Trustee under Section 6.11. The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:

(i) hold all sums held by it for the payment of amounts due with respect to the Recovery Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;

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(ii) give the Indenture Trustee and the Rating Agencies written notice of any Default by the Issuer of which it has actual knowledge (and if the Indenture Trustee is the Paying Agent, a Responsible Officer of the Paying Agent has actual knowledge) in the making of any payment required to be made with respect to the Recovery Bonds;

(iii) at any time during the continuance of any such Default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;

(iv) immediately, with notice to the Rating Agencies, resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Recovery Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and

(v) comply with all requirements of the Code and other tax laws with respect to the withholding from any payments made by it on any Recovery Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

(c)    The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

(d)    Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Recovery Bond and remaining unclaimed for two (2) years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on an Issuer Request; and, subject to Section 10.16, the Holder of such Recovery Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the written direction and expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

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SECTION 3.04. Existence.

The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the other Basic Documents, the Recovery Bonds, the Recovery Bond Collateral and each other instrument or agreement referenced herein or therein.

SECTION 3.05. Protection of Recovery Bond Collateral.

(a)    The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the CPUC or the California Secretary of State pursuant to the Financing Order or the Wildfire Financing Law and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to:

(i) maintain or preserve the Lien and security interest (and the priority thereof) of this Indenture and the Series Supplement or carry out more effectively the purposes hereof;

(ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;

(iii) enforce any of the Recovery Bond Collateral;

(iv) preserve and defend title to the Recovery Bond Collateral and the rights of the Indenture Trustee and the Holders in such Recovery Bond Collateral against the Claims of all Persons and parties, including, without limitation, the challenge by any party to the validity or enforceability of the Financing Order, any Tariff, the Recovery Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the CPUC or the State of California of any of its obligations or duties under the Wildfire Financing Law, the State Pledge, or the Financing Order or Tariff; or

(v) pay any and all taxes levied or assessed upon all or any part of the Recovery Bond Collateral.

(b)    The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute or authorize, as the case may be, any filings with the CPUC or the California Secretary of State, financing statements, continuation statements or other instrument required pursuant to this Section 3.05, it being understood that the Indenture Trustee shall not be responsible for filing any such financing statement and shall have no obligation or any duty to prepare, authorize, execute or file such documents. The Indenture Trustee is specifically authorized upon written direction of the Issuer or Servicer to file financing statements covering the Recovery Bond Collateral,

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including, without limitation, financing statements that describe the Recovery Bond Collateral as “all assets” or “all personal property” of the Issuer; provided, however, that such authorization shall not be deemed to be an obligation.

SECTION 3.06. Opinions as to Recovery Bond Collateral.

(a)    Within ninety (90) days after the beginning of each calendar year beginning with the calendar year beginning January 1, 2022, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any filings with the CPUC, the Delaware Secretary of State or the California Secretary of State pursuant to the Wildfire Financing Law and the Financing Order and any financing statements and continuation statements as are necessary to maintain the Lien and the perfected security interest created by this Indenture and reciting the details of such action or stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and security interest. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any filings with the CPUC, the Delaware Secretary of State or the California Secretary of State, financing statements and continuation statements that will, in the opinion of such counsel, be required within the twelve-month period following the date of such opinion to maintain the Lien and the perfected security interest created by this Indenture and the Series Supplement.

(b)    Prior to the effectiveness of any amendment to the Sale Agreement or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the CPUC, the Delaware Secretary of State and the California Secretary of State pursuant to the Wildfire Financing Law or the Financing Order, have been executed and filed that are necessary fully to maintain the Lien and security interest of the Issuer and the Indenture Trustee in the Recovery Property and the Recovery Bond Collateral, respectively, and the proceeds thereof, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to maintain such Lien and security interest.

SECTION 3.07. Performance of Obligations; Servicing; SEC Filings.

(a)    The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Recovery Bond Collateral and (ii) shall not take any action and shall use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person’s covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Series Supplement, the Sale Agreement, the Servicing Agreement or such other instrument or agreement.

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(b)    The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee herein or in an Officer’s Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture.

(c)    The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Series Supplement, the other Basic Documents and in the instruments and agreements included in the Recovery Bond Collateral, including filing or causing to be filed all filings with the CPUC, the Delaware Secretary of State or the California Secretary of State pursuant to the Wildfire Financing Law or the Financing Order, all UCC financing statements and continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.

(d)    If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Issuer shall promptly give written notice thereof to the Indenture Trustee and the Rating Agencies, and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such Servicer Default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Recovery Property, the Recovery Bond Collateral or the Fixed Recovery Charges, the Issuer shall take all reasonable steps available to it to remedy such failure.

(e)    As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer’s rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Indenture Trustee shall, at the written direction of the Holders evidencing not less than a majority of the Outstanding Amount of the Recovery Bonds) appoint a successor Servicer (the “Successor Servicer”), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer and the Indenture Trustee. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement. If within thirty (30) days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee, at the Issuer’s expense, may petition the CPUC or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, PG&E may make such arrangements for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 8.02 and in the Servicing Agreement.

(f)    Upon any termination of the Servicer’s rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Holders and the Rating Agencies. As soon as a Successor Servicer is appointed, the Indenture Trustee shall notify the Issuer, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.

(g)    The Issuer shall (or shall cause the Depositor to) post on its website (which for this purpose may be the website of any direct or indirect parent company of the Issuer) and, to the extent consistent with the Issuer’s and the Depositor’s obligations under applicable law, file with or furnish to the SEC in periodic reports and other reports as are required from time to time under

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Section 13 or Section 15(d) of the Exchange Act, the following information (other than any such information filed with the SEC and publicly available to investors unless the Issuer specifically requests such items to be posted) with respect to the Outstanding Recovery Bonds, in each case to the extent such information is reasonably available to the Issuer:

(i) the final Prospectus;

(ii) the statements of any remittances of Fixed Recovery Charges made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K, or successor forms thereto);

(iii) a statement reporting the balances in the Collection Account and in each subaccount of the Collection Account as of the end of each quarter or the most recent date available (to be included in a Form 10-D or Form 10-K, or successor forms thereto);

(iv) a statement showing the balance of Outstanding Recovery Bonds that reflects the actual periodic payments made on the Recovery Bonds during the applicable period (to be included in the next Form 10-D or Form 10-K filed, or successor forms thereto);

(v) the Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K, or successor forms thereto);

(vi) the Monthly Servicer’s Certificate as required to be submitted pursuant to the Servicing Agreement;

(vii) the Reconciliation Certificate as required to be submitted pursuant to the Servicing Agreement;

(viii) the text (or a link to the website where a reader can find the text) of each filing of a True-Up Adjustment and the results of each such filing;

(ix) any change in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies;

(x) material legislative or regulatory developments directly relevant to the Outstanding Recovery Bonds (to be filed or furnished in a Form 8-K); and

(xi) any reports and other information that the Issuer is required to file with the SEC under the Securities Exchange Act of 1934.

(h)    Notwithstanding the foregoing, nothing herein shall preclude the Issuer from voluntarily suspending or terminating its filing obligations as Issuer with the SEC to the extent permitted by applicable law.

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(i)    The address of the Indenture Trustee’s website for investors is currently https://gctinvestorreporting.bnymellon.com. The Indenture Trustee shall promptly notify the Issuer, the Bondholders and the Rating Agencies of any change to the address of the website for investors.

(j)    The Issuer shall make all filings required under the Wildfire Financing Law relating to the transfer of the ownership or security interest in the Recovery Property other than those required to be made by the Seller or the Servicer pursuant to the Basic Documents.

SECTION 3.08. Certain Negative Covenants.

So long as any Recovery Bonds are Outstanding, the Issuer shall not:

(a)    except as expressly permitted by this Indenture and the other Basic Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Recovery Bond Collateral, unless directed to do so by the Indenture Trustee in accordance with Article V;

(b)     claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Recovery Bonds (other than amounts properly withheld from such payments under the Code or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the Recovery Bond Collateral;

(c)    terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;

(d)    (i) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture and the Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Recovery Bonds under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien (other than the Lien of this Indenture or of the Series Supplement) to be created on or extend to or otherwise arise upon or burden the Recovery Bond Collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due), or (iii) permit the Lien of this Indenture or of the Series Supplement not to constitute a valid first priority perfected security interest in the Recovery Bond Collateral;

(e)    elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise take any action, file any tax return, or make any election inconsistent with the treatment of the Issuer, for purposes of federal taxes and, to the extent consistent with applicable State tax law, State income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;

(f)    change its name, identity or structure or the location of its chief executive office, unless at least ten (10) Business Days’ prior to the effective date of any such change the Issuer delivers to the Indenture Trustee (with copies to the Rating Agencies) such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture and the Series Supplement;

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(g)    take any action which is subject to a Rating Agency Condition without satisfying the Rating Agency Condition;

(h)    except to the extent permitted by applicable law, voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g); or

(i)    issue any recovery bonds under the Wildfire Financing Law or any similar law (other than the Recovery Bonds).

SECTION 3.09. Annual Statement as to Compliance.

The Issuer will deliver to the Indenture Trustee and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2023), an Officer’s Certificate stating, as to the Responsible Officer signing such Officer’s Certificate, that:

(a)    a review of the activities of the Issuer during the preceding twelve (12) months ended December 31 (or, in the case of the first such Officer’s Certificate, since the Closing Date) and of performance under this Indenture has been made; and

(b)    to the best of such Responsible Officer’s knowledge, based on such review, the Issuer has in all material respects complied with all conditions and covenants under this Indenture throughout such twelve-month period (or such shorter period in the case of the first such Officer’s Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.

SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.

(a)    The Issuer shall not consolidate or merge with or into any other Person, unless:

(i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall a. be a Person organized and existing under the laws of the United States of America or any State, b. expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and c. assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Servicing Agreement and each other Basic Document to which the Issuer is a party;

(ii) immediately after giving effect to such merger or consolidation, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

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(iii) the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;

(iv) the Issuer shall have delivered to PG&E, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to PG&E, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that the consolidation or merger will not result in a material adverse federal or State income tax consequence to the Issuer, PG&E, the Indenture Trustee or the then existing Bondholders;

(v) any action as is necessary to maintain the Lien and the perfected security interest in the Recovery Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture and each Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

(b)    Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the Recovery Bond Collateral, to any Person, unless:

(i) the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted: (i) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (ii) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, (iii) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (iv) unless otherwise provided in the supplemental indenture referred to in clause (i) above, expressly agrees to indemnify, defend and hold harmless the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Recovery Bonds (including

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the enforcement costs of such indemnity), (v) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person) required by the Exchange Act in connection with the Recovery Bonds and (vi) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer’s rights and obligations under the Sale Agreement or the Servicing Agreement, assumes all obligations and succeeds to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;

(ii) immediately after giving effect to such transaction, no Default, Event of Default or Servicer Default shall have occurred and be continuing;

(iii) the Rating Agency Condition shall have been satisfied with respect to such transaction;

(iv) the Issuer shall have delivered to PG&E, the Indenture Trustee and the Rating Agencies an opinion or opinions of outside tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to PG&E, and which may be based on a ruling from the Internal Revenue Service) to the effect that the disposition will not result in a material adverse federal or State income tax consequence to the Issuer, PG&E, the Indenture Trustee or the then existing Bondholders;

(v) any action as is necessary to maintain the Lien and the perfected security interest in the Recovery Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of external counsel of the Issuer delivered to the Indenture Trustee; and

(vi) the Issuer shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel of the Issuer each stating that such sale, conveyance, exchange, transfer or other disposition and such supplemental indenture comply with this Indenture and each Series Supplement and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).

SECTION 3.11. Successor or Transferee.

(a)    Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.

(b)    Except as set forth in Section 6.07, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic

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Documents to be observed or performed on the part of the Issuer with respect to the Recovery Bonds and the Recovery Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.

SECTION 3.12. No Other Business.

The Issuer shall not engage in any business other than financing, purchasing, owning and managing the Recovery Property and the other Recovery Bond Collateral and the issuance of the Recovery Bonds in the manner contemplated by the Financing Order and this Indenture and the Basic Documents and activities incidental thereto.

SECTION 3.13. No Borrowing.

The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Recovery Bonds and any other indebtedness expressly permitted by or arising under the Basic Documents.

SECTION 3.14. Servicer’s Obligations.

The Issuer shall enforce the Servicer’s compliance with and performance of all of the Servicer’s material obligations under the Servicing Agreement.

SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.

Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.

SECTION 3.16. Capital Expenditures.

Other than the purchase of Recovery Property from the Seller on each Closing Date, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

SECTION 3.17. Restricted Payments.

Except as provided in Section 8.04(c), the Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that, if no Event of Default shall have occurred and be continuing or would be caused

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thereby, the Issuer may make, or cause to be made, any such distributions to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer using funds distributed to the Issuer pursuant to Section 8.02(e)(xi) to the extent that such distributions would not cause the balance of the Capital Subaccount to decline below the Required Capital Level. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.

SECTION 3.18. Notice of Events of Default.

The Issuer agrees to give the Indenture Trustee, the CPUC and the Rating Agencies prompt written notice of each Default or Event of Default hereunder as provided in Section 5.01, and each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement, respectively.

SECTION 3.19. Further Instruments and Acts.

Upon request of the Indenture Trustee (it being understood that this covenant shall not be construed as an affirmative duty of the Indenture Trustee), the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the Recovery Bond Collateral.

SECTION 3.20. Notice of Events of Default.

The Issuer agrees to give the Indenture Trustee, the CPUC and the Rating Agencies prompt written notice of each Event of Default hereunder and each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement with respect to the Recovery Property, respectively.

SECTION 3.21. Sale Agreement, Servicing Agreement and Administration Agreement Covenants.

(a)    The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement and the Administration Agreement and to compel or secure the performance and observance by the Seller, the Servicer and the Administrator of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement in accordance with the terms thereof. So long as no Event of Default occurs and is continuing, but subject to Section 3.21(f), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement; provided that such action shall not adversely affect the interests of the Holders in any material respect.

(b)    If an Event of Default occurs and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of Holders of a majority of the Outstanding Amount of the Recovery Bonds of all Tranches affected thereby shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator and the Servicer,

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as the case may be, under or in connection with the Sale Agreement, the Administration Agreement and the Servicing Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, the Administrator or the Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Administration Agreement and the Servicing Agreement, and any right of the Issuer to take such action shall be suspended.

(c)    Except as set forth in Section 3.22(e), with the prior written consent of the Indenture Trustee (subject to the delivery of the Opinion of Counsel set forth below), the Administration Agreement, the Sale Agreement and the Servicing Agreement may be amended in accordance with the provisions thereof, so long as the Rating Agency Condition is satisfied in connection therewith, at any time and from time to time, without the consent of the Holders of the Recovery Bonds; provided that all conditions precedent for such amendment have been satisfied and such amendment is authorized and permitted by the terms of such agreement, as evidenced by an Opinion of Counsel of external counsel of the Issuer. Notwithstanding the foregoing, the Sale Agreement, the Administration Agreement and the Servicing Agreement may be amended in accordance with the provisions thereof with ten (10) Business Days’ prior written notice given to the Rating Agencies, the prior written consent of the Indenture Trustee, but without the consent of the Holders, (I) to cure any ambiguity, to correct or supplement any provisions in the applicable agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in such agreement or of modifying in any manner the rights of the Holders; provided, however, that such action shall not adversely affect in any material respect the interests of any Holder or (II) to conform the provisions of the applicable agreement to the description of such agreement in the Prospectus. In the case of an amendment described in the preceding sentence, the Issuer shall furnish copies of such amendment to the Rating Agencies promptly after execution thereof.

(d)    Except as set forth in Section 3.21(d), if the Issuer, the Seller, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of the Sale Agreement, the Administration Agreement, or the Servicing Agreement, or waive timely performance or observance by the Seller, the Administrator or the Servicer under the Sale Agreement, the Administration Agreement or the Servicing Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Recovery Bonds, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly notify the Indenture Trustee in writing and the Indenture Trustee shall notify the Holders of the Recovery Bonds of the proposed amendment, modification, waiver, supplement, termination or surrender and whether the Rating Agency Condition has been satisfied with respect thereto. The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only if the Rating Agency Condition is satisfied and only with the prior written consent of the Holders of a majority of the Outstanding Amount of Recovery Bonds of the Tranches materially and adversely affected. If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances.

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(e)    If the Issuer or the Servicer proposes to amend, modify, waive, supplement, terminate or surrender, or to agree to any amendment, modification, supplement, termination, waiver or surrender of, the process for True-Up Adjustments, the Issuer shall notify the Indenture Trustee in writing and the Indenture Trustee shall notify the Holders of the Recovery Bonds of such proposal, and the Indenture Trustee shall consent thereto with the prior written consent of the Holders of a majority of the Outstanding Amount of Recovery Bonds of the Tranches affected thereby and only if the Rating Agency Condition has been satisfied with respect thereto.

(f)    Promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer’s expense, the Issuer agrees to take all such lawful actions as the Indenture Trustee may request to compel or secure the performance and observance by each of the Seller, the Administrator or the Servicer of their obligations under and in accordance with the Sale Agreement, the Administration Agreement and the Servicing Agreement, as the case may be, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with such agreements to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default by the Seller, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proceedings to compel or secure performance of their obligations under the Sale Agreement, the Administration Agreement or the Servicing Agreement, as applicable.

(g)    Before consenting to any amendment, modification, supplement, termination, waiver or surrender under Sections 3.21(d) or (e), the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that such action is authorized or permitted by this Indenture and all conditions precedent to such amendment have been satisfied.

SECTION 3.22. Taxes.

So long as any of the Recovery Bonds are Outstanding, the Issuer shall pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Recovery Bond Collateral; provided that no such tax need be paid if the Issuer is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

SECTION 3.23. Additional Recovery Bonds or Additional Other Recovery Bonds.

(a)    Following the issuance by the CPUC of any Subsequent Financing Order or pursuant to remaining authority under the Financing Order, the Issuer may, in its sole discretion but subject to the terms contained in this Section 3.23, acquire additional and separate recovery bond collateral and issue Additional Recovery Bonds or Additional Other Recovery Bonds under

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any such Subsequent Indenture that are backed by such separate additional recovery bond collateral. Any Additional Recovery Bonds and Additional Other Recovery Bonds may include terms and provisions unique to such Additional Recovery Bonds or such Additional Other Recovery Bonds.

(b)    In addition to all applicable requirements set forth in any Subsequent Indenture for any Additional Recovery Bonds or Additional Other Recovery Bonds, the following conditions must be satisfied in connection with any issuance of Additional Recovery Bonds or Additional Other Recovery Bonds:

(i) PG&E has existing authority under the Financing Order to issue Additional Recovery Bonds or PG&E requests and receives a Subsequent Financing Order from the CPUC to recover additional recovery costs through the issuance of Additional Other Recovery Bonds;

(ii) PG&E must serve as initial servicer and administrator for such series of the Additional Recovery Bonds or Additional Other Recovery Bonds and that the servicer and the administrator cannot be replaced without the requisite approval of the holders of all series of Recovery Bonds then-Outstanding;

(iii) satisfaction of the Rating Agency Condition;

(iv) each series of the Additional Recovery Bonds or Additional Other Recovery Bonds has recourse only to the recovery property created by the Financing Order or any Subsequent Financing Order, as the case may be, and funds on deposit in the trust accounts held by the Indenture Trustee with respect to that series, is nonrecourse to the Recovery Property securing the Recovery Bonds and does not constitute a claim against the Issuer if revenue from the fixed recovery charges and funds on deposit in the trust accounts with respect to that series are insufficient to pay such other series in full;

(v) the Issuer has provided to the Indenture Trustee and the Rating Agencies then rating any series of the Issuer’s Outstanding Recovery Bonds an opinion of a nationally recognized law firm experienced in such matters to the effect that such issuance would not result in the Issuer’s substantive consolidation with PG&E and that there has been a true sale of the recovery property for such series, subject to the customary exceptions, qualifications and assumptions contained therein;

(vi) transaction documentation for the other series provides that the indenture trustee on behalf of holders of the recovery bonds of the other series will not file or join in filing of any bankruptcy petition against the Issuer;

(vii) if holders of such other series are deemed to have any interest in any of the Recovery Bond Collateral dedicated to the Recovery Bonds, holders of such Additional Recovery Bonds or Additional Other Recovery Bonds must agree that their interest in the recovery bond collateral dedicated to the Additional Recovery Bonds or Additional Other Recovery Bonds is only a

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first priority perfected interest in the assets relating to the Additional Recovery Bonds or Additional Other Recovery Bonds, as the case may be, in accordance with the related intercreditor agreement;

(viii) each series of Additional Recovery Bonds or Additional Other Recovery will have its own bank accounts or trust accounts and funds for each series of recovery bonds shall be remitted in accordance with the related servicing agreement and related intercreditor agreement;

(ix) no series of Additional Recovery Bonds or Additional Other Recovery Bonds will be issued under this Indenture; and

(x) each series will bear its own indenture trustee fees, servicer fees and administration fees.

ARTICLE IV

SATISFACTION AND DISCHARGE; DEFEASANCE

SECTION 4.01. Satisfaction and Discharge of Indenture; Defeasance.

(a)    This Indenture shall cease to be of further effect with respect to the Recovery Bonds and the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Recovery Bonds, when:

(i) either

(A) all Recovery Bonds theretofore authenticated and delivered (other than (I) Recovery Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (II) Recovery Bonds for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or

(B) either (I) the Scheduled Final Payment Date has occurred with respect to all Recovery Bonds not theretofore delivered to the Indenture Trustee for cancellation or (II) the Recovery Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (1) cash and/or (2) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not theretofore delivered to the Indenture

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Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due;

(ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and

(iii) the Issuer has delivered to the Indenture Trustee an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of registered public accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to Recovery Bonds have been complied with.

(b)    Subject to Sections 4.01(e) and 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Recovery Bonds (“Legal Defeasance Option”) or (ii) its obligations under Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18 and 3.19 and the operation of Section 5.01(a)(iii) (“Covenant Defeasance Option”) with respect to Recovery Bonds. The Issuer may exercise the Legal Defeasance Option with respect to Recovery Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.

(c)    If the Issuer exercises the Legal Defeasance Option, the maturity of the Recovery Bonds may not be accelerated because of an Event of Default. If the Issuer exercises the Covenant Defeasance Option, the maturity of the Recovery Bonds may not be accelerated because of an Event of Default specified in Section 5.01(a)(iii).

(d)    Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds, the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are terminated pursuant to such exercise.

(e)    Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Recovery Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, shall survive until this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) have been paid in full. Thereafter the obligations in Sections 6.07 and 4.04 shall survive.

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SECTION 4.02. Conditions to Defeasance.

The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to Recovery Bonds only if:

(a)    the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Recovery Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Recovery Bonds when scheduled to be paid and to discharge the entire indebtedness on the Recovery Bonds when due;

(b)    the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Recovery Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to the Recovery Bonds;

(c)    in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(a)(v) or (vi) occurs which is continuing at the end of the period;

(d)    no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;

(e)    in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

(f)    in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that the Holders of the Recovery Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(g)    the Issuer delivers to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel of external counsel to the Issuer, each stating that all conditions precedent to the satisfaction and discharge of the Recovery Bonds to the extent contemplated by this Article IV have been complied with;

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(h)    the Issuer delivers to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which PG&E (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of PG&E (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer’s assets and liabilities with the assets and liabilities of PG&E or such other Affiliate; and

(i)    the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option.

Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until principal of and premium, if any, and interest on the Recovery Bonds shall have been paid in accordance with the provisions of this Indenture and the Series Supplement.

SECTION 4.03. Application of Trust Money.

All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or 4.02 shall be held in trust and applied by it, in accordance with the provisions of the Recovery Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Recovery Bonds for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by law. Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 which, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof which would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited, provided that any such payment shall be subject to the satisfaction of the Rating Agency Condition.

SECTION 4.04. Repayment of Moneys Held by Paying Agent.

In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to the Recovery Bonds, all moneys

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then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

ARTICLE V

REMEDIES

SECTION 5.01. Events of Default.

(a)    “Event of Default” wherever used herein, means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(i) default in the payment of any interest on any Recovery Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in Fixed Recovery Charges received or otherwise), and such default shall continue for a period of five (5) Business Days; or

(ii) default in the payment of the then unpaid principal of any Recovery Bond of any Tranche on the Final Maturity Date for such Tranche; or

(iii) default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in clauses (i) or (ii) above), and such default shall continue or not be cured, for a period of thirty (30) days after the earlier of (x) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Recovery Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (y) the date that the Issuer has actual knowledge of the default; or

(iv) any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of which such representation or warranty was incorrect shall not have been eliminated or otherwise cured, within thirty (30) days after the earlier of (x) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Recovery Bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder or (y) the date the Issuer has actual knowledge of the default, or

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(v) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Recovery Bond Collateral in an involuntary case or proceeding under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Recovery Bond Collateral, or ordering the winding-up or liquidation of the Issuer’s affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days; or

(vi) the commencement by the Issuer of a voluntary case under any applicable federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case or proceeding under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Recovery Bond Collateral, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing; or

(vii) any act or failure to act by the State of California or any of its agencies (including the CPUC), officers or employees which violates or is not in accordance with the State Pledge.

(b)    The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five (5) days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer’s Certificate of any event (x) which is an Event of Default under clauses (i), (ii), (v), (vi) or (vii) or (y) which with the giving of notice, the lapse of time, or both, would become an Event of Default under clause (ii), (iii) or (iv), including, in each case, the status of such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.

(a)    If an Event of Default (other than an Event of Default under clause (vii) of Section 5.01) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing not less than a majority of the Outstanding Amount of the Recovery Bonds may declare the Recovery Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Holders), and upon any such declaration the unpaid principal amount of the Recovery Bonds, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

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(b)    At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders representing not less than a majority of the Outstanding Amount of the Recovery Bonds, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

(i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:

(A) all payments of principal of and premium, if any, and interest on all Recovery Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Recovery Bonds if the Event of Default giving rise to such acceleration had not occurred; and

(B) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and

(ii) all Events of Default, other than the nonpayment of the principal of the Recovery Bonds that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

(c)    No such rescission shall affect any subsequent default or impair any right consequent thereto.

SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)    If an Event of Default under Section 5.01(a)(i) or (ii) has occurred and is continuing, subject to Section 10.18, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon the Recovery Bonds and collect in the manner provided by law out of the property of the Issuer or other obligor upon the Recovery Bonds, wherever situated the moneys payable, or the Recovery Bond Collateral and the proceeds thereof, the whole amount then due and payable on the Recovery Bonds for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest, at the respective rate borne by the Recovery Bonds or the applicable Tranche and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.

(b)    If an Event of Default (other than Event of Default under clause (vii) of Section 5.01) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate

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Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture and the Series Supplement or by law, including foreclosing or otherwise enforcing the Lien of the Recovery Bond Collateral securing the Recovery Bonds or applying to a court of competent jurisdiction for sequestration of revenues arising with respect to the Recovery Property.

(c)    If an Event of Default under Section 5.01(a)(v) or (vi) has occurred and is continuing, the Indenture Trustee, irrespective of whether the principal of any Recovery Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default or otherwise:

(i) to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Recovery Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in such Proceedings;

(ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, a standby trustee or Person performing similar functions in any such Proceedings;

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and

(iv) to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any judicial proceeding relative to the Issuer, its creditors and its property,

and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

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(d)    Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Recovery Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

(e)    All rights of action and of asserting claims under this Indenture, or under any of the Recovery Bonds, may be enforced by the Indenture Trustee without the possession of any of the Recovery Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Recovery Bonds.

(f)    In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Recovery Bonds, and it shall not be necessary to make any Holder a party to any such Proceedings.

SECTION 5.04. Remedies; Priorities.

(a)    If an Event of Default (other than an Event of Default under clause (vii) of Section 5.01) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):

(i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Recovery Bonds or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due upon the Recovery Bonds;

(ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Recovery Bond Collateral;

(iii) exercise any remedies of a secured party under the UCC, the Wildfire Financing Law or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Recovery Bonds;

(iv) at the written direction of the Holders of a majority of the Outstanding Amount of the Recovery Bonds, sell the Recovery Bond Collateral or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law, or elect that the Issuer maintain possession of all or a portion of the Recovery Bond Collateral pursuant to Section 5.05 and continue to apply the Recovery Bond Charge Collection as if there had been no declaration of acceleration; and

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(v) exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator, PG&E or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement or the Servicing Agreement;

provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the Recovery Bond Collateral following such an Event of Default, other than an Event of Default described in Section 5.01(a)(i), or (ii), unless (1) the Holders of 100 percent of the Outstanding Amount of the Recovery Bonds consent thereto, (2) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Recovery Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (3) the Indenture Trustee determines that the Recovery Bond Collateral will not continue to provide sufficient funds for all payments on the Recovery Bonds as they would have become due if the Recovery Bonds had not been declared due and payable, and the Indenture Trustee obtains the written consent of Holders of 66-2/3 percent of the Outstanding Amount of the Recovery Bonds. In determining such sufficiency or insufficiency with respect to clause (2) and (3), the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Recovery Bond Collateral for such purpose.

(b)    If an Event of Default under clause (vii) of Section 5.01 shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(a)(vii).

(c)    If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).

SECTION 5.05. Optional Preservation of the Recovery Bond Collateral.

If the Recovery Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of all or a portion of the Recovery Bond Collateral. It is the desire of the parties hereto and the Holders that there be at all times sufficient funds for the payment of principal of and premium, if any, and interest on the Recovery Bonds, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Recovery Bond Collateral. In determining whether to maintain possession of the Recovery Bond Collateral or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Recovery Bond Collateral for such purpose.

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SECTION 5.06. Limitation of Suits.

(a)    No Holder of any Recovery Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Wildfire Financing Law or to avail itself of the right to foreclose on the Recovery Bond Collateral or otherwise enforce the Lien and the security interest on the Recovery Bond Collateral with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(i) such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;

(ii) the Holders of not less than a majority of the Outstanding Amount of the Recovery Bonds have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;

(iii) such Holder or Holders have offered to the Indenture Trustee indemnity or security satisfactory to it against the costs, expenses, losses and liabilities which may be incurred in complying with such request;

(iv) the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and

(v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty-day period by the Holders of a majority of the Outstanding Amount of the Recovery Bonds;

it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

(b)    In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Recovery Bonds, the Indenture Trustee in its sole discretion may file a petition with a court of competent jurisdiction to resolve such conflict or determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

SECTION 5.07. Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest.

Notwithstanding any other provisions in this Indenture, the Holder of any Recovery Bond shall have the right, which is absolute and unconditional, (a) to receive payment of (i) the interest,

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if any, on such Recovery Bond on the due dates thereof expressed in such Recovery Bond or in this Indenture or (ii) the unpaid principal, if any, of the Recovery Bonds on the Final Maturity Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.08. Restoration of Rights and Remedies.

If the Indenture Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such Proceeding had been instituted.

SECTION 5.09. Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.10. Delay or Omission Not a Waiver.

No delay or omission of the Indenture Trustee or any Holder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.

SECTION 5.11. Control by Holders.

The Holders of not less than a majority of the Outstanding Amount of the Recovery Bonds of an affected Tranche shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Recovery Bonds of such Tranche or Tranches or exercising any trust or power conferred on the Indenture Trustee with respect to such Tranche or Tranches; provided that:

(a)    such direction shall not be in conflict with any rule of law or with this Indenture and shall not involve the Indenture Trustee in any personal liability or expense;

(b)    subject to other conditions specified in Section 5.04, any direction to the Indenture Trustee to sell or liquidate any Recovery Bond Collateral shall be by the Holders representing the applicable percentage of the Outstanding Amount of the Recovery Bonds as provided in Section 5.04;

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(c)    if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Recovery Bond Collateral pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Recovery Bonds to sell or liquidate the Recovery Bond Collateral shall be of no force and effect; and

(d)    the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

provided, however, that, the Indenture Trustee’s duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action. Furthermore and without limiting the foregoing, the Indenture Trustee shall not be required to take any action for which it reasonably believes that it will not be indemnified to its satisfaction against any costs, expenses, losses or liabilities.

SECTION 5.12. Waiver of Past Defaults.

(a)    Prior to the declaration of the acceleration of the maturity of the Recovery Bonds as provided in Section 5.02, the Holders representing not less than a majority of the Outstanding Amount of the Recovery Bonds of an affected Tranche, may waive any past Default or Event of Default and its consequences except a Default (A) in payment of principal of or premium, if any, or interest on any of the Recovery Bonds or (B) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Recovery Bond of all Tranches affected. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

(b)    Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

SECTION 5.13. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Recovery Bond by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders, in each case holding in the aggregate more than ten (10) percent of the Outstanding Amount of the

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Recovery Bonds or (c) any suit instituted by any Holder for the enforcement of the payment of (i) interest on any Recovery Bond on or after the due dates expressed in such Recovery Bond and in this Indenture or (ii) the unpaid principal, if any, of any Recovery Bond on or after the Final Maturity Date therefor.

SECTION 5.14. Waiver of Stay or Extension Laws.

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 5.15. Action on Recovery Bonds.

The Indenture Trustee’s right to seek and recover judgment on the Recovery Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Recovery Bond Collateral or any other assets of the Issuer.

SECTION 5.16. Performance and Enforcement of Certain Obligations.

(a)    Promptly following a request from the Indenture Trustee to do so and at the Issuer’s expense, the Issuer agrees to take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Seller and the Servicer, as applicable, of each of their obligations to the Issuer under or in connection with the Sale Agreement and the Servicing Agreement with respect to the Recovery Property, respectively, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement and the Servicing Agreement, respectively, to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller or the Servicer of each of their obligations under the Sale Agreement and the Servicing Agreement with respect to the Recovery Property, respectively.

(b)    If an Event of Default has occurred, the Indenture Trustee may, and, at the direction (which direction shall be in writing) of the Holders of sixty-six and two-thirds percent (66-2/3%) of the Outstanding Amount of the Recovery Bonds shall, subject to Article VI, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller or the Servicer under or in connection with the Sale Agreement and the Servicing Agreement with respect to the Recovery Property, respectively, including the right or power to take any action to compel or secure performance or observance by the Seller or the Servicer of each of their obligations to the Issuer

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thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement or the Servicing Agreement, respectively, and any right of the Issuer to take such action shall be suspended.

ARTICLE VI

THE INDENTURE TRUSTEE

SECTION 6.01. Duties of Indenture Trustee.

(a)    If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b)    Except during the continuance of an Event of Default:

(i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and

(ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming on their face to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c)    The Indenture Trustee may not be relieved from liability for its own negligent action, its own bad faith, its own negligent failure to act or its own willful misconduct, except that:

(i) this paragraph (c) does not limit the effect of paragraph (b) of this Section 6.01;

(ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by an officer of the Indenture Trustee unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it hereunder.

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(d)    Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.

(e)    The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.

(f)    Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by law or the terms of this Indenture.

(g)    No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(h)    Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the TIA.

(i)    In the event that the Indenture Trustee is also acting as Paying Agent or Recovery Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Recovery Bond Registrar.

(j)    Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect Recovery Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Recovery Property.

(k)    Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Recovery Bonds or the Basic Documents. None of the provisions of this Indenture shall in any event require the Indenture Trustee to perform or be responsible for the performance of any of the Servicer’s obligations under the Basic Documents.

(l)    Commencing with March 15, 2023, on or before March 15 of each fiscal year ending December 31, the Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee’s assessment of compliance, during the immediately preceding fiscal year ending December 31, with each of the applicable servicing criteria specified on Exhibit C attached hereto as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to clause (i).

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(m)    The Indenture Trustee shall not be required to take any action it is directed to take under this Indenture if the Indenture Trustee determines in good faith that the action so directed is inconsistent with the Indenture, any other Basic Document or Applicable Law, or would involve the Indenture Trustee in personal liability.

SECTION 6.02. Rights of Indenture Trustee.

(a)    The Indenture Trustee may conclusively rely and shall be fully protected in relying on any document (including electronic documents and communications delivered in accordance with the terms of this Indenture) believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in such document.

(b)    Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel, which counsel may be an employee of or counsel to the Issuer or the Seller and which shall be reasonably satisfactory to the Indenture Trustee, or, in the Indenture Trustee’s sole judgment, of external counsel of the Issuer (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.

(c)    The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. The Indenture Trustee shall give prompt written notice to the Rating Agencies of the appointment of any such agent, custodian or nominee to whom it delegates any of its express duties under this Indenture provided, that the Indenture Trustee shall not be obligated to give such notice (i) if the Issuer or the Holders have directed the Indenture Trustee to appoint such agent, custodian or nominee (in which event the Issuer shall give prompt notice to the Rating Agencies of any such direction) or (ii) of the appointment of any agents, custodians or nominees made at any time that an Event of Default of the Issuer has occurred and is continuing.

(d)    The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however that the Indenture Trustee’s conduct does not constitute willful misconduct, negligence or bad faith.

(e)    The Indenture Trustee may consult with counsel, and the advice or Opinion of Counsel with respect to legal matters relating to this Indenture and the Recovery Bonds shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)    The Indenture Trustee shall be under no obligation to (i) take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document or (ii) institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto or to investigate any matter, at the request, order or direction of any of the Bondholders pursuant

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to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have received security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred..

(g)    In no event shall the Indenture Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, governmental action, strikes, work stoppages, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes, pandemics or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer systems and services; it being understood that the Indenture Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(h)    Any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer Order. Whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officer’s Certificate.

(i)    The Indenture Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document.

(j)    In no event shall the Indenture Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Indenture Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(k)    The Indenture Trustee shall not be deemed to have notice of any Default or Event of Default unless it has actual knowledge or written notice of any event which is in fact such a default is received by a Responsible Officer of the Indenture Trustee at the Corporate Trust Office of the Indenture Trustee, and such notice references the Recovery Bonds and this Indenture.

(l)    The rights, privileges, protections, immunities and benefits given to the Indenture Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Indenture Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(m)    Beyond the exercise of reasonable care in the custody thereof, the Indenture Trustee will have no duty as to any Recovery Bond Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto. The Indenture Trustee will be deemed to have exercised reasonable care in the custody of the Recovery Bond Collateral in its possession if the Recovery Bond Collateral is accorded treatment substantially equal to that which it accords its own property, and the Indenture Trustee will not be liable or responsible for any loss or

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diminution in the value of any of the Recovery Bond Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Indenture Trustee in good faith.

(n)    The Indenture Trustee will not be responsible for the existence, genuineness or value of any of the Recovery Bond Collateral or for the validity, sufficiency, perfection, priority or enforceability of the Liens in any of the Recovery Bond Collateral, except to the extent such action or omission constitutes negligence or willful misconduct on the part of the Indenture Trustee. The Indenture Trustee shall not be responsible for the validity of the title of any grantor to the collateral, for insuring the Recovery Bond Collateral or for the payment of taxes, charges, assessments or liens upon the Recovery Bond Collateral or otherwise as to the maintenance of the Recovery Bond Collateral.

(o)    In the event that the Indenture Trustee is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Indenture Trustee’s sole discretion may cause the Indenture Trustee, as applicable, to be considered an “owner or operator” under any environmental laws or otherwise cause the Indenture Trustee to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Indenture Trustee reserves the right, instead of taking such action, either to resign as Indenture Trustee or to arrange for the transfer of the title or control of the asset to a court appointed receiver. The Indenture Trustee will not be liable to any person for any environmental claims or any environmental liabilities or contribution actions under any federal, state or local law, rule or regulation by reason of the Indenture Trustee’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

SECTION 6.03. Individual Rights of Indenture Trustee.

The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Recovery Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Recovery Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.

SECTION 6.04. Indenture Trustee’s Disclaimer.

The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Recovery Bonds, it shall not be accountable for the Issuer’s use of the proceeds from the Recovery Bonds, and it shall not be responsible for any statement of the Issuer in the Indenture or in any document issued in connection with the sale of the Recovery Bonds or in the Recovery Bonds other than the Indenture Trustee’s certificate of authentication. The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Recovery Bond Collateral (or for the perfection or priority of the Liens thereon), or for or in respect of the Recovery Bonds (other than the certificate of authentication for the Recovery Bonds) or the Basic Documents and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any

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Holder, other than as expressly provided in this Indenture. The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller, or the Servicer under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of such Persons.

SECTION 6.05. Notice of Defaults.

If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee or a Responsible Officer of the Indenture Trustee has been notified in writing of such Default, the Indenture Trustee shall deliver to each Rating Agency and each Bondholder notice of the Default within ten (10) Business Days after actual notice of such Default was received by a Responsible Officer of the Indenture Trustee (provided that the Indenture Trustee shall give the Rating Agencies prompt notice of any payment default in respect of the Recovery Bonds). Except in the case of a Default in payment of principal of and premium, if any, or interest on any Recovery Bond, the Indenture Trustee may withhold the notice if a Responsible Officer in good faith determines that withholding the notice is in the interests of Holders. Except for an Event of Default under Sections 5.01(a)(i) or (ii) that occur at a time when the Indenture Trustee is acting as the Paying Agent, and except as provided in the first sentence of this Section 6.05, in no event shall the Indenture Trustee be deemed to have knowledge of a Default.

SECTION 6.06. Reports by Indenture Trustee to Holders.

(a)    So long as Recovery Bonds are Outstanding and the Indenture Trustee is the Recovery Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, it shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or State tax returns. If the Recovery Bond Registrar and Paying Agent is other than the Indenture Trustee, such Recovery Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or State tax returns.

(b)    On or prior to each Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to each Holder of the Recovery Bonds on such Payment Date or Special Payment Date a statement as provided and prepared by the Servicer which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Recovery Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

(i) the amount of the payment to Holders allocable to principal, if any;

(ii) the amount of the payment to Holders allocable to interest;

(iii) the aggregate Outstanding Amount of the Recovery Bonds, before and after giving effect to any payments allocated to principal reported under clause (i) above;

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(iv) the difference, if any, between the amount specified in clause (iii) above and the Outstanding Amount specified in the related Expected Amortization Schedule;

(v) any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

(vi) the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

(c)    The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant’s Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Rating Agencies, the Indenture Trustee and to the Servicer for posting on the 17g-5 Website in accordance with Rule 17g-5 under the Exchange Act. A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.

SECTION 6.07. Compensation and Indemnity.

(a)    The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it in connection with the Recovery Bonds, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee’s agents, counsel, accountants and experts.

(b)    The Issuer shall indemnify the Indenture Trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability or expense (including attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of its duties hereunder, including the cost and expense of enforcing this Indenture (including this Section) and defending itself against any claim or liability in connection with the exercise or performance of such duties. The Indenture Trustee shall notify the Issuer as soon as is reasonably practicable of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim and the Indenture Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel.

(c)    Notwithstanding any other provision of this Indenture, the Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee’s own willful misconduct, negligence or bad faith.

(d)    The Issuer’s payment obligations to the Indenture Trustee pursuant to this Section shall survive the discharge of this Indenture, resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(a)(v) or (vi) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable federal or State bankruptcy, insolvency or similar law.

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SECTION 6.08. Replacement of Indenture Trustee and Securities Intermediary.

(a)    The Indenture Trustee (or any other Eligible Institution in any capacity hereunder) may resign at any time upon thirty (30) days’ prior written notice to the Issuer subject to clause (c) below. The Holders of a majority of the Outstanding Amount of the Recovery Bonds may remove the Indenture Trustee (or any other Eligible Institution in any capacity hereunder) with thirty (30) days’ prior written notice by so notifying the Indenture Trustee (or such other Eligible Institution, as applicable) and may appoint a successor Indenture Trustee (or successor Eligible Institution in the applicable capacity). The Issuer shall remove the Indenture Trustee if:

(i) the Indenture Trustee fails to comply with Section 6.11;

(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Indenture Trustee or its property;

(iv) the Indenture Trustee otherwise becomes incapable of acting; or

(v) the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or the Depositor to comply with its reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer’s and the Indenture Trustee’s mutual satisfaction within a reasonable period of time.

Subject to clause (c) below, the Issuer shall remove any Person who maintains the Collection Account or any other account established under this Indenture and fails to constitute an Eligible Institution with thirty (30) days’ prior notice.

Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.

(b)    If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary. If any Person (other than the Indenture Trustee) acting in any capacity hereunder as an Eligible Institution is removed, fails to constitute an Eligible Institution or if a vacancy exists in any such capacity for any reason, the Issuer shall promptly appoint a successor to such capacity that constitutes an Eligible Institution.

(c)    A successor Indenture Trustee (or any other successor Eligible Institution) shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary (or any such other capacity) to the retiring Indenture Trustee (or any such other capacity) and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee

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(or any such other Person) shall become effective, and the successor Indenture Trustee (or such other successor Eligible Institution) shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary (or such other Eligible Institution), as applicable, under this Indenture. No resignation or removal of the Indenture Trustee (or any such other Person) pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11 (or such other successor constituting an Eligible Institution). Notice of any such appointment shall be promptly given to each Rating Agency by the successor Indenture Trustee. The successor Indenture Trustee shall mail a notice of its succession (or the succession of any other Eligible Institution) to Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee. The retiring Eligible Institution shall promptly transfer all property held by it in its capacity hereunder to the successor Eligible Institution.

(d)    If a successor Indenture Trustee (or other successor Eligible Institution) does not take office within sixty (60) days after the retiring Indenture Trustee (or other retiring Eligible Institution) resigns or is removed, the retiring Indenture Trustee (or other retiring Eligible Institution), the Issuer or the Holders of a majority in Outstanding Amount of the Recovery Bonds may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee (or other successor Eligible Institution).

(e)    If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(f)    Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.

SECTION 6.09. Successor Indenture Trustee by Merger.

(a)    If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be replaced in accordance with Section 6.08. Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture Trustee.

(b)    In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Recovery Bonds shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver the Recovery Bonds so authenticated; and in case at that time any of the Recovery Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate the Recovery Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Recovery Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.

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SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.

(a)    Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the trust created by this Indenture or the Recovery Bond Collateral may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the trust created by this Indenture or the Recovery Bond Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the Recovery Bond Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. Notice of any such appointment shall be promptly given to each Rating Agency by the Indenture Trustee.

(b)    Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(i) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Recovery Bond Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;

(ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

(iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.

(c)    Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.

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(d)    Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

SECTION 6.11. Eligibility; Disqualification.

The Indenture Trustee shall at all times satisfy the requirements of TIA § 310(a)(1) and § 310(a)(5) and Section 26(a)(1) of the Investment Company Act. The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it shall have a long term debt rating of “Baa3” or better by Moody’s and “BBB-” or better by Standard & Poor’s. The Indenture Trustee shall comply with TIA § 310(b), including the optional provision permitted by the second sentence of TIA § 310(b)(9); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

SECTION 6.12. Preferential Collection of Claims Against Issuer.

The Indenture Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

SECTION 6.13. Representations and Warranties of Indenture Trustee.

The Indenture Trustee hereby represents and warrants that:

(a)    the Indenture Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States; and

(b)    the Indenture Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and the Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery, and performance by it of this Indenture and such Basic Documents.

SECTION 6.14. Annual Report by Independent Registered Public Accountants.

In the event the firm of Independent registered public accountants requires the Indenture Trustee to agree or consent to the procedures performed by such firm pursuant to Section 3.04(a) of the Servicing Agreement, the Indenture Trustee shall deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer in accordance with Section 3.04(a) of the Servicing Agreement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so

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agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

SECTION 6.15. Custody of Recovery Bond Collateral.

The Indenture Trustee shall hold such of the Recovery Bond Collateral (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit, and advices of credit in the State of New York. The Indenture Trustee shall hold such of the Recovery Bond Collateral as constitute investment property through the Securities Intermediary (which, as of the date hereof, is The Bank of New York Mellon Trust Company, N.A.). The initial Securities Intermediary, hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (A) such investment property (other than cash) shall at all times be credited to a Securities Account of the Indenture Trustee, (B) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each Financial Asset credited to such Securities Account, (C) all property (other than cash) credited to such Securities Account shall be treated as a Financial Asset, (D) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other person or entity, (E) the Securities Intermediary will not agree with any person other than the Indenture Trustee to comply with entitlement orders originated by such other person, (F) such Securities Accounts and the property credited thereto shall not be subject to any Lien or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee), and (G) such agreement shall be governed by the internal laws of the State of New York. The Indenture Trustee shall hold any Recovery Bond Collateral consisting of money in a deposit account and shall act as a “bank” for purposes of perfecting the security interest in such deposit account. Terms used in the two preceding sentences that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC. Except as permitted by this Section 6.15, or elsewhere in this Indenture, the Indenture Trustee shall not hold Recovery Bond Collateral through an agent or a nominee.

SECTION 6.16 FATCA.

The Issuer agrees (i) to provide the Indenture Trustee with such reasonable information as it has in its possession to enable the Indenture Trustee to determine whether any payments pursuant to the Indenture are subject to the withholding requirements described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations, or agreements thereunder or official interpretations thereof (“Applicable Law”), and (ii) that the Indenture Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law, for which the Indenture Trustee shall not have any liability.

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ARTICLE VII

HOLDERS’ LISTS AND REPORTS

SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Holders.

The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after the earlier of (i) each Record Date and (ii) six (6) months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Bondholders as of such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Recovery Bond Registrar, no such list shall be required to be furnished.

SECTION 7.02. Preservation of Information; Communications to Holders.

(a)    The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Recovery Bond Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished.

(b)    Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or under the Recovery Bonds. In addition, upon the written request of any Holder or group of Holders of Outstanding Recovery Bonds evidencing not less than 10 percent of the Outstanding Amount of the Recovery Bonds, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders for purposes of communicating with other Holders with respect to their rights hereunder.

(c)    The Issuer, the Indenture Trustee and the Recovery Bond Registrar shall have the protection of TIA § 312(c).

SECTION 7.03. Reports by Issuer.

(a)    The Issuer shall:

(i) so long as the Issuer or the Depositor is required to file such documents with the SEC, provide to the Indenture Trustee, within fifteen (15) days after the Issuer is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Issuer or the Depositor may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;

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(ii) provide to the Indenture Trustee and file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

(iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit to all Holders described in TIA § 313(c)), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be required by rules and regulations prescribed from time to time by the SEC.

(b)    Except as may be provided by Section 313(c) of the Trust Indenture Act, the Issuer may fulfill its obligation to provide the materials described in this Section 7.03(a) by providing such materials in electronic format.

(c)    The fiscal year of the Issuer shall end on December 31 of each year, unless the Issuer otherwise determines, in which case the Issuer will promptly notify the Indenture Trustee regarding any change in fiscal year.

(d)    Delivery of such reports, information and documents to the Indenture Trustee is for informational purposes only and the Indenture Trustee’s receipt of such shall not constitute actual or constructive notice or knowledge of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Indenture Trustee is entitled to rely exclusively on Officer’s Certificates).

SECTION 7.04. Reports by Indenture Trustee.

(a)    If required by TIA § 313(a), within sixty (60) days after March 30 of each year, commencing with March 30, 2022, the Indenture Trustee shall send to each Bondholder as required by TIA § 313(c) a brief report dated as of such date that complies with TIA § 313(a). The Indenture Trustee also shall comply with TIA § 313(b); provided, however, that the initial report so issued shall be delivered not more than twelve (12) months after the initial issuance thereof.

(b)    A copy of each report at the time of its sending to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Recovery Bonds are listed. The Issuer shall notify the Indenture Trustee in writing if and when the Recovery Bonds are listed on any stock exchange.

ARTICLE VIII

ACCOUNTS, DISBURSEMENTS AND RELEASES

SECTION 8.01. Collection of Money.

Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or

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assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the other Basic Documents. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Recovery Bond Collateral, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.

SECTION 8.02. Collection Account.

(a)    Prior to the Closing Date, the Issuer shall open or cause to be opened with the Securities Intermediary located at the Indenture Trustee’s office located at the Corporate Trust Office, or at another Eligible Institution, one or more segregated trust accounts in the Indenture Trustee’s name for the deposit of Estimated FRC Collections, FRC Collections and all other amounts received with respect to the Recovery Bond Collateral (the “Collection Account”). The Collection Account will consist of three subaccounts: a general subaccount (the “General Subaccount”), an excess funds subaccount (the “Excess Funds Subaccount”) and a capital subaccount (the “Capital Subaccount” and, together with the General Subaccount and the Excess Funds Subaccount, the “Subaccounts”). Each Subaccount shall have a separate subaccount (each, a “Cash Subaccount”) where cash allocated to the related Subaccount will be held. Only cash shall be allocated to a Cash Subaccount and no other Recovery Bond Collateral shall be allocated to a Cash Subaccount. References to any Subaccount shall be deemed to include the related Cash Subaccount. For administrative purposes, the Subaccounts may be established by the Indenture Trustee as separate accounts. Such separate accounts will be recognized individually as a Subaccount and collectively as the “Collection Account”. Prior to or concurrently with the issuance of Recovery Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Level. All amounts in the Collection Account not allocated to any other subaccount shall be allocated to the General Subaccount. Any cash transferred to, or arising under, a Subaccount will be held in the related Cash Subaccount. Prior to the Initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount, up to the Required Capital Level and any Capital Subaccount Investment Earnings) shall be allocated to the General Subaccount. All references to the Collection Account shall be deemed to include reference to all subaccounts contained therein. Withdrawals from and deposits to each of the foregoing subaccounts of the Collection Account shall be made as set forth in Sections 8.02(d) and (e). The Collection Account shall at all times be maintained in an Eligible Account, under the sole dominion and exclusive control of the Indenture Trustee, through the Securities Intermediary, and only the Indenture Trustee shall have access to the Collection Account for the purpose of making deposits in and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Collection Account, including amounts not required to pay costs of issuance of Recovery Bonds transferred by the Issuer to the Indenture Trustee, all deposits therein pursuant to this Indenture, and all investments made in Eligible Investments as directed in writing by the Issuer with such moneys, including all income or other gain from such investments other than Capital Subaccount Investment Earnings, shall be held by the Indenture Trustee in the

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Collection Account as part of the Recovery Bond Collateral as herein provided. The Securities Intermediary shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.

(b)    The Securities Intermediary hereby confirms that (i) the Collection Account (other than each Cash Subaccount) is, or at inception will be established as, a “securities account” as such term is defined in Section 8-501(a) of the UCC, (ii) it is a “securities intermediary” (as such term is defined in Section 8-102(a) (14) of the UCC) and is acting in such capacity with respect to such accounts, (iii) the Indenture Trustee for the benefit of the Secured Parties is the sole “entitlement holder” (as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and no other Person shall have the right to give “entitlement orders” (as such term is defined in Section 8-102(a)(8)) with respect to such Collection Account and (iv) the Securities Intermediary agrees to comply with “entitlement orders” originated by the Indenture Trustee with respect to the Collection Account without further consent of the Issuer or any other Person. The Securities Intermediary hereby further agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the Collection Account (and that all cash will be credited to the related Cash Subaccount). Such property, other than cash, shall be treated by it as a Financial Asset. The Indenture Trustee shall cause the Securities Intermediary to hold any Recovery Bond Collateral consisting of money in the applicable Cash Subaccount and the Securities Intermediary hereby confirms that each Cash Subaccount is a “deposit account” within the meaning of Section 9-102(a)(29) of the UCC. The Securities Intermediary further confirms that for purposes of perfecting the security interest in such deposit account, it shall (i) act as the “bank” within the meaning of Section 9-102(a)(8) of the UCC and (ii) comply with instructions originated by the Indenture Trustee directing disposition of the funds in the Cash Subaccount without further consent of the Issuer or any other Person. Notwithstanding anything to the contrary, for purposes of the UCC, New York State shall be deemed to be “securities intermediary jurisdiction” within the meaning of Section 8-110(e) of the UCC of the Securities Intermediary and “bank’s jurisdiction” within the meaning of Section 9-304(a) of the UCC of the Securities Intermediary acting as the “bank” and the Collection Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.

(c)    The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the Collection Account through the Securities Intermediary and shall apply such amounts therein as provided in this Section 8.02. The Indenture Trustee shall also pay from the Collection Account any amounts requested in writing to be paid by or to the Servicer pursuant to Section 6.11(c)(ii) of the Servicing Agreement.

(d)    FRC Collections shall be deposited in the General Subaccount as provided in Section 6.11 of the Servicing Agreement. All deposits to and withdrawals from the Collection Account, all allocations to the subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(c) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer’s Certificate, the Servicer’s Certificate or upon other written notice provided by the Servicer pursuant to Section 6.11(a) of the Servicing Agreement, as applicable.

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(e)    On each Payment Date (or on any other date as directed by the Servicer with respect to Operating Expenses referred to in clause (iv) payable prior to the next Payment Date), the Indenture Trustee shall apply all amounts on deposit in the Collection Account, including all Investment Earnings thereon, to pay the following amounts, solely in accordance with the Servicer’s Certificate, in the following priority:

(i) all amounts owed by the Issuer to the Indenture Trustee (including legal fees and expenses and outstanding indemnity amounts) shall be paid to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed annually the amount set forth in the Series Supplement (the “Indenture Trustee Cap”); provided, however, that the Indenture Trustee Cap shall be disregarded and inapplicable upon the acceleration of the Recovery Bonds following the occurrence of an Event of Default;

(ii) the Servicing Fee with respect to such Payment Date and all unpaid Servicing Fees for prior Payment Dates shall be paid to the Servicer;

(iii) the Administration Fee for such Payment Date shall be paid to the Administrator and the Independent Manager Fee for such Payment Date shall be paid to the Independent Managers;

(iv) all other ordinary periodic Operating Expenses for such Payment Date not described above shall be paid to the parties to which such Operating Expenses are owed;

(v) Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable Recovery Bond Interest Rate), with respect to the Recovery Bonds shall be paid to the Holders of Recovery Bonds;

(vi) principal due and payable on the Recovery Bonds as a result of an Event of Default or on the Final Maturity Date of the Recovery Bonds shall be paid to the Holders of Recovery Bonds;

(vii) Periodic Principal for such Payment Date, including any overdue Periodic Principal, with respect to the Recovery Bonds shall be paid to the Holders of Recovery Bonds, pro rata;

(viii) any other unpaid fees, expenses and indemnity amounts owed to the Indenture Trustee;

(ix) any other unpaid Operating Expenses and any remaining amounts owed pursuant to the Basic Documents;

(x) the amount, if any, by which the Required Capital Level exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;

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(xi) provided that no Event of Default has occurred and is continuing, release to PG&E an amount representing a return on capital of its Capital Contribution calculated at an annual rate per annum equal to the weighted average interest rate on the Recovery Bonds;

(xii) the balance, if any, shall be allocated to the Excess Funds Subaccount for distribution on subsequent Payment Dates; and

(xiii) after principal of and premium, if any, and interest on all the Recovery Bonds, and all of the other foregoing amounts, have been paid in full, including, without limitation, amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to PG&E, free from the Lien of this Indenture and the Series Supplement and credited to Consumers through normal ratemaking processes.

(f)    All payments to the Holders of the Recovery Bonds pursuant to clauses (v), (vi) and (vii) above shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, in the case of Recovery Bonds comprised of two or more Tranches, the Series Supplement provides otherwise. Payments in respect of principal of and premium, if any, and interest on any Tranche of Recovery Bonds will be made on a pro rata basis among all the Holders of such Tranche. In the case of an Event of Default, then, in accordance with Section 5.04(c), moneys will be applied pursuant to clauses (v) and (vi), in such order, on a pro rata basis, based upon the interest or the principal owed.

(g)    The amounts paid during any calendar year pursuant to clauses (i), (ii), (iii), (iv) and (viii) may not exceed the amounts approved in the Series Supplement.

(h)    If on any Payment Date funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (i) through (ix) of Section 8.02(e) above, the Indenture Trustee shall (I) first, draw from amounts on deposit in the Excess Funds Subaccount and (II) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by clauses (i) through (ix) of Section 8.02(e). In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (x) above, the Indenture Trustee shall draw from amounts on deposit in the Excess Funds Subaccount to make such allocations.

SECTION 8.03. General Provisions Regarding the Collection Account.

(a)    So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that (i) such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date, if applicable, for the Recovery Bonds and (ii) such Eligible Investments shall not be sold, liquidated or otherwise disposed of at a loss prior to the maturity or the date of redemption thereof. All income or other gain from investments of moneys

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deposited in the Collection Account shall be deposited by the Indenture Trustee in such Collection Account, and any loss resulting from such investments shall be charged to such Collection Account. The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) to such effect. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction. The Indenture Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order, in which case such amounts shall remain uninvested.

(b)    Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee’s failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.

(c)    If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Recovery Bonds but the Recovery Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in such Collection Account in the money market fund (described under clause (d) of the definition of “Eligible Investments”) specified in the most recent written investment directions delivered by the Issuer to the Indenture Trustee with respect to such type of Eligible Investments; provided that if the Issuer has never delivered written investment directions to the Indenture Trustee or if the money market fund specified in the most recent written investment directions no longer exists, the Indenture Trustee shall not invest or reinvest such funds in any investments.

(d)    The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer.

SECTION 8.04. Release of Recovery Bond Collateral.

(a)    So long as the Issuer is not in default hereunder and no Default hereunder would occur as a result of such action, the Issuer, through the Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become Recovery Bond Collateral and be deposited to the General Subaccount

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immediately upon receipt thereof by the Issuer or any other Person, including the Servicer. Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any Recovery Bond Collateral previously written-off as a defaulted or uncollectible account in accordance with the terms of the Servicing Agreement and the requirements of the proviso in the immediately preceding sentence.

(b)    The Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee’s interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an Opinion of Counsel of external counsel of the Issuer (at the Issuer’s cost and expense) and (if required by the TIA) Independent Certificates in accordance with TIA §§ 314(c) and 314(d)(1) meeting the applicable requirements of Section 10.01.

(c)    The Indenture Trustee shall, at such time as there are no Recovery Bonds Outstanding and all sums payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the Recovery Bond Collateral that secured the Recovery Bonds from the Lien of this Indenture, release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credit to the Collection Account.

SECTION 8.05. Opinion of Counsel.

The Indenture Trustee shall receive at least seven (7) days’ notice when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of external counsel of the Issuer, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the perfection or priority of the remaining security for the Recovery Bonds or the rights of the Holders in contravention of the provisions of this Indenture and the Series Supplement; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Recovery Bond Collateral. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.

SECTION 8.06. Reports by Independent Registered Public Accountants.

As of the Closing Date, the Issuer shall appoint a firm of Independent registered public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the Series Supplement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm,

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the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Upon any resignation by, or termination by the Issuer of, such firm the Issuer shall provide written notice thereof to the Indenture Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within fifteen (15) days after such resignation or termination, the Indenture Trustee shall promptly notify the Issuer of such failure in writing. If the Issuer shall not have appointed a successor within ten (10) days thereafter the Indenture Trustee shall promptly appoint a successor firm of Independent registered public accountants of recognized national reputation; provided that the Indenture Trustee shall have no liability with respect to such appointment. The fees of such Independent registered public accountants and its successor shall be payable by the Issuer as an Operating Expense.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.01. Supplemental Indentures Without Consent of Holders.

(a)    Without the consent of the Holders of any Recovery Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:

(i) to correct or amplify the description of any property, including, without limitation, the Recovery Bond Collateral, at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture and the Series Supplement, or to subject to the Lien of this Indenture and the Series Supplement additional property;

(ii) to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Recovery Bonds;

(iii) to add to the covenants of the Issuer, for the benefit of the Secured Parties, or to surrender any right or power herein conferred upon the Issuer;

(iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;

(v) to cure any ambiguity or mistake, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, which may be inconsistent with any other provision herein or in any

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supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided that (A) such action shall not, as evidenced by an Opinion of Counsel of external counsel of the Issuer, adversely affect in any material respect the interests of the Holders of the Recovery Bonds and (B) the Rating Agency Condition shall have been satisfied with respect thereto;

(vi) to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Recovery Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;

(vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar or successor federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA;

(viii) to evidence the final terms of the Recovery Bonds in the Series Supplement;

(ix) to qualify the Recovery Bonds for registration with a Clearing Agency;

(x) to satisfy any Rating Agency requirements;

(xi) to make any amendment to this Indenture or the Recovery Bonds relating to the transfer and legending of the Recovery Bonds to comply with applicable securities laws; or

(xii) to conform the text of this Indenture or the Recovery Bonds to any provision of the registration statement filed by the Issuer with the SEC with respect to the issuance of the Recovery Bonds to the extent that such provision was intended to be a verbatim recitation of a provision of this Indenture or the Recovery Bonds.

The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

(b)    The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Recovery Bonds, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Recovery Bonds under this Indenture; provided, however, that (i) such action shall not, as evidenced by an Opinion of Counsel of nationally recognized counsel of the Issuer experienced in structured finance transactions, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.

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SECTION 9.02. Supplemental Indentures with Consent of Holders.

(a)    The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of not less than a majority of the Outstanding Amount of the Recovery Bonds of each Tranche to be adversely affected, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Recovery Bonds under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Recovery Bond of each Tranche affected thereby:

(i) change the date of payment of any installment of principal of or premium, if any, or interest on any Recovery Bond of such Tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto, change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Recovery Bond Collateral to payment of principal of or premium, if any, or interest on the Recovery Bonds, or change any place of payment where, or the coin or currency in which, any Recovery Bond or the interest thereon is payable;

(ii) reduce the percentage of the Outstanding Amount of the Recovery Bonds or of a Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;

(iii) reduce the percentage of the Outstanding Amount of the Recovery Bonds required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Recovery Bond Collateral pursuant to Section 5.04;

(iv) modify any provision of this Section 9.02 except to increase any percentage specified herein or to provide that those provisions of this Indenture or the other Basic Documents referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Recovery Bond affected thereby;

(v) modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due on any Recovery Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Amortization Schedule or Final Maturity Date of any Tranche of Recovery Bonds;

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(vi) decrease the Required Capital Level;

(vii) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Recovery Bond Collateral or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Recovery Bond of the security provided by the Lien of this Indenture;

(viii) cause any material adverse federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then existing Holders; or

(ix) impair the right to institute suit for the enforcement of the provisions of this Indenture regarding payment or application of funds.

(b)    It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

(c)    Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall mail to the Rating Agencies a copy of such supplemental indenture and to the Holders of the Recovery Bonds to which such supplemental indenture relates either a copy of such supplemental indenture or a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

SECTION 9.03. Reserved.

SECTION 9.04. Execution of Supplemental Indentures.

In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and all conditions precedent have been satisfied. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.

SECTION 9.05. Effect of Supplemental Indenture.

Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each Tranche of Recovery Bonds affected thereby, and the respective rights, limitations

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of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.06. Conformity with Trust Indenture Act.

Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture shall then be qualified under the TIA.

SECTION 9.07. Reference in Recovery Bonds to Supplemental Indentures.

Recovery Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may bear a notation as to any matter provided for in such supplemental indenture. If the Issuer shall so determine, new Recovery Bonds so modified as to conform, in the opinion of the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Recovery Bonds.

ARTICLE X

MISCELLANEOUS

SECTION 10.01. Compliance Certificates and Opinions, etc.

(a)    Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of registered public accountants meeting the applicable requirements of this Section 10.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

(b)    Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

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(iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.

(c)    (i) Prior to the deposit of any Recovery Bond Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such deposit) to the Issuer of the Recovery Bond Collateral or other property or securities to be so deposited.

(ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (c) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (c) above and this clause (ii), is ten percent or more of the Outstanding Amount of the Recovery Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the Outstanding Amount of the Recovery Bonds.

(iii) Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.

(iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer’s Certificate certifying or stating the opinion of any signatory thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities with respect thereto, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv),

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equals 10 percent or more of the Outstanding Amount of the Recovery Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer’s Certificate is less than the lesser of (A) $25,000 or (B) one percent of the then Outstanding Amount of the Recovery Bonds.

(v) Notwithstanding any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the Recovery Property and the other Recovery Bond Collateral as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of the Collection Account as and to the extent permitted or required by the Basic Documents.

SECTION 10.02. Form of Documents Delivered to Indenture Trustee.

(a)    In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b)    Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters (including financial and capital markets), upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer and other documents necessary and advisable in the judgment of counsel delivering such Opinion of Counsel.

(c)    Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

(d)    Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

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SECTION 10.03. Acts of Holders.

(a)    Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.

(b)    The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)    The ownership of Recovery Bonds shall be proved by the Recovery Bond Register.

(d)    Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Recovery Bonds shall bind the Holder of every Recovery Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Recovery Bond.

SECTION 10.04. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.

(a)    Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with:

(i) the Indenture Trustee by any Holder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing by facsimile or other electronic communication, first-class mail or overnight delivery service to or with the Indenture Trustee at the Corporate Trust Office;

(ii) the Issuer by the Indenture Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Issuer addressed to: PG&E Wildfire Recovery Funding LLC at c/o Pacific Gas and Electric Company, 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, Attention: Brian M. Wong, Vice President, General Counsel and Corporate Secretary, Telephone: (415) 973-1000, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee; or

(iii) the CPUC by the Seller, the Issuer or the Indenture Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the CPUC addressed to: California Public Utilities

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Commission at 505 Van Ness Avenue, San Francisco, California 94102, Attention: General Counsel, Telephone: (415) 703-2782, Facsimile: (415) 703-1758.

(b)    Notices required to be given to the Rating Agencies by the Issuer or the Indenture Trustee shall be in writing, facsimile, personally delivered or mailed by certified mail, return receipt requested to:

(i) in the case of Moody’s, to: Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);

(ii) in the case of Standard & Poor’s, to S&P Global Ratings, a division of S&P Global Inc., Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@spglobal.com (all such notices to be delivered to Standard & Poor’s in writing by email); and

(iii) as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

Any notice, report or other communication given hereunder may be in writing and addressed as follows or to the extent receipt is confirmed telephonically sent by Electronic Means to the address provided above.

The Indenture Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by the Issuer by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that (a) subsequent to such transmission of written instructions, the Issuer shall provide the originally executed instructions or directions to the Indenture Trustee in a timely manner, and (b) such originally executed instructions or directions shall be signed by an authorized representative of the Issuer providing such instructions or directions. If the Issuer elects to give the Indenture Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Indenture Trustee in its discretion elects to act upon such instructions, the Indenture Trustee’s understanding of such instructions shall be deemed controlling. The Indenture Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Indenture Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Indenture Trustee, including without limitation the risk of the Indenture Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

SECTION 10.05. Notices to Holders; Waiver.

(a)    Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Holder affected by such event, at such Holder’s address as it appears

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on the Recovery Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

(b)    Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

(c)    In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event of Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

(d)    Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default.

SECTION 10.06. Rule 17g-5 Compliance.

The Indenture Trustee agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Indenture Trustee to any Rating Agency under this Indenture or any other Basic Document to which it is a party for the purpose of determining or confirming the credit rating of the Recovery Bonds or undertaking credit rating surveillance of the Recovery Bonds shall be provided, substantially concurrently, to the Servicer for posting on a password-protected website (the “17g-5 Website”). The Servicer shall be responsible for posting all of the information on the 17g-5 Website.

SECTION 10.07. Conflict with Trust Indenture Act.

(a)    If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control.

(b)    The provisions of TIA §§ 310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

SECTION 10.08. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

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SECTION 10.09. Successors and Assigns.

All covenants and agreements in this Indenture and the Recovery Bonds by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.

SECTION 10.10. Severability.

Any provision in this Indenture or in the Recovery Bonds that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 10.11. Benefits of Indenture.

Nothing in this Indenture or in the Recovery Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Recovery Bond Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 10.12. Legal Holidays.

In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Recovery Bonds or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.

SECTION 10.13. GOVERNING LAW; WAIVER OF JURY TRIAL.

THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. EACH OF THE ISSUER AND THE INDENTURE TRUSTEE AND EACH HOLDER (BY ITS ACCEPTANCE OF THE RECOVERY BONDS) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY.

SECTION 10.14. Counterparts.

This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The Issuer and Indenture Trustee agree that this Indenture may be electronically signed, that any digital or electronic signatures (including pdf, facsimile or electronically imaged signatures provided by DocuSign or any other digital signature provider as specified in writing to the Indenture Trustee) appearing on this Indenture are the same as

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handwritten signatures for the purposes of validity, enforceability and admissibility, and that delivery of any such electronic signature to, or a signed copy of, this Indenture may be made by facsimile, email or other electronic transmission. The Issuer agrees to assume all risks arising out of the use of digital signatures and electronic methods of submitting such signatures to the Indenture Trustee, including without limitation the risk of the Indenture Trustee acting upon documents with unauthorized signatures and the risk of interception and misuse by third parties.

SECTION 10.15. Recording of Indenture.

If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at the Issuer’s cost and expense (which shall be external counsel of the Issuer) to the effect that such recording is necessary either for the protection of the Holders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.

SECTION 10.16. Issuer Obligation.

No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Recovery Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (I) any owner of a membership interest in the Issuer (including PG&E) or (II) any shareholder, partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including PG&E) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing. Each Holder by accepting a Recovery Bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Recovery Bonds.

SECTION 10.17. Inspection.

The Issuer agrees that, on reasonable prior notice, it will permit, subject to the requirements of applicable law and the CPUC Regulations, any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all the books of account, records, reports, and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers, employees, and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information and are not subject to a duty of confidentiality, (ii) disclosure of any and all information (A) if required to do so by any applicable statute, law, rule or regulation, (B) pursuant to any subpoena, civil

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investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (C) in any preliminary or final offering circular, registration statement or contract or other document pertaining to the transactions contemplated by this Indenture or the Basic Documents approved in advance by the Issuer or (D) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided, that such parties agree to be bound by the confidentiality provisions contained in this Section 10.17, or (iii) any other disclosure authorized by the Issuer.

SECTION 10.18. No Petition.

The Indenture Trustee, by entering into this Indenture, and each Holder, by accepting a Recovery Bond (or interest therein) issued hereunder, hereby covenant and agree that, subject to the CPUC’s right to order the sequestration and payment of revenues arising with respect to the Recovery Property notwithstanding any bankruptcy, reorganization or other insolvency proceedings with respect to the debtor, pledgor or transferor of the Recovery Property pursuant to Section 850.3(e) and (g) of the Wildfire Financing Law, they shall not, prior to the date which is one year and one day after the termination of this Indenture, acquiesce, petition or otherwise invoke or cause the Issuer or any Manager to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its respective property, or ordering the dissolution, winding up or liquidation of the affairs of the Issuer. Nothing in this paragraph shall preclude, or be deemed to estop, such Holder or the Indenture Trustee (a) from taking or omitting to take any action prior to such date in (i) any case or proceeding voluntarily filed or commenced by or on behalf of the Issuer under or pursuant to any such law or (ii) any involuntary case or proceeding pertaining to the Issuer which is filed or commenced by or on behalf of a Person other than such Holder and is not joined in by such Holder (or any Person to which such holder shall have assigned, transferred or otherwise conveyed any part of the obligations of the Issuer hereunder) under or pursuant to any such law, or (b) from commencing or prosecuting any legal action which is not an involuntary case or proceeding under or pursuant to any such law against the Issuer or any of its properties.

SECTION 10.19. Securities Intermediary.

The Securities Intermediary, in acting under this Indenture, is entitled to all rights, benefits, protections, immunities and indemnities accorded The Bank of New York Mellon Trust Company, N.A., a national banking association, in its capacity as Indenture Trustee under this Indenture.

IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and the Securities Intermediary have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and duly attested, all as of the day and year first above written.

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PG&E WILDFIRE RECOVERY FUNDING LLC,

as Issuer

By:
	Name: Title:
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Indenture Trustee and as Securities Intermediary
By:
	Name: Title:

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EXHIBIT A

FORM OF RECOVERY BOND

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE PRINCIPAL OF THIS BOND WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.

THE HOLDER OF THIS BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO THE RECOVERY BOND COLLATERAL, AS DESCRIBED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. IN THE EVENT THAT THE RECOVERY BOND COLLATERAL PLEDGED TO SECURE THIS BOND HAS BEEN EXHAUSTED AND THIS BOND HAS NOT BEEN PAID IN FULL, THEN ANY AND ALL AMOUNTS REMAINING DUE ON THIS BOND SHALL BE EXTINGUISHED AND THIS BOND SHALL BE CANCELLED. TO THE EXTENT THAT UNDER ANY APPLICABLE LAW THE HOLDER OF THIS BOND OR THE OWNER OF A SECURITY ENTITLEMENT HERETO IS DEEMED TO HAVE AN INTEREST IN OTHER ISSUER ASSETS, THE HOLDER HEREOF AND THE OWNER OF A SECURITY ENTITLEMENT HERETO ARE EACH DEEMED TO HAVE AGREED THAT THEIR INTEREST IN SUCH OTHER ISSUER ASSETS IS FULLY SUBORDINATE TO THE CLAIM AGAINST SUCH OTHER ISSUER ASSETS OF THE PLEDGEES OR GRANTEES TO WHICH SUCH OTHER ISSUER ASSETS ARE PLEDGED OR GRANTED AND ARE FURTHER DEEMED TO HAVE AGREED THAT THIS AGREEMENT SHALL CONSTITUTE A SUBORDINATION AGREEMENT FOR PURPOSE OF SECTION 510(a) OF THE UNITED STATES BANKRUPTCY CODE.

THE HOLDER OF THIS BOND, BY ACCEPTING THIS BOND, HEREBY COVENANTS AND AGREES, AND EACH OWNER OF A SECURITY ENTITLEMENT

EXHIBIT A-1

HERETO, BY ACCEPTING SUCH SECURITY ENTITLEMENT, IS DEEMED TO COVENANT AND AGREE, WITH THE ISSUER, THE INDENTURE TRUSTEE AND EACH OTHER THAT NOTWITHSTANDING ANY PRIOR TERMINATION OF THE INDENTURE, BUT SUBJECT TO THE CPUC’S RIGHT TO ORDER THE SEQUESTRATION AND PAYMENT OF REVENUES ARISING WITH RESPECT TO THE RECOVERY PROPERTY NOTWITHSTANDING ANY BANKRUPTCY, REORGANIZATION OR OTHER INSOLVENCY PROCEEDINGS WITH RESPECT TO THE DEBTOR, PLEDGOR OR TRANSFEROR OF THE RECOVERY PROPERTY PURSUANT TO SECTION 850.3(e) AND (g) OF THE CALIFORNIA PUBLIC UTILITIES CODE, THEY SHALL NOT, PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE TERMINATION OF THE INDENTURE, ACQUIESCE, PETITION OR OTHERWISE INVOKE OR CAUSE THE ISSUER TO INVOKE THE PROCESS OF ANY COURT OR GOVERNMENTAL AUTHORITY FOR THE PURPOSE OF COMMENCING OR SUSTAINING A CASE AGAINST THE ISSUER UNDER ANY FEDERAL OR STATE BANKRUPTCY, INSOLVENCY OR SIMILAR LAW OR APPOINTING A RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE, CUSTODIAN, SEQUESTRATOR OR OTHER SIMILAR OFFICIAL OF THE ISSUER OR ANY SUBSTANTIAL PART OF THE PROPERTY OF THE ISSUER OR ORDERING THE WINDING UP OR LIQUIDATION OF THE AFFAIRS OF THE ISSUER. THE HOLDER OF THIS BOND HEREBY FURTHER COVENANTS AND AGREES, AND EACH OWNER OF A SECURITY ENTITLEMENT HERETO IS HEREBY DEEMED TO COVENANT AND AGREE, WITH THE ISSUER, THE INDENTURE TRUSTEE AND EACH OTHER THAT THEY SHALL NOT COOPERATE WITH OR ENCOURAGE OTHERS TO FILE A BANKRUPTCY PETITION AGAINST THE ISSUER DURING THE SAME PERIOD. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP, THE HOLDER OF THIS BOND OR OWNER OF A SECURITY ENTITLEMENT HERETO (A) FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN (I) ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR (II) ANY INVOLUNTARY CASE OR PROCEEDING PERTAINING TO THE ISSUER THAT IS FILED OR COMMENCED BY OR ON BEHALF OF A PERSON OTHER THAN THE HOLDER OF THIS BOND OR OWNER OF A SECURITY ENTITLEMENT HERETO AND IS NOT JOINED IN BY THE HOLDER OF THIS BOND (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR OTHERWISE CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) OR OWNER OF A SECURITY ENTITLEMENT HERETO UNDER OR PURSUANT TO ANY SUCH LAW, OR (B) FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION THAT IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.

NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, OR INTEREST ON, THIS BOND.

REGISTERED No.              $                

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP NO.

EXHIBIT A-2

THE PRINCIPAL OF THIS TRANCHE RECOVERY BOND (“THIS TRANCHE RECOVERY BOND”) WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TRANCHE RECOVERY BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS RECOVERY BOND HAS NO RECOURSE TO THE ISSUER HEREOF AND AGREES TO LOOK ONLY TO THE RECOVERY BOND COLLATERAL, AS DESCRIBED IN THE INDENTURE, FOR PAYMENT OF ANY AMOUNTS DUE HEREUNDER. ALL OBLIGATIONS OF THE ISSUER OF THIS TRANCHE RECOVERY BOND UNDER THE TERMS OF THE INDENTURE WILL BE RELEASED AND DISCHARGED UPON PAYMENT IN FULL HEREOF OR AS OTHERWISE PROVIDED IN SECTION 3.11(b) OR ARTICLE IV OF THE INDENTURE. THE HOLDER OF THIS TRANCHE RECOVERY BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE PAYMENT IN FULL OF THE TRANCHE RECOVERY BONDS, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES. NOTHING IN THIS PARAGRAPH SHALL PRECLUDE, OR BE DEEMED TO ESTOP, SUCH HOLDER a. FROM TAKING OR OMITTING TO TAKE ANY ACTION PRIOR TO SUCH DATE IN i. ANY CASE OR PROCEEDING VOLUNTARILY FILED OR COMMENCED BY OR ON BEHALF OF THE ISSUER UNDER OR PURSUANT TO ANY SUCH LAW OR ii. ANY INVOLUNTARY CASE OR PROCEEDING PERTAINING TO THE ISSUER WHICH IS FILED OR COMMENCED BY OR ON BEHALF OF A PERSON OTHER THAN SUCH HOLDER AND IS NOT JOINED IN BY SUCH HOLDER (OR ANY PERSON TO WHICH SUCH HOLDER SHALL HAVE ASSIGNED, TRANSFERRED OR OTHERWISE CONVEYED ANY PART OF THE OBLIGATIONS OF THE ISSUER HEREUNDER) UNDER OR PURSUANT TO ANY SUCH LAW, OR b. FROM COMMENCING OR PROSECUTING ANY LEGAL ACTION WHICH IS NOT AN INVOLUNTARY CASE OR PROCEEDING UNDER OR PURSUANT TO ANY SUCH LAW AGAINST THE ISSUER OR ANY OF ITS PROPERTIES.

PG&E Wildfire Recovery Funding LLC SENIOR SECURED RECOVERY BONDS, TRANCHE .

INTEREST RATE ORIGINAL PRINCIPAL AMOUNT FINAL MATURITY DATE

PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (herein referred to as the “Issuer”), for value received, hereby promises to pay to or registered assigns, the Original Principal Amount shown above in semi-annual installments on the Payment Dates and in the amounts specified on the reverse hereof or, if less, the amounts determined

EXHIBIT A-3

pursuant to Section 8.02 of the Indenture, in each year, commencing on the date determined as provided on the reverse hereof and ending on or before the Final Maturity Date shown above and to pay interest, at the Interest Rate shown above, on each                      and                      or if any such day is not a Business Day, the next succeeding Business Day, commencing on and continuing until the earlier of the payment in full of the principal hereof and the Final Maturity Date (each a “Payment Date”), on the principal amount of this Tranche Recovery Bond (hereinafter referred to as this “Tranche Recovery Bond”). Interest on this Tranche Recovery Bond will accrue for each Payment Date from the most recent Payment Date on which interest has been paid to but excluding such Payment Date or, if no interest has yet been paid, from the date of issuance. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Such principal of and interest on this Tranche Recovery Bond shall be paid in the manner specified on the reverse hereof.

The principal of and interest on this Tranche Recovery Bond are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Tranche Recovery Bond shall be applied first to interest due and payable on this Tranche Recovery Bond as provided above and then to the unpaid principal of and premium, if any, on this Tranche Recovery Bond, all in the manner set forth in the Indenture.

Reference is made to the further provisions of this Tranche Recovery Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Tranche Recovery Bond.

Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual or electronic signature, this Tranche Recovery Bond shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose.

[Signature Page Follows]

EXHIBIT A-4

IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually, electronically or in facsimile, by its Responsible Officer.

Date:	PG&E Wildfire Recovery Funding LLC
	By:
		Name: Title:

EXHIBIT A-5

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

Dated:                              ,         

This is one of the Tranche Recovery Bonds, designated above and referred to in the within-mentioned Indenture.

The Bank of New York Mellon Trust Company, N.A., as Indenture Trustee
By:
	Name: Title:

EXHIBIT A-6

REVERSE OF RECOVERY BOND* ¹

This Tranche Recovery Bond is one of a duly authorized issue of Recovery Bonds of the Issuer (herein called the “Recovery Bonds”), issued and which Recovery Bonds are issuable in one or more Tranches, and the Recovery Bonds consists of Tranches, including this Tranche Recovery Bond (herein called the “Tranche Recovery Bonds”), all issued and to be issued under that certain Indenture dated as of [        ], 2022, (as supplemented by the Series Supplement (as defined below), the “Indenture”), between the Issuer and The Bank of New York Mellon Trust Company, N.A., in its capacity as indenture trustee (the “Indenture Trustee”, which term includes any successor indenture trustee under the Indenture) and in its separate capacity as a securities intermediary (the “Securities Intermediary”, which term includes any successor securities intermediary under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Holders of the Recovery Bonds. For purposes herein, “Series Supplement” means that certain Series Supplement dated as of [            ] [    ], 2022, between the Issuer and the Indenture Trustee. All terms used in this Tranche Recovery Bond that are defined in the Indenture, as amended, restated, supplemented or otherwise modified from time to time, shall have the meanings assigned to such terms in the Indenture.

The Tranche Recovery Bonds, the other Tranches of Recovery Bonds (all of such Tranches being referred to herein as “Recovery Bonds”) are and will be equally and ratably secured by the Recovery Bond Collateral pledged as security therefor as provided in the Indenture.

The principal of this Tranche Recovery Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account are available therefor, and only until the outstanding principal balance thereof on the preceding Payment Date (after giving effect to all payments of principal, if any, made on the preceding Payment Date) has been reduced to the principal balance specified in the Expected Amortization Schedule which is attached to the Series Supplement as Schedule A, unless payable earlier because an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Bondholders representing not less than a majority of the Outstanding Amount of the Recovery Bonds have declared the Recovery Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02 of the Indenture. The entire unpaid principal amount of this Tranche Recovery Bond shall be due and payable on the Final Maturity Date hereof. Notwithstanding the foregoing, the entire unpaid principal amount of the Recovery Bonds shall be due and payable, if not then previously paid, on the date on which

* The form of the reverse of a Recovery Bond is substantially as follows, unless otherwise specified in the Series Supplement.

EXHIBIT A-7

an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Holders of the Recovery Bonds representing not less than a majority of the Outstanding Amount of the Recovery Bonds have declared the Recovery Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture (unless such declaration shall have been rescinded and annulled in accordance with Section 5.02 of the Indenture). All principal payments on the Tranche Recovery Bonds shall be made pro rata to the Tranche Holders entitled thereto based on the respective principal amounts of the Tranche Recovery Bonds held by them.

Payments of interest on this Tranche Recovery Bond due and payable on each Payment Date, together with the installment of principal or premium, if any, shall be made by wire transfer to an account maintained by the Person whose name appears as the Registered Holder of this Tranche  Recovery Bond (or one or more Predecessor Recovery Bonds) on the Recovery Bond Register as of the close of business on the Record Date or in such other manner as may be provided in the Indenture or the Series Supplement, except that if this Tranche Recovery Bond is held in Book-Entry Form, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Recovery Bond evidencing this Tranche Recovery Bond unless and until such Global Recovery Bond is exchanged for Definitive Recovery Bonds (in which event payments shall be made as provided above), and except for the final installment of principal and premium, if any, payable with respect to this Tranche Recovery Bond on a Payment Date which shall be payable as provided below. Any reduction in the principal amount of this Tranche Recovery Bond (or any one or more Predecessor Recovery Bonds) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Tranche Recovery Bond and of any Recovery Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Tranche Recovery Bond on a Payment Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the Record Date preceding such Payment Date by notice sent no later than five (5) days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of this Tranche Recovery Bond and shall specify the place where this Tranche Recovery Bond may be presented and surrendered for payment of such installment.

The Issuer shall pay interest on overdue installments of interest at the Recovery Bond Interest Rate to the extent lawful.

This Recovery Bond is a “recovery bond” as such term is defined in the Wildfire Financing Law. Principal and interest due and payable on this Recovery Bond are payable from and secured primarily by Recovery Property created and established by the Financing Order obtained from the Public Utilities Commission of California pursuant to the Wildfire Financing Law. Recovery Property consists of the rights and interests of the Seller in the Financing Order, including the right to impose, collect and recover certain charges (defined in the Wildfire Financing Law as “fixed recovery charges” to be included in regular electric utility bills of existing and future electric service Consumers within the service territory of PG&E or its successors or assigns, as more fully described in the Financing Order.

EXHIBIT A-8

The Wildfire Financing Law provides that: “The State of California does hereby pledge and agree with the electrical corporation, owners of recovery property, financing entities, and holders of recovery bonds that the state shall neither limit nor alter, except as otherwise provided with respect to the true-up adjustment of the fixed recovery charges pursuant to subdivision (g) of Section 850.1, the fixed recovery charges, any associated fixed recovery tax amounts, recovery property, financing orders, or any rights under a financing order until the recovery bonds, together with the interest on the recovery bonds and associated financing costs, are fully paid and discharged, and any associated fixed recovery tax amounts have been satisfied or, in the alternative, have been refinanced through an additional issue of recovery bonds, provided that nothing contained in this section shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the electrical corporation and of owners and holders of the recovery bonds. The financing entity is authorized to include this pledge and undertaking for the state in these recovery bonds.”

The Wildfire Financing Law further provides that: “Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond. The issuance of recovery bonds under this article [of the Wildfire Financing Law] shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment.”

The Issuer and PG&E hereby acknowledge that the purchase of this Recovery Bond by the Holder hereof or the purchase of any beneficial interest herein by any Person are made in reliance on the foregoing pledge.

As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Tranche Recovery Bond may be registered on the Recovery Bond Register upon surrender of this Tranche Recovery Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by (A) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder hereof or such Holder’s attorney duly authorized in writing, with such signature guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (I) The Securities Transfer Agent Medallion Program (STAMP); (II) The New York Stock Exchange Medallion Program (MSP); (III) The Stock Exchange Medallion Program (SEMP); or (IV) in such other guarantee program acceptable to the Indenture Trustee, and (B) such other documents as the Indenture Trustee may require, and thereupon one or more new Tranche Recovery Bonds of Minimum Denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Tranche Recovery Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange, other than exchanges pursuant to Sections 2.04 or 2.06 of the Indenture not involving any transfer.

EXHIBIT A-9

Each Recovery Bond holder, by acceptance of a Recovery Bond, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Recovery Bonds or under the Indenture or any certificate or other writing delivered in connection therewith, against (I) any owner of a membership interest in the Issuer (including PG&E) or (II) any shareholder, partner, owner, beneficiary, agent, officer or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including PG&E) in its respective individual or corporate capacities, or of any successor or assign of any of them in their individual or corporate capacities, except as any such Person may have expressly agreed in writing. Each Holder by accepting a Recovery Bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Recovery Bonds.

Prior to the due presentment for registration of transfer of this Tranche Recovery Bond, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Tranche Recovery Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and premium, if any, and interest on this Tranche Recovery Bond and for all other purposes whatsoever, whether or not this Tranche Recovery Bond be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Recovery Bonds under the Indenture at any time by the Issuer with the consent of the Bondholders representing not less than a majority of the Outstanding Amount of all Recovery Bonds at the time outstanding of each Tranche to be affected. The Indenture also contains provisions permitting the Bondholders representing specified percentages of the Outstanding Amount of the Recovery Bonds, on behalf of the Holders of all the Recovery Bonds, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Tranche Recovery Bond (or any one of more Predecessor Recovery Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Tranche Recovery Bond and of any Recovery Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Tranche Recovery Bond. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Recovery Bonds issued thereunder.

The Indenture contains provisions for defeasance at any time of (A) the entire indebtedness of the Issuer on this Tranche Recovery Bond and (B) certain restrictive covenants and the related Events of Default, upon compliance by the Issuer with certain conditions set forth herein, which provisions apply to this Tranche Recovery Bond.

The term “Issuer” as used in this Tranche Recovery Bond includes any successor to the Issuer under the Indenture.

EXHIBIT A-10

The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Bondholders under the Indenture.

The Tranche Recovery Bonds are issuable only in registered form in denominations as provided in the Indenture and the Series Supplement subject to certain limitations therein set forth.

This Tranche Recovery Bond, the Indenture and the Series Supplement shall be construed in accordance with the laws of the State of CALIFORNIA, without reference to its conflict of law provisions, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

No reference herein to the Indenture and no provision of this Tranche Recovery Bond or of the Indenture shall alter or impair the obligation, which is absolute and unconditional, to pay the principal of and interest on this Tranche Recovery Bond at the times, place, and rate, and in the coin or currency herein prescribed.

The Issuer and the Indenture Trustee, by entering into the Indenture, and the Holders and any Persons holding a beneficial interest in any Tranche  Recovery Bond, by acquiring any Tranche Recovery Bond or interest therein, (I) express their intention that, solely for the purpose of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purpose of state, local and other taxes, the Tranche Recovery Bonds qualify under applicable tax law as indebtedness of the sole owner of the Issuer secured by the Recovery Bond Collateral and (II) solely for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Tranche [ - ] Recovery Bonds are outstanding, agree to treat the Tranche Recovery Bonds as indebtedness of the sole owner of the Issuer secured by the Recovery Bond Collateral unless otherwise required by appropriate taxing authorities.

ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this Tranche  Recovery Bond, shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM	as tenants in common
TEN ENT	as tenants by the entireties
JT TEN	as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT	Custodian                                                  (Custodian)                                             (minor)
	Under Uniform Gifts to Minor Act (                                         )                                                                                       (State)

Additional abbreviations may also be used though not in the above list.

EXHIBIT A-11

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee                         

FOR VALUE RECEIVED, the undersigned² hereby sells, assigns and transfers unto

(name and address of assignee)

the within Tranche Recovery Bond and all rights thereunder, and hereby irrevocably constitutes and appoints                 , attorney, to transfer said Tranche Recovery Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated:                                Signature Guaranteed:

² RECOVERY BOND: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Tranche Recovery Bond in every particular, without alteration, enlargement or any change whatsoever.

NOTE: Signature(s) must be guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (I) The Securities Transfer Agent Medallion Program (STAMP), (II) The New York Stock Exchange Medallion Program (MSP), (III) the Stock Exchange Medallion Program (SEMP) or (IV) such other guarantee program acceptable to the Indenture Trustee.

EXHIBIT A-12

EXHIBIT B

FORM OF SERIES SUPPLEMENT

This SERIES SUPPLEMENT dated as of [    ], 2022 (this “Supplement”), by and between PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Issuer”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association (“BANK”), in its capacity as indenture trustee (the “Indenture Trustee”) for the benefit of the Secured Parties under the Indenture dated as of [    ], 2022 (the “Indenture”), by and between the Issuer and the BANK, in its capacity as Indenture Trustee and in its separate capacity as a securities intermediary.

PRELIMINARY STATEMENT

Section 9.01 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an indenture supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of the Recovery Bonds and specifying the terms thereof. The Issuer has duly authorized the creation of the Recovery Bonds with an initial aggregate principal amount of $ to be known as PG&E Wildfire Recovery Funding LLC Recovery Bonds (the “Recovery Bonds”), and the Issuer and the Indenture Trustee are executing and delivering this Supplement in order to provide for the Recovery Bonds.

All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this Supplement or the context clearly requires otherwise. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture, the terms and provisions of this Supplement shall govern.

GRANTING CLAUSE

With respect to the Recovery Bonds, the Issuer hereby Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Secured Parties of the Recovery Bonds, a Lien on and a security interest in and to all of the Issuer’s right, title and interest (whether now owned or hereafter acquired or arising) in, to and under all of the following property (such property, collectively, the “Recovery Bond Collateral”): (a) the Recovery Property created under and pursuant to the Financing Order, and transferred by the Seller to the Issuer pursuant to the Sale Agreement (including, to the fullest extent permitted by law, the right, title, and interest of the Issuer (i) in and to the Fixed Recovery Charges, including all rights to True-Up Adjustments to the Fixed Recovery Charges in accordance with the Wildfire Financing Law and the Financing Order and (ii) to be paid the amount that is determined in a Financing Order to be the amount that the Seller and Issuer is lawfully entitled to receive pursuant to the provisions of the Wildfire Financing Law and the proceeds thereof, and in and to all revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges; (b) the Sale Agreement and all property and interests in property transferred under the Sale Agreement with respect to the Recovery Property and the Recovery Bonds, (c) the Servicing Agreement, the Administration Agreement and any subservicing, agency, intercreditor, administration or collection agreements executed in connection therewith, to the extent related to the foregoing Recovery Property and the Recovery

EXHIBIT B-1

Bonds, (d) the Collection Account, all subaccounts thereof and all amounts of cash, instruments, investment property or other assets on deposit therein or credited thereto from time to time and all Financial Assets and securities entitlements carried therein or credited thereto, (e) all rights to compel the Servicer to file for and obtain adjustments to the Fixed Recovery Charges in accordance with Section 850.1(g) of the Wildfire Financing Law, the Financing Order or any Tariff filed in connection therewith, (f) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, whether such claims, demands, causes and choses in action constitute Recovery Property, accounts, general intangibles, instruments, contract rights, chattel paper or proceeds of such items or any other form of property, (g) all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters of credit, letters-of-credit rights, money, commercial tort claims and supporting obligations related to the foregoing, (h) all payments on or under, and all proceeds in respect of, any or all of the foregoing; it being understood that the following do not constitute Recovery Bond Collateral: amounts deposited with the Issuer on the Closing Date, required for payment of costs of issuance with respect to the Recovery Bonds (together with any interest earnings thereon), it being understood that such amounts described in this clause shall not be subject to Section 3.17 of the Indenture.

The foregoing Grant is made in trust to secure the payment of principal of and premium, if any, interest on, and any other amounts owing in respect of, the Recovery Bonds and all fees, expenses, counsel fees and other amounts due and payable to the Indenture Trustee equally and ratably without prejudice, priority or distinction, except as expressly provided in the Indenture, to secure compliance with the provisions of the Indenture with respect to the Recovery Bonds, all as provided in the Indenture and to secure the performance by the Issuer of all of its obligations under the Indenture (collectively, the “Secured Obligations”). The Indenture and this Series Supplement constitute a security agreement within the meaning of the Wildfire Financing Law and under the UCC to the extent that the provisions of the UCC are applicable hereto.

The Indenture Trustee, as indenture trustee on behalf of the Secured Parties of the Recovery Bonds, acknowledges such Grant and accepts the trusts under this Supplement and the Indenture in accordance with the provisions of this Supplement and the Indenture.

SECTION 1. Designation. The Recovery Bonds shall be designated generally as the Senior Secured Recovery Bonds, Series [    ], and further denominated as Tranches through .

SECTION 2. Initial Principal Amount; Recovery Bond Interest Rate; Scheduled Payment Date; Final Maturity Date. The Recovery Bonds of each Tranche shall have the initial principal amount, bear interest at the rates per annum and shall have the Scheduled Final Payment Dates and the Final Maturity Dates set forth below:

Tranche Initial Principal Amount Recovery Bond Interest Rate Scheduled Final Payment Date Final Maturity Date

EXHIBIT B-2

The Recovery Bond Interest Rate shall be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 3. Authentication Date; Payment Dates; Expected Amortization Schedule for Principal; Periodic Interest; No Premium; Other Terms.

(a)     Authentication Date. The Recovery Bonds that are authenticated and delivered by the Indenture Trustee to or upon the order of the Issuer on (the “Closing Date”) shall have as their date of authentication ..

(b)     Payment Dates. The Payment Dates for the Recovery Bonds are [                    ] and [                    ] of each year or, if any such date is not a Business Day, the next succeeding Business Day, commencing on (the “Initial Payment Date”) and continuing until the earlier of repayment of the Tranche Recovery Bonds in full and the Final Maturity Date Tranche Recovery Bonds.

(c)     Expected Amortization Schedule for Principal. Unless an Event of Default shall have occurred and be continuing on each Payment Date, the Indenture Trustee shall distribute to the Holders of record as of the related Record Date amounts payable pursuant to Section 8.02(e) of the Indenture as principal, in the following order and priority: (1) to the holders of the Tranche A-1 Recovery Bonds, until the Outstanding Amount of such Tranche of Recovery Bonds thereof has been reduced to zero; (2) to the holders of the Tranche A-2 Recovery Bonds, until the Outstanding Amount of such Tranche of Recovery Bonds thereof has been reduced to zero; (3) to the holders of the Tranche A-3 Recovery Bonds, until the Outstanding Amount of such Tranche of Recovery Bonds thereof has been reduced to zero; provided, however, that in no event shall a principal payment pursuant to this Section 3(c) on any Tranche on a Payment Date be greater than the amount necessary to reduce the Outstanding Amount of such Tranche of Recovery Bonds to the amount specified in the Expected Amortization Schedule set forth on Schedule A hereto for such Tranche and Payment Date.

(d)     Periodic Interest. Periodic Interest will be payable on each Tranche of the Recovery Bonds on each Payment Date in an amount equal to one-half of the product of (i) the applicable Recovery Bond Interest Rate and (ii) the Outstanding Amount of the related Tranche of Recovery Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the related Tranche of Recovery Bonds on such preceding Payment Date; provided, however, that with respect to the Initial Payment Date, or, if no payment has yet been made, interest on the outstanding principal balance will accrue from and including the Closing Date to, but excluding, the following Payment Date.

(e)     Book-Entry Recovery Bonds. The Recovery Bonds shall be Book-Entry Recovery Bonds and the applicable provisions of Section 2.11 of the Indenture shall apply to the Recovery Bonds.

(f)    Indenture Trustee Cap. The amount payable with respect to the Recovery Bonds pursuant to Section 8.02(e)(i) shall not exceed $200,000 annually; provided, however, that the Indenture Trustee Cap shall be disregarded and inapplicable upon the acceleration of the Recovery Bonds following the occurrence of an Event of Default.

EXHIBIT B-3

SECTION 4. Minimum Denominations. The Recovery Bonds shall be issuable in the Minimum Denomination and integral multiples of $1,000 in excess thereof.

SECTION 5. Certain Defined Terms. Article I of the Indenture provides that the meanings of certain defined terms used in the Indenture shall be as defined in Appendix A attached to the Indenture. Additionally, Article II of the Indenture provides certain terms will have the meanings specified in the related Supplement. With respect to the Recovery Bonds, the following definitions shall apply:

“Initial Payment Date” has the meaning specified in Section 3 of this Supplement.

“Minimum Denomination” shall mean $2,000.

“Recovery Bond Interest Rate” has the meaning specified in Section 2 of this Supplement.

“Payment Date” has the meaning specified in Section 3(b) of this Supplement.

“Periodic Interest” has the meaning specified in Section 3(d) of this Supplement.

“Closing Date” has the meaning specified in Section 3(a) of this Supplement.

SECTION 6. Delivery and Payment for the Recovery Bonds; Form of the Recovery Bonds. The Indenture Trustee shall deliver the Recovery Bonds to the Issuer when authenticated in accordance with Section 2.03 of the Indenture. The Recovery Bonds of each Tranche shall be in the form of Exhibits A-1 through A-3 hereto.

SECTION 7. Ratification of Agreement. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken, and construed as one and the same instrument. This Supplement amends, modifies and supplemented the Indenture only in so far as it relates to the Recovery Bonds.

SECTION 8. Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.

SECTION 9. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. EACH OF THE ISSUER AND THE INDENTURE TRUSTEE AND EACH HOLDER (BY ITS ACCEPTANCE OF THE RECOVERY BONDS) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THAT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY.

SECTION 10. Issuer Obligation. No recourse may be taken directly or indirectly, by the Holders with respect to the obligations of the Issuer on the Recovery Bonds, under the Indenture

EXHIBIT B-4

or under this Supplement or any certificate or other writing delivered in connection herewith or therewith, against (i) any owner of a beneficial interest in the Issuer (including PG&E) or (ii) any shareholder, partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee, the Managers or any owner of a beneficial interest in the Issuer (including PG&E) in its individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed. Each Holder by accepting a Recovery Bond specifically confirms the nonrecourse nature of these obligations, and waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Recovery Bonds.

[Signature Page Follows]

EXHIBIT B-5

IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Supplement to be duly executed by their respective officers thereunto duly authorized as of the first day of the month and year first above written.

ISSUER: PG&E Wildfire Recovery Funding LLC a Delaware limited liability company
By:	Name: Title:
INDENTURE TRUSTEE: The Bank of New York Mellon Trust Company, N.A., not in its individual capacity but solely as Indenture Trustee
By:	Name: Title:

Signature Page to Series Supplement

EXHIBIT B-6

SCHEDULE A

EXPECTED AMORTIZATION SCHEDULE

OUTSTANDING PRINCIPAL BALANCE

DATE	TRANCHE	TRANCHE	TRANCHE
Closing Date	$	$	$
, 20_
, 20_
, 20_
, 20_

EXHIBIT B-7

EXHIBIT A-1

FORM OF TRANCHE [    ] RECOVERY BOND

[to be attached]

EXHIBIT B-8

EXHIBIT C

SERVICING CRITERIA TO BE ADDRESSED

BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

Reg AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for pool assets are maintained.
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.
	Cash Collection and Administration
1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days of receipt, or such other number of days specified in the transaction agreements.	X
1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	X
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	X

EXHIBIT C-1

Reg AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.	X
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations a. are mathematically accurate; b. are prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; c. are reviewed and approved by someone other than the person who prepared the reconciliation; and d. contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports a. are prepared in accordance with timeframes and other terms set forth in the transaction agreements; b. provide information calculated in accordance with the terms specified in the transaction agreements; c. are filed with the Commission as required by its rules and regulations; and d. agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the servicer.
1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	X
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the servicer’s investor records, or such other number of days specified in the transaction agreements.	X
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	X
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related documents.

EXHIBIT C-2

Reg AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.
1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related pool asset documents.
1122(d)(4)(v)	The servicer’s records regarding the pool assets agree with the servicer’s records with respect to an obligor’s unpaid principal balance.
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s pool assets (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.
1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period any pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.

EXHIBIT C-3

Reg AB Reference	Servicing Criteria	Applicable Indenture Trustee Responsibility
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): a. such funds are analyzed, in accordance with the obligor’s pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; b. interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and c. such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets, or such other number of days specified in the transaction agreements.
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.
1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.

EXHIBIT C-4

APPENDIX A

DEFINITIONS

This is Appendix A to the Indenture.

A.     Defined Terms. As used in the Indenture, the Sale Agreement, the LLC Agreement, the Servicing Agreement, the Series Supplement or any other Basic Document as hereinafter defined, as the case may be (unless the context requires a different meaning), the following terms have the following meanings:

“17g-5 Website” has the meaning specified in Section 10.06 of the Indenture.

“Account Records” has the meaning specified in Section 1(a)(i) of the Administration Agreement.

“Act” has the meaning specified in Section 10.03(a) of the Indenture.

“Actual FRC Collections” means, if no Servicer Default has occurred and is continuing, the calculation of the collections of the Fixed Recovery Charges by the Servicer made in accordance with Section 6(e) of Annex I to the Servicing Agreement, and, if a Servicer Default has occurred and is continuing, a calculation of the collections of the Fixed Recovery Charges by the Servicer made in accordance with Section 6.11(c) of the Servicing Agreement.

“Additional Other Recovery Bonds” means any series of recovery bonds (as defined in the Wildfire Financing Law) and any other recovery bonds described in any similar securitization statute issued by the Issuer or any other issuing entity that is an affiliate of PG&E after the date hereof pursuant to any Subsequent Indenture and in accordance with the related Subsequent Financing Order to recover costs eligible to be financed under the Wildfire Financing Law or such other securitization statute and as determined reasonable by the CPUC.

“Additional Recovery Bonds” means any series of “recovery bonds” (as defined in the Wildfire Financing Law) issued by the Issuer or any other issuing entity that is an affiliate of PG&E after the date hereof pursuant to any Subsequent Indenture and in accordance with the Financing Order.

“Adjustment Date” means the effective date of any Advice Letter, including an Annual Adjustment Date.

“Administration Agreement” means the Administration Agreement, dated as of [        ], 2022, by and between PG&E and the Issuer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Administration Fee” has the meaning specified in Section 2 of the Administration Agreement.

“Administrator” means PG&E, as Administrator under the Administration Agreement, or any successor Administrator to the extent permitted under the Administration Agreement.

“Advice Letter” means any filing made to the CPUC by the Servicer on behalf of the Issuer with respect to the Fixed Recovery Charges or any True-Up Adjustment in the form of an advice letter, including the Issuance Advice Letter, any Routine Annual True-Up Mechanism Advice Letter, any Routine Semi-Annual True-Up Mechanism Advice Letter, any Routine Interim True-Up Mechanism Advice Letter, or any Non-Routine True-Up Mechanism Advice Letter.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Annual Accountant’s Report” has the meaning specified in Section 3.04 of the Servicing Agreement.

“Annual Adjustment Date” means the date on which a Routine Annual True-Up Adjustment becomes effective in accordance with Section 4.01(b)(i) of the Servicing Agreement.

“Applicable ESP” means, with respect to each Consumer, the ESP, if any, providing “direct access” service to that Consumer.

“Applicable MDMA” has the meaning specified in Section 1 of Annex I attached to the Servicing Agreement.

“Application” means the Application of PG&E for a Financing Order to securitize regulatory assets and other Recovery Costs filed by PG&E with the CPUC dated January 6, 2021 pursuant to the Wildfire Financing Law, or any subsequent similar Application of PG&E.

“Bankruptcy” has the meaning specified in Section 9.01 of the LLC Agreement.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.), as amended from time to time.

“Basic Documents” means the Indenture, the Administration Agreement, the Sale Agreement, the Certificate of Formation, the LLC Agreement, the Servicing Agreement, the Series Supplement, the Letter of Representations, the Underwriting Agreement and all other documents and certificates delivered in connection therewith.

“Billed FRCs” has the meaning specified in Annex I to the Servicing Agreement.

“Billing Commencement Date” means the date specified in the Issuance Advice Letter on which the Servicer will commence billing the Fixed Recovery Charges.

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“Bills” means each of the regular monthly bills, the summary bills, the opening bills and the closing bills issued to Consumers or ESPs by PG&E on its own behalf and in its capacity as Servicer.

“Book-Entry Form” means, with respect to any Recovery Bond, that such Recovery Bond is not certificated and the ownership and transfers thereof shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture and the Series Supplement pursuant to which such Recovery Bond was issued.

“Book-Entry Recovery Bonds” means any Recovery Bonds issued in Book-Entry Form; provided, however, that after the occurrence of a condition whereupon book-entry registration and transfer are no longer permitted and Definitive Recovery Bonds are to be issued to the Holder of such Recovery Bonds, such Recovery Bonds shall no longer be “Book-Entry Recovery Bonds”.

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in San Francisco, California or New York, New York, are, or DTC or the Corporate Trust Office is, authorized or obligated by law, regulation or executive order to remain closed.

“CA UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of California.

“Calculation Cut-Off Date” means a date, specified in an Advice Letter, on which the balance held to the credit of the Collection Account is ascertained.

“Capital Contribution” means the amount of cash contributed to the Issuer by PG&E as specified in the LLC Agreement.

“Capital Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“CARE” means the California Alternative Rates for Energy program under the Public Utilities Code.

“Cash Flow Model” means the cash flow model approved in the Financing Order, as the same may be revised from time to time in connection with a Non-Routine True-Up Adjustment.

“Cash Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“Certificate of Formation” means the Certificate of Formation filed with the Secretary of State of the State of Delaware on March 8, 2022 pursuant to which the Issuer was formed.

“Claim” means a “claim” as defined in Section 101(5) of the Bankruptcy Code.

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“Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act.

“Clearing Agency Participant” means a securities broker, dealer, bank, trust company, clearing corporation or other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency.

“Closing Date” means, [        ], 2022, the date on which the Recovery Bonds are to be originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collection Account” means the account established and maintained by the Indenture Trustee in accordance with Section 8.02(a) of the Indenture and any subaccounts contained therein.

“Collection Curve” means the collections curve that is expressed as a percentage measured at each of six consecutive 30-day intervals and represents the ratio of accumulative daily collections to the total amount billed to a sample customer population.

“Collection Period” means any period commencing on the first Servicer Business Day of any Billing Period and ending on the last Servicer Business Day of such Billing Period.

“Commission” has the meaning specified in Section 1(a)(ii) of the Administration Agreement.

“Company Minutes” has the meaning specified in Section 1(a)(iv) of the Administration Agreement.

“Corporate Trust Office” means the office of the Indenture Trustee at which, at any particular time, its corporate trust business shall be administered, which office (for all purposes other than registration of transfer of Recovery Bonds) as of the Closing Date is located at The Bank of New York Mellon Trust Company, N.A., Attn: ABS Structured Finance, 2 N. LaSalle Street, Suite 700, Chicago, IL 60602, and for registration of transfers of Recovery Bonds, the office as of the Closing Date is located at The Bank of New York Mellon Trust Company, N.A., Attn: ABS Structured Finance, 2 N. LaSalle Street, Suite 700, Chicago, IL 60602, or at such other address as the Indenture Trustee may designate from time to time by notice to the Holders of Recovery Bonds and the Issuer, or the principal corporate trust office of any successor trustee by like notice.

“Covenant Defeasance Option” has the meaning specified in Section 4.01(b) of the Indenture.

“Consumers” means the existing and future consumers of electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those facilities are owned by the consumer, PG&E or any other party, to the extent those existing

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and future consumers of electricity are located in the service territory in which the Seller provided electric distribution service as of May 6, 2021, other than consumers of electricity exempted from the obligation to pay Fixed Recovery Charges under Section 850.1(l) of the Public Utilities Code.

“CPUC” means the Public Utilities Commission of California, or any Governmental Authority succeeding to the duties of such agency.

“CPUC Regulations” means the regulations, including proposed or temporary regulations, promulgated under the Public Utilities Code.

“Daily Remittance” has the meaning specified in Section 6.11(a) of the Servicing Agreement.

“Default” means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default as defined in Section 5.01 of the Indenture.

“Definitive Recovery Bonds” means Recovery Bonds issued in definitive form in accordance with Section 2.13 of the Indenture.

“Depositor” means PG&E, in its capacity as depositor of the Recovery Property.

“DTC” means The Depository Trust Company or any successor thereto.

“Electronic Means” means telephone, telecopy, telegraph, telex, internet, electronic mail, facsimile transmission or any other similar means of electronic communication. Any communication by telephone as an Electronic Means shall be promptly confirmed in writing or by one of the other means of electronic communication authorized herein.

“Eligible Account” means a segregated non-interest-bearing trust account with an Eligible Institution.

“Eligible Institution” means:

(a)    the corporate trust department of the Indenture Trustee, so long as any of the securities of the Indenture Trustee have (i) either a short-term credit rating from Moody’s of at least “P-1” or a long-term unsecured debt rating from Moody’s of at least “A2” and (ii) a credit rating from S&P of at least “A”; or

(b)    a depository institution organized under the laws of the United States of America or any state (or any domestic branch of a foreign bank) (i) that has either (A) a long-term issuer rating of “AA-” or higher by S&P and “A2” or higher by Moody’s, or (B) a short-term issuer rating of “A-1” or higher by S&P and “P-1” or higher by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the FDIC.

If so qualified under clause (b) above, the Indenture Trustee may be considered an Eligible Institution for the purposes of clause (a) of this definition.

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“Eligible Investments” mean instruments or investment property which evidence:

(a)    direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America;

(b)     demand or time deposits of, unsecured certificates of deposit of, money market deposit accounts of or bankers’ acceptances issued by, any depository institution (including the Indenture Trustee, acting in its commercial capacity) incorporated or organized under the laws of the United States of America or any state thereof and subject to the supervision and examination by U.S. federal or state banking authorities, so long as the commercial paper or other short-term debt obligations of such depository institution are, at the time of deposit, rated at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s, or such lower rating as will not result in the downgrading or withdrawal of the Recovery Bonds;

(c)    commercial paper (including commercial paper of the Indenture Trustee, acting in its commercial capacity, and other than commercial paper issued by PG&E or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating of at least “A-1” and “P-1” or their equivalents by each of S&P and Moody’s or such lower rating as will not result in the downgrading or withdrawal of the ratings of the Recovery Bonds;

(d)    investments in money market funds which have a rating in the highest investment category granted thereby (including funds for which the Indenture Trustee or any of its affiliates is investment manager or advisor) from Moody’s and S&P;

(e)    repurchase obligations with respect to any security that is a direct obligations of, or fully guaranteed by, the United States of America or certain of its agencies or instrumentalities, entered into with Eligible Institutions;

(f)    repurchase obligations with respect to any security or whole loan entered into with an Eligible Institution or with a registered broker-dealer acting as principal and that meets certain ratings criteria; and

(g)    (i) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any such broker/dealer being referred to in this definition as a “broker/dealer”), the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P at the time of entering into such repurchase obligation; or (ii) an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and “A-1+” by S&P at the time of purchase so long as the obligations of such unrated broker/dealer are unconditionally guaranteed by such non-bank or bank holding company.

Notwithstanding the foregoing: (1) no securities or investments which mature in 30 days or more will be Eligible Investments unless the issuer thereof has either a short-term unsecured debt rating of at least “P-1” from Moody’s or a long-term unsecured debt rating of at least “A1” from Moody’s; (2) no securities or investments described in bullet points (b) through (d) above

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which have maturities of more than 30 days but less than or equal to 3 months will be Eligible Investments unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; (3) no securities or investments described in bullet points (b) through (d) above which have maturities of more than 3 months will be Eligible Investments unless the issuer thereof has a long-term unsecured debt rating of at least “A1” from Moody’s and a short-term unsecured debt rating of at least “P-1” from Moody’s; (4) no securities or investments described in bullet points (b) through (d) above which have a maturity of 60 days or less will be Eligible Investments unless such securities have a rating from S&P of at least “A-1”; and (5) no securities or investments described in bullet points (b) through (d) above which have a maturity of more than 60 days will be Eligible Investments unless such securities have a rating from S&P of at least “AA-”, “A-1+” or “AAAm”.

“ESP” means an alternative energy service provider who has entered into an ESP Service Agreement with the Seller.

“ESP Service Agreement” means an agreement between an ESP and the Seller for the provision of “direct access” service to Consumers in accordance with CPUC Decision 97-10-087 and subsequent decisions.

“Estimated FRC Collections” means the payments in respect of Fixed Recovery Charges which are deemed to have been received by the Servicer, directly or indirectly (including through a ESP), from or on behalf of Consumers, calculated in accordance with Section 6(e) of Annex I of the Servicing Agreement.

“Event of Default” has the meaning specified in Section 5.01 of the Indenture.

“Excess Funds Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

“Excess Remittance” means the amount, if any, calculated for a particular Reconciliation Period, by which all Estimated FRC Collections remitted to the Collection Account during such Reconciliation Period exceed Actual FRC Collections received by the Servicer during such Reconciliation Period.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exempted Consumers” means Consumers who participate in the CARE program and/or the FERA program.

“Expected Amortization Schedule” means, with respect to any Tranche, the expected amortization schedule related thereto set forth in the Series Supplement.

“FDIC” means the Federal Deposit Insurance Corporation or any successor thereto.

“Federal Book-Entry Regulations” means 31 C.F.R. Part 357 et seq. (Department of Treasury).

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“Federal Book-Entry Securities” means securities issued in book-entry form by the United States Treasury.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Servicer from three (3) federal funds brokers of recognized standing selected by it.

“FERA” means the Family Electric Rate Assistance program under the Public Utilities Code.

“Final” means, with respect to the Financing Order, that the Financing Order has become final, is not being appealed and that the time for filing an appeal therefrom has expired.

“Final Maturity Date” means, with respect to each Tranche of Recovery Bonds, the Final Maturity Date therefor, as specified in the Series Supplement.

“Financial Asset” means “financial asset” as set forth in Section 8-102(a)(9) of the CA UCC.

“Financing Order” means the order of the CPUC, D. 21-05-015, issued on May 11, 2021, which became effective on February 28, 2022.

“First Payment Period” means the period commencing on an Adjustment Date (or for the period immediately after the issuance of the Recovery Bonds, the Closing Date) through and including the next Payment Date.

“Fixed Recovery Charge” means any fixed recovery charge as defined in Section 850(b)(7) of the Wildfire Financing Law which is authorized by the Financing Order.

“Fixed Recovery Charge Payments” means the payments made by Consumers based on the Fixed Recovery Charges.

“FRC Collections” means Fixed Recovery Charges revenues received by the Servicer to be remitted to the Collection Account.

“FRTAs” means fixed recovery tax amounts authorized by the Financing Order.

“Full Consolidated ESP Billing” has the meaning specified in Section 1 of Annex I attached to the Servicing Agreement.

“General Subaccount” has the meaning specified in Section 8.02(a) of the Indenture.

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“Global Recovery Bond” means a Recovery Bond to be issued to the Holders thereof in Book-Entry Form, which Global Recovery Bond shall be issued to the Clearing Agency, or its nominee, in accordance with Section 2.11 of the Indenture and the Series Supplement.

“Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any court, administrative agency or other instrumentality or entity exercising executive, legislative, judicial, regulatory or administrative function of government.

“Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, grant, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture and the Series Supplement. A Grant of the Recovery Bond Collateral or of any other agreement or instrument included therein shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for payments in respect of the Recovery Bond Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Holder” or “Bondholder” means the Person in whose name a Recovery Bond is registered on the Recovery Bond Register.

“Indemnified Losses” has the meaning specified in Section 5.03 of the Servicing Agreement.

“Indemnified Person” has the meaning specified in Section 6.02 of the Servicing Agreement.

“Indenture” means the Indenture, dated as of [        ], 2022, by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., a national banking association, as Indenture Trustee and as Securities Intermediary as originally executed and, as from time to time supplemented or amended by the Series Supplement or indentures supplemental thereto entered into pursuant to the applicable provisions of the Indenture, as so supplemented or amended, or both, and shall include the forms and terms of the Recovery Bonds established thereunder.

“Indenture Trustee” means The Bank of New York Mellon Trust Company, N.A., a national banking association, as indenture trustee for the benefit of the Secured Parties, or any successor indenture trustee under the Indenture.

“Independent” means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Issuer, any other obligor on the Recovery Bonds, the Seller, the Servicer and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons and (c) is not

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connected with the Issuer, any such other obligor, the Seller, the Servicer or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director (other than as an independent director or manager) or Person performing similar functions.

“Independent Certificate” means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and consented to by the Indenture Trustee, and such opinion or certificate shall state that the signer has read the definition of “Independent” in the Indenture and that the signer is Independent within the meaning thereof.

“Independent Manager” has the meaning specified in Section 4.01(a) of the LLC Agreement.

“Independent Manager Fee” has the meaning specified in Section 4.01(a) of the LLC Agreement.

“Initial Payment Date” has the meaning specified in Section 3 of the Series Supplement.

“Insolvency Event” means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

“Internal Revenue Service” means the Internal Revenue Service of the United States of America.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“Investment Earnings” means investment earnings on funds deposited in the Collection Account net of losses and investment expenses.

“Issuance Advice Letter” means the Issuance Advice Letter filed with the CPUC pursuant to the Wildfire Financing Law and the Financing Order with respect to the Recovery Bonds.

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“Issuer” means PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company, named as such in the Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the Recovery Bonds.

“Issuer Documents” has the meaning specified in Section 1(a)(iv) of the Administration Agreement.

“Issuer Order” and “Issuer Request” mean a written order or request signed in the name of the Issuer by any one of its Responsible Officers and delivered to the Indenture Trustee or Paying Agent, as applicable.

“Legal Defeasance Option” has the meaning specified in Section 4.01(b) of the Indenture.

“Letter of Representations” means any applicable agreement between the Issuer and the applicable Clearing Agency, with respect to such Clearing Agency’s rights and obligations (in its capacity as a Clearing Agency) with respect to any Book-Entry Recovery Bonds, as the same may be amended, supplemented, restated or otherwise modified from time to time.

“Lien” means, with respect to any asset, any security interest, lien, mortgage, leasehold mortgage, charge, pledge, hypothecation, claim, equity or encumbrance of any kind.

“LLC Act” means the Delaware Limited Liability Company Act, as amended.

“LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of PG&E Wildfire Recovery Funding LLC, effective as of [        ], 2022, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Manager” means each manager of the Issuer under the LLC Agreement.

“Member” has the meaning specified in the first paragraph of the LLC Agreement.

“Minimum Denomination” means, with respect to any Recovery Bond, the minimum denomination therefor specified in the Series Supplement, which minimum denomination shall be not less than $2,000, except for one Recovery Bond of each tranche which may be of smaller denomination, and, except as otherwise provided in the Series Supplement, integral multiples of $1,000 in excess thereof.

“Monthly Servicer’s Certificate” means a certificate, substantially in the form of Exhibit A to the Servicing Agreement, completed and executed by a Responsible Officer of the Servicer pursuant to Section 4.01(c)(iv) of the Servicing Agreement.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto. References to Moody’s are effective so long as Moody’s is a Rating Agency.

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“Non-Routine True-Up Adjustment” means each adjustment to the Fixed Recovery Charges made pursuant to the terms of a Non-Routine True-Up Mechanism Advice Letter in accordance with Section 4.01(b)(iv) of the Servicing Agreement.

“Non-Routine True-Up Effective Date” has the meaning specified in Section 4.01(b)(iv) of the Servicing Agreement.

“Non-Routine True-Up Mechanism Advice Letter” means the Advice Letter substantially in the form of Exhibit E to the Servicing Agreement filed in connection with a Non-Routine True-Up Adjustment.

“Notice of Default” has the meaning specified in Section 5.01 of the Indenture.

“Notice Parties” means those Persons who are required to receive notice of filings made with the CPUC pursuant to A. 21-01-004.

“Officer’s Certificate” means a certificate signed by a Responsible Officer of the Issuer under the circumstances described in, and otherwise complying with, the applicable requirements of Section 10.01 of the Indenture, and delivered to the Indenture Trustee. Unless otherwise specified, any reference in the Indenture to an Officer’s Certificate shall be to an Officer’s Certificate of any Responsible Officer of the party delivering such certificate.

“Operating Expenses” means all unreimbursed fees, costs and expenses of the Issuer, including all amounts owed by the Issuer to the Indenture Trustee, any Manager, the Servicing Fee, the Administration Fee, legal and accounting fees, Rating Agency fees, costs and expenses of the Issuer and PG&E, the return on equity due PG&E for its Capital Contribution and any franchise taxes owed on investment income in the Collection Account.

“Opinion of Counsel” means one or more written opinions of counsel who may, except as otherwise expressly provided in the Basic Documents, be employees of or counsel to the party providing such opinion of counsel, which counsel shall be reasonably acceptable to the party receiving such opinion of counsel, and shall be in form and substance reasonably acceptable to such party. Any Opinion of Counsel may be based, insofar as it relates to factual matters (including financial and capital markets), upon a certificate or opinion or, or representations by, an officer or officer of the Servicer or the Issuer and other documents necessary and advisable in the judgment of counsel delivering such opinion.

“Outstanding” means, as of the date of determination, all Recovery Bonds theretofore authenticated and delivered under this Indenture except:

(a)     Recovery Bonds theretofore canceled by the Recovery Bond Registrar or delivered to the Recovery Bond Registrar for cancellation;

(b)     Recovery Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Indenture Trustee or any Paying Agent in trust for the Holders of such Recovery Bonds; and

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(c)     Recovery Bonds in exchange for or in lieu of other Recovery Bonds which have been issued pursuant to this Indenture unless proof satisfactory to the Indenture Trustee is presented that any such Recovery Bonds are held by a Protected Purchaser;

provided that in determining whether the Holders of the requisite Outstanding Amount of the Recovery Bonds or any Tranche thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Recovery Bonds owned by the Issuer, any other obligor upon the Recovery Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Recovery Bonds that the Indenture Trustee actually knows to be so owned shall be so disregarded. Recovery Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Indenture Trustee the pledgee’s right so to act with respect to such Recovery Bonds and that the pledgee is not the Issuer, any other obligor upon the Recovery Bonds, the Member, the Seller, the Servicer or any Affiliate of any of the foregoing Persons.

“Outstanding Amount” means the aggregate principal amount of all Recovery Bonds or, if the context requires, all Recovery Bonds of a Tranche, Outstanding at the date of determination.

“Partial Consolidated ESP Billing” has the meaning specified in Section 1 of Annex I attached to the Servicing Agreement.

“Paying Agent” means with respect to the Indenture, the Indenture Trustee and any other Person appointed as a paying agent for the Recovery Bonds pursuant to the Indenture.

“Payment Date” means, with respect to any Tranche of Recovery Bonds, the dates specified in the Series Supplement; provided that if any such date is not a Business Day, the Payment Date shall be the Business Day immediately succeeding such date.

“Payment Period” means, as of any date of calculation, a period commencing on a Payment Date through and including the next succeeding Payment Date.

“Periodic Billing Requirement” means, for any Payment Period, the aggregate amount of Fixed Recovery Charges calculated by the Servicer, using write-offs and Average Days Sales Outstanding data as necessary to be billed during such period in order to collect the Periodic Payment Requirement on a timely basis.

“Periodic Interest” means, with respect to any Payment Date, the periodic interest for such Payment Date as specified in the Series Supplement.

“Periodic Payment Requirement” means, for any Payment Period, the total dollar amount required to pay all scheduled (or legally due) payments of Periodic Principal and Periodic Interest on the Recovery Bonds and all Operating Expenses.

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“Periodic Principal” means, with respect to any Payment Date, the excess, if any, of the Outstanding Amount of Recovery Bonds over the outstanding Unrecovered Balance specified for such Payment Date on the Expected Amortization Schedule.

“Permitted Lien” means the Lien created by the Indenture.

“Person” means any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

“PG&E” means Pacific Gas and Electric Company, a California corporation, and any of its successors or permitted assigns.

“Predecessor Recovery Bond” means, with respect to any particular Recovery Bond, every previous Recovery Bond evidencing all or a portion of the same debt as that evidenced by such particular Recovery Bond, and, for the purpose of this definition, any Recovery Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Recovery Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Recovery Bond.

“Premises” has the meaning specified in Section 1(g) of the Administration Agreement.

“Proceeding” means any suit in equity, action at law or other judicial or administrative proceeding.

“Prospectus” means the prospectus dated [    ], 2022 relating to the Recovery Bonds.

“Protected Purchaser” has the meaning specified in Section 8-303 of the UCC.

“Public Utilities Code” means the California Public Utilities Code, as amended from time to time.

“Quarterly Adjustment Date” means, the date on which a Routine Annual True-Up Adjustment becomes effective in accordance with Section 4.01(b)(i) of the Servicing Agreement.

“Rating Agency” means, with respect to any Tranche of Recovery Bonds, any of Moody’s or Standard & Poor’s which provides a rating with respect to such Tranche of Recovery Bonds. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Indenture Trustee and the Servicer.

“Rating Agency Condition” means, with respect to any action, not less than ten (10) Business Days’ prior written notification to each Rating Agency of such action, and written confirmation from each of Standard & Poor’s and Moody’s to the Servicer, the Indenture Trustee

14

and the Issuer that such action will not result in a suspension, reduction or withdrawal of the then current rating by such Rating Agency of any Tranche of Recovery Bonds and that prior to the taking of the proposed action no other Rating Agency shall have provided written notice to the Issuer that such action has resulted or would result in the suspension, reduction or withdrawal of the then current rating of any Tranche of Recovery Bonds; provided, that if within such ten (10) Business Day period, any Rating Agency (other than Standard & Poor’s) has neither replied to such notification nor responded in a manner that indicates that such Rating Agency is reviewing and considering the notification, then (i) the Issuer shall be required to confirm that such Rating Agency has received the Rating Agency Condition request, and if it has, promptly request the related Rating Agency Condition confirmation and (ii) if the Rating Agency neither replies to such notification nor responds in a manner that indicates it is reviewing and considering the notification within five (5) Business Days following such second (2nd) request, the applicable Rating Agency Condition requirement shall not be deemed to apply to such Rating Agency. For the purposes of this definition, any confirmation, request, acknowledgment or approval that is required to be in writing may be in the form of electronic mail or a press release (which may contain a general waiver of a Rating Agency’s right to review or consent).

“Reconciliation Certificate” means, with respect to any Payment Date, a certificate in the form of the Reconciliation Certificate attached as Exhibit G to the Servicing Agreement and delivered to the Indenture Trustee in accordance with Sections 4.01(c)(iv) and 6.11(c) of the Servicing Agreement for such Payment Date.

“Reconciliation Period” means, with respect to any date of calculation, a period commencing on the second preceding Payment Date through and including the next preceding Payment Date.

“Record Date” means, with respect to a Payment Date, in the case of Definitive Recovery Bonds, the close of business on the last day of the calendar month preceding the calendar month in which such Payment Date occurs, and in the case of Book-Entry Recovery Bonds, one Business Day prior to the applicable Payment Date.

“Recovery Bonds” means the Recovery Bonds authorized by the Financing Order and issued under the Indenture.

“Recovery Bond Collateral” has the meaning specified in the preamble of the Indenture.

“Recovery Bond Interest Rate” means, with respect to any Tranche of Recovery Bonds, the rate at which interest accrues on the Recovery Bonds of such Tranche, as specified in the Series Supplement.

“Recovery Bond Register” means the register maintained pursuant to Section 2.05 of the Indenture, providing for the registration of the Recovery Bonds and transfers and exchanges thereof.

“Recovery Bond Registrar” means the registrar at any time of the Recovery Bond Register, appointed pursuant to Section 2.05 of the Indenture.

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“Recovery Costs” means all Recovery Costs as defined in Section 850(b)(10) of the Wildfire Financing Law.

“Recovery Property” means all recovery property as defined in Section 850(b)(11) of the Wildfire Financing Law created pursuant to the Financing Order and sold or otherwise conveyed to the Issuer under the Sale Agreement, including the right to impose, collect and receive the Fixed Recovery Charges authorized in the Financing Order. As used in the Basic Documents, the term “Recovery Property” when used with respect to PG&E includes the contract rights of PG&E that exist prior to the time that such rights are first transferred in connection with the issuance of the Recovery Bonds, at which time they become recovery property in accordance with Section 850.1(g) of the Wildfire Financing Law.

“Recovery Property Records” has the meaning specified in Section 5.01 of the Servicing Agreement.

“Registered Holder” means the Person in whose name a Recovery Bond is registered on the Recovery Bond Register.

“Registration Statement” means the registration statement, Form SF-1 Registration Nos. 333-263719 and 333-263719-01, filed with the SEC for registration under the Securities Act relating to the offering and sale of the Recovery Bonds, and including all amendments thereto.

“Regulation AB” means the rules of the SEC promulgated under Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§ 229.1100-229.1125, as such may be amended from time to time.

“Reimbursable Expenses” has the meaning specified in Section 2 of the Administration Agreement.

“Released Parties” has the meaning specified in Section 6.02(e) of the Servicing Agreement.

“Remittance Shortfall” means the amount, if any, calculated for a particular Reconciliation Period, by which Actual FRC Collections received by the Servicer during such Reconciliation Period exceed all Estimated FRC Collections remitted to the Collection Account during such Reconciliation Period.

“Required Capital Level” means an amount equal to 0.50% of the initial principal amount of the Recovery Bonds, or such other amount as may be permitted or required under the Financing Order and applicable Internal Revenue Service rulings, deposited into the Capital Subaccount by the Member prior to or upon the issuance of the Recovery Bonds.

“Requirement of Law” means any foreign, federal, state or local laws, statutes, regulations, rules, codes or ordinances enacted, adopted, issued or promulgated by any Governmental Authority or common law.

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“Responsible Officer” means with respect to (a) the Issuer, any Manager or any duly authorized officer; (b) the Indenture Trustee, any officer within the Corporate Trust Office of such trustee (including the President, any Vice President, Assistant Vice President, Secretary or Assistant Treasurer, Trust Officer or any other officer of the Indenture Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers, respectively), and that has direct responsibility for the administration of the Indenture and also, with respect to a particular matter, any other officer to whom such matter is referred to because of such officer’s knowledge and familiarity with the particular subject; (c) any corporation (other than the Indenture Trustee), the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Assistant Treasurer or any other duly authorized officer of such Person who has been authorized to act in the circumstances; (d) any partnership, any general partner thereof; and (e) any other Person (other than an individual or the Indenture Trustee), any duly authorized officer or member of such Person, as the context may require, who is authorized to act in matters relating to such Person.

“Retirement of the Recovery Bonds” means any day on which the final distribution is made to the Indenture Trustee in respect of the last Outstanding Recovery Bonds.

“Routine Annual True-Up Adjustment” means each adjustment to the Fixed Recovery Charges made pursuant to the terms of an Annual True-Up Mechanism Advice Letter in accordance with Section 4.01(b)(i) of the Servicing Agreement.

“Routine Annual True-Up Mechanism Advice Letter” means the Advice Letter substantially in the form of Exhibit D to the Servicing Agreement filed in connection with a Routine Annual True-Up Adjustment.

“Routine Semi-Annual True-Up Adjustment” means each adjustment to the Fixed Recovery Charges made pursuant to the terms of a Routine Semi-Annual True-Up Mechanism Advice Letter in accordance with Section 4.01(b)(ii) of the Servicing Agreement.

“Routine Semi-Annual True-Up Mechanism Advice Letter” means the Advice Letter substantially in the form of Exhibit D to the Servicing Agreement filed in connection with a Routine Semi-Annual True-Up Adjustment.

“Routine Interim True-Up Adjustment” means each adjustment to the Fixed Recovery Charges made pursuant to the terms of an Interim True-Up Mechanism Advice Letter in accordance with Section 4.01(b)(iii) of the Servicing Agreement.

“Routine Interim True-Up Mechanism Advice Letter” means the Advice Letter substantially in the form of Exhibit D to the Servicing Agreement filed in connection with a Routine Interim True-Up Adjustment.

“Sale Agreement” means the Recovery Property Purchase and Sale Agreement, dated as of [        ], 2022, by and between PG&E and the Issuer, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Scheduled Final Payment Date” means with respect to each Tranche of Recovery Bonds, the date when all interest and principal is scheduled to be paid with respect to that

17

Tranche in accordance with the Expected Amortization Schedule, as specified in the Series Supplement. For the avoidance of doubt, the Scheduled Final Payment Date with respect to any Tranche shall be the last Scheduled Payment Date set forth in the Expected Amortization Schedule relating to such Tranche. The “last Scheduled Final Payment Date” means the Scheduled Final Payment Date of the last maturing Tranche of Recovery Bonds.

“Scheduled Payment Date” has the meaning specified in the Series Supplement with respect to each Tranche of Recovery Bonds.

“SEC” means the U.S. Securities and Exchange Commission.

“Second Payment Period” means the period commencing on the day following the First Payment Period through and including the next Payment Date on the Recovery Bonds.

“Secretary of State” means the Secretary of State of the State of Delaware or the Secretary of State of the State of California, as the case may be, or any Governmental Authority succeeding to the duties of such offices.

“Secured Obligations” has the meaning specified in the Series Supplement, a form of which is attached as Exhibit B to the Indenture.

“Secured Parties” means the Indenture Trustee, the Bondholders and any credit enhancer described in the Series Supplement.

“Securities Account” means the Collection Account (to the extent it constitutes a securities account as defined in the CA UCC and Federal Book-Entry Regulations).

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Intermediary” means The Bank of New York Mellon Trust Company, N.A., a national banking association, solely in the capacity of a “securities intermediary” as defined in the CA UCC and Federal Book-Entry Regulations or any successor securities intermediary under the Indenture.

“Security Entitlement” means “security entitlement” (as defined in Section 8-102(a)(17) of the CA UCC) with respect to Financial Assets now or hereafter credited to the Securities Account and, with respect to Federal Book-Entry Regulations, with respect to Federal Book-Entry Securities now or hereafter credited to the Securities Account, as applicable.

“Seller” has the meaning specified in the preamble to the Sale Agreement.

“Series” means any series of “recovery bonds” (as defined in the Wildfire Financing Law) issued by the Issuer under this Indenture or any Subsequent Indenture, including the Recovery Bonds and any Additional Recovery Bonds or Additional Other Recovery Bonds.

“Series Supplement” means the indenture supplemental to the Indenture in the form attached as Exhibit B to the Indenture that authorizes the issuance of the Recovery Bonds.

18

“Servicer” means PG&E, as Servicer under the Servicing Agreement, or any successor Servicer to the extent permitted under the Servicing Agreement.

“Servicer Business Day” means any day other than a Saturday, Sunday or holiday on which the Servicer maintains normal office hours and conducts business.

“Servicer Default” has the meaning specified in Section 7.01 of the Servicing Agreement.

“Servicer Policies and Practices” has the meaning specified in Section 1 of Annex I attached to the Servicing Agreement.

“Servicer’s Certificate” means a certificate, substantially in the form of Exhibit B to the Servicing Agreement, completed and executed by a Responsible Officer of the Servicer pursuant to Section 4.01(c)(ii) of the Servicing Agreement.

“Servicer’s Regulation AB Certificate” means the certificate referred to in Section 3.03 of the Servicing Agreement and substantially in the form of Exhibit B attached to the Servicing Agreement.

“Servicing Agreement” means the Recovery Property Servicing Agreement, dated as of [        ], 2022, by and between the Issuer and PG&E, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Servicing Fee” means the fee payable to the Servicer on each Payment Date for services rendered during the period from, but not including, the preceding Payment Date (or from the Closing Date in the case of the first Payment Date) to and including the current Payment Date, determined pursuant to Section 6.06 of the Servicing Agreement.

“Special Member” has the meaning specified in Section 1.02(b) of the LLC Agreement.

“Special Payment” means with respect to any Tranche of Recovery Bonds, any payment of principal of or interest on (including any interest accruing upon default), or any other amount in respect of, the Recovery Bonds of such Tranche that is not actually paid within five (5) days of the Payment Date applicable thereto.

“Special Payment Date” means the date on which a Special Payment is to be made by the Indenture Trustee to the Holders.

“Special Purpose Provisions” has the meaning specified in Section 11.02 of the LLC Agreement.

“Special Record Date” means with respect to any Special Payment Date, the close of business on the fifteenth (15^th) day (whether or not a Business Day) preceding such Special Payment Date.

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“Standard & Poor’s” or “S&P” means S&P Global Ratings, a division of S&P Global Inc., or any successor thereto. References to S&P are effective so long as S&P is a Rating Agency.

“State” means any one of the fifty states of the United States of America, or the District of Columbia.

“State Pledge” means the pledge of the State of California as set forth in Section 850.1(e) of the Wildfire Financing Law.

“Subsequent Financing Order” means a financing order of the CPUC under the Wildfire Financing Law issued to PG&E subsequent to the Financing Order.

“Subaccounts” has the meaning specified in Section 8.02(a) of the Indenture.

“Subsequent Indenture” means any indenture by and between the Issuer and an indenture trustee subsequent to this Indenture, pursuant to which any Series of Additional Recovery Bonds or Additional Other Recovery Bonds is issued by the Issuer.

“Successor Servicer” has the meaning specified in Section 3.07(e) of the Indenture.

“Tariff” means the Tariff filed with the CPUC pursuant to the Wildfire Financing Law to evidence the Fixed Recovery Charges pursuant to the Financing Order.

“Tax Return” has the meaning specified in Section 1(a)(iii) of the Administration Agreement.

“Temporary Recovery Bonds” means Recovery Bonds executed, and upon the receipt of an Issuer Order, authenticated and delivered by the Indenture Trustee pending the preparation of Definitive Recovery Bonds pursuant to Section 2.04 of the Indenture.

“Termination Notice” has the meaning specified in Section 7.01 of the Servicing Agreement.

“Tranche” means any one of the tranches of Recovery Bonds.

“Treasury Regulations” means the regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

“True-Up Adjustment” means any Routine Annual True-Up Adjustment, Routine Semi-Annual True-Up Adjustment, Routine Interim True-Up Adjustment, or Non-Routine True-Up Adjustment, as the case may be.

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“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, as in force on the Closing Date, unless otherwise specifically provided.

“UCC” means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

“Underwriters” means the underwriters who purchase Recovery Bonds of any Tranche from the Issuer and sell such Recovery Bonds in a public offering.

“Underwriting Agreement” means the Underwriting Agreement, dated as of [    ], 2022, by and among the Issuer, PG&E and the representatives of the several Underwriters named therein, as the same may be amended, supplemented or modified from time to time, with respect to the issuance of the Recovery Bonds.

“Unrecovered Balance” means, as of any Payment Date, the sum of the outstanding principal amount of the Recovery Bonds less the amount in the Excess Funds Subaccount available to make principal payments on the Recovery Bonds.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the option of the issuer thereof.

“Weighted Average Days Sales Outstanding” means the weighted average number of days PG&E’s monthly bills to Consumers remain outstanding during the calendar year immediately preceding the calculation thereof, or for such other period specified in an Advice Letter or Reconciliation Certificate, pursuant to the Servicing Agreement.

“Wildfire Financing Law” means Division 1, Part 1, Chapter 4, Article 5.8 of the California Public Utilities Code, §§ 850 – 850.8, in each case as amended from time to time.

B.     Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with United States generally accepted accounting principles. To the extent that the definitions of accounting terms in any Basic Document are inconsistent with the meanings of such terms under generally accepted accounting principles or regulatory accounting principles, the definitions contained in such Basic Document shall control. As used in the Basic Documents, the term “including” means “including without limitation,” and other forms of the verb “to include” have correlative meanings. All references to any Person shall include such Person’s permitted successors.

C.     Computation of Time Periods. Unless otherwise stated in any of the Basic Documents, as the case may be, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

21

D.     Reference; Captions. The words “hereof”, “herein” and “hereunder” and words of similar import when used in any Basic Document shall refer to such Basic Document as a whole and not to any particular provision of such Basic Document; and references to “Section”, “subsection”, “Schedule” and “Exhibit” in any Basic Document are references to Sections, subsections, Schedules and Exhibits in or to such Basic Document unless otherwise specified in such Basic Document. The various captions (including the tables of contents) in each Basic Document are provided solely for convenience of reference and shall not affect the meaning or interpretation of any Basic Document.

E.     The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter forms of such terms.

22

EX-5.1

Exhibit 5.1

HUNTON ANDREWS KURTH LLP 200 PARK AVENUE
NEW YORK, NY 10166-0005   TEL 212 • 309 • 1000
FAX 212 • 309 • 1100

April 25, 2022

Pacific Gas and Electric Company

PG&E Wildfire Recovery Funding LLC

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

Re: Pacific Gas and Electric Company

  PG&E Wildfire Recovery Funding LLC

  Registration Statement on Form SF-1

Ladies and Gentlemen:

We have acted as counsel to Pacific Gas and Electric Company, a California corporation (“PG&E”) and PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Company”), in connection with the preparation of the Registration Statement on Form SF-1 (Registration Nos. 333-263719 and 333-263719-01) filed on March 21, 2022 with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), as amended by Amendment No. 1 thereto filed on April 25, 2022 (collectively, the “Registration Statement”) relating to the proposed issuance of Senior Secured Recovery Bonds, Series 2022-A (the “Bonds”) of the Company to be offered in such manner as described in the prospectus (the “Prospectus”) included as part of the Registration Statement. The Bonds are to be issued under an Indenture (the “Base Indenture”) to be entered into between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee (the “Trustee”), as to be supplemented by a Series Supplement establishing the form(s), terms and other provisions of the Bonds (the “Series Supplement” and, together with the Base Indenture, the “Indenture”) between the Company and the Trustee, the form of each of which has been filed as an exhibit to the Registration Statement.

This opinion letter is being delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

We are familiar with the proceedings taken and proposed to be taken by the Company in connection with the proposed authorization, issuance and sale of the Bonds. In rendering the opinions expressed below, we have examined and relied upon copies of the Registration Statement and the exhibits filed therewith, and the form of Indenture. We have also examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and statements of government officials and other instruments, and have examined

ATLANTA    AUSTIN    BANGKOK    BEIJING    BOSTON     BRUSSELS    CHARLOTTE    DALLAS    DUBAI    HOUSTON    LONDON

LOS ANGELES    MIAMI    NEW YORK    NORFOLK    RICHMOND    SAN FRANCISCO    THE WOODLANDS    TOKYO    TYSONS    WASHINGTON, DC

www.HuntonAK.com

April 25, 2022

Page 2

such questions of law and have satisfied ourselves as to such matters of fact, as we have considered relevant and necessary as a basis for this opinion. We have assumed (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals and (iii) the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. In delivering the opinions expressed below, we have relied without independent verification, as to factual matters, on certifications and other written or oral statements of governmental and other public officials and of officers and representatives of the Company and PG&E.

Based on the foregoing, and subject to the qualifications and limitations hereinafter set forth, we are of the opinion that:

1. The Company is a limited liability company validly existing and in good standing under the laws of the State of Delaware;

2. The Company has limited liability company power and authority to execute and deliver the Indenture, to authorize and issue the Bonds and to perform its obligations under the Indenture and the Bonds; and

3. The Bonds will be validly issued and binding obligations of the Company when (i) the Registration Statement, as finally amended (including any post-effective amendments), shall have become effective under the Securities Act; (ii) the member or managers of the Company have taken all necessary limited liability company action to approve the issuance and establish the terms of the Bonds, the terms of the offering of the Bonds and related matters; (iii) the Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended, and duly executed and delivered by the Company and the Trustee; and (iv) the Bonds shall have been duly executed and authenticated in accordance with the provisions of the Indenture and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor.

Our opinion is subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting creditors’ rights generally and to general equitable principles (regardless of whether considered in a proceeding in equity or at law), including concepts of commercial reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief.

We express no opinion herein as to the law of any jurisdiction other than the law of the State of California and the Limited Liability Company Act of the State of Delaware.

We hereby consent to (i) the filing of this opinion letter as an exhibit to the Registration Statement and to all references to us included in or made a part of the Registration Statement and (ii) the posting of a copy of this opinion letter to an internet website required under Rule 17g-5 under the Securities Exchange Act of 1934 and maintained by PG&E for the purpose of complying with such rule. In giving the foregoing consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the

April 25, 2022

Page 3

Securities Act or the rules and regulations of the SEC thereunder. This opinion is limited to the matters stated in this letter, and no opinion may be implied or inferred beyond the matters expressly stated in this letter. This opinion is given as of the date hereof, and we assume no obligation to advise you after the date hereof of facts or circumstances that come to our attention or changes in the law, including judicial or administrative interpretations thereof, that occur which could affect the opinions contained herein.

                                         Very truly yours,

                                                                 /s/ Hunton Andrews Kurth LLP

13936/13952/09310/14929

EX-8.1

Exhibit 8.1

	HUNTON ANDREWS KURTH LLP RIVERFRONT PLAZA, EAST TOWER 951 EAST BYRD STREET RICHMOND, VIRGINIA 23219 TEL 804 • 788 • 8200
	File No: 026915.0000027

April 25, 2022

Pacific Gas and Electric Company

PG&E Wildfire Recovery Funding LLC

c/o Pacific Gas and Electric Company

77 Beale Street

San Francisco, CA 94177

Pacific Gas and Electric Company

RECOVERY BONDS

Ladies and Gentlemen:

We have acted as United States federal income tax counsel to Pacific Gas and Electric Company, a California corporation (“PG&E”), and PG&E’s wholly owned subsidiary, PG&E Wildfire Recovery Funding LLC (the “Issuer”), in connection with the Registration Statement on Form SF-1 (File Nos. 333-263719 and 333-263719-01) (the “Registration Statement”) filed on March 21, 2022, and as amended by Amendment No. 1 filed on April 25, 2022, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, including the prospectus therein (the “Prospectus”) included as part of the Registration Statement, relating to the registration thereunder of the Issuer’s Senior Secured Recovery Bonds, Series 2022-A (the “Bonds”). The Issuer intends to issue the Bonds pursuant to an Indenture among the Issuer, as issuer, and The Bank of New York Mellon Trust Company (“BNY”), as indenture trustee, account bank and securities intermediary, together with a Series Supplement between the Issuer and BNY establishing the form and terms of such Bonds (collectively the “Indenture”). Capitalized terms used and not defined herein have the respective meanings ascribed to them in the Prospectus. You have requested our opinion regarding certain U.S. federal income tax matters.

We have reviewed the Registration Statement, including the Prospectus, as part of the Registration Statement (collectively, the “Offering Documents”), relating to the Bonds, and the basic documents (as defined in the Prospectus, and together with the Offering Documents, the “Transaction Documents”).

We are familiar with the proceedings taken by PG&E and the Issuer in connection with the authorization, issuance and sale of the Bonds. As to any facts material to the opinions expressed herein, we have relied, without independent verification, upon certificates and statements and representations and warranties of officers and other representatives and agents of PG&E, the Issuer, BNY and other parties and signatories to the Transaction Documents and their related exhibits and of public officials.

Pacific Gas and Electric Company

April 25, 2022

Page 2

In rendering this opinion letter, except for the matters that are specifically addressed in the opinions expressed below, with your permission we have assumed, and are relying thereon without independent investigation, (i) the authenticity of all Transaction Documents submitted to us as originals or as copies thereof, and the conformity to the originals of all Transaction Documents submitted to us as copies, (ii) the genuineness of signatures, (iii) the legal capacity of natural persons signing the basic documents, (iv) the necessary entity formation and continuing existence in the jurisdiction of formation, and the necessary licensing and qualification in all jurisdictions, of the parties to all basic documents, (v) the necessary entity authorization, execution, delivery and enforceability (as limited by bankruptcy and other insolvency laws) of the basic documents, and the necessary entity power and authority with respect thereto, (vi) that each of the parties and signatories to the basic documents have complied and will comply (without waiver) with all of the provisions and representations and certifications of such basic documents, (vii) that the Issuer and the other parties and signatories to the basic documents have conducted and will conduct their activities only as provided in the Transaction Documents, (viii) that there has been no mutual mistake of fact or misunderstanding, fraud, duress or undue influence in connection with any Transaction Document and (ix) that there is not any other agreement that modifies or supplements the agreements expressed in any Transaction Document to which this opinion letter relates and that renders any of the opinions expressed below inconsistent with such Transaction Document as so modified or supplemented. Finally, we have assumed that the Wildfire Financing Law (as defined in the Prospectus) is valid and that the financing order (as defined in the Prospectus) issued by the California Public Utilities Commission (“CPUC”) on May 11, 2021, is valid, complies with California law, is in full force and effect, and is final and non-appealable.

In rendering this opinion letter, except for the matters that are specifically addressed in the opinions expressed below, we have made no inquiry, have conducted no investigation and assume no responsibility with respect to (a) the accuracy of and compliance by the parties thereto with the representations, financial calculations, warranties, covenants, certifications and assumptions as to factual matters contained in any Transaction Document or otherwise provided to us or (b) the conformity of the underlying assets and related documents to the requirements of any agreement to which this opinion letter relates.

Based upon the foregoing and based upon, in particular, Revenue Procedure 2005-62, 2005-2 C.B. 507 (the “Revenue Procedure”), and subject to the qualifications, representations, warranties, covenants, certifications, financial calculations and assumptions stated herein and in the Transaction Documents, we are of the opinion that if (i) all of the parties and signatories to the Transaction Documents comply (without waiver) with all of the provisions of the Indenture and the other Transaction Documents prepared and executed in connection with such transaction and (ii) the Bonds are issued as described in the Transaction Documents and not as part of another transaction or series of transactions that would require the Issuer, PG&E, any investor or any other participant to treat such transaction or transactions as subject to the disclosure, registration or list maintenance requirements of section 6011, 6111 or 6112 of the Internal Revenue Code, as amended (the “Code”), then, in each case below, solely for United States federal income tax purposes:

Pacific Gas and Electric Company

April 25, 2022

Page 3

1. the issuance of the Bonds will be a “qualifying securitization” within the meaning of the Revenue Procedure;

2. the Bonds will be characterized as obligations of PG&E for United States federal income tax purposes as expressly set forth in section 6.02 of the Revenue Procedure;

3. the Issuer will not be subject to federal income tax as an entity separate from PG&E (the Issuer’s sole member); and

4. PG&E will not be treated as recognizing gross income upon the issuance of the Bonds.

You should be aware that the above opinions represent our conclusions as to the application of existing law to the transaction described above. There can be no assurance, however, that contrary positions will not be taken by the Internal Revenue Service or that existing law, regulations, administrative rules and practice will not change. Any such change might be retroactive and might affect the opinions set forth above. We also caution you that our opinions depend upon the facts, qualifications, representations, warranties, covenants, certifications, financial calculations, assumptions and Transaction Documents to which this letter refers, which are subject to change, reinterpretation and misunderstanding. Our conclusion could differ if these items on which we have relied are, become or are found to be, different. No opinion has been sought, and none has been given, concerning the tax consequences of the transaction described herein or of the acquisition, ownership, or disposition of the Bonds under the laws of any state, locality or foreign jurisdiction.

These opinions are rendered as of the date hereof, speak only as of the date hereof and are based on the current provisions of the Code and the Treasury Regulations issued or proposed thereunder, revenue rulings, revenue procedures and other published releases of the Internal Revenue Service and current case law, any of which can change at any time. We undertake no obligation to update this opinion letter after the date hereof or advise you of changes in the event there is any change in legal authorities, facts, qualifications, representations, warranties, covenants, certifications, financial calculations, assumptions or Transaction Documents on which this opinion letter is based (including the taking of any action by any party or signatory to the basic documents or any amendments to any basic document pursuant to any opinion of counsel or a waiver), or any inaccuracy in any of these items upon which we have relied in rendering this opinion letter, unless we are specifically engaged to do so.

Pacific Gas and Electric Company

April 25, 2022

Page 4

In rendering this opinion letter, other than as expressly stated above, we do not express any opinion concerning any law other than the federal income tax laws of the United States, including without limitation the Code, Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof, all of which are subject to change. We do not express any opinion herein with respect to any matter not specifically addressed in the opinions expressed above, including without limitation, (i) any statute, regulation or provision of law of any state, county, municipality or other political subdivision or any agency or instrumentality thereof, (ii) the securities laws of any jurisdiction or (iii) the tax laws of any jurisdiction (other than the federal income tax laws of the United States and only as specifically described in the opinions above). Additional issues may exist that could affect the United States federal tax treatment of the transaction that is the subject of this opinion letter, and this opinion letter does not consider or provide a conclusion with respect to any such additional issues.

We are furnishing this opinion letter to you and this opinion letter is not to be relied on, circulated, quoted or otherwise referred to for any other purpose. We hereby consent, however, to (a) the posting of a copy of this opinion letter to an internet website required under Rule 17g-5 under the Securities Exchange Act of 1934, as amended, and maintained by PG&E solely for the purpose of complying with such rule and (b) the filing of this opinion letter as Exhibit 8.1 to the Registration Statement and the incorporation thereof in the Registration Statement and the use of our name under the captions “Material U.S. Federal Income Tax Consequences” and “Legal Matters” in the Prospectus. In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the Commission.

Very truly yours,
	/s/ HUNTON ANDREWS KURTH LLP

EX-10.1

Exhibit 10.1

RECOVERY PROPERTY SERVICING AGREEMENT

by and between

PG&E WILDFIRE RECOVERY FUNDING LLC,

Issuer

and

PACIFIC GAS AND ELECTRIC COMPANY,

Servicer

Dated as of [                    ], 2022

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS			1
SECTION 1.01.	Definitions		1
ARTICLE II APPOINTMENT AND AUTHORIZATION			2
SECTION 2.01.	Appointment of Servicer; Acceptance of Appointment		2
SECTION 2.02.	Authorization		2
SECTION 2.03.	Dominion and Control Over the Recovery Property		2
ARTICLE III ROLE OF SERVICER			3
SECTION 3.01.	Duties of Servicer		3
SECTION 3.02.	Servicing and Maintenance Standards		5
SECTION 3.03.	Annual Reports on Compliance with Regulation AB		6
SECTION 3.04.	Annual Report by Independent Registered Public Accountants		6
ARTICLE IV SERVICES RELATED TO TRUE-UP ADJUSTMENTS			7
SECTION 4.01.	True-Up Adjustments		7
SECTION 4.02.	Limitation of Liability		12
ARTICLE V THE RECOVERY PROPERTY			13
SECTION 5.01.	Custody of Recovery Property Records		13
SECTION 5.02.	Duties of Servicer as Custodian		13
SECTION 5.03.	Custodian’s Indemnification		15
SECTION 5.04.	Effective Period and Termination		15
ARTICLE VI THE SERVICER			15
SECTION 6.01.	Representations and Warranties of Servicer		15
SECTION 6.02.	Indemnities of Servicer; Release of Claims		17
SECTION 6.03.	Merger or Consolidation of, or Assumption of the Obligations of, Servicer		19
SECTION 6.04.	Limitation on Liability of Servicer and Others		19
SECTION 6.05.	PG&E Not to Resign as Servicer		20
SECTION 6.06.	Servicing Compensation		20
SECTION 6.07.	Compliance with Applicable Law		21
SECTION 6.08.	Access to Certain Records and Information Regarding Recovery Property		21
SECTION 6.09.	Appointments		22
SECTION 6.10.	No Servicer Advances		22
SECTION 6.11.	Remittances		22

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ARTICLE VII DEFAULT		23
SECTION 7.01.	Servicer Default	23
SECTION 7.02.	Appointment of Successor	25
SECTION 7.03.	Waiver of Past Defaults	25
SECTION 7.04.	Notice of Servicer Default	26
ARTICLE VIII MISCELLANEOUS PROVISIONS		26
SECTION 8.01.	Amendment	26
SECTION 8.02.	Maintenance of Accounts and Records	27
SECTION 8.03.	Notices	27
SECTION 8.04.	Assignment	28
SECTION 8.05.	Limitations on Rights of Others	28
SECTION 8.06.	Severability	28
SECTION 8.07.	Separate Counterparts	29
SECTION 8.08.	Headings	29
SECTION 8.09.	Governing Law	29
SECTION 8.10.	Assignment to Indenture Trustee	29
SECTION 8.11.	Nonpetition Covenants	29
SECTION 8.12.	Limitation of Liability	30
SECTION 8.13.	Rule 17g-5 Compliance	30

ANNEXES, SCHEDULES AND EXHIBITS

ANNEX I	Servicing Procedures
SCHEDULE 4.01	Expected Amortization Schedule
EXHIBIT A	Monthly Servicer’s Certificate
EXHIBIT B	Semi-Annual Servicer’s Certificate
EXHIBIT C	Servicer’s Regulation AB Certificate
EXHIBIT D	Form of Routine Annual/ Semi-Annual/Interim True-Up Mechanism Advice Letter
EXHIBIT E	Form of Non-Routine True-Up Mechanism Advice Letter
EXHIBIT F	Reconciliation Certificate

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This RECOVERY PROPERTY SERVICING AGREEMENT, dated as of [                    ], 2022 (this “Agreement”) by and between PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company, as issuer (the “Issuer”), and PACIFIC GAS AND ELECTRIC COMPANY (“PG&E”), a California corporation, as servicer (the “Servicer”).

RECITALS

WHEREAS, pursuant to the Wildfire Financing Law and the Financing Order, PG&E, in its capacity as seller (the “Seller”), and the Issuer are concurrently entering into the Sale Agreement pursuant to which the Seller is selling and the Issuer is purchasing certain Recovery Property created pursuant to the Wildfire Financing Law and the Financing Order described therein;

WHEREAS, in connection with its ownership of the Recovery Property and in order to collect the associated Fixed Recovery Charges, the Issuer desires to engage the Servicer to carry out the functions described herein and the Servicer desires to be so engaged;

WHEREAS, the Issuer desires to engage the Servicer to act on its behalf in obtaining Routine Annual True-Up Adjustments, Routine Semi-Annual True-Up Adjustments, Routine Interim True-Up Adjustments and Non-Routine True-Up Adjustments from the CPUC and the Servicer desires to be so engaged;

WHEREAS, the FRC Collections initially will be commingled with other funds collected by the Servicer;

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.    Definitions.

(a)    Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in that certain Indenture (including Appendix A thereto) dated as of the date hereof between the Issuer and The Bank of New York Mellon Trust Company, N.A., a national banking association, in its capacity as the Indenture Trustee (the “Indenture Trustee”) and in its separate capacity as a securities intermediary (the “Securities Intermediary”), as the same may be amended, restated, supplemented or otherwise modified from time to time.

(b)    All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(c)    The words “hereof,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule, Exhibit, Annex and Attachment references contained in this Agreement are references to Sections, Schedules, Exhibits, Annexes and Attachments in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

(d)    The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

(e)    Non-capitalized terms used herein which are defined in the Public Utilities Code shall, as the context requires, have the meanings assigned to such terms in the Public Utilities Code, but without giving effect to amendments to the Public Utilities Code after the date hereof which have a material adverse effect on the Issuer or the Holders.

ARTICLE II

APPOINTMENT AND AUTHORIZATION

SECTION 2.01.    Appointment of Servicer; Acceptance of Appointment.

Subject to Section 6.05 and Article VII, the Issuer hereby appoints the Servicer, and the Servicer, as an independent contractor, hereby accepts such appointment, to perform the Servicer’s obligations pursuant to this Agreement on behalf of and for the benefit of the Issuer or any assignee thereof in accordance with the terms of this Agreement and applicable law. This appointment and the Servicer’s acceptance thereof may not be revoked except in accordance with the express terms of this Agreement.

SECTION 2.02.    Authorization.

With respect to all or any portion of the Recovery Property, the Servicer shall be, and hereby is, authorized and empowered by the Issuer to (a) execute and deliver, on behalf of itself and/or the Issuer, as the case may be, any and all instruments, documents or notices, and (b) on behalf of itself and/or the Issuer, as the case may be, make any filing and participate in proceedings of any kind with any Governmental Authority, including with the CPUC. The Issuer shall execute and deliver to the Servicer such documents as have been prepared by the Servicer for execution by the Issuer and shall furnish the Servicer with such other documents as may be in the Issuer’s possession, in each case as the Servicer may determine to be necessary or appropriate to enable it to carry out its servicing and administrative duties hereunder. Upon the Servicer’s written request, the Issuer shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its duties hereunder.

SECTION 2.03.    Dominion and Control Over the Recovery Property.

Notwithstanding any other provision herein, the Issuer shall have dominion and control over the Recovery Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent and custodian for the Issuer with respect to the Recovery Property and the Recovery Property Records. The Servicer shall not take any action that is not authorized by this Agreement, that would contravene the Public Utilities Code, the CPUC Regulations or

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the Financing Order, that is not consistent with its customary procedures and practices, or that shall impair the rights of the Issuer in the Recovery Property, in each case unless such action is required by applicable law or court or regulatory order.

ARTICLE III

ROLE OF SERVICER

SECTION 3.01.    Duties of Servicer.

The Servicer, as agent for the Issuer, shall have the following duties:

(a)    Duties of Servicer Generally. The Servicer’s duties in general shall include management, servicing and administration of the Recovery Property; obtaining meter reads, calculating electric usage, billing, collections and posting of all payments in respect of the Recovery Property; responding to inquiries by Consumers, the CPUC, or any federal, local or other state governmental authorities with respect to the Recovery Property; delivering Bills to Consumers and ESPs, processing and depositing collections and making periodic remittances pursuant to the Financing Order and each Tariff; furnishing periodic reports to the Issuer, the Indenture Trustee and the Rating Agencies; and taking action in connection with True-Up Adjustments as set forth herein. Certain of the duties set forth above may be performed by ESPs pursuant to ESP Service Agreements if such ESPs satisfy the creditworthiness requirements as set forth in PG&E’s Electric Rule 22.P., “Credit Requirements.” Anything to the contrary notwithstanding, the duties of the Servicer set forth in this Servicing Agreement shall be qualified in their entirety by any CPUC Regulations, the Financing Order and the U.S. federal securities laws and the rules and regulations promulgated thereunder, including Regulation AB, as in effect at the time such duties are to be performed. Without limiting the generality of this Section 3.01(a), in furtherance of the foregoing, the Servicer hereby agrees that it shall also have, and shall comply with, the duties and responsibilities relating to data acquisition, usage and bill calculation, billing, customer service functions, collections, payment processing and remittance set forth in Annex I hereto, as it may be amended from time to time. For the avoidance of doubt, the term “usage” when used herein includes references to both kilowatt hour consumption and kilowatt demand.

(b)    Reporting Functions.

(i)    Monthly Servicer’s Certificate. On or before the twenty-fifth calendar day of each month (or if such day is not a Servicer Business Day, on the immediately preceding Servicer Business Day), the Servicer shall prepare and deliver to the Issuer, the Indenture Trustee and the Rating Agencies a written report substantially in the form of Exhibit A hereto (a “Monthly Servicer’s Certificate”) setting forth certain information relating to Fixed Recovery Charge Payments received by the Servicer during the Collection Period immediately preceding such date; provided, however, that for any month in which the Servicer is required to deliver a Servicer’s Certificate pursuant to Section 4.01(c)(ii), the Servicer shall prepare and deliver the Monthly Servicer’s Certificate no later than the date of delivery of such Servicer’s Certificate.

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(ii)    Notification of Laws and Regulations. The Servicer shall immediately notify the Issuer, the Indenture Trustee and the Rating Agencies in writing if it becomes aware of any Requirements of Law or CPUC Regulations hereafter promulgated that have a material adverse effect on the Servicer’s ability to perform its duties under this Agreement.

(iii)    Other Information. Upon the reasonable request of the Issuer, the Indenture Trustee or any Rating Agency, the Servicer shall provide to the Issuer, the Indenture Trustee or such Rating Agency, as the case may be, any public financial information in respect of the Servicer, or any material information regarding the Recovery Property to the extent it is reasonably available to the Servicer, as may be reasonably necessary and permitted by law to enable the Issuer, the Indenture Trustee or the Rating Agencies to monitor the performance by the Servicer hereunder; provided, however, that any such request by the Indenture Trustee shall not create any obligation for the Indenture Trustee to monitor the performance of the Servicer. In addition, so long as any of the Recovery Bonds are outstanding, the Servicer shall provide the Issuer and the Indenture Trustee, within a reasonable time after written request therefor, any information available to the Servicer or reasonably obtainable by it that is necessary to calculate the Fixed Recovery Charges.

(iv)    Preparation of Reports. The Servicer shall prepare and deliver such additional reports as required under this Agreement, including a copy of each Servicer’s Certificate described in Section 4.01(c)(ii), the annual Servicer’s Regulation AB Certificate described in Section 3.03, and the Annual Accountant’s Report described in Section 3.04. In addition, the Servicer shall prepare, procure, deliver and/or file, or cause to be prepared, procured, delivered or filed, any reports, attestations, exhibits, certificates or other documents required to be delivered or filed with the SEC (and/or any other Governmental Authority) by the Issuer or the Depositor under the federal securities or other applicable laws or in accordance with the Basic Documents, including, but without limiting the generality of foregoing, filing with the SEC, if applicable and required by applicable law, a copy or copies of (i) the Monthly Servicer’s Certificates described in Section 3.01(b)(i) (under Form 10-D or any other applicable form), (ii) the Servicer’s Certificates described in Section 4.01(c)(ii) (under Form 10-D or any other applicable form), (iii) the annual statements of compliance, attestation reports and other certificates described in Section 3.03, and (iv) the Annual Accountant’s Report (and any attestation required under Regulation AB) described in Section 3.04. In addition, the appropriate officer or officers of the Servicer shall (in its separate capacity as Servicer) sign the Depositor’s annual report on Form 10-K (and any other applicable SEC or other reports, attestations, certifications and other documents), to the extent that the Servicer’s signature is required by, and consistent with, the federal securities laws and/or any other applicable law.

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(c)    Opinions of Counsel. The Servicer shall deliver to the Issuer and the Indenture Trustee:

(i)    promptly after the execution and delivery of this Agreement and of each amendment hereto, an Opinion of Counsel from external counsel of the Issuer either (A) to the effect that, in the opinion of such counsel, all filings, including filings with the CPUC and the California Secretary of State and all filings pursuant to the UCC, that are necessary under the UCC and the Wildfire Financing Law to perfect or maintain, as applicable, the Liens of the Indenture Trustee in the Recovery Property have been authorized, executed and filed, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve, protect and perfect such Liens; and

(ii)    within ninety (90) days after the beginning of each calendar year beginning with the first calendar year beginning more than three (3) months after the date hereof, an Opinion of Counsel from external counsel of the Issuer, dated as of a date during such ninety (90)-day period, either (A) to the effect that, in the opinion of such counsel, all filings, including filings with the CPUC and the California Secretary of State and all filings pursuant to the UCC, have been executed and filed that are necessary under the UCC and the Wildfire Financing Law to maintain the Liens of the Indenture Trustee in the Recovery Property, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve, protect and perfect such Liens.

Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to perfect or maintain, as applicable, such interest or Lien.

SECTION 3.02.    Servicing and Maintenance Standards.

On behalf of the Issuer, the Servicer shall (a) manage, service, administer, bill, collect and calculate Fixed Recovery Charges in accordance with the Wildfire Financing Law and post collections in respect of the Recovery Property with reasonable care and in material compliance with applicable Requirements of Law, including all applicable CPUC Regulations and guidelines, using the same degree of care and diligence that the Servicer exercises with respect to similar assets for its own account and, if applicable, for others; (b) follow customary standards, policies and procedures for the industry in California in performing its duties as Servicer; (c) use all reasonable efforts, consistent with its customary servicing procedures, to enforce, and maintain rights in respect of, the Recovery Property and to bill and collect the Fixed Recovery Charges; (d) comply with all Requirements of Law, including all applicable CPUC Regulations and guidelines, applicable to and binding on it relating to the Recovery Property; (e) file all CPUC notices described in the Wildfire Financing Law and file and maintain the effectiveness of UCC financing statements with respect to the property transferred under the Sale Agreement, and (f) take such other action on behalf of the Issuer to ensure that the Lien of the Indenture Trustee on the Recovery Bond Collateral remains perfected and of first priority. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable

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in its servicing of all or any portion of the Recovery Property, which, in the Servicer’s judgment, may include the taking of legal action, at the Issuer’s expense but subject to the priority of payments set forth in Section 8.02(e) of the Indenture.

SECTION 3.03.    Annual Reports on Compliance with Regulation AB.

(a)    The Servicer shall deliver to the Issuer, the Indenture Trustee and the Rating Agencies, on or before the earlier of (A) March 31 of each year or (B) with respect to each calendar year during which the Depositor’s annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, a certificate from a Responsible Officer of the Servicer (each such certificate, a “Servicer’s Regulation AB Certificate”) (i) containing, and certifying as to, the statements of compliance required by Item 1123 (or any successor or similar items or rule) of Regulation AB, as then in effect and (ii) containing, and certifying as to, the statements and assessment of compliance required by Item 1122(a) (or any successor or similar items or rule) of Regulation AB, as then in effect. The Servicer’s Regulation AB Certificates shall be in the form of Exhibit C attached hereto, with such changes as may be required to conform to the applicable securities law.

(b)    The Servicer shall use commercially reasonable efforts to obtain from each other party participating in the servicing function any additional certifications as to the statements and assessment required under Item 1122 or Item 1123 of Regulation AB to the extent required in connection with the filing of the annual report on Form 10-K; provided, however, that a failure to obtain such certifications shall not be a breach of the Servicer’s duties hereunder. The parties acknowledge that the Indenture Trustee’s certifications shall be limited to the Item 1122 certifications described in Exhibit C attached to the Indenture.

(c)    The initial Servicer, in its capacity as Depositor, shall post on its website and file with or furnish to the SEC, in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act, the information described in Section 3.07(g) of the Indenture to the extent such information is reasonably available to the Depositor. Except to the extent permitted by applicable law, the initial Servicer, in its capacity as Depositor, shall not voluntarily suspend or terminate its filing obligations as Depositor with the SEC as described in this Section 3.03(c). The covenants of the initial Servicer, in its capacity as Depositor, pursuant to this Section 3.03(c) shall survive the resignation, removal or termination of the initial Servicer as Servicer hereunder.

SECTION 3.04.    Annual Report by Independent Registered Public Accountants.

(a)    The Servicer shall cause a firm of Independent registered public accountants (which may provide other services to the Servicer or the Seller) to prepare annually, and the Servicer shall deliver annually to the Issuer, the Indenture Trustee and the Rating Agencies on or before the earlier of (A) March 31 of each year, beginning March 31, 2023, or (B) with respect to each calendar year during which the Depositor’s annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations

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thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, a report (the “Annual Accountant’s Report”) regarding the Servicer’s assessment of compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB during the immediately preceding twelve (12) months ended December 31 (or, in the case of the first Annual Accountant’s Report to be delivered on or before March 31, 2023, the period of time from the date of this Agreement until December 31, 2022), in accordance with paragraph (b) of Rule 13a-18 and Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by an authorized officer of the Servicer and shall at a minimum address each of the servicing criteria specified in Exhibit C. In the event that the accounting firm providing such report requires the Indenture Trustee to agree or consent to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer subject to the Indenture Trustee’s rights, privileges, protections and immunities under the Indenture, and the Indenture Trustee will not make any independent inquiry or investigation as to, and shall have no obligation or liability in respect of the sufficiency, validity or correctness of such procedures.

(b)    The Annual Accountant’s Report shall also indicate that the accounting firm providing such report is independent of the Servicer in accordance with the Rules of the Public Company Accounting Oversight Board, and shall include any attestation report required under Item 1122(b) of Regulation AB (or any successor or similar items or rule), as then in effect.

ARTICLE IV

SERVICES RELATED TO TRUE-UP ADJUSTMENTS

SECTION 4.01.    True-Up Adjustments.

From time to time, until the Retirement of the Recovery Bonds, the Servicer shall identify the need for True-Up Adjustments and shall take all reasonable action to obtain and implement such True-Up Adjustments, all in accordance with the following:

(a)    Expected Amortization Schedule. The Expected Amortization Schedule for the Recovery Bonds is attached hereto as Schedule 4.01(a). If the Expected Amortization Schedule is revised, the Servicer shall send a copy of such revised Expected Amortization Schedule to the Issuer, the Indenture Trustee and the Rating Agencies promptly thereafter.

(b)    True-Up Adjustments.

(i)    Routine Annual True-Up Adjustments and Advice Letter Submissions. At least fifty (50) days before the last day of February (and beginning twelve months prior to the Scheduled Final Payment Date, on each Quarterly Adjustment Date), the Servicer shall: (A) for each of the First Payment Period and Second Payment Period, update the data and assumptions underlying the calculation of the Fixed Recovery Charges, including the electric sales forecast for all Consumers (excluding Exempted Consumers) for the forthcoming

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year, Periodic Principal, interest and estimated fees and all other Ongoing Financing Costs; (B) determine the Periodic Payment Requirements and Periodic Billing Requirement for the First Payment Period and Second Payment Period based on such updated data and assumptions and adjusting for (i) FRC Collections and excess funds held to the credit of the General Subaccount and Excess Funds Subaccount on the Calculation Cut-Off Date and (ii) FRC Collections to be collected at the then current Fixed Recovery Charge rates after the Calculation Cut-Off Date; (C) determine the Fixed Recovery Charges on a per kWh/basis through the next succeeding Annual Adjustment Date based on such Periodic Billing Requirements and the terms of the Financing Order, including the Cash Flow Model; (D) make all required notice and other submissions with the CPUC to reflect the revised Fixed Recovery Charges, including a Routine Annual True-Up Mechanism Advice Letter in the form attached hereto as Exhibit D; and (E) take all reasonable actions and make all reasonable efforts to effect such Routine Annual True-Up Adjustment and to enforce the provisions of the Wildfire Financing Law and the Financing Order. The Servicer shall implement the revised Fixed Recovery Charges, if any, resulting from such Routine Annual True-Up Adjustment as of the Annual Adjustment Date.

(ii)    Routine Semi-Annual True-Up Adjustments and Advice Letter Submissions. If the Servicer forecasts that FRC Collections will be insufficient to meet the Periodic Payment Requirement during the Second Payment Period, at least fifty (50) days before August 31 the Servicer shall: (A) for the Second Payment Period and the next succeeding Payment Period, update the data and assumptions underlying the calculation of the Fixed Recovery Charges, including the electric sales forecast for all Consumers (excluding Exempted Consumers) for the forthcoming year, Periodic Principal, interest and estimated fees and all other Ongoing Financing Costs; (B) determine the Periodic Payment Requirements and Periodic Billing Requirement for the Second Payment Period and the next succeeding Payment Period based on such updated data and assumptions and adjusting for (i) FRC Collections and excess funds held to the credit of the General Subaccount and Excess Funds Subaccount on the Calculation Cut-Off Date and (ii) FRC Collections to be collected at the then-current Fixed Recovery Charge rates after the Calculation Cut-Off Date; and (C) based upon such updated data and requirements, project whether existing and projected FRC Collections together with available fund balances in the Excess Funds Subaccount, will be sufficient (x) to make on a timely basis all scheduled payments of Periodic Principal and interest in respect of each Recovery Bond during such Payment Period, (y) to pay other Ongoing Financing Costs on a timely basis and (z) to maintain the Capital Subaccount at the Required Capital Level. If the Servicer determines that Fixed Recovery Charges will not be sufficient for such purposes, the Servicer shall, no later than fifty (50) days prior August 31, the day prior to the proposed effective date of the revised Fixed Recovery Charges (which shall be the date that is six months after the Annual Adjustment Date): (1) determine the Fixed Recovery Charges on a per kWh/basis through the Annual Adjustment Date based on such Periodic Billing Requirement and the terms of the Financing Order, including the Cash Flow Model; (2) make all required notice and other

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submissions with the CPUC to reflect the revised Fixed Recovery Charges, including a Routine Semi-Annual True-Up Mechanism Advice Letter in the form attached hereto as Exhibit D; and (3) take all reasonable actions and make all reasonable efforts to effect such Routine Semi-Annual True-Up Adjustment and to enforce the provisions of the Wildfire Financing Law and the Financing Order.

(iii)    Routine Interim True-Up Adjustments and Advice Letter Submissions. If at any time the Servicer forecasts that FRC Collections will be insufficient to meet the Periodic Payment Requirement during the First Payment Period or Second Payment Period, the Servicer may: (A) for each of the First Payment Period and Second Payment Period, update the data and assumptions underlying the calculation of the Fixed Recovery Charges, including the electric sales forecast for all Consumers (excluding Exempted Consumers) for the forthcoming year, Periodic Principal, interest and estimated fees and all other Ongoing Financing Costs; (B) determine the Periodic Payment Requirements and Periodic Billing Requirement for the First Payment Period and Second Payment Period based on such updated data and assumptions and adjusting for (i) FRC Collections and excess funds held to the credit of the General Subaccount and Excess Funds Subaccount on the Calculation Cut-Off Date and (ii) FRC Collections to be collected at the then-current Fixed Recovery Charge rates after the Calculation Cut-Off Date; and (C) based upon such updated data and requirements, project whether existing and projected FRC Collections together with available fund balances in the Excess Funds Subaccount, will be sufficient (x) to make on a timely basis all scheduled payments of Periodic Principal and interest in respect of each Recovery Bond during such Payment Period, (y) to pay other Ongoing Financing Costs on a timely basis and (z) to maintain the Capital Subaccount at the Required Capital Level. If the Servicer determines that Fixed Recovery Charges will not be sufficient for such purposes, the Servicer shall, no later than fifty (50) days prior to the proposed effective date of the revised Fixed Recovery Charges (provided that such effective date shall be on the first calendar day of a month): (1) determine the Fixed Recovery Charges on a per kWh/basis through the Annual Adjustment Date based on such Periodic Billing Requirement and the terms of the Financing Order, including the Cash Flow Model; (2) make all required notice and other submissions with the CPUC to reflect the revised Fixed Recovery Charges, including a Routine Interim True-Up Mechanism Advice Letter in the form attached hereto as Exhibit D; and (3) take all reasonable actions and make all reasonable efforts to effect such Routine Interim True-Up Adjustment and to enforce the provisions of the Wildfire Financing Law and the Financing Order.

(iv)    Non-Routine Adjustments and Advice Letter Submissions. The Servicer may submit a Non-Routine True-Up Adjustment to propose revisions to the logic, structure and components of the Cash Flow Model in the Financing Order. In connection with any Non-Routine True-Up Adjustment, the Servicer will: (A) present a new Cash Flow Model; (B) for each of the First Payment Period and Second Payment Period, update the data and assumptions underlying the calculation of the Fixed Recovery Charges, including the electric sales

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forecast for all Consumers (excluding Exempted Consumers) for the forthcoming year, Periodic Principal, interest and estimated fees and all other Ongoing Financing Costs; (C) recalculate the Fixed Recovery Charges based on the revisions to Cash Flow Model proposed by the Servicer; (D) file a Non-Routine True-Up Mechanism Advice Letter in the form attached hereto as Exhibit E necessary to begin the billing of such revised Fixed Recovery Charges, which Advice Letter will provide that neither the proposed revision in such Advice Letter, nor any modification ordered by the CPUC, will become effective unless the Rating Agency Condition is satisfied; and (E) take all reasonable actions and make all reasonable efforts to effect such Non-Routine True-Up Adjustment and to enforce the provisions of the Wildfire Financing Law and the Financing Order. Any such Non-Routine True-Up Mechanism Advice Letter must be submitted at least ninety (90) days before the effective date (the “Non-Routine True-Up Effective Date”) contained in the related Non-Routine True-Up Mechanism Advice Letter, provided such effective date may be delayed as required to ensure that the Rating Agency Condition is satisfied. The Servicer shall implement the revised Fixed Recovery Charges, if any, resulting from such Non-Routine True-Up Adjustment on the Non-Routine True-Up Effective Date, provided the CPUC will have the opportunity to consider a resolution that adopts, modifies or rejects the proposed revisions to the Cash Flow Model and the public will have an opportunity to review and protest a Non-Routine True-Up Mechanism Advice Letter in accordance with CPUC procedures, to the extent permitted by Section 850.1(e) of the Wildfire Financing Law, and provided further than, in the absence of a CPUC resolution that adopts, modifies or rejects the revisions proposed in the Non-Routine True-Up Mechanism Advice Letter shall go into effect on the Non-Routine True-Up Effective Date if such Non-Routine True-Up Effective Date is at least ninety (90) days after the date of submission of the related Non-Routine True-Up Mechanism Advice Letter.

(c)    Reports.

(i)    Notification of Advice Letter Submissions and True-Up Adjustments. Whenever the Servicer submits an Advice Letter with the CPUC and Notice Parties, the Servicer shall send a copy of such submission or notice (together with a copy of all notices and documents which, in the Servicer’s reasonable judgment, are material to the adjustments effected by such Advice Letter or notice) to the Issuer, the Indenture Trustee and the Rating Agencies concurrently therewith. If, for any reason any revised Fixed Recovery Charges are not implemented and effective on the applicable date set forth herein, the Servicer shall notify the Issuer, the Indenture Trustee and each Rating Agency by the end of the second Servicer Business Day after such applicable date.

(ii)    Servicer’s Certificate. Not later than five (5) Servicer Business Days prior to each Payment Date or Special Payment Date, the Servicer shall deliver a written report substantially in the form of Exhibit B attached hereto (the “Servicer’s Certificate”) to the Issuer, the Indenture Trustee and the Rating Agencies which shall include all of the following information (to the extent

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applicable and including any other information so specified in the Series Supplement) as to the Recovery Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

(a) the amount of the payment to Holder allocable to principal, if any;

(b) the amount of the payment to Holders allocable to interest;

(c) the aggregate Outstanding Amount of the Recovery Bonds, before and after giving effect to any payments allocated to principal reported under clause (A) above;

(d) the difference, if any, between the amount specified in clause (C) above and the Outstanding Amount specified in the Expected Amortization Schedule;

(e) any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

(f) the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

(iii) Reports to Consumers.

(a) After each revised Fixed Recovery Charge has gone into effect pursuant to a True-Up Adjustment, the Servicer shall, to the extent and in the manner and time frame required by the Financing Order and applicable CPUC Regulations, if any, cause to be prepared and delivered to Consumers any required notices announcing such revised Fixed Recovery Charges.

(b) The Servicer shall comply with the requirements of the Financing Order with respect to the identification of Fixed Recovery Charges on Bills. As provided in the Financing Order, the back of the bill shall display the Fixed Recovery Charge as the “Recovery Bond Charge” and the Customer Credit as the “Recovery Bond Credit” and shall state as follows: “Recovery Bond Charge: Your bill for electric service includes a charge that has been approved by the CPUC to repay bonds issued for certain costs related to catastrophic wildfires. The Recovery Bond Charge (RBC) rate is currently $[##] per kWh. PG&E has also contributed certain amounts to a trust fund which is used provide a customer credit equal to $[##] per kWh (Recovery Bond Credit). The right to recover the RBC has been transferred to one or more Special Purpose Entities that issued the bonds and does not belong to PG&E. PG&E is collecting that portion of the RBC on behalf of the Special Purpose Entities.” The fixed recovery charges for each series of recovery bonds, including Additional Recovery

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Bonds and Additional Other Recovery Bonds, may not be separately identified on consumer electricity bills, although consumer electricity bills will state that a portion of the electricity bill consists of the rights to the fixed recovery charges that have been sold to the financing entity created to issue such Additional Recovery Bonds or Additional Other Recovery Bonds.

(c) Except to the extent that applicable CPUC Regulations make the Applicable ESP responsible for such costs, or the Applicable ESP has otherwise agreed to pay such costs, the Servicer shall pay from its own funds all costs of preparation and delivery incurred in connection with clauses (a) and (b) above, including printing and postage costs as the same may increase or decrease from time to time.

(iv)    Reconciliation Certificates. The Servicer shall provide to the Indenture Trustee within sixty (60) days of each Payment Date, a Reconciliation Certificate in the form of Exhibit F hereto, in accordance with Section 6.11(c) of this Agreement.

(v)    ESP Reports. The Servicer shall provide to the Rating Agencies, upon request, any publicly available reports filed by the Servicer with the CPUC (or otherwise made publicly available by the Servicer) relating to ESPs and any other non-confidential and non-proprietary information relating to ESPs reasonably requested by the Rating Agencies to the extent such information is reasonably available to the Servicer.

SECTION 4.02.    Limitation of Liability.

(a) The Issuer and the Servicer expressly agree and acknowledge that:

(i)    In connection with any True-Up Adjustment, the Servicer is acting solely in its capacity as the servicing agent hereunder.

(ii)    Neither the Servicer nor the Issuer nor the Indenture Trustee is responsible in any manner for, and shall have no liability whatsoever as a result of, any action, decision, ruling or other determination made or not made, or any delay (other than any delay resulting from the Servicer’s failure to make any filings required by Section 4.01 in a timely and correct manner or any breach by the Servicer of its duties under this Agreement), by the CPUC in any way related to the Recovery Property or in connection with any True-Up Adjustment, the subject of any filings under Section 4.01, any proposed True-Up Adjustment, or the approval of any revised Fixed Recovery Charges and the scheduled adjustments thereto.

(iii)    Except to the extent the Servicer is liable under Section 6.02, the Servicer shall have no liability whatsoever relating to the calculation of any revised Fixed Recovery Charges and the scheduled adjustments thereto, including as a result of any inaccuracy of any of the assumptions made in such calculation

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regarding expected energy usage volume, the Collections Curve, so long as the Servicer has acted in good faith and has not acted in a grossly negligent manner in connection therewith, nor shall the Servicer have any liability whatsoever as a result of any Person, including the Bondholders, not receiving any payment, amount or return anticipated or expected or in respect of any Recovery Bond generally, except only to the extent that the same is caused by the Servicer’s gross negligence, willful misconduct or bad faith.

(b)    Notwithstanding the foregoing, this Section 4.02 shall not relieve the Servicer of liability for any misrepresentation by the Servicer under Section 6.01 or for any breach by the Servicer of its other obligations under this Agreement.

ARTICLE V

THE RECOVERY PROPERTY

SECTION 5.01.    Custody of Recovery Property Records.

To assure uniform quality in servicing the Recovery Property and to reduce administrative costs, the Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Issuer as custodian of any and all documents and records that the Servicer shall keep on file, in accordance with its customary procedures, relating to the Recovery Property, including copies of the Financing Order, Issuance Advice Letter and Advice Letters, relating thereto and all documents filed with the CPUC in connection with any True-Up Adjustment and computational records relating thereto (collectively, the “Recovery Property Records”), which are hereby constructively delivered to the Indenture Trustee, as pledgee of the Issuer with respect to all Recovery Property.

SECTION 5.02.    Duties of Servicer as Custodian.

(a)    Safekeeping. The Servicer shall hold the Recovery Property Records on behalf of the Issuer and maintain such accurate and complete accounts, records and computer systems pertaining to the Recovery Property Records as shall enable the Issuer and the Indenture Trustee, as applicable, to comply with this Agreement, the Sale Agreement and the Indenture. In performing its duties as custodian, the Servicer shall act with reasonable care, using that degree of care and diligence that the Servicer exercises with respect to comparable assets that the Servicer services for itself or, if applicable, for others. The Servicer shall promptly report to the Issuer, the Indenture Trustee and the Rating Agencies any failure on its part to hold the Recovery Property Records and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer or the Indenture Trustee of the Recovery Property Records. The Servicer’s duties to hold the Recovery Property Records set forth in this Section 5.02, to the extent the Recovery Property Records have not been previously transferred to a successor Servicer pursuant to Article VII, shall terminate one year and one day after the earlier of the date on which (i) the Servicer is succeeded by a successor Servicer in accordance with Article VII and (ii) no Recovery Bonds are Outstanding.

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(b)    Maintenance of and Access to Records. The Servicer shall maintain the Recovery Property Records at 77 Beale Street, San Francisco, California 94177 or at such other office as shall be specified to the Issuer and the Indenture Trustee by written notice at least thirty (30) days prior to any change in location. The Servicer shall make available for inspection, audit and copying to the Issuer and the Indenture Trustee or their respective duly authorized representatives, attorneys or auditors the Recovery Property Records at such times during normal business hours as the Issuer or the Indenture Trustee shall reasonably request and which do not unreasonably interfere with the Servicer’s normal operations. Nothing in this Section 5.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any CPUC Regulation) prohibiting disclosure of information regarding the Consumers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 5.02(b).

(c)    Release of Documents. Upon instruction from the Indenture Trustee in accordance with the Indenture, the Servicer shall release any Recovery Property Records to the Indenture Trustee, the Indenture Trustee’s agent or the Indenture Trustee’s designee, as the case may be, at such place or places as the Indenture Trustee may designate, as soon as practicable. Nothing in this Section 5.02(c) shall affect the obligation of the Servicer to observe any applicable law (including any CPUC Regulation) prohibiting disclosure of information regarding the Consumers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 5.02(c).

(d)    Defending Recovery Property Against Claims. The Servicer agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary (i) to block or overturn any attempts to cause a repeal, modification or supplement to the Wildfire Financing Law or the Financing Order or the rights of holders of Recovery Property by legislative enactment, voter initiative, constitutional amendment or other means that would be materially adverse to Bondholders and (ii) to compel performance by the CPUC or the State of California of any of their obligations or duties under the Wildfire Financing Law, the Financing Order or any Advice Letter. The costs of any such action shall be payable from FRC Collections as an Operating Expense in accordance with the priorities set forth in Section 8.02(d) of the Indenture. The Servicer shall have no obligations under this paragraph if it is not being reimbursed on a current basis for its costs and expenses in taking such actions, and shall not be required to advance its own funds to satisfy its obligations hereunder).

(e)    Seeking to Prevent Expansions of Exemptions. The Servicer agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary to attempt to prevent the granting by the State of California or the CPUC, after the Closing Date, of any material exemptions from the obligation to pay Fixed Recovery Charges that are not expressly provided for in the Wildfire Financing Law and that violate the State Pledge or any other obligations of the State of California or the CPUC under the Wildfire Financing Law or the Financing Order, including any failure of the CPUC to require any municipal entity which acquires any portion of the service territory of PG&E to impose, collect and remit the Fixed Recovery Charges. The Servicer shall have no obligations under this paragraph if it is not being reimbursed on a current basis for its costs and expenses in taking such actions, and shall not be required to advance its own funds to satisfy its obligations hereunder.

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SECTION 5.03.    Custodian’s Indemnification.

The Servicer as custodian shall indemnify the Issuer, any Independent Manager and the Indenture Trustee (for itself and for the benefit of the Holders) and each of their respective officers, directors, employees and agents for, and defend and hold harmless each such Person from and against, any and all liabilities, obligations, losses, damages, payments and claims, and reasonable costs or expenses, of any kind whatsoever (collectively, “Indemnified Losses”) that may be imposed on, incurred by or asserted against each such Person as the result of any grossly negligent act or omission in any way relating to the maintenance and custody by the Servicer, as custodian, of the Recovery Property Records; provided, however, that the Servicer shall not be liable for any portion of any such amount resulting from the willful misconduct, bad faith or negligence of the Issuer, any Independent Manager or the Indenture Trustee, as the case may be.

Indemnification under this Section 5.03 shall survive resignation or removal of the Indenture Trustee or any Independent Manager and shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney’s fees and expenses and reasonable fees, out-of-pocket expenses and costs incurred in connection with any action, claim or suit brought to enforce the Indenture Trustee’s right to indemnification).

SECTION 5.04.    Effective Period and Termination.

The Servicer’s appointment as custodian shall become effective as of the Closing Date and shall continue in full force and effect until terminated pursuant to this Section 5.04. If the Servicer shall resign as Servicer in accordance with Section 6.05 of this Agreement or if all of the rights and obligations of the Servicer shall have been terminated under Section 7.01, the appointment of the Servicer as custodian shall be terminated effective as of the date on which the termination or resignation of the Servicer is effective. Additionally, if not sooner terminated as provided above, the Servicer’s obligations as custodian shall terminate one year and one day after the date on which no Recovery Bonds are Outstanding.

ARTICLE VI

THE SERVICER

SECTION 6.01.    Representations and Warranties of Servicer.

The Servicer makes the following representations and warranties, as of the Closing Date, and as of such other dates as expressly provided in this Section 6.01, on which the Issuer and the Indenture Trustee are deemed to have relied in entering into this Agreement relating to the servicing of the Recovery Property. The representations and warranties shall survive the execution and delivery of this Agreement, the sale of any Recovery Property and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

(a)    Organization and Good Standing. The Servicer is duly organized and validly existing and is in good standing under the laws of the State of California, with the requisite corporate or other power and authority to own its properties and to conduct its business

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as such properties are currently owned and such business is presently conducted by it and to service the Recovery Property and hold the Recovery Property Records, and to execute, deliver and carry out the terms of this Agreement, and had at all relevant times, and has, the requisite power, authority and legal right to service the Recovery Property and to hold the Recovery Property Records as custodian.

(b)    Due Qualification. The Servicer is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Recovery Property as required by this Agreement) shall require such qualifications, licenses or approvals (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the Servicer’s business, operations, assets, revenues or properties or to its servicing of the Recovery Property).

(c)    Power and Authority. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of the Servicer under its organizational or governing documents and laws.

(d)    Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ rights generally from time to time in effect and to general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.

(e)    No Violation. The consummation by the Servicer of the transactions contemplated by this Agreement and the fulfillment by the Servicer of the terms hereof shall not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a material default under, the articles of incorporation or bylaws of the Servicer, or any indenture, material agreement or other instrument to which the Servicer is a party or by which it or any of its property is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument other than the Basic Documents or any lien created pursuant to the Wildfire Financing Law; nor violate any existing law or any order, rule or regulation applicable to the Servicer of any court or of any Governmental Authority having jurisdiction over the Servicer or its properties.

(f)    No Proceedings. There are no proceedings pending and, to the Servicer’s knowledge, there are no proceedings threatened and, to the Servicer’s knowledge, there are no investigations pending or threatened, before any Governmental Authority having jurisdiction over the Servicer or its properties involving or relating to the Servicer or the Issuer or, to the Servicer’s knowledge, any other Person: (i) asserting the invalidity of this Agreement or any of the other Basic Documents, (ii) seeking to prevent the issuance of the Recovery Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents, (iii) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement, any of the other Basic Documents or the Recovery Bonds or (iv) seeking to adversely affect the federal income tax or state income or franchise tax classification of the Recovery Bonds as debt.

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(g)    Approvals. No approval, authorization, consent, order or other action of, or filing with, any court, Federal or state regulatory body, administrative agency or other governmental instrumentality is required in connection with the execution and delivery by the Servicer of this Agreement, the performance by the Servicer of the transactions contemplated hereby or the fulfillment by the Servicer of the terms hereof, except those that have been obtained or made and those that the Servicer is required to make in the future pursuant to Article IV hereof.

(h)    Reports and Certificates. Each report and certificate delivered in connection with the Issuance Advice Letter or delivered in connection with any Advice Letter made to the CPUC by the Issuer with respect to the Fixed Recovery Charges or True-Up Adjustments will constitute a representation and warranty by the Servicer that each such report or certificate, as the case may be, is true and correct in all material respects; provided, however, that to the extent any such report or certificate is based in part upon or contains assumptions, forecasts or other predictions of future events, the representation and warranty of the Servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are reasonable based upon historical performance (and facts known to the Servicer on the date such report or certificate is delivered).

SECTION 6.02.    Indemnities of Servicer; Release of Claims.

(a)    The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement.

(b)    The Servicer shall indemnify the Issuer, the Indenture Trustee (for itself and for the benefit of the Holders) and the Independent Manager and each of their respective trustees, officers, directors, employees and agents (each, an “Indemnified Person”), for, and defend and hold harmless each such Person from and against, any and all Indemnified Losses imposed on, incurred by or asserted against any such Person as a result of (i) the Servicer’s willful misconduct, bad faith or gross negligence in the performance of, or reckless disregard of, its obligations and duties or observance of its covenants under this Agreement or (ii) the Servicer’s material breach of any of its representations or warranties that results in a Servicer Default under this Agreement, except to the extent of Indemnified Losses either resulting from the willful misconduct, bad faith or gross negligence of such Person seeking indemnification hereunder or resulting from a material breach of a representation or warranty made by such Person seeking indemnification hereunder in any of the Basic Documents that gives rise to the Servicer’s breach.

(c)    For purposes of Section 6.02(b), in the event of the termination of the rights and obligations of PG&E (or any successor thereto pursuant to Section 6.03) as Servicer pursuant to Section 7.01, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be the Servicer pending appointment of a successor Servicer pursuant to Section 7.02.

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(d)    Indemnification under this Section 6.02 shall survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Wildfire Financing Law or the Financing Order and shall survive the resignation or removal of the Indenture Trustee or any Independent Manager or the termination of this Agreement and shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney’s fees and expenses and the reasonable fees, out-of-pocket expenses and costs incurred in connection with any action, claim or suit brought to enforce the Indenture Trustee’s right to indemnification).

(e)    Except to the extent expressly provided in this Agreement or the other Basic Documents (including the Servicer’s claims with respect to the Servicing Fee, reimbursement for any Excess Remittance, reimbursement for costs incurred pursuant to Section 5.02(d) and the payment of the purchase price of Recovery Property), the Servicer hereby releases and discharges the Issuer, any Independent Manager and the Indenture Trustee, and each of their respective officers, directors and agents (collectively, the “Released Parties”) from any and all actions, claims and demands whatsoever, whenever arising, which the Servicer, in its capacity as Servicer or otherwise, shall or may have against any such Person relating to the Recovery Property or the Servicer’s activities with respect thereto other than any actions, claims and demands arising out of the willful misconduct, bad faith or gross negligence of the Released Parties.

(f)    Promptly after receipt by an Indemnified Person of notice (or, in the case of the Indenture Trustee, receipt of notice by a Responsible Officer only) of the commencement of any action, proceeding or investigation, such Indemnified Person shall, if a claim in respect thereof is to be made against the Servicer under this Section 6.02, notify the Servicer in writing of the commencement thereof. Failure by an Indemnified Person to so notify the Servicer shall relieve the Servicer from the obligation to indemnify and hold harmless such Indemnified Person under this Section 6.02 only to the extent that the Servicer suffers actual prejudice as a result of such failure. With respect to any action, proceeding or investigation brought by a third party for which indemnification may be sought under this Section 6.02, the Servicer shall be entitled to conduct and control, at its expense and with counsel of its choosing that is reasonably satisfactory to such Indemnified Person, the defense of any such action, proceeding or investigation (in which case the Servicer shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person except as set forth below); provided that the Indemnified Person shall have the right to participate in such action, proceeding or investigation through counsel chosen by it and at its own expense. Notwithstanding the Servicer’s election to assume the defense of any action, proceeding or investigation, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Servicer shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the defendants in any such action include both the Indemnified Person and the Servicer and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Servicer, (ii) the Servicer shall not have employed counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action, (iii) the Servicer shall authorize the Indemnified Person to employ separate counsel at the expense of the Servicer or (iv) in the case of the Indenture Trustee, such action exposes the Indenture Trustee to a material risk of criminal liability or forfeiture or a Servicer Default has occurred and is continuing. Notwithstanding the foregoing, the Servicer shall not be obligated to

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pay for the fees, costs and expenses of more than one separate counsel for the Indemnified Persons other than one local counsel, if appropriate. The Servicer will not, without the prior written consent of the Indemnified Person, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought under this Section 6.02 (whether or not the Indemnified Person is an actual or potential party to such claim or action) unless such settlement, compromise or consent includes an unconditional release of the Indemnified Person from all liability arising out of such claim, action, suit or proceeding.

SECTION 6.03.    Merger or Consolidation of, or Assumption of the Obligations of, Servicer.

Any Person (a) into which the Servicer may be merged or consolidated and that succeeds to all or substantially all of the electric distribution business of the Servicer, (b) that results from the division of the Servicer into two or more entities and succeeds to all or substantially all of the electric distribution business of the Servicer, (c) that may result from any merger or consolidation to which the Servicer shall be a party and succeeds to all or substantially all of the electric distribution business of the Servicer, or (d) that may otherwise succeed to all or substantially all of the electric distribution business of the Servicer, shall be the successor to the Servicer under this Agreement; provided, however, that (i) such successor must execute an agreement of assumption to perform every obligation of the Servicer hereunder, (ii) immediately after giving effect to such transaction, no Servicer Default and no event that, after notice or lapse of time, or both, would become a Servicer Default shall have occurred and be continuing, (iii) the Servicer shall have delivered to the Issuer, the Indenture Trustee and the Rating Agencies an Officers’ Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption complies with this Section 6.03 and that all conditions precedent provided for in this Agreement relating to such transaction have been complied with and (iv) prior written notice shall have been delivered to the Rating Agencies. Notwithstanding anything herein to the contrary, the execution of the foregoing agreement of assumption and compliance with clauses (i) and (ii) above shall be conditions to the consummation of the transactions referred to in clauses (a), (b), (c) and (d) above. If all the conditions to any such assumption are met, then the prior Servicer will automatically be released from all of its obligations under this Agreement, other than those that specifically survive a termination of this Agreement.

SECTION 6.04.    Limitation on Liability of Servicer and Others.

Neither the Servicer nor any of the directors or officers or employees or agents of the Servicer shall be liable to the Issuer, the Indenture Trustee, the Bondholders or any other Person, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for good faith errors in judgment; provided, however, that this provision shall not protect the Servicer or any such person against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising under this Agreement.

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Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be related to or incidental to its duties to service the Recovery Property in accordance with this Agreement, and that in its opinion may involve it in any expense or liability; provided, however, that the Servicer may, in respect of any Proceeding, undertake any action that it is not specifically identified in this Agreement as a duty of the Servicer but that the Servicer reasonably determines is necessary or desirable in order to protect the rights and duties of the Issuer or the Indenture Trustee under this Agreement and the interests of the Holders and Consumers under this Agreement. The Servicer’s costs and expenses incurred in connection with any such proceeding shall be payable from FRC Collections as an Operating Expense (and shall not be deemed to constitute a portion of the Servicing Fee) in accordance with the Indenture. The Servicer shall have no obligations under this paragraph if it is not being reimbursed on a current basis for its costs and expenses in taking such actions, and shall not be required to advance its own funds to satisfy its obligations hereunder.

SECTION 6.05.    PG&E Not to Resign as Servicer.

Subject to the provisions of Section 6.03, PG&E shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon either (a) a determination by PG&E that the performance of its duties under this Agreement shall no longer be permissible under applicable law or (b) satisfaction of the following: (i) the Rating Agency Condition shall have been satisfied and (ii) the CPUC shall have approved such resignation. Notice of any such determination permitting the resignation of PG&E pursuant to clause (a) shall be communicated to the Issuer, the Indenture Trustee and the Rating Agencies at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Issuer and the Indenture Trustee, with a copy to the CPUC, concurrently with or promptly after such notice. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and obligations of PG&E in accordance with Section 7.02. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and obligations of PG&E in accordance with Section 7.02.

SECTION 6.06.    Servicing Compensation.

(a)    In consideration for its services hereunder, until the Retirement of the Recovery Bonds, the Servicer shall receive an annual fee (the “Servicing Fee”) in an amount equal to (i) 0.05% of the initial principal amount of the Recovery Bonds for so long as PG&E or an Affiliate of PG&E is the Servicer or (ii) if PG&E or any of its Affiliates is not the Servicer, an amount agreed upon by the Successor Servicer and the Indenture Trustee, provided that such fee must be approved by the CPUC, plus, in either case, reasonable out-of-pocket expenses to cover the Servicer’s incremental costs and expenses in servicing the Recovery Bond. The Servicing Fee owing shall be calculated based on the initial principal amount of the Recovery Bonds and shall be paid semi-annually with half of the Servicing Fee being paid on each Payment Date (provided that the first payment may be adjusted for a longer or shorter first Payment Period). The Servicer also shall be entitled to retain as additional compensation (i) any interest earnings on Fixed Recovery Charge Payments received by the Servicer and invested by the Servicer

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during each Collection Period prior to remittance to the Collection Account and (ii) all late payment charges, if any, collected from Consumers or ESPs; provided, however, that if the Servicer has failed to remit the Daily Remittance to the General Subaccount of any Collection Account on the Servicer Business Day that such payment is to be made pursuant to Section 6.11 on more than three (3) occasions during the period that the Recovery Bonds are outstanding, then thereafter the Servicer will be required to pay to the Indenture Trustee interest on each Daily Remittance accrued at the Federal Funds Rate from the Servicer Business Day on which such Daily Remittance was required to be made to the date that such Daily Remittance is actually made.

(b)    The Servicing Fee set forth in Section 6.06(a) shall be paid to the Servicer by the Indenture Trustee, on each Payment Date in accordance with the priorities set forth in Section 8.02(e) of the Indenture, by wire transfer of immediately available funds from the Collection Account to an account designated by the Servicer. Any portion of the Servicing Fee not paid on any such date should be added to the Servicing Fee payable on the subsequent Payment Date. In no event shall the Indenture Trustee be liable for the payment of any Servicing Fee or other amounts specified in this Section 6.06; provided that this Section 6.06 does not relieve the Indenture Trustee of any duties it has to allocate funds for payment for such fees under Section 8.02 of the Indenture.

(c)    The foregoing Servicing Fees constitute a fair and reasonable price for the obligations to be performed by the Servicer. Such Servicing Fee shall be determined without regard to the income of the Issuer, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Issuer and shall be considered an Operating Expense of the Issuer subject to the limitations on such expenses set forth in the Financing Order.

SECTION 6.07.    Compliance with Applicable Law.

The Servicer covenants and agrees, in servicing the Recovery Property, to comply in all material respects with all laws applicable to, and binding upon, the Servicer and relating to the Recovery Property the noncompliance with which would have a material adverse effect on the value of the Recovery Property; provided, however, that the foregoing is not intended to, and shall not, impose any liability on the Servicer for noncompliance with any Requirement of Law that the Servicer is contesting in good faith in accordance with its customary standards and procedures.

SECTION 6.08.    Access to Certain Records and Information Regarding Recovery Property.

The Servicer shall provide to the Indenture Trustee access to the Recovery Property Records as is reasonably required for the Indenture Trustee to perform its duties and obligations under the Indenture and the other Basic Documents, and shall provide access to such records to the Holders as required by applicable law. Access shall be afforded without charge, but only upon reasonable request and during normal business hours at the respective offices of the Servicer. Nothing in this Section 6.08 shall affect the obligation of the Servicer to observe any applicable law (including any CPUC Regulation) prohibiting disclosure of information regarding the Consumers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 6.08.

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SECTION 6.09.    Appointments.

The Servicer may at any time appoint any Person to perform all or any portion of its obligations as Servicer hereunder; provided, however, that, unless such Person is an Affiliate of PG&E, the Rating Agency Condition shall have been satisfied in connection therewith; provided further that the Servicer shall remain obligated and be liable under this Agreement for the servicing and administering of the Recovery Property in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such Person and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Recovery Property. The fees and expenses of any such Person shall be as agreed between the Servicer and such Person from time to time and none of the Issuer, the Indenture Trustee, the Holders or any other Person shall have any responsibility therefor or right or claim thereto. Any such appointment shall not constitute a Servicer resignation under Section 6.05.

SECTION 6.10.    No Servicer Advances.

The Servicer shall not make any advances of interest on or principal of the Recovery Bonds.

SECTION 6.11.    Remittances.

(a)    On each Servicer Business Day, after the Billing Commencement Date, the Servicer shall remit to the General Subaccount of the Collection Account the total Estimated FRC Collections estimated to have been received by the Servicer from or on behalf of Consumers on such Servicer Business Day in respect of all previously billed Fixed Recovery Charges (the “Daily Remittance”), which Daily Remittance shall be calculated according to the procedures set forth in Annex I and shall be remitted as soon as reasonably practicable but in no event later than the second Servicer Business Day after such payments are estimated to have been received. Prior to each remittance to the General Subaccount of the Collection Account pursuant to this Section 6.11, the Servicer shall provide written notice to the Indenture Trustee of each such remittance (including the exact dollar amount to be remitted). The Servicer shall also, promptly upon receipt, remit to the Collection Account any other proceeds of the Recovery Bond Collateral which it may receive from time to time.

(b)    The Servicer agrees and acknowledges that it holds all Fixed Recovery Charge Payments collected by it and any other proceeds for the Recovery Bond Collateral received by it for the benefit of the Indenture Trustee and the Holders and that all such amounts will be remitted by the Servicer in accordance with this Section 6.11 without any surcharge, fee, offset, charge or other deduction except (i) as set forth in clause (c) below and (ii) for late fees permitted by Section 6.06. The Servicer further agrees not to make any claim to reduce its obligation to remit all Fixed Recovery Charge Payments collected by it in accordance with this Agreement except (i) as set forth in clause (c) below and (ii) for late fees permitted by Section 6.06.

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(c)    Not less than semi-annually (except in the case of the first reconciliation after the first Payment Date, which will be longer than six months), the Servicer will compare Actual FRC Collections to the Estimated FRC Collections that have been remitted to the Indenture Trustee. Such reconciliation will be conducted within sixty (60) days of each Payment Date and reflected in a Reconciliation Certificate delivered to the Indenture Trustee in the form attached hereto as Exhibit F. The Servicer shall calculate the amount of any Remittance Shortfall or Excess Remittance for the immediately preceding Reconciliation Period, and (A) if a Remittance Shortfall exists, the Servicer shall make a supplemental remittance, to the General Subaccount of the Collection Account within ten (10) days, or (B) if an Excess Remittance exists, the Servicer will reduce the Daily Remittance(s) over the next month following the date of the Reconciliation Certificate to the Indenture Trustee. If there is a Remittance Shortfall, the amount which the Servicer remits to the General Subaccount of the Collection Account on the relevant date set forth above shall be increased by the amount of such Remittance Shortfall, such increase coming from the Servicer’s own funds.

(d)    The Servicer acknowledges and agrees that the Issuer is the owner of and has the legal right to all Fixed Recovery Charges received by the Servicer, and that the daily and reconciliation calculations and remittances permitted by this Servicing Agreement, which are based upon estimates of the Fixed Recovery Charges received by the Servicer, is made for convenience and cost effectiveness given the current billing system of the Servicer. The Servicer agrees that in the event any Servicer Default hereunder or if otherwise required or permitted, as provided in Section 6(e)(ii) of Annex I, the Servicer, upon demand of the Indenture Trustee, will promptly, but not later than 60 days follow such request, provide to the Indenture Trustee a reconciliation of actual Fixed Recovery Charges received by the Servicer and the Fixed Recovery Charges remitted by the Servicer.

(e)    Unless otherwise directed to do so by the Issuer, the Servicer shall be responsible for selecting Eligible Investments in which the funds in each Collection Account shall be invested pursuant to Section 8.03 of the Indenture.

ARTICLE VII

DEFAULT

SECTION 7.01.    Servicer Default.

If any one or more of the following events (each, a “Servicer Default”) shall occur and be continuing:

(a)    any failure by the Servicer to remit to the Collection Account on behalf of the Issuer any required remittance that shall continue unremedied for a period of five (5) Business Days after written notice of such failure is received by the Servicer from the Issuer or the Indenture Trustee or after discovery of such failure by an officer of the Servicer; or

(b)    any failure on the part of the Servicer or, so long as the Servicer is PG&E or an Affiliate thereof, any failure on the part of PG&E, as the case may be, duly to observe or to perform in any material respect any covenants or agreements of the Servicer or PG&E, as the case may be, set forth in this Agreement (other than as provided in clause (a) of this Section

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7.01) or any other Basic Document to which it is a party, which failure shall (i) materially and adversely affect the rights of the Holders and (ii) continue unremedied for a period of sixty (60) days after the date on which (A) written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer or PG&E, as the case may be, by the Issuer (with a copy to the Indenture Trustee) or to the Servicer or PG&E, as the case may be, by the Indenture Trustee or (B) such failure is discovered by an officer of the Servicer; or

(c)    any failure by the Servicer duly to perform its obligations under Section 4.01(b) of this Agreement in the time and manner set forth therein, which failure continues unremedied for a period of five (5) Business Days; or

(d)    any representation or warranty made by the Servicer in this Agreement or any Basic Document shall prove to have been incorrect in a material respect when made, which has a material adverse effect on the Holders and which material adverse effect continues unremedied for a period of sixty (60) days after the date on which (A) written notice thereof, requiring the same to be remedied, shall have been delivered to the Servicer (with a copy to the Indenture Trustee) by the Issuer or the Indenture Trustee or (B) such failure is discovered by an officer of the Servicer; or

(e)    an Insolvency Event occurs with respect to the Servicer or PG&E;

then, and in each and every case, so long as the Servicer Default shall not have been remedied, either the Indenture Trustee, or the Holders of Recovery Bonds evidencing not less than a majority of the Outstanding Amount of the Recovery Bonds, by notice then given in writing to the Servicer (and to the Indenture Trustee if given by the Bondholders) (a “Termination Notice”) may terminate all the rights and obligations of the Servicer, subject to compliance with Section 7.02. In addition, upon a Servicer Default described in Section 7.01(a), each of the following shall be entitled to apply to the CPUC for sequestration and payment of revenues arising with respect to the Recovery Property: (i) the holders of any Recovery Bonds and any Indenture Trustee or representative thereof as beneficiaries of any statutory or other Lien permitted by the Wildfire Financing Law; (ii) the Issuer or its assignees; or (iii) pledgees or transferees, including transferees under Section 850.4 of the Wildfire Financing Law, of the Recovery Property. On or after the receipt by the Servicer of a Termination Notice, all authority and power of the Servicer under this Agreement, whether with respect to the Recovery Bonds, the Recovery Property, the Fixed Recovery Charges or otherwise, shall, without further action, pass to and be vested in such successor Servicer as may be appointed under Section 7.02; and, without limitation, the Indenture Trustee is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Termination Notice, whether to complete the transfer of the Recovery Property Records and related documents, or otherwise. The predecessor Servicer shall cooperate with the successor Servicer, the Issuer and the Indenture Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all Recovery Property Records and all cash amounts that shall at the time be held by the predecessor Servicer for remittance, or shall thereafter be received by it with respect to the Recovery Property or the Fixed Recovery Charges. As soon as practicable after receipt by the Servicer of such Termination Notice, the

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Servicer shall deliver the Recovery Property Records to the successor Servicer. In case a successor Servicer is appointed as a result of a Servicer Default, all reasonable costs and expenses (including reasonable attorney’s fees and expenses) incurred in connection with transferring the Recovery Property Records to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 7.01 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Termination of PG&E as Servicer shall not terminate PG&E’s rights or obligations under the Sale Agreement (except rights thereunder deriving from its rights as the Servicer hereunder).

SECTION 7.02.    Appointment of Successor.

(a)    Upon the Servicer’s receipt of a Termination Notice pursuant to Section 7.01 or the Servicer’s resignation or removal in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, and shall be entitled to receive the requisite portion of the Servicing Fee, until a successor Servicer shall have assumed in writing the obligations of the Servicer hereunder as described below. In the event of the Servicer’s termination, removal or resignation hereunder, the Issuer shall appoint a successor Servicer with the Indenture Trustee’s prior written consent thereto (which consent shall not be unreasonably withheld) and the written approval of the CPUC, and the successor Servicer shall accept its appointment by a written assumption in form acceptable to the Issuer and the Indenture Trustee. If within 30 days after the delivery of the Termination Notice, the Issuer shall not have obtained such a new Servicer, the Indenture Trustee may petition the CPUC or a court of competent jurisdiction to appoint a successor Servicer under this Agreement. A Person shall qualify as a successor Servicer only if (i) such Person is permitted under CPUC Regulations to perform the duties of the Servicer, (ii) the Rating Agency Condition shall have been satisfied and (iii) such Person enters into a servicing agreement with the Issuer having substantially the same provisions as this Agreement. In no event shall the Indenture Trustee be liable for its or the Issuer’s appointment of a successor Servicer. The Indenture Trustee’s expenses incurred under this Section 7.02(a) shall be at the sole expense of the Issuer and payable from the Collection Account as provided in Section 8.02 of the Indenture.

(b)    Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer and shall be entitled to the Servicing Fee and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement.

SECTION 7.03.    Waiver of Past Defaults.

The Holders of Recovery Bonds evidencing not less than a majority of the Outstanding Amount of the Recovery Bonds may, on behalf of all Bondholders, direct the Indenture Trustee to waive in writing any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required remittances to the Indenture Trustee for deposit to the Collection Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto.

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SECTION 7.04.    Notice of Servicer Default.

The Servicer shall deliver to the Issuer, the Indenture Trustee, the CPUC and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five (5) Business Days thereafter, written notice of any event which with the giving of notice or lapse of time, or both, would become a Servicer Default under Section 7.01.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

SECTION 8.01.    Amendment.

(a)    This Agreement may be amended in writing by the Servicer and the Issuer with five Business Days’ prior written notice given to the Rating Agencies and the prior written consent of the Indenture Trustee, but without the consent of any of the Bondholders, (i) to cure any ambiguity, to correct or supplement any provisions in this Agreement, (ii) to add additional Recovery Property under this Agreement or (iii) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the Bondholders; provided, however, that any such amendment pursuant to clause (iii) shall not, as evidenced by an Officer’s Certificate delivered to the Issuer and the Indenture Trustee, adversely affect in any material respect the interests of any Bondholder. For purposes of this paragraph (a), any amendment that increases the Servicing Fee payable to a successor Servicer shall not be treated as adversely affecting the interests of any Bondholder so long as the Servicing Fee is within the range approved in the Financing Order.

(b)    This Agreement may also be amended in writing from time to time by the Servicer and the Issuer with prior written notice given to the Rating Agencies and the prior written consent of the Indenture Trustee and the prior written consent of the Holders of Recovery Bonds evidencing not less than a majority of the Outstanding Amount of the Recovery Bonds affected by any such amendment, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Bondholders; provided, however, that no such amendment shall (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, FRC Collections or (ii) reduce the aforesaid percentage of the Outstanding Amount of Recovery Bonds, the Holders of which are required to consent to any such amendment, without the consent of the Holders of all the outstanding Recovery Bonds.

Promptly after the execution of any such amendment and the requisite consents, the Issuer shall furnish written notification of the substance of such amendment to the Indenture Trustee and each of the Rating Agencies.

It shall not be necessary for the consent of Recovery Bondholders pursuant to this Section 8.01(b) to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.

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(c)    Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel of external counsel stating that such amendment is authorized or permitted by this Agreement and that all conditions precedent have been satisfied and upon the Opinion of Counsel from external counsel referred to in Section 3.01(c)(i). The Issuer and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects their own rights, duties, indemnities or immunities under this Agreement or otherwise.

(d)    Notwithstanding Sections 8.01(a) or 8.01(b), or anything to the contrary in this Agreement, the Servicer and the Issuer may amend Annex I to this Agreement in writing with prior written notice given to the Indenture Trustee, the CPUC and the Rating Agencies, but without the consent of the Indenture Trustee, the CPUC, any Rating Agency or any Bondholder, solely to address changes to the Servicer’s method of calculating Fixed Recovery Charge Payments received as a result of changes to the Servicer’s current computerized customer information system or to address the manner of presenting Fixed Recovery Charges on the Bills of Consumers; provided that any such amendment shall not have or cause a material adverse effect on the Bondholders.

SECTION 8.02.    Maintenance of Accounts and Records.

(a)    The Servicer shall maintain accounts and records as to the Recovery Property accurately and in accordance with its standard accounting procedures and in sufficient detail to permit reconciliation between Fixed Recovery Charge Payments received by the Servicer and FRC Collections from time to time deposited in the Collection Account.

(b)    The Servicer shall permit the Indenture Trustee and its agents at any time during normal business hours, upon reasonable notice to the Servicer and to the extent it does not unreasonably interfere with the Servicer’s normal operations, to inspect, audit and make copies of and abstracts from the Servicer’s records regarding the Recovery Property and the Fixed Recovery Charges. Nothing in this Section 8.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any CPUC Regulation) prohibiting disclosure of information regarding the Consumers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 8.02(b).

SECTION 8.03.    Notices.

Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of, this Agreement shall be in writing and shall be effective (i) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (ii) upon receipt when sent by an overnight courier, (iii) on the date personally delivered to an authorized officer of the party to which sent or (iv) on the date transmitted by facsimile or other electronic transmission with a confirmation of receipt in all cases, addressed as follows:

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(a)    in the case of the Servicer, to Pacific Gas and Electric Company, at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, Attention: Brian M. Wong, Vice President, General Counsel and Corporate Secretary, Telephone: (415) 973-1000;

(b)    in the case of the Issuer, to PG&E Wildfire Recovery Funding LLC at c/o Pacific Gas and Electric Company, 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, Attention: Brian M. Wong, Vice President, General Counsel and Corporate Secretary, Telephone: (415) 973-1000;

(c)    in the case of the Indenture Trustee, to the Corporate Trust Office;

(d)    in the case of the CPUC, to California Public Utilities Commission at 505 Van Ness Avenue, San Francisco, California 94102, Attention: General Counsel, Telephone: (415) 703-2782, Facsimile: (415) 703-1758;

(e)    in the case of Moody’s, to Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25^th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);

(f)    in the case of Standard & Poor’s, to S&P Global Ratings, a division of S&P Global Inc., Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@spglobal.com (all such notices to be delivered to Standard & Poor’s in writing by email); and

(g)    as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

SECTION 8.04.    Assignment.

Notwithstanding anything to the contrary contained herein, except as provided in Section 6.03 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Servicer.

SECTION 8.05.    Limitations on Rights of Others.

The provisions of this Agreement are solely for the benefit of the Servicer and the Issuer and, to the extent provided herein or in the Basic Documents, Consumers, the Indenture Trustee and the Holders, and the other Persons expressly referred to herein, and such Persons shall have the right to enforce the relevant provisions of this Agreement. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Recovery Property or Recovery Bond Collateral or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.

SECTION 8.06.    Severability.

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability

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without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such a construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 8.07.    Separate Counterparts.

This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 8.08.    Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

SECTION 8.09.    Governing Law.

This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of California, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

SECTION 8.10.    Assignment to Indenture Trustee.

(a) The Servicer hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee for the benefit of the Secured Parties pursuant to the Indenture of any or all of the Issuer’s rights hereunder and (b) in no event shall the Indenture Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates delivered pursuant hereto, as to all of which any recourse shall be had solely to the assets of the Issuer subject to the availability of funds therefor under Section 8.02 of the Indenture.

SECTION 8.11.    Nonpetition Covenants.

Notwithstanding any prior termination of this Agreement or the Indenture, but subject to the CPUC’s right to order the sequestration and payment of revenues arising with respect to the Recovery Property notwithstanding any bankruptcy, reorganization or other insolvency proceedings with respect to the debtor, pledgor or transferor of the Recovery Property pursuant to Section 850.2(e) and (g) of the Wildfire Financing Law, the Servicer shall not, prior to the date that is one year and one day after the termination of the Indenture, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer or ordering the winding up or liquidation of the affairs of the Issuer.

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SECTION 8.12.    Limitation of Liability.

It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by the Indenture Trustee, not individually or personally but solely as Indenture Trustee in the exercise of the powers and authority conferred and vested in it, and that the Indenture Trustee, in acting hereunder, is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Indenture.

SECTION 8.13.    Rule 17g-5 Compliance.

The Servicer agrees that any notice, report, request for satisfaction of the Rating Agency Condition, document or other information provided by the Servicer to any Rating Agency under this Agreement or any other Basic Document to which it is a party for the purpose of determining the initial credit rating of the Recovery Bonds or undertaking credit rating surveillance of the Recovery Bonds with any Rating Agency, or satisfy the Rating Agency Condition, shall be substantially concurrently posted by the Servicer on the 17g-5 Website.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the date first above written.

	ISSUER: PG&E WILDFIRE RECOVERY FUNDING LLC, a Delaware limited liability company
	By:                                                                                   Name: Title:
	SERVICER: PACIFIC GAS AND ELECTRIC COMPANY, a California corporation
	By:                                                                                   Name: Title:
ACKNOWLEDGED AND ACCEPTED:
THE BANK OF NEW YORK MELLON     TRUST COMPANY, N.A., as Indenture Trustee
By:                                                   Name: Title:

Signature Page to

Recovery Property Servicing Agreement

ANNEX I

SERVICING PROCEDURES

The Servicer agrees to comply with the following servicing procedures:

SECTION 1. DEFINITIONS.

(a)    Capitalized terms used but not otherwise defined herein shall have the meanings specified in the Recovery Property Servicing Agreement (the “Agreement”) to which this Annex I is attached.

(b)    Whenever used in this Annex I, the following words and phrases shall have the following meanings:

“Applicable MDMA” means with respect to each Consumer, the meter data management agent providing meter reading services for that Consumer’s account.

“Billed FRCs” means the amounts of Fixed Recovery Charges billed by the Servicer, whether billed directly to Consumers by the Servicer.

“Collections Curve” means the collections curve that is expressed as a percentage measured at each of six consecutive 30-day intervals and represents the ratio of accumulative daily collections to the total amount billed to a sample customer population.

“Full Consolidated ESP Billing” means the billing procedures pursuant to which, subject to the Servicer’s approval and consent, an ESP will be responsible for reading the meter, calculating and collecting all utility charges to Consumers served by such ESP and by the Servicer, including the Fixed Recovery Charges, and will become obligated to the Servicer for such Billed FRC Revenues, all in accordance with the Servicer Policies and Practices. In Full Consolidated ESP Billing, an ESP is responsible for the accuracy of calculating and collecting the Fixed Recovery Charges. Unless the context indicates otherwise, the term Full Consolidated ESP Billing includes Partial Consolidated ESP Billing.

“Partial Consolidated ESP Billing” means the billing procedures pursuant to which the Servicer will be responsible for calculating the utility charges to Consumers served by the Servicer, including the Fixed Recovery Charges, and sending such calculations to an ESP, which will then be responsible for billing and collecting all utility charges to Consumers served by such ESP and by the Servicer, including the Fixed Recovery Charges. In Partial Consolidated ESP Billing, an ESP is not responsible for the accuracy of the calculating and collecting Fixed Recovery Charges.

“Servicer Policies and Practices” means, with respect to the Servicer’s duties under this Annex I, the policies and practices of the Servicer applicable to such duties that the Servicer follows with respect to comparable assets that it services for itself and, if applicable, others.

EXHIBIT A

1

SECTION 2. DATA ACQUISITION.

(a)    Installation and Maintenance of Meters. Except to the extent that an ESP is responsible for such services pursuant to an ESP Agreement, the Servicer shall use its best efforts to cause to be installed, replaced and maintained meters in such places and in such condition as will enable the Servicer to obtain usage measurements for each Consumer at least once every Billing Period. If Consumers are billed by entities other than the Servicer or an ESP, the Servicer shall request these other entities to bill those Consumers for the Fixed Recovery Charge and to remit the Fixed Recovery Charge Revenues to the Servicer on behalf of those Consumers. The Servicer shall have no other responsibility to bill or collect Fixed Recovery Charges from or in respect of Consumers billed by entities other than ESPs.

(b)    Meter Reading. At least once each Billing Period, the Servicer shall obtain usage measurements from the Applicable MDMA for each Consumer; provided, however, that the Servicer may estimate any Consumer’s usage determined in accordance with applicable CPUC Regulations and Servicer Policies and Practices; and, provided, further, that the Servicer may obtain usage measurements from the Applicable ESP for Consumers receiving services from such ESP if the respective ESP Service Agreement so provides.

(c)    Cost of Metering. The Issuer shall not be obligated to pay any costs associated with the routine metering duties set forth in this Section 2, including the costs of installing, replacing and maintaining meters, nor shall the Issuer be entitled to any credit against the Servicing Fee for any cost savings realized by the Servicer as a result of new metering and/or billing technologies.

SECTION 3. USAGE AND BILL CALCULATION.

The Servicer (a) shall obtain a calculation of each Consumer’s usage (which may be based on data obtained from such Consumer’s meter read or on usage estimates determined in accordance with the Servicer Policies and Practices and applicable CPUC Regulations) at least once each Billing Period and shall determine therefrom each Consumer’s individual Fixed Recovery Charge to be included on such Consumer’s Bill; provided, however, that in the case of Consumers served by an ESP under Full Consolidated ESP Billing, the Applicable ESP, rather than the Servicer, shall determine such Consumers’ total Fixed Recovery Charges to be included on such Consumers’ Bills based on specific Fixed Recovery Charges (cents per kilowatt hour rates) provided by the Servicer, and the Servicer shall deliver to the Applicable ESPs such specific cents per kilowatt hour rates as are necessary for the Applicable ESPs to calculate such Consumers’ respective Fixed Recovery Charges as such charges may change from time to time pursuant to the True-Up Adjustments.

SECTION 4. BILLING.

The Servicer shall implement the Fixed Recovery Charges as of the Billing Commencement Date and shall thereafter bill each Consumer or the Applicable ESP, for the respective Consumer’s outstanding current and past due Fixed Recovery Charges accruing through the date on which the Fixed Recovery Charges may no longer be billed under the Tariff, all in accordance with the following:

Annex I-2

(a)    Frequency of Bills; Billing Practices. In accordance with the Servicer’s then-existing Servicer Policies and Practices for its own charges, as such Servicer Policies and Practices may be modified from time to time, the Servicer shall generate and issue a Bill to each Consumer, or, in the case of a Consumer subject to Partial Consolidated ESP Billing, to the Applicable ESP, for such Consumers’ Fixed Recovery Charges once every applicable Billing Period, at the same time, with the same frequency and on the same Bill as that containing the Servicer’s own charges to such Consumers or ESPs, as the case may be. In the event that the Servicer makes any material modification to its Servicer Policies and Practices for its own charges, it shall notify the Issuer, the Indenture Trustee, the CPUC and the Rating Agencies as soon as practicable, and in no event later than 60 Business Days after such modification goes into effect; provided, however, that the Servicer may not make any modification that will materially adversely affect the Bondholders.

(b)    Format.

(i)    The Servicer shall conform to such requirements regarding the format, structure and text of Bills delivered to Consumers and ESPs as this Agreement, the Financing Order, the Wildfire Financing Law and applicable CPUC Regulations shall from time to time prescribe. To the extent that Bill format, structure and text are not prescribed by this Agreement, the Financing Order, the Wildfire Financing Law or by applicable CPUC Regulations, the Servicer shall determine the format, structure and text of all Bills in accordance with its reasonable business judgment, its Servicer Policies and Practices with respect to its own charges and prevailing industry standards.

(c)    Delivery. The Servicer shall deliver all Bills issued by it (i) by United States mail in such class or classes as are consistent with the Servicer Policies and Practices followed by the Servicer with respect to its own charges to its Consumers or (ii) by any other means, whether electronic or otherwise, that the Servicer may from time to time use to present its own charges to its Consumers. In the case of Consumers that are subject to Partial Consolidated ESP Billing, the Servicer shall deliver all Bills or charges to the Applicable ESPs by such means as are mutually agreed upon by the Servicer and the Applicable ESP and are consistent with CPUC Regulations. The Servicer or an ESP, as applicable, shall pay from its own funds all costs of issuance and delivery of all Bills, including but not limited to printing and postage costs as the same may increase or decrease from time to time.

SECTION 5. CUSTOMER SERVICE FUNCTIONS.

The Servicer shall handle all Consumer inquiries and other Consumer service matters according to the same procedures it uses to service Consumers with respect to its own charges.

SECTION 6. COLLECTIONS; PAYMENT PROCESSING; REMITTANCE.

(a)    Collection Efforts, Policies, Procedures.

(i)    The Servicer shall use reasonable efforts to collect all Billed FRC Revenues from Consumers and ESPs as and when the same become due and shall follow such collection procedures as it follows with respect to comparable assets that it services for itself or others, including with respect to the following:

Annex I-3

(A) The Servicer shall prepare and deliver overdue notices to Consumers and ESPs in accordance with applicable CPUC Regulations and Servicer Policies and Practices.

(B) The Servicer shall apply late payment charges, which may be payable to the extent authorized, to outstanding Consumer and ESP balances in accordance with applicable CPUC Regulations and as required by the Financing Order. All late payment charges, to the extent available, and interest collected shall be payable to and retained by the Servicer as a component of its compensation under the Agreement, and the Issuer shall have no right to share in the same.

(C) The Servicer shall deliver oral and written past-due and shut-off notices in accordance with applicable CPUC Regulations and Servicer Policies and Practices.

(D) The Servicer shall adhere to and carry out disconnection policies and termination of Full Consolidated ESP Billing in accordance with Section 779.2 of the Public Utilities Code, CPUC Decision 97-10-087, as it may be amended or modified from time to time, and applicable CPUC Regulations and Servicer Policies and Practices.

(E) The Servicer may employ the assistance of collection agents in accordance with applicable CPUC Regulations and Servicer Policies and Practices.

(F) In circumstances where the Servicer is allowed to bill Consumers directly, the Servicer shall deliver verbal and written final notices of delinquency and possible disconnection in accordance with applicable CPUC Regulations and Servicer Policies and Practices.

(G) The Servicer shall adhere to and carry out disconnection policies and termination of ESP billing in accordance with the Public Utilities Code, the Financing Order, applicable CPUC Regulations and the Servicer Policies and Practices.

(H) The Servicer may employ the assistance of collection agents to collect any past-due Fixed Recovery Charges in accordance with applicable CPUC Regulations and Servicer Policies and Practices and the Tariff.

(I) The Servicer shall apply Consumer and ESP deposits to the payment of delinquent accounts in accordance with the Financing Order, applicable CPUC Regulations and Servicer Policies and Practices and according to the priorities set forth in Section 6(b) of this Annex I.

(ii)    The Servicer may in its own discretion waive any late payment charge or any other fee or charge relating to delinquent payments, if any, and may waive, vary or modify any terms of payment of any amounts payable by a Consumer, in each case if such waiver or action: (A) would be in accordance with the Servicer’s customary practices or those of any

Annex I-4

successor Servicer with respect to comparable assets that it services for itself and for others; (B) would not materially adversely affect the rights of the Holders as evidenced by an Officer’s Certificate of the Issuer; and (C) would comply with applicable law; provided, however, that notwithstanding anything in the Agreement or this Annex I to the contrary, the Servicer is authorized to write off any Billed FRCs, in accordance with its Servicer Policies and Practices.

(iii)    The Servicer shall accept payment from Consumers in respect of Billed FRCs in such forms and methods and at such times and places as it accepts for payment of its own charges. The Servicer shall accept payment from ESPs in respect of Billed FRCs in such forms and methods and at such times and places as the Servicer and each ESP shall mutually agree in accordance with applicable CPUC Regulations.

(b)    Payment Processing; Allocation; Priority of Payments.

(i)    The Servicer shall post all payments received to Consumer or ESP accounts as promptly as practicable, and, in any event, substantially all payments shall be posted no later than three (3) Business Days after receipt.

(ii)    Subject to clause (iii) below, the Servicer shall apply payments received to each Consumer’s or each Applicable ESP’s account in proportion to the charges contained on the outstanding Bill to such Consumer or Applicable ESP.

(iii)    Any amounts collected by the Servicer that represent partial payments of the total Bill to a Consumer or ESP shall be allocated as follows: (A) first to amounts owed to the Issuer, PG&E and any other affiliate of PG&E which is owed “fixed recovery charges” as defined in Section 850(b)(7) of the Wildfire Financing Law and other fees and charges, (excluding any late fees), regardless of age, pro rata in proportion to the ratio of billed amounts for the Fixed Recovery Charges to the total billed amount; then (B) all late charges shall be allocated to the Servicer; provided that penalty payments owed on late payments of Fixed Recovery Charges shall be allocated to the Issuer in accordance with the terms of the Tariff.

(iv)    The Servicer shall hold all over-payments for the benefit of the Issuer and PG&E and shall apply such funds to future Bill charges in accordance with clauses (ii) and (iii) as such charges become due.

(c)    Accounts; Records.

The Servicer shall maintain accounts and records as to the Recovery Property accurately and in accordance with its standard accounting procedures and in sufficient detail (i) to permit reconciliation between payments or recoveries with respect to the Recovery Property and the amounts from time to time remitted to the Collection Account in respect of the Recovery Property and (ii) to permit the FRC Collections held by the Servicer to be accounted for separately from the funds with which they may be commingled, so that the dollar amounts of FRC Collections commingled with the Servicer’s funds may be properly identified and traced.

Annex I-5

(d)    Investment of Fixed Recovery Charge Payments Received.

Prior to each Daily Remittance, the Servicer may invest Fixed Recovery Charge Payments received at its own risk and (except as required by applicable CPUC Regulations) for its own benefit. So long as the Servicer complies with its obligations under Section 6(c), neither such investments nor such funds shall be required to be segregated from the other investment and funds of the Servicer.

(e)    Calculation of Daily Remittance.

(i)    For purposes of calculating the Daily Remittance, the Servicer shall, on each Servicer Business Day, estimate FRC Collections using the then-current Collections Curve, which resulting estimate shall constitute the amount of Estimated FRC Collections for such Servicer Business Day. Pursuant to Section 6.11(c) of the Agreement, not less than semi-annually (except in the case of the First Payment Period, which may be longer than six months), but in no event more than sixty (60) days after each Payment Date, the Servicer shall calculate the amount of Actual FRC Collections for the immediately preceding Reconciliation Period as compared to the Estimated FRC Collections forwarded to the Collection Account in respect of such Reconciliation Period. For purposes of such calculation, the Servicer may calculate Actual FRC Collections using an updated Collections Curve prepared by the Servicer for the most recent six-month period. Such calculation will be provided to the Indenture Trustee in a Reconciliation Certificate in substantially the form appended to the Agreement as Exhibit F.

(ii)    Reserved.

(iii)    All calculations of collections, each update of the Collections Curve and any changes in procedures used to calculate the Estimated FRC Collections pursuant to this Section 6(e) shall be made in good faith, and in the case of any change in procedures pursuant to clause (ii) above, in a manner reasonably intended to provide estimates and calculations that are at least as accurate as those that would be provided on the Billing Commencement Date utilizing the initial procedures.

(f)    Remittances.

(i)    The Issuer shall cause to be established the Collection Account in the name of the Indenture Trustee in accordance with the Indenture.

(ii)    The Servicer shall make remittances to the Collection Account in accordance with Section 6.11 of the Agreement.

(iii)    In the event of any change of account or change of institution affecting any Collection Account, the Issuer shall provide written notice thereof to the Servicer and the Rating Agencies not later than five (5) Business Days from the effective date of such change.

Annex I-6

SCHEDULE 4.01(a)

EXPECTED AMORTIZATION SCHEDULE

See Attached

Schedule 4.01(a)-1

EXHIBIT A

MONTHLY SERVICER’S CERTIFICATE

See Attached.

MONTHLY SERVICER’S CERTIFICATE

Dated as of [            ], 20[    ]

Reference is hereby made to the Recovery Property Servicing Agreement, dated as of [            ], 2022 (the “Servicing Agreement”) between Pacific Gas and Electric Company, a California corporation, as Servicer (the “Servicer”), and PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company, as Issuer (the “Issuer”). Capitalized terms used but not defined herein shall have the respective meanings specified in the Servicing Agreement.

Pursuant to Section 3.01(b) of the Servicing Agreement, the Servicer does hereby certify as follows:

Collection Period:

Remittance Dates:

Total a. FRCs in Effect b. FRCs Billed¹ c. Estimated FRC Collections Deemed Received² d. Estimated FRC Collections Remitted³

[Signature Page Follows]

¹  Fixed Recovery Charges billed during Collection Period.

²  Estimated Fixed Recovery Charges deemed collected during Collection Period (i.e., Fixed Recovery Charges collected based upon a Collections Curve.

³  Estimated Fixed Recovery Charges remitted during Collection Period (i.e., Estimated Fixed Recovery Chagres remitted within two Servicer Business Days of deemed collection date).

Exhibit A-2

IN WITNESS HEREOF, the undersigned has duly executed and delivered this Monthly Servicer’s Certificate as of the date first above written.

SERVICER:

PACIFIC GAS AND ELECTRIC

COMPANY,

a California corporation

By:                                                                     

          Name:                                                      

          Title: Treasurer

Signature Page to Monthly Servicer’s Certificate

EXHIBIT B

FORM OF SEMI-ANNUAL SERVICER’S CERTIFICATE

See Attached.

EXHIBIT B-1

SEMI-ANNUAL SERVICER’S CERTIFICATE

Dated as of [            ], 20[    ]

Pursuant to Section 4.01(c)(ii) of the Recovery Property Servicing Agreement, dated as of [                ], 2022 (the “Servicing Agreement”), between, PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, as Servicer (the “Servicer”), and PG&E Wildfire Recovery Funding LLC, as Issuer (the “Issuer”), the Servicer does hereby certify, for the             , 20     Payment Date (the “Current Payment Date”), as follows:

Capitalized terms used herein have their respective meanings as set forth in the Indenture. References herein to certain sections and subsections are references to the respective sections of the Servicing Agreement or the Indenture, as the context indicates.

Collection Periods:              to             

Payment Date:                                      

1.	Collections Allocable and Aggregate Amounts Available for the Current Payment Date:
	Fixed Recovery Charge Remittances
	a.	Estimated Monthly Fixed Recovery Charges Remitted for      Collection Period1	$
	b.	Estimated Monthly Fixed Recovery Charges Remitted for      Collection Period	$
	c.	Estimated Monthly Fixed Recovery Charges Remitted for      Collection Period	$
	d.	Estimated Monthly Fixed Recovery Charges Remitted for      Collection Period	$
	e.	Estimated Monthly Fixed Recovery Charges Remitted for      Collection Period	$
	f.	Estimated Fixed Recovery Charges Remitted for      Collection Period2	$
i.	Total Estimated Fixed Recovery Charge Remittances		$
ii.	Investment Earnings on Collection Account
		iii.        Investment Earnings on Capital Subaccount iv.        Investment Earnings on Excess Funds Subaccount v.         Investment Earnings on General Subaccount	$                 $                 $
vi.		General Subaccount Balance (sum of i through y above)	$
xii.		Excess Funds Subaccount Balance as of Prior Payment Date	$
xiii.		Capital Subaccount Balance as of Prior Payment Date	$
ix.		Collection Account Balance (sum of vi through vii above)	$
2.	Outstanding Amounts as of Prior Payment Date:
i.	Tranche [                ] Outstanding Amount		$
ii.	Tranche [                ] Outstanding Amount		$
iii.	Tranche [                ] Outstanding Amount		$

¹  Includes amounts calculated for the Reconciliation Period for the prior Collection Period, which was settled in [month-date]. Based upon Estimated Fixed Recovery Charges remitted during Collection Period (i.e., Estimated Fixed Recovery Charges remitted within two Servicer Business Days of deemed collection date).

²  Does not include reconciliation amounts calculated for the Reconciliation Period for such Collection Period, which will be settled in the month following such Collection Period

EXHIBIT B-2

iv.	Aggregate Outstanding Amount of all Tranches of Recovery Bonds	$
3.	Required Funding/Payments as of Current Payment Date:	$
Principal		Principal Due
i.	Tranche [                ]	$
ii.	Tranche [                ]	$
iii.	Tranche [                ]	$
iv.	For all Tranches of Recovery Bonds:	$

Interest Tranche	Interest Rate	Days in Interest Period3	Principal Balance	Interest Due
v. Tranche [                ]				$
vi. Tranche [                ]				$
vii. Tranche [                ]				$

viii. For all Tranches of Recovery Bonds: $                

		Required Level	Funding Required
ix.	Capital Subaccount
4.	Allocation of Remittances as of Current Payment Date Pursuant to 8.02(e) of Indenture
i.	Indenture Trustee Fees and Expenses; Indemnity Amounts4		$
ii.	Servicing Fee		$
iii.	Administration Fee		$
iv.	Other Ongoing Financing Costs Expenses		$
v.	Semi-Annual Interest (including any past-due for prior periods)		$
vi.	Return on PG&E Capital Contribution and any remittance of unpaid upfront financing costs

	Tranche	Aggregate	Per $1000 of Original Principal Amount
1.	Tranche [                ] Interest Payment	$	$
2.	Tranche [                ] Interest Payment	$	$
3.	Tranche [                ] Interest Payment	$	$
vii.	Principal Due and Payable as a Result of an Event of Default or on Final Maturity Date		$

³  On 30/360 day basis for initial payment date; otherwise use one-half of annual rate.

⁴  Subject to $200,000 cap per annum

EXHIBIT B-3

	Tranche	Aggregate	Per $1000 of Original Principal Amount
1.	Tranche [                ] Principal Payment	$		$
2.	Tranche [                ] Principal Payment	$		$
3.	Tranche [                ] Principal Payment	$		$
viii.	Semi-Annual Principal				$
ix.	Deposit to Excess Funds Subaccount				$
x.	Released to Issuer upon Retirement of all Notes				$
xi.	Aggregate Remittances as of Current Payment Date				$
5.	Subaccount Withdrawals as of Current Payment (if applicable, pursuant to Section 8.02(e) of Indenture:
i.	Excess Funds Subaccount				$
ii.	Capital Subaccount				$
iii.	Total Withdrawals				$
6.	Outstanding Amount and Collection Account Balance as of Current Payment Date (after giving effect to payments to be made on such Payment Date):
i.	Tranche [                ]				$
ii.	Tranche [                ]				$
iii.	Tranche [                ]				$
iv.	Aggregate Outstanding Amount of all Tranches of Recovery Bonds:				$
v.	Excess Funds Subaccount Balance				$
vi.	Capital Subaccount Balance				$
vii.	Aggregate Collection Account Balance				$

7.		Shortfalls in Interest and Principal Payments as of Current Payment Date
	i.		Semi-annual Interest
				Tranche [                ] Interest Payment	$
				Tranche [                ] Interest Payment	$
				Tranche [                ] Interest Payment	$
	ii.		Semi-Annual Principal
				Tranche [                ] Principal Payment	$
				Tranche [                ] Principal Payment	$
				Tranche [                ] Principal Payment	$
8.		Shortfalls in Required Subaccount Levels as of Current Payment Date
		iii.	Capital Subaccount

EXHIBIT B-4

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Semi-Annual Servicer’s Certificate as of the date first above written.

SERVICER:
PACIFIC GAS AND ELECTRIC COMPANY,         a California corporation
By:
	Name:
	Title:

EXHIBIT B-5

EXHIBIT C

SERVICER’S REGULATION AB CERTIFICATE

The undersigned hereby certifies that he/she is the duly elected and acting                      of PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, as servicer (the “Servicer”), under the Recovery Property Servicing Agreement dated as of [                    ], 2022 (the “Servicing Agreement”) between the Servicer and PG&E Wildfire Recovery Funding LLC, as issuer (the “Issuer”), and further that:

1.     The undersigned (a) is responsible under Item 1122(a) of Regulation AB for assessing the Servicer’s compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”) and (b) a review of the Servicer’s activities during the Assessment Period (defined below) and its performance under the Servicing Agreement has been made under the supervision of the undersigned in accordance with Item 1123 of Regulation AB.

2.     With respect to each of the Servicing Criteria, the undersigned has made the following assessment of the Servicing Criteria in accordance with Item 1122(d) of Regulation AB, with such discussion regarding the performance of such Servicing Criteria during the fiscal year covered by the Depositor’s annual report on Form 10-K Report (such fiscal year, the “Assessment Period”):

	Servicing Criteria	Applicable Servicing Criteria
Reference	Criteria
	General Servicing Considerations
1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.	Applicable; assessment below.
1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party’s performance and compliance with such servicing activities.	Not applicable; no servicing activities were outsourced.
1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for the pool assets are maintained.	Not applicable; documents do not provide for a back-up servicer.

EXHIBIT C-1

1

	Servicing Criteria	Applicable Servicing Criteria
Reference	Criteria
1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.	Not applicable; CPUC rules impose credit standards on retail electric providers who handle customer collections and govern performance requirements of utilities.
1122(d)(1)(v)	Aggregation of information, as applicable, is mathematically accurate and the information conveyed accurately reflects the information.	Applicable
	Cash Collection and Administration
1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days of receipt, or such other number of days specified in the transaction agreements.	Applicable
1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	Applicable
1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.	Not applicable; no advances by the Servicer are permitted under the transaction agreements.
1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	Applicable, but no current assessment is required since transaction accounts are maintained by and in the name of the Indenture Trustee.
1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, “federally insured depository institution” with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.	Applicable, but no current assessment required; all “custodial accounts” are maintained by the Indenture Trustee.
1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.	Not applicable; all transfers made by wire transfer.

EXHIBIT C-2

	Servicing Criteria	Applicable Servicing Criteria
Reference	Criteria
1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations (A) are mathematically accurate; (B) are prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) are reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.	Applicable; assessment below.
	Investor Remittances and Reporting
1122(d)(3)(i)	Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors’ or the trustee’s records as to the total unpaid principal balance and number of pool assets serviced by the Servicer.	Applicable; assessment below.
1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	Not applicable; investor records maintained by Indenture Trustee.
1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the Servicer’s investor records, or such other number of days specified in the transaction agreements.	Applicable
1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	Applicable; assessment below.
	Pool Asset Administration
1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents.	Applicable; assessment below.
1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.	Applicable; assessment below.

EXHIBIT C-3

	Servicing Criteria	Applicable Servicing Criteria
Reference	Criteria
1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.	Not applicable; no removals or substitutions of recovery property are contemplated or allowed under the transaction documents.
1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the Servicer’s obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related pool asset documents.	Applicable; assessment below.
1122(d)(4)(v)	The Servicer’s records regarding the pool assets agree with the Servicer’s records with respect to an obligor’s unpaid principal balance.	Not applicable; because underlying obligation (fixed recovery charge) is not an interest bearing instrument.
1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor’s pool asset (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.	Applicable; assessment below
1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.	Applicable; limited assessment below. Servicer actions governed by CPUC regulations.
1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period a pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity’s activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).	Applicable, but does not require assessment since no explicit documentation requirement with respect to delinquent accounts are imposed under the transactional documents due to availability of “true-up” mechanism.
1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.	Not applicable; fixed recovery charges are not interest bearing instruments.

EXHIBIT C-4

	Servicing Criteria	Applicable Servicing Criteria
Reference	Criteria
1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor’s pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool asset, or such other number of days specified in the transaction agreements.	Applicable; Servicer maintains ESP deposit accounts in accordance with CPUC rules and regulations.
1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.	Not applicable; Servicer does not make payments on behalf of obligors.
1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer’s funds and not charged to the obligor, unless the late payment was due to the obligor’s error or omission.	Not applicable; Servicer cannot make advances of its own funds on behalf of customers under the transaction documents.
1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor’s records maintained by the servicer, or such other number of days specified in the transaction agreements.	Not applicable; Servicer cannot make advances of its own funds on behalf of customers to pay principal or interest on the bonds.
1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectable accounts are recognized and recorded in accordance with the transaction agreements.	Applicable; assessment below.
1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.	Not applicable; no external enhancement is required under the transaction documents.

3.     To the best of the undersigned’s knowledge, based on such review, the Servicer is in compliance in all material respects with the applicable Servicing Criteria set forth above as of and for the period ending the end of the fiscal year covered by the Depositor’s annual report on Form 10-K[, except with respect to the matters identified in the list of Servicer Defaults contained in Annex A attached hereto (if any) and as otherwise set forth below.]⁵

⁵  If the Servicer is not in compliance in all material respects with the Servicing Criteria, include description of any material instance of noncompliance.

EXHIBIT C-5

4.     A registered public accounting firm has issued an attestation report on the undersigned’s assessment of compliance with the applicable Servicing Criteria set forth above as of and for the period ending the end of the fiscal year covered by the Depositor’s annual report on Form 10-K.

[Signature Page Follows]

EXHIBIT C-6

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Servicer’s Regulation AB Certificate as of the date first above written.

SERVICER:
PACIFIC GAS AND ELECTRIC COMPANY a California corporation
By:
	Name: Title:

EXHIBIT C-7

ANNEX A

LIST OF SERVICER DEFAULTS

The following Servicer Defaults, or events which with the giving of notice, the lapse of time, or both, would become Servicer Defaults known to the undersigned occurred during the year ended                      :

Nature of Default Status

ANNEX A-1

EXHIBIT D

FORM OF ROUTINE TRUE-UP MECHANISM ADVICE LETTER

[date]

Application                 -E

(Pacific Gas and Electric Company ID U 39-E)

Public Utilities Commission of the State of California

Subject: Routine [Annual (and at least quarterly beginning 12 months prior to the last scheduled final payment date of the last maturing tranche of a series of Recovery Bonds)] / [Semi-Annual] / [Interim] True-Up Mechanism Advice Letter for Fixed Recovery Charges True-up Mechanism

Pursuant to California Public Utilities Commission (CPUC) Decision (D.) 21-05-015 (Decision), Pacific Gas and Electric Company (PG&E), as servicer of the Recovery Bonds (Recovery Bonds) and on behalf of the Special Purpose Entity, hereby applies for adjustment to the Fixed Recovery Charge for series                     , Tranche(s)                      of the Recovery Bonds.

Purpose:

This submission establishes revised Fixed Recovery Charges for rate schedules for Consumers, as set forth in D.21-005-015.

Background:

In D.21-005-015, the CPUC granted PG&E authority to issue Recovery Bonds to pay Catastrophic Wildfire Amounts and associated financing costs, and consequently to reduce PG&E’s electric rates.

Recovery Bonds are securities that are backed by the cash flows generated by a specific asset that will be sold by PG&E to a Special Purpose Entity that issued the Recovery Bonds secured by this asset. The asset sold is Recovery Property, a current property right that was created by Article 5.8 as the right, title and interest in and to all (i) Fixed Recovery Charges established pursuant to the Financing Order, including all rights to obtain adjustments, and (ii) revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges that will cover debt service and all related Recovery Bond costs.

In D.21-005-015, the Commission authorized PG&E to submit Routine True-up Mechanism Advice Letters at least annually, and more frequently as permitted in the Financing Order, (i) at least 50 days before the last day of February for annual submissions, (ii) at least 50 days before August 31 for semi-annual submissions and (iii) at least 50 days before the end of the month for interim submissions.

EXHIBIT D-1

These advice letters are intended to ensure that the actual revenues collected under the Fixed Recovery Charges will be sufficient to make all scheduled payments of Bond principal, interest, and other financing costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount. Routine True-up Mechanism Advice Letters are those where PG&E uses the method found reasonable by the Commission in D.21-005-015 to revise existing Fixed Recovery Charges and FRTAs.

Using the adjustment mechanism approved by the Commission in D.21-005-015, this Advice Letter modifies the variables used in the Fixed Recovery Charge calculations and provides the resulting modified Fixed Recovery Charges.

Table 1 shows the revised assumptions for each of the variables used in calculating the Fixed Recovery Charges for Consumers. Exhibit 1 shows the revised payment schedule.

TABLE 1

Input Values For Revised Fixed Recovery Charges

kWh sales for the applicable period

Percent of Consumers’ revenue written off

Percent of revenue requirement allocated to Consumers

Percent of Consumers’ billed amounts expected to be uncollected

Percent of billed amounts collected in current month

Percent of billed amounts collected in second month after billing

Percent of billed amounts collected in third month after billing

Percent of billed amounts collected in fourth month after billing

Percent of billed amounts collected in fifth month after billing

Percent of billed amounts collected in sixth month after billing

Percent of billed amounts remaining less uncollectibles

Ongoing Financing Costs for the applicable period

Ongoing Financing Costs for the applicable payment period (See Table 1 above)

Expected Fixed Recovery Charges outstanding balance as of    /    /
Over- or undercollection of principal from previous Fixed Recovery Charge collections to be reflected in the new Fixed Recovery Charges

Table 2 shows the revised Fixed Recovery Charges calculated for Consumers. The Fixed Recovery Charge and FRTA, if any, calculations are shown in Exhibit 2.

TABLE 2
Consumer Fixed Recovery Charge	¢ / kWh
Consumers Fixed Recovery Tax Amount	¢ / kWh

Exhibit 3 includes proposed changes to Part I of PG&E’s Preliminary Statement to show Fixed Recovery Charges and FRTAs, if any, to be effective March 1, [September 1, if semi-annual Routine True-Up Mechanism Advice Letter] [or month, if interim Routine True-Up Mechanism Advice Letter], [year].

EXHIBIT D-2

Effective Date:

[If Annual Routine True-Up Mechanism Advice Letter]

In accordance with D.21-005-015, Routine True-Up Mechanism Advice Letters for required annual Fixed Recovery Charge adjustments shall be submitted at least 50 days before last day of February. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect the March 1st immediately following the submission. Therefore, these Fixed Recovery Charges and any FRTAs shall be effective March 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].⁶

[If Semi-Annual Routine True-Up Mechanism Advice Letter]

In accordance with D.21-005-015, semi-annual Routine True-Up Mechanism Advice Letters for interim Fixed Recovery Charge adjustments shall be submitted at least 50 days before the end of [August]. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect the September 1st immediately following the submission. Therefore these Fixed Recovery Charges shall be effective September 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].⁷

[If Interim Routine True-Up Mechanism Advice Letter]

In accordance with D.21-005-015, interim Routine True-Up Mechanism Advice Letters for interim Fixed Recovery Charge adjustments shall be submitted at least 50 days before the proposed effective date (which, for efficacy of reporting, will be the first day of a month). These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect on the proposed effective date. Therefore, these Fixed Recovery Charges shall be effective [month] 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].⁸

Description of Exhibits

Exhibit 1 to this Advice Letter presents the revised principal amortization schedule for the Recovery Bonds.

⁶  February 29 to be used in a Leap Year.

⁷  February 29 to be used in a Leap Year.

⁸  February 29 to be used in a Leap Year.

EXHIBIT D-3

Exhibit 2 presents the revised Fixed Recovery Charge calculations.

Exhibit 3 provides proposed changes to Part I of PG&E’s Preliminary Statement.

Notice

In accordance with General Order 96-B Section 4.4, a copy of this Advice Letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes should be directed to PG&E at email address PGETariffs@pge.com. Advice Letter submissions can also be accessed electronically at: https://www.pge.com/tariffs/advice-letters.page.

Vice President – Regulatory Relations

Attachments

cc: Service List for A.21-01-004.

EXHIBIT D-4

Exhibit 1

Revised Expected Principal Amount Amortization

Series             , Tranche             

EXHIBIT D-5

Exhibit 2

Revised Amounts Receivable And Expected Principal Amount Amortization

The total amount payable to the owner of the Recovery Property, or its assignee(s), pursuant to this letter is a $ principal amount, plus interest on such principal amount, plus other Financing Costs, to be obtained from Fixed Recovery Charge calculated in accordance with D.21-05-015.

The Fixed Recovery Charges shall be adjusted from time to time, at least annually, via the Fixed Recovery Charge True-Up Mechanism in accordance with D.21-05-015.

The following amounts are scheduled to be paid by the Bond Trustee from Fixed Recovery Charges it has received. These payment amounts include principal plus interest and other financing costs.

Payment Date	Receipt Amount	Payment Amount	Outstanding Principal
[date 1]	[$receipt 1]	[$payment 1]	[$outstanding principal 1]
•	•	•	•
•	•	•	•
•	•	•	•
[date n]	[$receipt n]	[$payment n]	[$outstanding principal n]
			[$0]

EXHIBIT D-6

Exhibit 3

Proposed Changes to Part I of PG&E’s Preliminary Statement

EXHIBIT D-7

EXHIBIT E

FORM OF NON-ROUTINE TRUE-UP MECHANISM ADVICE LETTER

[date]

Application             -E

(Pacific Gas and Electric Company ID U 39-E)

Public Utilities Commission of the State of California

Subject: Non-Routine True-Up Mechanism Advice Letter

Pursuant to California Public Utilities Commission (CPUC) Decision (D.) 21-05-015 (Decision), Pacific Gas and Electric Company (PG&E), as servicer of the Recovery Bonds (Recovery Bonds) and on behalf of the Special Purpose Entity, hereby applies for adjustment to the Fixed Recovery Charge for series , Tranche(s) of the Recovery Bonds.

Purpose

This Advice Letter establishes revised Fixed Recovery Charges for rate schedules for Consumers, as set forth in D.21-05-015.

Background

In D.21-05-015, the Commission granted PG&E authority to issue Recovery Bonds to pay Catastrophic Wildfire Amounts and associated financing costs, and consequently to reduce PG&E’s electric rates.

Recovery Bonds are securities that are backed by the cash flows generated by a specific asset that will be sold by PG&E to a Special Purpose Entity that issued the Recovery Bonds secured by this asset. The asset sold is Recovery Property, a current property right that was created by Article 5.8 as the right, title and interest in and to all (i) Fixed Recovery Charges established pursuant to the Financing Order, including all rights to obtain adjustments, and (ii) revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges that will cover debt service and all related Recovery Bond costs.

In D.21-05-015, the Commission authorized PG&E to submit Non-Routine True-up Mechanism Advice Letters as permitted in the Financing Order, to propose revisions to the logic, structure and components of the cash flow model adopted by the Financing Order. These submissions are intended to ensure that the actual revenues collected under the Fixed Recovery Charges will be sufficient to make all scheduled payments of Bond principal, interest, and other financing costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount.

EXHIBIT E-1

Using the cash flow model attached to this Non-Routine True-Up Mechanism Advice Letter as Exhibit 1, this Advice Letter modifies the variables used in the Fixed Recovery Charge calculations and provides the resulting modified Fixed Recovery Charges.

Table 1 shows the revised assumptions for each of the variables used in calculating the Fixed Recovery Charges for Consumers. Exhibit 2 shows the revised payment schedule.

TABLE 1

Input Values For Revised Fixed Recovery Charges

kWh sales for the applicable period

Percent of Consumers’ revenue written off

Percent of revenue requirement allocated to Consumers

Percent of Consumers’ billed amounts expected to be uncollected

Percent of billed amounts collected in current month

Percent of billed amounts collected in second month after billing

Percent of billed amounts collected in third month after billing

Percent of billed amounts collected in fourth month after billing

Percent of billed amounts collected in fifth month after billing

Percent of billed amounts collected in sixth month after billing

Percent of billed amounts remaining less uncollectibles

Ongoing Financing Costs for the applicable period

Ongoing Financing Costs for the applicable payment period (See Table 1 above)

Expected Fixed Recovery Charges outstanding balance as of    /    /

Over- or undercollection of principal from previous Fixed Recovery Charge collections to be reflected in the new Fixed Recovery Charges

Table 2 shows the revised Fixed Recovery Charges calculated for Consumers. The Fixed Recovery Charge calculations are shown in Exhibit 3.

TABLE 2
Consumer Fixed Recovery Charge	¢ / kWh

Exhibit 4 includes proposed changes to Part I of PG&E’s Preliminary Statement to show Fixed Recovery Charges to be effective on [Date].

Effective Date

In accordance with D.21-05-015, Non-Routine True-Up Mechanism Advice Letters for Fixed Recovery Charge adjustments shall be submitted at least 90 days before the date when the proposed changes would become effective. If the Commission provides a resolution adopting the proposed changes in the Non-Routine True-Up Mechanism Advice Letter, PG&E, or a successor servicer, may implement Fixed Recovery Charge adjustments proposed in this Non-Routine True-Up Mechanism Advice Letter on [Date].

Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model, PG&E or a successor servicer may implement the adjustments on the effective

EXHIBIT E-2

date identified in the Non-Routine True-Up Mechanism Advice Letter if that date is at least 90 days after the date of submission.

Description of Exhibits

Exhibit 1 to this Advice Letter presents the new cash flow model for the Fixed Recovery Charges.

Exhibit 2 to this Advice Letter presents the revised principal amortization schedule for the Recovery Bonds.

Exhibit 3 presents the revised Fixed Recovery Charge calculations.

Exhibit 4 provides proposed changes to Part I of PG&E’s Preliminary Statement.

Notice

In accordance with General Order 96-B Section 4.4, a copy of this Advice Letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes should be directed to PG&E at email address PGETariffs@pge.com. Advice Letter submissions can also be accessed electronically at: https://www.pge.com/tariffs/advice-letters.page.

Vice President – Regulatory Relations

Attachments

cc: Service List for A.21-01-004.

EXHIBIT E-3

Exhibit 1

New Cash Flow Model Description for the Fixed Recovery Charges

EXHIBIT E-4

Exhibit 2

Revised Expected Principal Amount Amortization

Series             , Tranches             

EXHIBIT E-5

Exhibit 3

Revised Amounts Receivable And Expected Principal Amount Amortization

The total amount payable to the owner of the Recovery Property, or its assignee(s), pursuant to this letter is a $[      ] principal amount, plus interest on such principal amount, plus other Financing Costs, to be obtained from a Fixed Recovery Charge calculated in accordance with D.21-05-015.

The Fixed Recovery Charges shall be adjusted from time to time, at least annually, via the Fixed Recovery Charge True-Up Mechanism in accordance with D.21-05-015.

The following amounts are scheduled to be paid by the Bond Trustee from Fixed Recovery Charges it has received. These payment amounts include principal plus interest and other financing costs.

Payment Date	Receipt Amount	Payment Amount	Outstanding Principal
[date 1]	[$receipt 1]	[$payment 1]	[$outstanding principal 1]
•	•	•	•
•	•	•	•
•	•	•	•
[date n]	[$receipt n]	[$payment n]	[$outstanding principal n]
			[$0]

EXHIBIT E-6

Exhibit 4

Proposed changes to Part I of PG&E’s Preliminary Statement

EXHIBIT E-7

EXHIBIT F

RECONCILIATION CERTIFICATE

Dated as of [            ], 20[    ]

Reference is hereby made to the Recovery Property Servicing Agreement, dated as of [            ], 2022 (the “Servicing Agreement”) between Pacific Gas and Electric Company, a California corporation, as Servicer (the “Servicer”), and PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company, as Issuer (the “Issuer”). Capitalized terms used but not defined herein shall have the respective meanings specified in the Servicing Agreement.

Pursuant to Section 4.01(c)(iv) of the Servicing Agreement the Servicer does hereby certify as follows:

Reconciliation Period: [Applicable Period]

Total a. Estimated FRC Collections Received Total ($) b. Actual Fixed Recovery Charge Payments Received ($) c. (Remittance Shortfall) or Excess Remittance for this Reconciliation Period ($)⁹

d. Daily remittances previously made by the Servicer to the Collection Account in respect of this Reconciliation Period (a):

e. If (a>b), (c) equals net amount due to the Servicer from the Collection Amount:

f. If (b>a), (c) equals net amount due from the Servicer to the Collection Amount:

Inputs for Reconciliation Period

a. Average Days Sales Outstanding

b. Write-offs:

[Signature Page Follows]

⁹  A Remittance Shortfall will be expressed as a negative number. Excess Remittance will be expressed as a positive number.

Exhibit F

IN WITNESS HEREOF, the undersigned has duly executed and delivered this Reconciliation Certificate as of the date first above written.

SERVICER:
PACIFIC GAS AND ELECTRIC COMPANY,
a California corporation
By:
	Name:
	Title: Treasurer

EXHIBIT F

EX-10.2

Exhibit 10.2

RECOVERY PROPERTY PURCHASE AND SALE AGREEMENT

by and between

PG&E WILDFIRE RECOVERY FUNDING LLC,

as Issuer

and

PACIFIC GAS AND ELECTRIC COMPANY,

as Seller

Dated as of [                ], 2022

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS		1
SECTION 1.01.	Definitions	1
SECTION 1.02.	Other Definitional Provisions	2
ARTICLE II CONVEYANCE OF RECOVERY PROPERTY		2
SECTION 2.01.	Conveyance of Recovery Property	2
SECTION 2.02.	Conditions to Sale of Recovery Property	3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER		4
SECTION 3.01.	Organization and Good Standing	4
SECTION 3.02.	Due Qualification	5
SECTION 3.03.	Power and Authority	5
SECTION 3.04.	Binding Obligation	5
SECTION 3.05.	No Violation	5
SECTION 3.06.	No Proceedings	6
SECTION 3.07.	Consents and Approvals	6
SECTION 3.08.	The Recovery Property	6
SECTION 3.09.	Change in Law	9
SECTION 3.10.	Limitations on Representations and Warranties	10
ARTICLE IV COVENANTS OF THE SELLER		10
SECTION 4.01.	Existence	10
SECTION 4.02.	No Liens	10
SECTION 4.03.	Delivery of Collections; Sale of Certain Assets	10
SECTION 4.04.	Notice of Liens	11
SECTION 4.05.	Compliance with Law	11
SECTION 4.06.	Covenants Related to Recovery Bonds and Recovery Property	11
SECTION 4.07.	Protection of Title	13
SECTION 4.08.	Nonpetition Covenants	13
SECTION 4.09.	Taxes	13
SECTION 4.10.	Notice of Breach to Rating Agencies, Etc.	14
SECTION 4.11.	Use of Proceeds	14
SECTION 4.12.	Further Assurances	14
ARTICLE V THE SELLER		14
SECTION 5.01.	Liability of Seller; Indemnities	14
SECTION 5.02.	Merger, Conversion or Consolidation of, or Assumption of the Obligations of, Seller	15
SECTION 5.03.	Limitation on Liability of Seller and Others	16
ARTICLE VI MISCELLANEOUS PROVISIONS		16
SECTION 6.01.	Amendment	16

i

SECTION 6.02.	Notices	17
SECTION 6.03.	Assignment	17
SECTION 6.04.	Limitations on Rights of Third Parties	17
SECTION 6.05.	Severability	17
SECTION 6.06.	Separate Counterparts	18
SECTION 6.07.	Headings	18
SECTION 6.08.	Governing Law	18
SECTION 6.09.	Assignment to Indenture Trustee	18
SECTION 6.10.	Limitation of Liability	18
SECTION 6.11.	Waivers	18

ii

This RECOVERY PROPERTY PURCHASE AND SALE AGREEMENT, dated as of [                ], 2022 (this “Agreement”), is between PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Issuer”), and PACIFIC GAS AND ELECTRIC COMPANY, a California corporation (together with its successors in interest to the extent permitted hereunder, the “Seller” or “PG&E”).

RECITALS

WHEREAS, the Issuer desires to purchase the Recovery Property created pursuant to the Wildfire Financing Law and the Financing Order and as further described in the Issuance Advice Letter;

WHEREAS, the Seller is willing to sell its rights and interests in and to the Recovery Property to the Issuer whereupon such rights and interests will become the Recovery Property;

WHEREAS, the Issuer, in order to finance the purchase of the Recovery Property, will enter into that certain Indenture, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Indenture”) between the Issuer and The Bank of New York Mellon Trust Company, N.A., a national banking association, in its capacity as Indenture Trustee (the “Indenture Trustee”) and in its separate capacity as a securities intermediary (the “Securities Intermediary”), and issue the Recovery Bonds thereunder and under the Series Supplement (as defined in the Indenture); and

WHEREAS, the Issuer, to secure its obligations under the Recovery Bonds and the Indenture, will pledge, among other things, all right, title and interest of the Issuer in and to the Recovery Property and this Agreement to the Indenture Trustee for the benefit of the Secured Parties.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions.

(a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings specified in the Indenture (including Appendix A attached thereto).

(b) Whenever used in this Agreement, the following words and phrases shall have the following meanings:

“Financing Order” means the order of the CPUC, D.21-05-015, issued on May 11, 2021, which became final and non-appealable on February 28, 2022.

“Fixed Recovery Charges” means the Fixed Recovery Charges authorized to be imposed and collected pursuant to the Financing Order and the Issuance Advice Letter.

“Issuance Advice Letter” means the Issuance Advice Letter filed with the CPUC pursuant to the Wildfire Financing Law and the Financing Order with respect to the Recovery Bonds.

“Recovery Property” means the “recovery property” as defined in Section 850(b)(11) of the Wildfire Financing Law that is established pursuant to the Financing Order, being all right, title and interest of PG&E: (i) in and to Fixed Recovery Charges in the amounts authorized to be imposed and collected under the Financing Order, including all rights to obtain adjustments to Fixed Recovery Charges in accordance with Wildfire Financing Law and the Financing Order, and (ii) all revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges.

“Tariff” means the rate tariff filed with the CPUC as the Issuance Advice Letter delivered pursuant to the Financing Order to evidence the Fixed Recovery Charges, as amended.

SECTION 1.02. Other Definitional Provisions.

(a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(b) The words “hereof,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation”.

(c) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

ARTICLE II

CONVEYANCE OF RECOVERY PROPERTY

SECTION 2.01. Conveyance of Recovery Property.

(a) In consideration of the Issuer’s payment to the Seller of $[                ], subject to the conditions specified in Section 2.02, the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse except as otherwise set forth herein, all right, title and interest of the Seller in and to the Recovery Property (such sale, transfer, assignment, set over and conveyance of the Recovery Property includes, to the fullest extent

2

permitted by the Wildfire Financing Law, the assignment of all revenues, collections, claims, rights, payments, money or proceeds of or arising from the Fixed Recovery Charges and the Tariff evidencing such charges. Such sale, transfer, assignment, set over and conveyance is hereby expressly stated to be a sale and, pursuant to Section 850.4(a) of the Wildfire Financing Law, shall be treated as an absolute transfer of all of the Seller’s right, title and interest (as in a true sale) and not as a pledge or other financing, of the Recovery Property. This is the statement referred to in Section 850.4(a) of the Wildfire Financing Law. If such sale, transfer, assignment, set over and conveyance is held not to be a true sale as contemplated by Section 850.4(a) of the Wildfire Financing Law, then such sale, transfer, assignment, set over and conveyance shall be treated as the grant of a security interest in the Recovery Property and the Seller hereby grants to the Issuer a security interest in the Recovery Property and the proceeds thereof to secure its obligations hereunder.

(b) Subject to Section 2.02, the Issuer does hereby purchase the Recovery Property from the Seller for the consideration set forth in Section 2.01(a).

SECTION 2.02. Conditions to Sale of Recovery Property.

The obligation of the Issuer to purchase Recovery Property on the Closing Date shall be subject to the satisfaction of each of the following conditions:

(i) on or prior to the Closing Date, the Seller must duly execute and deliver this Agreement to the Issuer;

(ii) on or prior to the Closing Date, the Seller shall have received the Financing Order creating the Recovery Property;

(iii) on or prior to the Closing Date, the Seller must have filed the Issuance Advice Letter with the CPUC, and such letter must be effective;

(iv) as of the Closing Date, the Seller is not insolvent and will not have been made insolvent by such sale and the Seller is not aware of any pending insolvency with respect to itself;

(v) as of the Closing Date, the representations and warranties of the Seller set forth in this Agreement shall be true and correct with the same force and effect as if made on the Closing Date (except to the extent that they relate to an earlier date); on and as of the Closing Date no breach of any covenant or agreement of the Seller contained in this Agreement has occurred and is continuing; and no Servicer Default shall have occurred and be continuing;

(vi) as of the Closing Date, (A) the Issuer shall have sufficient funds available to pay the purchase price for the Recovery Property to be conveyed on such date and (B) all conditions to the issuance of the Recovery Bonds intended to provide such funds set forth in the Indenture shall have been satisfied or waived;

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(vii) on or prior to the Closing Date, the Seller shall have taken all action required to transfer to the Issuer ownership of the Recovery Property to be conveyed on such date, free and clear of all Liens other than Liens created by the Issuer pursuant to the Basic Documents and to perfect such transfer, including, without limitation, filing any statements or filings under the Wildfire Financing Law or the UCC; and the Issuer or the Servicer, on behalf of the Issuer, shall have taken any action required for the Issuer to grant the Indenture Trustee a first priority perfected security interest in the Recovery Bond Collateral and maintain such security interest as of such date;

(viii) the Seller shall have received and delivered to the Issuer and the Indenture Trustee an opinion or opinions of outside tax counsel (as selected by the Seller, and in form and substance reasonably satisfactory to the Issuer and the Underwriters) to the effect that (A) the Issuer will not be subject to United States federal income tax as an entity separate from its sole owner and that the Recovery Bonds will be treated as debt of the Issuer’s sole owner for United States federal income tax purposes, and (B) the issuance of the Recovery Bonds will not result in gross income to the Seller. The opinion of outside tax counsel described above may, if the Seller so chooses, be conditioned on the receipt by the Seller of one or more letter rulings from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph) and in rendering such opinion outside tax counsel shall be entitled to rely on the rulings contained in such ruling letters and to rely on the representations made, and information supplied, to the Internal Revenue Service in connection with such letter rulings;

(ix) on and as of the Closing Date, each of the LLC Agreement, the Servicing Agreement, this Agreement, the Indenture, the Financing Order, the Tariff and the Wildfire Financing Law shall be in full force and effect; and

(x) the Seller shall have delivered to the Indenture Trustee and the Issuer an Officers’ Certificate confirming the satisfaction of each condition precedent specified in this Section 2.02.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to Sections 3.10, the Seller makes the following representations and warranties, as of the Closing Date, and the Seller acknowledges that the Issuer has relied thereon in acquiring the Recovery Property. The representations and warranties shall survive the sale and transfer of Recovery Property to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. The Seller agrees that (i) the Issuer may assign the right to enforce the following representations and warranties to the Indenture Trustee and (ii) the representations and warranties inure to the benefit of the Issuer and the Indenture Trustee.

SECTION 3.01. Organization and Good Standing.

(a) The Seller is duly organized and validly existing and in good standing under the laws of the State of California, with requisite corporate power and authority to own its properties as owned on the Closing Date and to conduct its business as conducted by it, on the Closing Date, to obtain the Financing Order and to own, sell and transfer Recovery Property and to execute, deliver and perform the terms of this Agreement.

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(b) After giving effect to the sale of the Recovery Property under this Agreement, the Seller: (i) is solvent and expects to remain solvent, (ii) is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes, (iii) is not engaged and does not expect to engage in a business for which its remaining property represents an unreasonably small capital, (iv) reasonably believes that it will be able to pay its debts as they become due and (v) is able to pay its debts as they mature and does not intend to incur, nor does it believe that it will incur, indebtedness that it will not be able to repay at its maturity.

SECTION 3.02. Due Qualification.

The Seller is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on the Seller’s business, operations, assets, revenues or properties).

SECTION 3.03. Power and Authority.

The Seller has the requisite corporate or other power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Seller under its organizational or governing documents and laws.

SECTION 3.04. Binding Obligation.

This Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors’ or secured parties’ rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.

SECTION 3.05. No Violation.

The consummation by the Seller of the transactions contemplated by this Agreement (a) do not conflict with the organizational documents of the Seller or any indenture or other agreement or instrument to which the Seller is a party or by which it or any of its property is bound, nor will consummation by the Seller of the transactions contemplated hereunder result in the creation or imposition of any Lien upon its properties pursuant to the terms of such indenture, agreement or other instrument (other than any that may be granted under the Basic Documents or the Lien arising under Section 850.3(g) of the Wildfire Financing Law, the Financing Order and the Issuance Advice Letter) or violate any existing law or any existing order, rule or regulation applicable to the Seller and (b) is consistent with the Wildfire Financing Law and the Financing Order.

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SECTION 3.06. No Proceedings.

(a) There are no proceedings pending and, to the Seller’s knowledge, there are no proceedings threatened and, to the Seller’s knowledge, there are no investigations pending or threatened, before any Governmental Authority having jurisdiction over the Seller or its properties involving or relating to the Seller or the Issuer or, to the Seller’s knowledge, any other Person: (i) asserting the invalidity of the Wildfire Financing Law, the Financing Order, the Issuance Advice Letter, this Agreement, any of the other Basic Documents or the Recovery Bonds, (ii) seeking to prevent the issuance of the Recovery Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents, (iii) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of the Wildfire Financing Law, the Financing Order, the Issuance Advice Letter, this Agreement, any of the other Basic Documents or the Recovery Bonds or (iv) seeking to adversely affect the federal income tax or state income or franchise tax classification of the Recovery Bonds as debt.

(b) There is no order by any court or regulatory agency providing for the revocation, alteration, limitation or other impairment of the Wildfire Financing Law, the Financing Order, the Issuance Advice Letter, the Recovery Property or the Fixed Recovery Charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the Financing Order.

SECTION 3.07. Consents and Approvals.

(a) The Seller filed its written consent to the terms and conditions to the Financing Order on May 14, 2021, as required by Section 850.1(d) of the Wildfire Financing Law.

(b) No governmental approvals, authorizations, consents, orders or other actions or filings, other than filings under the Wildfire Financing Law, are required for the Seller to execute, deliver and perform its obligations under this Agreement except those which have been obtained or made or are required to be made by the Seller in the future pursuant to this Agreement.

SECTION 3.08. The Recovery Property.

(a) Information. Subject to subsection (f) below, at the Closing Date, all written information, as amended or supplemented from time to time, provided by the Seller to the Issuer with respect to the Recovery Property is true and correct in all material respects.

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(b) Title. It is the intention of the parties hereto that (other than for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes) the transfers and assignments herein contemplated each constitute a sale and absolute transfer of the Recovery Property from the Seller to the Issuer and that no interest in, or right or title to, the Recovery Property shall be part of the Seller’s estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. No portion of the Recovery Property has been sold, transferred, assigned or pledged or otherwise conveyed by the Seller to any Person other than the Issuer, and no security agreement, financing statement or equivalent security or lien instrument listing the Seller as debtor covering all or any part of the Recovery Property is on file or of record in any jurisdiction, except such as may have been filed, recorded or made in favor of the Issuer or the Indenture Trustee in connection with the Basic Documents. The Seller has not authorized the filing of and is not aware (after due inquiry) of any financing statement against it that includes a description of collateral including the Recovery Property other than any financing statement filed, recorded or made in favor of the Issuer or the Indenture Trustee in connection with the Basic Documents. The Seller is not aware (after due inquiry) of any judgment or tax lien filings against either the Seller or the Issuer. At the Closing Date, immediately prior to the sale of the Recovery Property hereunder, the Seller is the original and the sole owner of the Recovery Property free and clear of all Liens and rights of any other Person, and no offsets, defenses or counterclaims exist or have been asserted with respect thereto.

(c) Transfer Filings. On the Closing Date, immediately upon the sale under this Agreement, the Recovery Property transferred on the Closing Date shall be validly transferred and sold to the Issuer, the Issuer shall own all such Recovery Property, free and clear of all Liens, except for the Lien arising under Section 850.3(g) of the Wildfire Financing Law, the Financing Order and the Issuance Advice Letter, and all filings (including filings with the Secretary of State of California under the Wildfire Financing Law) necessary in any jurisdiction to give the Issuer a perfected ownership interest in the Recovery Property shall have been made.

(d) Financing Order, Issuance Advice Letter and Tariff; Other Approvals. Under the laws of the State of California (including the Wildfire Financing Law) and the United States in effect on the Closing Date: (i) the Financing Order and the Issuance Advice Letter pursuant to which the rights and the interests of the Seller have been created, including the right to impose, collect and receive the Fixed Recovery Charges and the interest in and to the Recovery Property is in full force and effect, and the Seller has validly and irrevocably consented to the terms of the Financing Order, (ii) as of the Closing Date, subject to the limitations set forth in Section 850.1(g) of the Wildfire Financing Law, the Recovery Bonds are entitled to the protection provided in the first sentence of Section 850.1(e) and the first sentence of Section 850.2(f) of the Wildfire Financing Law, (iii) as of the Closing Date, the Tariff has been filed with the CPUC in accordance with the Financing Order, (iv) the process by which the Financing Order was approved and the Financing Order, the Issuance Advice Letter and the Tariff comply with all applicable laws and regulations and the Seller has provided the certification to the CPUC required by the Issuance Advice Letter, (v) the Issuance Advice Letter and the Tariff have been filed in accordance with the Financing Order, (vi) no other approval, authorization, consent, order or other action of, or filing with any governmental authority is required on the part of the Seller in connection with the creation of the Recovery Property, except those that have been obtained or made, and (vii) under the “contract clause” of the U.S. Constitution and the “contract clause” of the California Constitution, Holders of the Recovery Bonds could, absent a demonstration by the State of California that such action is necessary to further a significant and legitimate public purpose, successfully challenge the constitutionality of any legislative action that limits, alters, impairs or reduces the value of the recovery property or the fixed recovery charges so as to impair (a) the terms of the indenture or the bonds or (b) the rights and remedies of the bondholders determined by such court to limit, alter, impair or reduce the value of the recovery property or the fixed recovery charges prior to the time that the bonds are fully paid and discharged.

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(e) State Action. Under the Wildfire Financing Law, the State of California has pledged that it will not take or permit any action that would impair the value of the Recovery Property transferred on such date, or, except as permitted by Section 850.1(g) of the Wildfire Financing Law, reduce, alter or impair the Fixed Recovery Charges relating to the Recovery Property until the principal, interest and premium and any other charges incurred and contracts to be performed in connection with the Recovery Bonds relating to the Recovery Property have been paid and performed in full. Under the laws of the State of California and the United States, any law enacted by the State of California, whether by legislation or voter initiative, that repeals or amends the Wildfire Financing Law or take any other action in contravention of the State pledge would constitute a “taking,” for which just compensation must be paid, if, for a public use, either the law (a) constituted a permanent appropriation of a substantial property interest of the bondholders in the recovery property or denied all economically productive use of the Recovery Property; (b) destroyed the recovery property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the recovery property so as to unduly interfere with the reasonable expectations of the bondholders arising from their investments in the Recovery Bonds. There is no assurance, however, that, even if a court were to award just compensation it would be sufficient to pay the full amount of principal and interest on the Recovery Bonds.

(f) Assumptions. On the Closing Date, based upon the information available to the Seller on such date, the assumptions used in calculating the Fixed Recovery Charges are reasonable and are made in good faith. Notwithstanding the foregoing, the Seller makes no representation or warranty, express or implied, that amounts actually collected arising from those Fixed Recovery Charges will in fact be sufficient to meet the payment obligations on the related Recovery Bonds or that the assumptions used in calculating such Fixed Recovery Charges will in fact be realized.

(g) Creation of Recovery Property. Upon the filing of the Issuance Advice Letter with respect to the Recovery Property pursuant to the Financing Order: (i) the related rights and interests of the Seller under the Financing Order, including the right to impose, collect and receive the Fixed Recovery Charges established pursuant to the Financing Order, will become Recovery Property, (ii) the Recovery Property will constitute a current property right, (iii) the Recovery Property will include the right, title and interest of the Seller to the Tariff imposing the Fixed Recovery Charges, and the right to obtain periodic true-up adjustments of the Fixed Recovery Charges, (iv) the owner of the Recovery Property will be legally entitled to bill Fixed Recovery Charges and collect payments in respect of the Fixed Recovery Charges in the aggregate amount sufficient to pay or fund, in accordance with the Indenture, the principal of the Recovery Bonds, all interest thereon, and all other Ongoing Financing Costs, and (v) the Recovery Property will not be subject to any Lien, except for the lien arising under Section 850.3(g) of the Wildfire Financing Law, the Financing Order and the Issuance Advice Letter.

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(h) Nature of Representations and Warranties. The representations and warranties set forth in this Section 3.08, insofar as they involve conclusions of law, are made not on the basis that the Seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the parties’ good faith understanding of the legal basis on which the parties are entering into this Agreement and the other Basic Documents and the basis on which the Holders are purchasing the Recovery Bonds, and to reflect the parties’ agreement that, if such understanding turns out to be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuer and its permitted assigns (to the extent required by and in accordance with Section 5.01), and that the Issuer and its permitted assigns will be entitled to enforce any rights and remedies under the Basic Documents, on account of such inaccuracy to the same extent as if the Seller had breached any other representations or warranties hereunder.

(i) Under existing law as of the Closing Date, Holders will not be responsible for, nor will payments to Holders be reduced by, any sales tax, gross receipts tax, general corporation tax, single business tax, personal property tax, privilege tax, franchise or license tax, or other tax imposed on the Seller or the Issuer as a result of the sale and assignment of the Recovery Property by the Seller to the Issuer, the acquisition of the Recovery Property by the Issuer or the issuance and sale by the Issuer of the Recovery Bonds, other than withholding of taxes applicable to Recovery Bond payments and any taxes imposed as a result of a failure of the Issuer or the Seller to properly withhold or remit taxes imposed with respect to payments on any Recovery Bond.

(j) Prospectus. As of the date hereof, the information describing the Seller under the caption “The Depositor, Seller, Initial Servicer and Sponsor” in the prospectus dated [                ], 2022 relating to the Bonds is true and correct in all material respects.

(k) No Court Order. There is no order by any court providing for the revocation, alteration, limitation or other impairment of the Wildfire Financing Law, the Financing Order, the Recovery Property or the Fixed Recovery Charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the Financing Order.

(l) Survival of Representations and Warranties. The representations and warranties set forth in this Section 3.08 shall survive the execution and delivery of this Agreement and may not be waived by any party hereto except pursuant to a written agreement executed in accordance with Article VI and as to which the Rating Agency Condition has been satisfied.

SECTION 3.09. Change in Law.

The representations and warranties in this Agreement speak as of the Closing Date. Any change in the law by legislative enactment, constitutional amendment or voter initiative that renders untrue any of the representations or warranties in this Agreement will not constitute a breach under this Agreement.

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SECTION 3.10. Limitations on Representations and Warranties.

Without prejudice to any of the other rights of the parties, the Seller will not be in breach of any representation or warranty, as a result of a change in law by means of any legislative enactment, constitutional amendment or voter initiative. THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT BILLED FRCS WILL BE ACTUALLY COLLECTED FROM CONSUMERS.

ARTICLE IV

COVENANTS OF THE SELLER

SECTION 4.01. Existence.

Subject to Section 5.02, so long as any of the Recovery Bonds are Outstanding, the Seller (a) will keep in full force and effect its existence and remain in good standing under the laws of the jurisdiction of its organization, (b) will obtain and preserve its qualification to do business, in each case to the extent that in each such jurisdiction such existence or qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Basic Documents to which the Seller is a party and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby or to the extent necessary for the Seller to perform its obligations hereunder or thereunder and (c) will continue to operate its distribution system to provide service to its customers.

SECTION 4.02. No Liens.

Except for the conveyances hereunder or any Lien under or in accordance with Section 850.3(g) of the Wildfire Financing Law in favor of the Indenture Trustee for the benefit of the Holders and any Lien that may be granted under the Basic Documents, the Seller will not sell, pledge, assign or transfer, or grant, create, incur, assume or suffer to exist any Lien on, any of the Recovery Property, or any interest therein, and the Seller shall defend the right, title and interest of the Issuer and the Indenture Trustee, on behalf of the Secured Parties, in, to and under the Recovery Property against all claims of third parties claiming through or under the Seller. PG&E, in its capacity as Seller, will not at any time assert any Lien against, or with respect to, any of the Recovery Property.

SECTION 4.03. Delivery of Collections; Sale of Certain Assets.

(a) In the event that the Seller receives any FRC Collections or other payments in respect of the Fixed Recovery Charges or the proceeds thereof other than in its capacity as the Servicer, the Seller agrees to pay to the Servicer, on behalf of the Issuer, all payments received by it in respect thereof as soon as practicable after receipt thereof. Prior to such remittance to the Servicer by the Seller, the Seller agrees that such amounts are held by it in trust for the Issuer and the Indenture Trustee.

(b) The Seller shall not continue as or become a party to any trade receivables purchase and sale agreement or similar arrangement under which it sells all or any portion of its accounts receivables owing from Consumers unless the Indenture Trustee, the Seller and the other parties to such additional arrangement shall have entered into a joinder to the Intercreditor Agreement in connection therewith and the terms of the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude Recovery Property (including Fixed Recovery Charges) from any receivables or other assets pledged or sold under such arrangement.

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(c) If the Seller enters into a sale agreement selling to any other Affiliate property consisting of nonbypassable charges payable by Consumers comparable to those sold by the seller pursuant to the sale agreement, the Rating Agency Condition shall be satisfied with respect to the Recovery Bonds prior to or coincident with such sale and the Seller shall enter into a joinder to the Intercreditor Agreement with the Issuer, the Indenture Trustee, the issuing entity of any such Additional Recovery Bonds or Additional Other Recovery Bonds and the trustee for such Additional Recovery Bonds or Additional Other Recovery Bonds.

SECTION 4.04. Notice of Liens.

The Seller shall notify the Issuer and the Indenture Trustee promptly after becoming aware of any Lien on any of the Recovery Property, other than the conveyances hereunder, any Lien under the Basic Documents or any Lien under or in accordance with Section 850.3(g) of the Wildfire Financing Law created in favor of the Indenture Trustee for the benefit of the Holders.

SECTION 4.05. Compliance with Law.

The Seller hereby agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any Governmental Authority applicable to it, except to the extent that failure to so comply would not materially adversely affect the Issuer’s or the Indenture Trustee’s interests in the Recovery Property or under any of the other Basic Documents to which the Seller is party or the Seller’s performance of its obligations hereunder or under any of the other Basic Documents to which it is party.

SECTION 4.06. Covenants Related to Recovery Bonds and Recovery Property.

(a) So long as any of the Recovery Bonds are Outstanding, the Seller shall treat the Recovery Property as the Issuer’s property for all purposes other than financial reporting, state or federal regulatory or tax purposes, and treat the Recovery Bonds as debt for all purposes and specifically as debt of the Issuer, other than for financial reporting, state or federal regulatory or tax purposes.

(b) Solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, so long as any of the Recovery Bonds are Outstanding, the Seller agrees to treat the Recovery Bonds as indebtedness of the Seller (as the sole owner of the Issuer) secured by the Recovery Bond Collateral unless otherwise required by appropriate taxing authorities.

(c) So long as any of the Recovery Bonds are Outstanding, the Seller shall disclose in its financial statements that the Issuer and not the Seller is the owner of the Recovery Property and that the assets of the Issuer are not available to pay creditors of the Seller or its Affiliates (other than the Issuer).

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(d) So long as any of the Recovery Bonds are Outstanding, the Seller shall not own or purchase any Recovery Bonds.

(e) So long as the Recovery Bonds are Outstanding, the Seller shall disclose the effects of all transactions between the Seller and the Issuer in accordance with generally accepted accounting principles.

(f) The Seller agrees that upon the sale by the Seller of the Recovery Property to the Issuer pursuant to this Agreement, (i) to the fullest extent permitted by law, the Issuer shall have all of the rights originally held by the Seller with respect to such Recovery Property, including the right to exercise any and all rights and remedies to collect any amounts payable by any Consumer in respect of such Recovery Property, notwithstanding any objection or direction to the contrary by the Seller and (ii) any payment by any Consumer to the Issuer shall discharge such Consumer’s obligations in respect of such Recovery Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller.

(g) So long as any of the Recovery Bonds are Outstanding, (i) in all proceedings relating directly or indirectly to the Recovery Property, the Seller shall affirmatively certify and confirm that it has sold all of its rights and interests in and to such property (other than for financial reporting or tax purposes), (ii) the Seller shall not make any statement or reference in respect of the Recovery Property that is inconsistent with the ownership interest of the Issuer (other than for financial reporting or tax purposes), (iii) the Seller shall not take any action in respect of the Recovery Property except solely in its capacity as Servicer pursuant to the Servicing Agreement or as otherwise contemplated by the Basic Documents, and (iv) neither the Seller nor the Issuer shall take any action, file any tax return, or make any election inconsistent with the treatment of the Issuer, for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, as a disregarded entity that is not separate from the Seller (or, if relevant, from another sole owner of the Issuer).

(h) The Seller agrees not to withdraw the filing of the Issuance Advice Letter with the CPUC.

(i) The Seller shall make all reasonable efforts to keep each Tariff that relates to the Recovery Property in full force and effect.

(j) Promptly after obtaining knowledge of any breach in any material respect of its representations and warranties in this Agreement, the Seller shall notify the Issuer, the CPUC and the Rating Agencies of the breach.

(k) The Seller shall use the proceeds of the sale of the Recovery Property in accordance with the Financing Order and the Wildfire Financing Law.

(l) Upon the request of the Issuer, the Seller shall execute and deliver such further instruments and do such further acts as may be necessary to carry out the provisions and purposes of this Agreement.

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(m) The Seller shall not permit the issuance of any Additional Recovery Bonds or Additional Other Recovery Bonds by any issuing entity, unless the Rating Agency Condition with respect to the Recovery Bonds is satisfied.

SECTION 4.07. Protection of Title.

The Seller shall execute and file the filings required by law to perfect and continue the perfection of the interests of the Issuer in the Recovery Property and the Indenture Trustee’s Lien on the Recovery Property, including all filings required under the Wildfire Financing Law and the UCC relating to the transfer of the ownership of the rights and interests related to the Recovery Bonds under the Financing Order by the Seller to the Issuer and the pledge of the Recovery Property to the Indenture Trustee. The Seller also agrees to take those legal or administrative actions that may be reasonably necessary (i) to protect the Issuer and Secured Parties from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty of the Seller set forth in Article III, and the costs of any such actions or proceedings will be paid by the Seller and (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Wildfire Financing Law, the Financing Order, the Issuance Advice Letter or the rights of Holders by legislative enactment or constitutional amendment that would be materially adverse to the Issuer or the Secured Parties or which would otherwise cause an impairment of the rights of the Issuer or the Secured Parties. The costs of any such actions or proceedings will be payable by the Seller.

SECTION 4.08. Nonpetition Covenants.

Notwithstanding any prior termination of this Agreement or the Indenture, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture and payment in full of the Recovery Bonds or any other amounts owed under the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of any Government Authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, Indenture Trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer.

SECTION 4.09. Taxes.

So long as any of the Recovery Bonds are Outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Recovery Property; provided that no such tax need be paid if the Seller or one of its Affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such Affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

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SECTION 4.10. Notice of Breach to Rating Agencies, Etc.

Promptly after obtaining knowledge thereof, in the event of a breach in any material respect (without regard to any materiality qualifier contained in such representation, warranty or covenant) of any of the Seller’s representations, warranties or covenants contained herein, the Seller shall promptly notify the Issuer, the Indenture Trustee, the CPUC and the Rating Agencies of such breach. For the avoidance of doubt, any breach which would adversely affect scheduled payments on the Recovery Bonds will be deemed to be a material breach for purposes of this Section 4.10.

SECTION 4.11. Use of Proceeds.

The Seller shall use the proceeds of the sale of the Recovery Property in accordance with the Financing Order and the Wildfire Financing Law.

SECTION 4.12. Further Assurances.

Upon the request of the Issuer, the Seller shall execute and deliver such further instruments and do such further acts as may be reasonably necessary to carry out more effectually the provisions and purposes of this Agreement.

ARTICLE V

THE SELLER

SECTION 5.01. Liability of Seller; Indemnities.

(a) The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.

(b) The Seller shall indemnify the Issuer and the Indenture Trustee (for itself, for the benefit of the Holders) and each of the Issuer’s and the Indenture Trustee’s respective officers, directors, members, employees and agents and defend and hold harmless each such person from and against (i) any and all amounts of principal of and interest on the Recovery Bonds not paid when due or when scheduled to be paid in accordance with their terms, (ii) any other amounts payable to any Person in connection with the Recovery Bonds or in connection with the Recovery Property, including but not limited to Indenture Trustee’s fees and expenses, that are not paid when due or when scheduled to be paid pursuant to the Indenture, (iii) the amount of any other deposits to the Collection Account required to have been made in accordance with the terms of the Basic Documents and retained in the Capital Subaccount, or in the Excess Funds Subaccount or released to the Issuer free of the lien of the Indenture, which are not made when so required, (v) any reasonable costs and expenses incurred by such Person that are not recoverable pursuant to the Indenture and (vi) any taxes payable by Holders resulting in a breach of Section 3.08(i), in each case to the extent resulting from the Seller’s breach of any of its representations, warranties or covenants contained in this Agreement, except to the extent of

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losses either resulting from the willful misconduct, bad faith or gross negligence of such indemnified Persons or resulting from a breach of representation or warranty made by such indemnified Persons in the Indenture or any other document that gives rise to the Seller’s breach. Indemnification under this paragraph shall survive the resignation or removal of the Indenture Trustee.

(c) Notwithstanding Section 5.01(b) above, the Seller shall not be liable for any loss, damages, liability, obligation, claim, action, suit or payment resulting solely from a downgrade in the ratings on the Recovery Bonds or for any consequential damages, including any loss of market value of the Recovery Bonds resulting from any default or any downgrade of the ratings of the Recovery Bonds.

(d) The indemnities described in this Section will survive the termination of this Agreement and include reasonable fees and expenses of investigation and litigation, including reasonable attorneys’ fees and expenses. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.

SECTION 5.02. Merger, Conversion or Consolidation of, or Assumption of the Obligations of, Seller.

Any Person (a) into which the Seller may be merged, converted or consolidated and that succeeds to all or substantially all of the electric distribution business of the Seller, (b) that results from the division of the Seller into two or more Persons and succeeds to all or substantially all of the electric distribution business of the Seller, (c) that results from any merger or consolidation to which the Seller shall be a party and that succeeds to all or substantially all of the electric distribution business of the Seller, (d) that succeeds to the properties and assets of the Seller substantially as a whole, or succeeds to all or substantially all of the electric distribution business of the Seller, or (e) that otherwise succeeds to all or substantially all of the electric distribution business of the Seller, shall be the successor to the Seller under this Agreement without further act on the part of any of the parties to this Agreement; provided, further, that (i) immediately after giving effect to any transaction referred to above, no representation or warranty made by the Seller pursuant to Article III shall have been breached and, to the extent the Seller is the Servicer, no Servicer Default under the Servicing Agreement, and no event, that after notice or lapse of time, or both, would become a Servicer Default under the Servicing Agreement will have occurred and be continuing, (ii) the successor to the Seller must execute an agreement of assumption to perform every obligation of the Seller under this Agreement, (iii) the Rating Agencies shall have received prior written notice of such transaction, and (iv) the Seller shall have delivered to the Issuer and the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with.

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SECTION 5.03. Limitation on Liability of Seller and Others.

The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising hereunder. Subject to Section 4.07, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 6.01. Amendment.

This Agreement may be amended in writing by the Seller and the Issuer with ten (10) Business Days’ prior written notice to the Rating Agencies, but without the consent of any of the Holders (i) to cure any ambiguity, to correct or supplement any provisions in this Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Agreement or of modifying in any manner the rights of the Holders; provided, however, that such action shall not, as evidenced by an Officer’s Certificate delivered to the Issuer and the Indenture Trustee, adversely affect in any material respect the interests of any Holder or (ii) to conform the provisions hereof to the description of this Agreement in the Prospectus. Promptly after execution of any such amendment or consent, the Issuer shall furnish copies of such amendment or consent to each of the Rating Agencies.

In addition, this Agreement may be amended in writing by the Seller and the Issuer with (i) the prior written consent of the Indenture Trustee, (ii) the satisfaction of the Rating Agency Condition, and (iii) if any amendment would adversely affect in any material respect the interest of any Holder of the Bonds, the consent of a majority of the Holders of each affected Tranche of Bonds. In determining whether a majority of Holders have consented, Bonds owned by the Issuer, Seller or any Affiliate of the Issuer or Seller shall be disregarded, except that, in determining whether the Indenture Trustee shall be protected in relying upon any such consent, the Indenture Trustee shall only be required to disregard any Bonds it actually knows to be so owned. Promptly after the execution of any such amendment or consent, the Issuer shall furnish copies of such amendment or consent to each of the Rating Agencies.

It shall not be necessary for the consent of Holders pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof.

Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel from external counsel of the Seller stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent have been satisfied and the Opinion of Counsel referred to in Section 3.01(c)(i) of the Servicing Agreement. The Issuer and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Indenture Trustee’s own rights, duties or immunities under this Agreement or otherwise.

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SECTION 6.02. Notices.

All demands, notices and communications upon or to the Seller, the Issuer, the Indenture Trustee or the Rating Agencies under this Agreement shall be sufficiently given for all purposes hereunder if in writing, and delivered personally, sent by documented delivery service or, to the extent receipt is confirmed telephonically, sent by electronic transmission:

(a) in the case of the Seller, to Pacific Gas and Electric Company, at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, Attention: Brian M. Wong, Vice President, General Counsel and Corporate Secretary, Telephone: (415) 973-1000;

(b) in the case of the Issuer, to PG&E Wildfire Recovery Funding LLC, c/o Pacific Gas and Electric Company at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, Attention: Brian M. Wong, Vice President, General Counsel and Corporate Secretary, Telephone: (415) 973-1000;

(c) in the case of the Indenture Trustee, to the Corporate Trust Office;

(d) in the case of Moody’s, to Moody’s Investors Service, Inc., ABS/RMBS Monitoring Department, 25^th Floor, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Email: ServicerReports@moodys.com (all such notices to be delivered to Moody’s in writing by email);

(e) in the case of Standard & Poor’s, to S&P Global Ratings, a division of S&P Global Inc., Structured Credit Surveillance, 55 Water Street, New York, New York 10041, Telephone: (212) 438-8991, Email: servicer_reports@spglobal.com (all such notices to be delivered to Standard & Poor’s in writing by email); and

(f) as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.

SECTION 6.03. Assignment.

Notwithstanding anything to the contrary contained herein, except as provided in Section 5.02, this Agreement may not be assigned by the Seller.

SECTION 6.04. Limitations on Rights of Third Parties.

The provisions of this Agreement are solely for the benefit of the Seller, the Issuer, the Indenture Trustee (for the benefit of the Secured Parties) and the other Persons expressly referred to herein, and such Persons shall have the right to enforce the relevant provisions of this Agreement. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Recovery Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.

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SECTION 6.05. Severability.

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 6.06. Separate Counterparts.

This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 6.07. Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

SECTION 6.08. Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

SECTION 6.09. Assignment to Indenture Trustee.

The Seller hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Secured Parties of all right, title and interest of the Issuer in, to and under this Agreement, the Recovery Property and the proceeds thereof and the assignment of any or all of the Issuer’s rights hereunder to the Indenture Trustee for the benefit of the Secured Parties. For the avoidance of doubt, the Indenture Trustee is a third-party beneficiary of this Agreement and is entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it were a party hereto.

SECTION 6.10. Limitation of Liability.

It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by the Indenture Trustee, not individually or personally but solely as Indenture Trustee on behalf of the Secured Parties, in the exercise of the powers and authority conferred and vested in it. The Indenture Trustee in acting hereunder is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Indenture.

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SECTION 6.11. Waivers.

Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof; provided, however, that no such waiver delivered by the Issuer shall be effective unless the Indenture Trustee has given its prior written consent thereto. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such party. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.

PG&E WILDFIRE RECOVERY FUNDING LLC,

a Delaware limited liability Company

By: ________________________________

Name:

Title:

PACIFIC GAS AND ELECTRIC COMPANY,

a California Corporation

By: ________________________________

Name:

Title:

ACKNOWLEDGED AND ACCEPTED:

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A.,

as Indenture Trustee

By: ________________________________

Name:

Title:

Signature Page to

Recovery Property Purchase and Sale Agreement

EX-10.3

Exhibit 10.3

ADMINISTRATION AGREEMENT

This ADMINISTRATION AGREEMENT, dated as of [        ], 2022 (this “Administration Agreement”), by and between PACIFIC GAS AND ELECTRIC COMPANY, a California corporation (“PG&E”), as administrator (in such capacity, the “Administrator”), and PG&E WILDFIRE RECOVERY FUNDING LLC, a Delaware limited liability company (the “Issuer”). Capitalized terms used but not otherwise defined herein shall have the meanings specified in Appendix A attached to the Indenture (as defined below).

RECITALS

WHEREAS, the Issuer is issuing Recovery Bonds pursuant to that certain Indenture, dated as of the date hereof (including Appendix A thereto, the “Indenture”), by and between the Issuer and The Bank of New York Mellon Trust Company, N.A., a national banking association, in its capacity as indenture trustee (the “Indenture Trustee”) and in its separate capacity as a securities intermediary (the “Securities Intermediary”), as the same may be amended, restated, supplemented or otherwise modified from time to time, and the Series Supplement;

WHEREAS, the Issuer has entered into certain agreements in connection with the issuance of the Recovery Bonds, including (i) the Indenture, (ii) the Recovery Property Servicing Agreement, dated as of [        ], 2022 (the “Servicing Agreement”), by and between the Issuer and PG&E, as Servicer, (iii) the Recovery Property Purchase and Sale Agreement, dated as of [        ], 2022 (the “Sale Agreement”), by and between the Issuer and PG&E, as Seller and (iv) the other Basic Documents to which the Issuer is a party, relating to the Recovery Bonds (the Indenture, the Servicing Agreement, the Sale Agreement and the other Basic Documents to which the Issuer is a party, as such agreements may be amended and supplemented from time to time, collectively, the “Related Agreements”);

WHEREAS, pursuant to the Related Agreements, the Issuer is required to perform certain duties in connection with the Related Agreements, the Recovery Bonds and the Recovery Bond Collateral pledged to the Indenture Trustee pursuant to the Indenture;

WHEREAS, the Issuer has no employees, other than its officers and managers, and does not intend to hire any employees, and consequently desires to have the Administrator perform certain of the duties of the Issuer referred to in the preceding clauses and to provide such additional services consistent with the terms of this Administration Agreement and the Related Agreements as the Issuer may from time to time request; and

WHEREAS, the Administrator has the capacity to provide the services and the facilities required thereby and is willing to perform such services and provide such facilities for the Issuer on the terms set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1. Duties of the Administrator – Management Services. The Administrator hereby agrees to provide the following corporate management services to the Issuer and to cause third parties to provide professional services required for or contemplated by such services in accordance with the provisions of this Administration Agreement:

(a) furnish the Issuer with ordinary clerical, bookkeeping and other corporate administrative services necessary and appropriate for the Issuer, including, without limitation, the following services:

(i) maintain at the Premises (as defined below) general accounting records of the Issuer (the “Account Records”), subject to year-end audit, in accordance with generally accepted accounting principles, separate and apart from its own accounting records, prepare or cause to be prepared such quarterly and annual financial statements as may be necessary or appropriate and arrange for year-end audits of the Issuer’s financial statements by the Issuer’s independent accountants;

(ii) prepare and, after execution by the Issuer, file with the Securities and Exchange Commission (the “Commission”) and any applicable state agencies documents required to be filed by the Issuer with the Commission and any applicable state agencies, including, without limitation, periodic reports required to be filed under the Securities Exchange Act of 1934, as amended;

(iii) prepare for execution by the Issuer and cause to be filed such income, franchise or other tax returns of the Issuer as shall be required to be filed by applicable law (the “Tax Returns”) and cause to be paid on behalf of the Issuer from the Issuer’s funds any taxes required to be paid by the Issuer under applicable law;

(iv) prepare or cause to be prepared for execution by the Issuer’s Managers minutes of the meetings of the Issuer’s Managers and such other documents deemed appropriate by the Issuer to maintain the separate limited liability company existence and good standing of the Issuer (the “Company Minutes”) or otherwise required under the Related Agreements (together with the Account Records, the Tax Returns, the Company Minutes, the LLC Agreement, and the Certificate of Formation, the “Issuer Documents”); and any other documents deliverable by the Issuer thereunder or in connection therewith; and

(v) hold, maintain and preserve at the Premises (or such other place as shall be required by any of the Related Agreements) executed copies (to the extent applicable) of the Issuer Documents and other documents executed by the Issuer thereunder or in connection therewith;

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(b) take such actions on behalf of the Issuer, as are necessary or desirable for the Issuer to keep in full effect its existence, rights and franchises as a limited liability company under the laws of the state of Delaware and obtain and preserve its qualification to do business in each jurisdiction in which it becomes necessary to be so qualified;

(c) take such actions on the behalf of the Issuer as are necessary for the issuance and delivery of the Recovery Bonds;

(d) provide for the performance by the Issuer of its obligations under each of the Related Agreements, and prepare, or cause to be prepared, all documents, reports, filings, instruments, notices, certificates and opinions that it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Related Agreements;

(e) to the full extent allowable under applicable law, enforce each of the rights of the Issuer under the Related Agreements, at the direction of the Indenture Trustee (acting at the direction of Holders of a majority of the Outstanding Amount of the Recovery Bonds);

(f) provide for the defense, at the direction of the Issuer’s Managers, of any action, suit or proceeding brought against the Issuer or affecting the Issuer or any of its assets;

(g) provide office space (the “Premises”) for the Issuer and such reasonable ancillary services as are necessary to carry out the obligations of the Administrator hereunder, including telecopying, duplicating and word processing services;

(h) undertake such other administrative services as may be appropriate, necessary or requested by the Issuer; and

(i) provide such other services as are incidental to the foregoing or as the Issuer and the Administrator may agree.

In providing the services under this Section 1 and as otherwise provided under this Administration Agreement, the Administrator will not knowingly take any actions on behalf of the Issuer which (i) the Issuer is prohibited from taking under the Related Agreements, or (ii) would cause the Issuer to be in violation of any federal, state or local law or the LLC Agreement.

In performing its duties hereunder, the Administrator shall use the same degree of care and diligence that the Administrator exercises with respect to performing such duties for its own account and, if applicable, for others.

SECTION 2. Compensation. As compensation for the performance of the Administrator’s obligations under this Administration Agreement (including the compensation of Persons serving as Manager(s), other than the Independent Manager(s), and officers of the Issuer, but, for the avoidance of doubt, excluding the performance by PG&E of its obligations in its capacity as Servicer), the Administrator shall be entitled to $75,000 annually (the “Administration Fee”), payable by the Issuer in installments of $75,000 on each Payment Date, provided that the first payment may be adjusted for a longer or shorter first Payment Period. In addition, the Administrator shall be entitled to be reimbursed by the Issuer for all costs and expenses of services performed by unaffiliated third parties and actually incurred by the

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Administrator in connection with the performance of its obligations under this Administration Agreement in accordance with Section 3 (but, for the avoidance of doubt, excluding any such costs and expenses incurred by PG&E in its capacity as Servicer), to the extent that such costs and expenses are supported by invoices or other customary documentation and are reasonably allocated to the Issuer (“Reimbursable Expenses”).

SECTION 3. Third Party Services. Any services required for or contemplated by the performance of the above-referenced services by the Administrator to be provided by unaffiliated third parties (including independent auditors’ fees and counsel fees) may, if provided for or otherwise contemplated by the Financing Order and if the Issuer deems it necessary or desirable, be arranged by the Issuer or by the Administrator at the direction (which may be general or specific) of the Issuer. Costs and expenses associated with the contracting for such third-party professional services may be paid directly by the Issuer or paid by the Administrator and reimbursed by the Issuer in accordance with Section 2, or otherwise as the Administrator and the Issuer may mutually arrange.

SECTION 4. Additional Information to be Furnished to the Issuer. The Administrator shall furnish to the Issuer from time to time such additional information regarding the Recovery Bond Collateral as the Issuer shall reasonably request.

SECTION 5. Independence of the Administrator. For all purposes of this Administration Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority, and shall not hold itself out as having the authority, to act for or represent the Issuer in any way and shall not otherwise be deemed an agent of the Issuer.

SECTION 6. No Joint Venture. Nothing contained in this Administration Agreement (a) shall constitute the Administrator and the Issuer as partners or co-members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (b) shall be construed to impose any liability as such on either of them or (c) shall be deemed to confer on either of them any express, implied or apparent authority to incur any obligation or liability on behalf of the other.

SECTION 7. Other Activities of Administrator. Nothing herein shall prevent the Administrator or any of its members, managers, officers, employees, subsidiaries or affiliates from engaging in other businesses or, in its sole discretion, from acting in a similar capacity as an Administrator for any other person or entity even though such person or entity may engage in business activities similar to those of the Issuer.

SECTION 8. Term of Agreement; Resignation and Removal of Administrator.

(a) This Administration Agreement shall continue in force until the payment in full of the Recovery Bonds and any other amount which may become due and payable under the Indenture, upon which event this Administration Agreement shall automatically terminate.

(b) The Administrator may resign on not less than 30 days’ written notice to the Issuer. The Administrator may be removed by written notice from the Issuer to the Administrator. Such resignation or removal shall not take effect until a successor has been appointed by the Issuer and has accepted the duties of Administrator.

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(c) The appointment of any successor Administrator shall be effective only after satisfaction of the Rating Agency Condition with respect to the proposed appointment.

SECTION 9. Action upon Termination, Resignation or Removal. Promptly upon the effective date of termination of this Administration Agreement pursuant to Section 8(b), the resignation of the Administrator or the removal of the Administrator pursuant to Section 8, the Administrator shall be entitled to be paid a pro-rated portion of the annual fee described in Section 2 hereof through the date of termination and all Reimbursable Expenses incurred by it through the date of such termination, resignation or removal. The Administrator shall forthwith upon such termination pursuant to Section 8(a) deliver to the Issuer all property and documents of or relating to the Recovery Bond Collateral then in the custody of the Administrator. In the event of the resignation of the Administrator or the removal of the Administrator pursuant to Section 8, the Administrator shall cooperate with the Issuer and take all reasonable steps requested to assist the Issuer in making an orderly transfer of the duties of the Administrator.

SECTION 10. Administrator’s Liability. The Administrator shall render the services called for hereunder in good faith, taking into consideration the best interests of the Company. In no event shall the Administrator ever be liable to the Company under this Agreement or in connection with services provided hereunder for any punitive, incidental, consequential, or indirect damages in tort, contract, or otherwise.

SECTION 11. Notices. Any notice, report or other communication given hereunder shall be in writing and addressed as follows:

(a) if to the Issuer, to:

PG&E Wildfire Recovery Funding LLC

c/o Pacific Gas and Electric Company

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

Attention: Brian M. Wong

Telephone: (415) 973-1000

(b) if to the Administrator, to:

Pacific Gas and Electric Company

77 Beale Street, P.O. Box 770000

San Francisco, California 94177

Attention: Brian M. Wong

Telephone: (415) 973-1000

(c) if to the Indenture Trustee, to the Corporate Trust Office;

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or to such other address as any party shall have provided to the other parties in writing. Any notice required to be in writing hereunder shall be deemed given if such notice is mailed by certified mail, postage prepaid, or hand-delivered to the address of such party as provided above.

SECTION 12. Amendments. (a) This Administration Agreement may be amended from time to time by a written amendment duly executed and delivered by each of the Issuer and the Administrator with ten Business Days’ prior written notice given to the Rating Agencies, (i) to cure any ambiguity, to correct or supplement any provisions in this Administration Agreement or for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions in this Administration Agreement or of modifying in any manner the rights of the Holders; provided, however, that the Issuer and the Indenture Trustee shall receive an Officer’s Certificate stating that the execution of such amendment shall not adversely affect in any material respect the interests of any Holder and that all conditions precedent have been satisfied or (ii) to conform the provisions hereof to the description of this Administration Agreement in the Prospectus.

(b) In addition, this Administration Agreement may be amended from time to time by a written amendment duly executed and delivered by each of the Issuer and the Administrator with the prior written consent of the Indenture Trustee, the satisfaction of the Rating Agency Condition; provided that any such amendment may not adversely affect the interest of any Holder in any material respect without the consent of the Holders of a majority of the outstanding principal amount of the Recovery Bonds. Promptly after the execution of any such amendment or consent, the Issuer shall furnish copies of such amendment or consent to each of the Rating Agencies.

SECTION 13. Successors and Assigns. This Administration Agreement may not be assigned by the Administrator unless such assignment is previously consented to in writing by the Issuer and the Indenture Trustee and subject to the satisfaction of the Rating Agency Condition in connection therewith. Any assignment with such consent and satisfaction, if accepted by the assignee, shall bind the assignee hereunder in the same manner as the Administrator is bound hereunder. Notwithstanding the foregoing, this Administration Agreement may be assigned by the Administrator without the consent of the Issuer or the Indenture Trustee and without satisfaction of the Rating Agency Condition to a corporation or other organization that is a successor (by merger, reorganization, consolidation or purchase of assets) to the Administrator, including without limitation any Permitted Successor; provided that such successor or organization executes and delivers to the Issuer an Agreement in which such corporation or other organization agrees to be bound hereunder by the terms of said assignment in the same manner as the Administrator is bound hereunder. Subject to the foregoing, this Administration Agreement shall bind any successors or assigns of the parties hereto. Upon satisfaction of all of the conditions of this Section 13, the preceding Administrator shall automatically and without further notice be released from all of its obligations hereunder.

SECTION 14. Governing Law. This Administration Agreement shall be governed by, and construed and interpreted in accordance with the laws of the State of California, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

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SECTION 15. Headings. The Section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Administration Agreement.

SECTION 16. Counterparts. This Administration Agreement may be executed in counterparts, each of which when so executed shall be an original, but all of which together shall constitute but one and the same Administration Agreement. The words “execution,” “signed,” “delivery,” and words of like import in or relating to this Agreement or any document to be signed in connection with this Agreement shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.

SECTION 17. Severability. Any provision of this Administration Agreement that is prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 18. Nonpetition Covenant. Notwithstanding any prior termination of this Administration Agreement, the Administrator covenants that it shall not, prior to the date which is one year and one day after payment in full of the Recovery Bonds, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer.

SECTION 19. Assignment to Indenture Trustee. The Administrator hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee for the benefit of the Secured Parties pursuant to the Indenture of any or all of the Issuer’s rights hereunder and the assignment of any or all of the Issuer’s rights hereunder to the Indenture Trustee for the benefit of the Secured Parties. For the avoidance of doubt, the Indenture Trustee is a third-party beneficiary of this Agreement and is entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it were a party hereto.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties have caused this Administration Agreement to be duly executed and delivered as of the day and year first above written.

PACIFIC GAS AND ELECTRIC COMPANY, a California corporation
By:
	Name:
	Title:
PG&E WILDFIRE RECOVERY FUNDING LLC, a Delaware limited liability company
By:
	Name:
	Title:

Signature Page to

Administration Agreement

EX-99.1

Exhibit 99.1

Date of Issuance 5/11/2021

Decision 21-05-015 May 6, 2021

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Pacific Gas and Electric Company for Authority to Issue Recovery Bonds for Stress Test Costs Pursuant to Article 5.8 of the California Public Utilities Code. (U39E.) Application 21-01-004

FINANCING ORDER AUTHORIZING THE ISSUANCE

OF RECOVERY BONDS PURSUANT TO ARTICLE 5.8

OF THE CALIFORNIA PUBLIC UTILITIES CODE

TABLE OF CONTENTS

Title		Page
FINANCING ORDER AUTHORIZING THE ISSUANCE OF RECOVERY BONDS PURSUANT TO ARTICLE 5.8 OF THE CALIFORNIA PUBLIC UTILITIES CODE			1
Summary			1
1.	Background and Procedural History		4
2.	Overview of PG&E’s Application to Issue Recovery Bonds		9
2.1.	Standard for Approval of the Financing Order Application		12
2.2.	Motion to Dismiss		13
2.2.1.	Disposition of Motion to Dismiss		15
2.3.	Parties’ Objections to the Financing Order on Substantive Grounds		17
2.3.1.	Disposition of Parties’ Objections to the Financing Order		19
3.	Approval of the Financing Order		22
3.1.	The Cost and Expenses Identified by PG&E for Recovery in the Application Related to the Catastrophic Wildfires Will be Determined Pursuant to Subdivision (c) of Section 451.2		22
3.2.	The Issuance of Recovery Bonds is Just and Reasonable		23
3.3.	The Issuance of Recovery Bonds is Consistent with Public Interest		23
3.4.	The Recovery of Recovery Costs Through the Designation of the Fixed Recovery Charges, and any FRTAs, and the Issuance of Recovery Bonds Would Reduce, to the Maximum Extent Possible, Rates on a Present Value Basis that Consumers Within PG&E’s Service Territory Would Pay as Compared to the Use of Traditional Utility Financing Mechanisms		24
3.5.	Compliance with Sections 701.5 and 816 et seq.		25
3.6.	Approval of the Recovery Bonds		28
3.7.	Requirement to Employ a Finance Team		28
4.	Description of the Approved Recovery Bonds		31
4.1.	No Recourse to the State		31
4.2.	Up to Three Series of Recovery Bonds		32
4.3.	Authorized Amount of Recovery Bonds		33
4.4.	Receipt of Additional Insurance Proceeds, Tax Benefits, or Other Amounts that Reimburse PG&E for Recovery Costs		33
4.5.	Obligations of Customers to Pay Fixed Recovery Charges		33
4.6.	The Bond Transaction		34
4.7.	Bond Transaction Structure		36
4.8.	Credit Rating Issues		37
4.9.	Bond Issuance Costs		38

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4.10.	Tax Issues	39
4.11.	Use of Bond Proceeds	40
4.12.	Sale of Recovery Bonds	40
5.	Description of the Approved Bond Charges	40
5.1.	Summary of Fixed Recovery Charges	41
5.2.	Benefits to be Addressed in Ratemaking Proceedings	49
5.3.	Consumer Responsibility for Fixed Recovery Charges	50
5.4.	Bill Presentation	51
5.5.	Revenue Accounting	51
5.6.	Billing, Connecting, and Remitting the Fixed Recovery Charges	52
5.7.	Servicing Cash Flows	54
6.	General Order 24-C and Financing Rule	58
7.	Fees	58
8.	Irrevocable Financing Order	60
9.	PG&E’s Written Consent to Be Bound by the Financing Order	61
10.	Rehearing and Judicial Review	61
11.	Comments on Proposed Decision	62
12.	Assignment of Proceeding	62
Findings of Fact		63
Conclusions of Law		71
ORDER		93

Attachments to the Financing Order:

Attachment 1:	Description of Cash Flow Model
Attachment 2:	Form of Issuance Advice Letter
Attachment 3:	Form of Routine True-Up Mechanism Advice Letter
Attachment 4:	Form of Non-Routine True-Up Mechanism Advice Letter
Attachment 5:	Customer Credit True-Up Mechanisms

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FINANCING ORDER AUTHORIZING THE ISSUANCE

OF RECOVERY BONDS PURSUANT TO ARTICLE 5.8

OF THE CALIFORNIA PUBLIC UTILITIES CODE

Summary

This Financing Order¹ grants Application (A.) 21-01-004 (the Application) filed by Pacific Gas and Electric Company (PG&E) for authority under Division 1, Part 1, Chapter 4 Article 5.8 of the California Public Utilities Code² (Article 5.8) to issue $7.5 billion of Recovery Bonds (Bonds or Recovery Bonds) to fund costs and expenses related to 2017 North Bay Wildfires³ (Catastrophic Wildfire Amounts) and other Financing Costs (as defined in Section 850(b)(4)) associated with issuing the Bonds (Bond Issuance Costs). The Bonds will be issued in up to three series by one or more legally separate special purpose entities (each, an SPE), which will transfer the Bond proceeds to PG&E in a true sale in exchange for PG&E’s right, title and interest in and to nonbypassable rates and other charges established by this Financing Order to be collected from certain existing and future Consumers (as defined herein) in PG&E’s service territory (Fixed Recovery Charges) in amounts sufficient to repay Bond principal, interest and related costs and all rights to obtain adjustments to such Fixed Recovery Charges in accordance with Section 850.1 and this Financing Order (such right, title and interest defined in Section 850(b)(11) as Recovery Property). In addition, PG&E will recover any Fixed Recovery Tax Amounts (FRTAs), which are nonbypassable charges to recover federal and State of California income and franchise taxes associated with Fixed Recovery Charges but are not approved as Financing Costs to be financed from the proceeds of the Recovery Bonds.

¹  Capitalized terms used but not otherwise defined herein have the meanings given in the Application or in the Stress Test Application, A.20-04-023.

²  All statutory references to Sections in this Financing Order are to the California Public Utilities Code unless otherwise indicated.

³  The 2017 North Bay Wildfires are described in Exhibit A to the Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization Dated June 19, 2020, confirmed by the Bankruptcy Court by Order dated June 20, 2020, and which became effective on July 1, 2020, In re PG&E Corporation, No. 19-30088 (Bankr. N.D. Cal. June 19, 2020) ECF No. 8048 (PG&E’s Plan or the Plan).

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As a basis for our adoption of this Financing Order, we have coordinated with and relied upon findings in A.20-04-023 determining that $7.5 billion of 2017 Catastrophic Wildfire Amounts are qualifying costs that may be financed through Recovery Bonds pursuant to Public Utilities Code Sections 850 et. seq. The adopted Financing Order generally follows the form offered by PG&E. We have, however, adopted certain modifications, as set forth herein. Most notably, as described in further detail below, we adopt a requirement for a Finance Team to perform an oversight role in connection with the issuance of Recovery Bonds. Also, PG&E’s proposals for establishing a “Customer Credit Trust” have been appropriately addressed in A.20-04-023, as further described below. Pursuant to the terms of California Public Utilities Commission (CPUC or Commission) orders issued in A.20-04-023, PG&E intends to establish a grantor trust (the Customer Credit Trust or Trust), the funds of which PG&E will use to credit affected Consumers (the Customer Credit) in connection with the Fixed Recovery Charges. No aspect of this crediting mechanism, which is designed to comply with requirements stated in Section 3291(b)(1)(D) and Decision 20-05-053, is relevant to the calculation, imposition or revision of Fixed Recovery Charges pursuant to this Financing Order. The Customer Credit Trust, Customer Credits and related mechanics are referenced herein for pragmatic reasons due to the interplay of the Customer Credits and the Fixed Recovery Charges. However, (i) except for the Customer Credit true-up provisions set forth in Attachment 5 and the Customer Credit bill presentation provisions set forth in Section 5.4, all establishment, governance, funding, distribution, liquidation, regulatory

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authority and other material provisions relating to the Customer Credit Trust and Customer Credits are governed by the terms of CPUC orders issued in A.20-04-023, and (ii) the irrevocability of this Financing Order and the Fixed Recovery Charges shall not be extended to or apply to any aspect of the Customer Credit Trust and Customer Credits (including the Customer Credit bill presentation provisions in Section 5.4 and the requirements set forth in Attachment 5, which are included herein out of necessity and, in the case of the Customer Credit true-up provisions in Attachment 5, to ensure they are consistent with the true-up mechanisms adopted herein for the Fixed Recovery Charges, as specifically contemplated by A.20-04-023).

The Bond principal, interest, and related costs will be recovered via Fixed Recovery Charges. All existing and future Consumers of electricity in the geographic area where PG&E provides electric distribution service as of the date of this Financing Order (Service Territory) will be required to pay the Fixed Recovery Charges and FRTAs, if any, except for those Consumers that are exempt pursuant to Section 850.1(i).

This Financing Order does not become binding until or unless PG&E affirmatively accepts all its terms in compliance with the procedures adopted herein. Pursuant to Section 850.1(e), however, upon the affirmative acceptance by PG&E, the provisions in this Financing Order authorizing the issuance of the Recovery Bonds, the recovery of Bond principal, interest, and certain other Recovery Costs from Consumers, the Fixed Recovery Charges, and the FRTAs are irrevocable.

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1. Background and Procedural History

On September 21, 2018, Governor Brown signed into law Senate Bill (SB) 901, which added Sections 451.1 and 451.2, as well as Division 1, Part 1, Chapter 4, Article 5.8 (commencing with Section 850) of the California Public Utilities Code. Article 5.8 was later amended by Assembly Bill (AB) 1054 and AB 1513.⁴ Section 451.2 and Article 5.8 authorize the issuance of recovery bonds. PG&E summarized certain relevant provisions of the applicable statutes in its original submission and they are provided, in substantially similar form, for convenience and reference only, with the actual language of the statute being controlling should questions of interpretation arise:

Recovery Bonds Authorized: Subdivision (c) of Section 451.2 allows a utility to apply for a financing order authorizing securitization of the amount of 2017 wildfire costs and expenses disallowed for recovery under Section 451 and subdivision (a) of Section 451.2 but exceeding a threshold set forth in subdivision (b) of that section. Paragraph (1) of Section 850.1, subdivision (a), correspondingly provides that a utility may seek authority to issue recovery bonds for recovery of the amount of costs and expenses determined pursuant to subdivision (c) of Section 451.2. In D.19-06-027, the Commission adopted a methodology for conducting a financial “Stress Test” to implement subdivision (b) of Section 451.2. Procedures to implement section 451.2 and Decision (D.)19-06-027 were conducted in A.20-04-023.

Consumer Benefits: The issuance of the Recovery Bonds and the imposition and collection of Fixed Recovery Charges are authorized if the Commission finds A. the Recovery Costs to be reimbursed from the Recovery Bonds have been found to be just and reasonable or are allocated to the ratepayers pursuant to subdivision (c) of Section 451.2 and B. the issuance of such Recovery Bonds (i) is just and reasonable, (ii) is consistent with the public interest, and (iii) would reduce, to the maximum extent possible, the rates on a present value basis that Consumers would pay as compared to the use of traditional utility financing mechanisms. (Section 850.1(a)(1)(A).) For purposes of this Financing Order, “Consumers” means any individual

⁴  Ch. 626, Stats. 2018 (Senate Bill 901), Ch. 79, Stats 2019 (Assembly Bill 1054). Article 5.8 was later amended by Assembly Bill 1513 and authorizes the issuance of Recovery Bonds. See, Pub. Util. Code §§ 850—850.8.

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government body, trust, business entity, or nonprofit organization that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities whether those electric transmission or distribution facilities are owned by the consumer, PG&E or any other party. (Section 850(b)(3).)

Nonbypassable Charges: The Commission can impose nonbypassable Fixed Recovery Charges and FRTAs on Consumers, as needed, to pay principal, interest, taxes, and other Recovery Costs. Except for a limited number of exemptions, these Fixed Recovery Charges and any FRTAs are applicable to all existing and future electric Consumers. (Sections 850(b)(7), (8) and (12), and 850.1(a)—(d).)

Periodic True-Up Adjustments: There shall be periodic true-up adjustments of the Fixed Recovery Charges using the True-Up Mechanism approved in this Financing Order (which shall be made at least annually and may be made more frequently) as necessary to correct for any overcollection or undercollection of the Fixed Recovery Charges authorized by this Financing Order and to otherwise ensure the timely and complete payment and recovery of Recovery Costs over the authorized repayment term.

Adjustments for any FRTAs shall be addressed in an annual Routine True-Up Mechanism Advice Letter.

(Sections 850(b)(13) and 850.1(g).)

Irrevocable Financing Order: The Commission’s financing order authorizing Recovery Bonds, the Fixed Recovery Charges, any FRTAs and amounts recoverable via the nonbypassable charges shall be irrevocable by future Commissions. (Section 850.1(e).)

State Pledge: The State of California pledges and agrees with PG&E, owners of Recovery Property, SPEs and holders of Recovery Bonds that the State shall neither limit nor alter, except as otherwise provided with respect to the periodic true-up adjustment pursuant to subdivision (g) of Section 850.1, the Fixed Recovery Charges, any FRTAs, Recovery Property, this Financing Order or rights under this Financing Order until the Recovery Bonds, together with the interest on the Recovery Bonds and associated Financing Costs, are fully paid and discharged. (Section 850.1(e).)

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No Debt or Liability of the State: Neither the State of California, nor any political subdivisions thereof, will be liable for any amounts associated with the Recovery Bonds or the Fixed Recovery Charges, and the State’s credit and taxes shall not be pledged to pay for the Recovery Bonds or associated costs. (Section 850.1(f)(1).)

Current Property Right: Article 5.8 creates a separate and current property right (Recovery Property) representing the right to receive the revenues from the nonbypassable Fixed Recovery Charges, including all rights to obtain adjustments to the Fixed Recovery Charges, and to all revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges. (Sections 850(b)(11), 850.1(e) and (h), 850.3, 850.3(d), (e), and (g), 850.4(a), (c) and (d), and 850.6.)

True Sale of Property Right: Authorizes the transfer of Recovery Property by PG&E to another entity as an “absolute transfer” and “true sale,” provided that the governing documentation expressly states that the transfer is an “absolute transfer” and a “true sale” (Sections 850.1(e), 850.2(c) and 850.4(a).)

Pledge of Property Right as Collateral: Authorizes the pledge of recovery property as collateral for recovery bonds to the extent approved in the pertinent financing orders providing for a security interest in the recovery property for the benefit of Recovery Bond investors. (Sections 850.2(b) and (c).)

On April 30, 2020, PG&E filed an application, A.20-04-023, with the Commission pursuant to Section 451.2 to determine the costs and expenses arising from, or incurred as a result of, catastrophic wildfires with an ignition date in the 2017 calendar year. In its application, PG&E stipulated that all of its costs and expenses associated with 2017 catastrophic wildfires should be deemed “disallowed” and reviewed for cost recovery and eligibility for securitization solely pursuant to the Stress Test Methodology adopted by the Commission to implement Section 451.2(b). In that application, PG&E requested the

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Commission to (1) apply the Stress Test Methodology adopted by the Commission in D.19-06-027; and (2) determine that $7.5 billion of costs and expenses associated with 2017 catastrophic wildfires claims costs exceeds the Customer Harm Threshold as defined in that Decision and therefore may be recovered from the issuance of Recovery Bonds pursuant to Section 850.1(a).

Net proceeds from the securitization will be used to pay or reimburse PG&E for the payment of Catastrophic Wildfire Amounts. As a result of the transaction, PG&E will retire $6 billion of temporary utility debt and pay or reimburse the $1.35 billion in cash payments to the Fire Victim Trust.

The July 28, 2020 Scoping Memo and Ruling in A.20-04-023 included issues related to the issuance of a Financing Order to implement the securitization. In A.20-04-023, PG&E expressed its intention, however, to file a subsequent application asking the Commission to approve and issue a Financing Order. PG&E proposed a draft Financing Order as Exhibit 3.1 to Chapter 3, Transaction Overview (M. Becker) in A.20-04-023.

The Proposed Decision of the Assigned Administrative Law Judge (ALJ) in A.20-04-023 was issued on March 23, 2021. As noted therein, PG&E’s proposal for issuance of a Financing Order, as previously referenced in the Scoping Memo in A.20-04-023, was to be addressed in A.21-01-004.

On January 6, 2021, PG&E filed the instant application (A.21-01-004) seeking a Financing Order, as previously contemplated. Accordingly, the financing order issues originally identified in A.20-04-023 are being resolved now in A.21-01-004. As proposed, PG&E asks the Commission to issue a Financing Order for authority pursuant to Article 5.8 of the Public Utilities Code to issue $7.5 billion of Recovery Bonds to fund Catastrophic Wildfire Amounts and Bond Issuance Costs through one or more legally separate SPEs. For purposes of this Financing Order, all references to the SPE shall be applicable to all SPEs that are created to issue any separate series of Recovery Bonds. Notice of A.21-01-004 appeared in the Commission’s Daily Calendar on January 8, 2021.

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The following parties filed protests on January 22, 2021: City and County of San Francisco (CCSF); the Public Advocates Office of the California Public Utilities Commission (Cal Advocates); The Utility Reform Network (TURN); and Wild Tree Foundation (Wild Tree). The Agricultural Energy Consumers Association (AECA) served a response to the application, and the following parties filed motions for party status that were subsequently granted: Southern California Edison Company (SCE); the Coalition of California Utility Employees (CUE), and the Official Committee of Pacific Gas and Electric Company Tort Claimants.

PG&E filed a reply to the protests on February 1, 2021.

On January 22, 2021, a notice was issued by the assigned ALJ, setting a prehearing conference (PHC) for February 5, 2021. By ruling on January 25, 2021, the assigned ALJ directed parties to file PHC statements. A Scoping Memo issued on February 24, 2021, which determined that no evidentiary hearing is needed to resolve this proceeding, but parties were permitted to submit additional facts into evidence. On February 25, 2021 TURN, Cal Advocates and Wild Tree submitted additional proposed facts. TURN and Cal Advocates offered into evidence PG&E’s responses to their respective data requests in this proceeding. Wild Tree offered further written testimony from Aaron Rothschild.⁵ PG&E did not object to the evidence submitted by TURN and Cal Advocates. On the other hand, PG&E did object to the Rothschild Testimony as being in substantial part a conclusory repetition of the testimony Mr. Rothschild

⁵  Wild Tree previously submitted direct and rebuttal testimony from Mr. Rothschild in the Stress Test Application proceeding. See WTF-01 (direct testimony of Mr. Rothschild); WTF-02 (rebuttal testimony of Mr. Rothschild).

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submitted in the Stress Test Application proceeding. The Assigned Commissioner’s Scoping Memo ruled that although this proceeding is not consolidated with A.20-04-023, the evidentiary record developed in A.20-04-023 is incorporated to the extent that it has a bearing on issues in A.21-01-004, and that parties may rely upon such record for purposes of the instant proceeding.⁶ We hereby formally receive into evidence the additional evidentiary material offered by TURN and Cal Advocates on February 25, 2021. We strike the additional testimony offered by Wild Tree for the reasons noted by PG&E.⁷ Parties filed opening briefs on March 1, 2021, and reply briefs on March 12, 2021. A motion to dismiss was jointly filed by multiple parties on February 10, 2021 and PG&E’s response to the motion were filed on February 17, 2021. We deny the motion to dismiss for the reasons discussed below.

Pursuant to Section 850.1(g), the Commission has 120 days from the date that A.21-01-004 was filed to approve or disapprove the Application. This Financing Order is being issued within the 120-day timeframe.

2. Overview of PG&E’s Application

to Issue Recovery Bonds

In A.21-01-004, PG&E requests that the Commission issue a Financing Order granting authority under Article 5.8 for one or more legally separate SPEs to issue $7.5 billion of Recovery Bonds in one or more separate series on or prior to a date sought by PG&E of December 31, 2035. The Bonds would be secured by the Recovery Property, and repaid with Fixed Recovery Charges.

⁶  See, Administrative Law Judge Ruling Denying Motion to Consolidate and Incorporating Records, March 29, 2021.

⁷  PG&E March 1, 2021, Opening Brief at 23-24 (duplicative of testimony presented in A.20-04-023 that is already part of the record in this proceeding and not responsive to issues in this proceeding). See, Assigned Commissioner’s Scoping Memo and Ruling, February 24, 2021, at 5-6 (parties may submit “proposed facts that they believe will be required to decide the scoped issues ... to the extent there are facts not already in the record of this proceeding or in the record of A.20-04-023.”).

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PG&E proposes that the Recovery Bonds be repaid using a modified mortgage style amortization, with full repayment, to be determined in an issuance advice letter submitted to the Commission after pricing and based on the pro forma example contained in Attachment 2 of this Financing Order (the Issuance Advice Letter). Principal payments may be made at a reduced amount for the first several payment periods.

PG&E offered a form of a Financing Order as Attachment A to the instant application (updated from its earlier version in A.20-04-023 as Exhibit 3.1 dated August 7, 2020). In a redline to its Application Attachment A, PG&E highlighted changes since the August 2020 version.

PG&E asks the Commission to:

(1) issue the Financing Order in the form included in its Application, which authorizes the issuance of one or more series of Recovery Bonds up to a total principal amount of $7.5 billion;

(2) determine that the issuance of Recovery Bonds and PG&E’s proposed terms are just and reasonable, consistent with the public interest, and reduce, to the maximum extent possible, the rates on a present value basis that customers would pay as compared to the use of traditional utility financing mechanisms;

(3) authorize PG&E to impose and collect a nonbypassable Fixed Recovery Charge (FRC) sufficient to cover debt service on the Recovery Bonds as well as costs of servicing the Recovery Bonds;

(4) approve a true-up mechanism (True-up Mechanism) to allow for adjustment of the Fixed Recovery Charges;

(5) authorize PG&E to sell or assign its right, title and interest in the Fixed Recovery Charges established by the Financing Order and all rights to obtain adjustments to such Fixed Recovery Charges in accordance with Section 850.1 and the Financing Order (such right, title and interest defined in Section 850(b)(11) as Recovery Property) to one or more financing entities for use in securing the Recovery Bonds;

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(6) authorize PG&E to service the Recovery Bonds on behalf of the financing entities;

(7) authorize PG&E to establish the Customer Credit Trust⁸

(8) approve a true-up mechanism that will allow for adjustment of the Customer Credit in conjunction with the True-up Mechanism described above;⁹

(9) authorize PG&E to impose and collect a nonbypassable Fixed Recovery Tax Amount (FRTA) sufficient to pay federal and state of California income and franchise taxes associated with the Fixed Recovery Charges, but not approved as Financing Costs financed from proceeds of Recovery Bonds, and make annual adjustments to the FRTA pursuant to a True-up Mechanism; and

(10) approve such further actions necessary for PG&E to carry out the transactions described in its application.

In its Opening Brief, PG&E proposed additional revisions to the specified sections of its Draft Financing Order, asking the Commission to:

• Add a provision (at 1-6, second paragraph) that to the extent a percentage of the authorized Securitization Amount is not issued until after 2021, a corresponding percentage of the Initial Shareholder Contribution will be postponed until the time of issuance of that subsequent portion of the Securitization;¹⁰

⁸  This was previously taken up by the Commission in A.20-04-023.

⁹  This is authorized pursuant to Ordering Paragraph 70 and Attachment 5 hereto.

¹⁰  Customer Credit Trust contributions have been addressed in A.20-04-023.

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• Add a provision stating that PG&E will submit the negotiated form of trust agreement, including the schedule of Trustee fees, via a Tier 2 advice letter;¹¹

• Revise the description of franchise fees, at 1-36 and 1-75 (paragraph 90) to state that it is the FRC net of the Customer Credit (i.e., it is the net revenue).

• Add a paragraph on page 1-36 of PG&E’s proposed draft stating: “In the event that the Fixed Recovery Charge exceeds the Customer Credit, under the definition of the fixed recovery tax amount in Section 850(b)(8)(FRTA), the FRTA is equal to the amount needed to recover the federal and State of California income and franchise taxes associated with the Fixed Recovery Charges not approved as Financing Costs financed from the proceeds of Recovery Bonds. Such tax liability will be computed on the amount, if any, by which the Fixed Recovery Charge exceeds the Customer Credit after deducting for any Recovery Bond interest portion of the FRC. PG&E will maintain an FRC Balancing Account (FRCBA) that will record those costs and benefits for subsequent recovery from or credit to customers.”

• Amend the second paragraph under Section 5 on page 1-27 to add a parenthetical as follows: “The new surcharges are identical to those described in A.21-01-004 (except as otherwise specified by the Commission herein) and consistent with Article 5.8.”

PG&E argues that it has satisfied the statutory requirements for approval of the Financing Order to issue securitized bonds, including the requirements of Section 850.1(a)(1)(A).

2.1. Standard for Approval of the Financing Order Application

Article 5.8 contemplates that the Application should be approved if the following conditions are satisfied:

¹¹  The establishment of the Customer Credit Trust has been addressed in A.20-04-023.

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1. The amount of costs and expenses identified by PG&E in A.20-04-023 related to catastrophic wildfires to be reimbursed from the Recovery Bonds are found to be just and reasonable or are allocated to ratepayers pursuant to subdivision (c) of Section 451.2. (Section 850.1(a)(1)(A)(i).)

2. The issuance of Recovery Bonds, including material terms and conditions of the bonds, is just and reasonable. (Section 850.1(a)(1)(A)(ii)(I).)

3. The issuance of Recovery Bonds is consistent with the public interest. (Section 850.1(a)(1)(A)(ii)(II).)

4. The recovery of Recovery Costs (defined herein as (i) the Catastrophic Wildfire Amounts, (ii) federal and State income and franchise taxes associated with recovery of Catastrophic Wildfire Amounts and (iii) Financing Costs) through the designation of the Fixed Recovery Charges and any associated FRTAs, and the issuance of Recovery Bonds, would reduce, to the maximum extent possible, the rates on a present value basis that Consumers within PG&E’s Service Territory would pay as compared with the use of traditional utility financing mechanisms.

(Section 850.1(a)(1)(A)(ii)(III).)

2.2. Motion to Dismiss

As a basis for ruling on PG&E’s application for a financing order, we have taken into account the objections raised by a number of interested parties. As a threshold matter, we address the Motion to Dismiss A.21-01-004, jointly sponsored by TURN, Wild Tree, CCSF, A4NR, CLECA, and EPUC (Movants).

Movants argue that PG&E’s Financing Order application should be dismissed as prematurely filed and not properly before the Commission. They argue that the application was filed in violation of the requirements of Public Utilities Code Sections 451.2(c) and 850(a)(1)1. Movants believe that the time to apply for a financing order under Section 451.2 and Sections 850 et seq. is only after the Commission has conducted a stress test analysis and resolved whether PG&E has demonstrated that costs are recoverable under Section 451.2. Because at the time of filing A.21-01-004, the stress test determination had not been completed by the Commission, Movants argue that PG&E was not eligible to apply for a financing order at the time of filing.

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As argued by Movants, a motion to dismiss is warranted when the “application is procedurally improper because the Applicant has not exhausted the process set forth by the Commission.”¹² Here, movants claim that PG&E has not exhausted the process set forth by the Legislature by filing the application for a financing order before a determination on the stress test application. They also argue that Commission adoption of a financing order based upon an application made prior to a decision in A.20-04-023 deprives ratepayers and their advocates their due process right to challenge the decision.

Even if the Commission disagrees with Movants as a matter of law dictated by the relevant statutes, Movants argue that the Commission should still exercise its discretion to dismiss this application to avoid wasting time and Commission and party resources in overseeing and litigating a financing order application if the stress test application is denied.

Movants further argue that dismissal will avoid a requirement to rush the Commission’s decision in the complex securitization case in order to meet the 120-day deadline for a financing order decision.

PG&E filed a response in opposition to the Motion to Dismiss, arguing that Movants’ arguments ignore the Commission’s broad discretion to establish the procedure for consideration of the Financing Order Application. PG&E argues that Movants interpret the statutory language in an ungrammatical way that conflicts with the purpose of the statutory scheme. PG&E contends that

¹²  D.18-11-028 at 4.

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expeditious resolution of proceedings to authorize the securitization of disallowed costs which undermine the utility’s financial health is in the interests of customers, as expressed in SB 901. PG&E argues that it would undermine legislative intent to deny the Commission the ability to even consider PG&E’s Financing Order Application filed before a final decision on the Stress Test Application.

This is because Movants’ reading of the statute, according to PG&E, is contrary to SB 901’s goal of protecting ratepayers by expeditiously securitizing stress test costs.

2.2.1. Disposition of Motion to Dismiss

Upon due consideration of parties’ arguments, we deny the motion to dismiss. We find no good cause to dismiss the application, particularly in view of the undue delays that would result in completing PG&E’s securitization. The Commission retains broad discretion to establish a schedule and sequence for considering PG&E’s Financing Order Application. “Subject to statute and due process” limitations, the California Constitution grants the Commission the authority to “establish its own procedures.” Cal. Const., art. XII, § 2.¹³

In this case, timely disposition of the Financing Order Application under the currently adopted schedule is consistent with statutory and due process limitations. Parties have had due notice of the procedural plan for expediting this application. In A.20-04-023 (the Stress Test Application), filed April 30, 2020, PG&E explained that it would file the Financing Order Application approximately 120 days before the anticipated Commission decision date for the Stress Test Application, to provide time to address the Stress Test Application

¹³  See also D.12-08-046 at 28. “As long as it meets these broad requirements [of constitutional due process], however, this Commission has been granted discretion to establish its own procedures for conducting proceedings.”

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and not be constrained by the 120-day statutory time frame for issuance of a decision on the Financing Order Application. The timing of PG&E’s Financing Order Application was again addressed during the December 2020 evidentiary hearings in A.20-04-023. PG&E suggested that the Financing Order Application could be filed on December 16, 2020, in anticipation of a final decision on both applications on April 15, 2021.¹⁴ The ALJ stated that “completing both decisions” by April 15 would be challenging, and encouraged PG&E instead to file the Financing Order 120 days before May 6, 2021.¹⁵ The subsequent filing of PG&E’s Financing Order application and the current schedule for Commission action upon it is consistent with the ALJ’s statements at the evidentiary hearings. We thus find that parties’ have had adequate notice and opportunity to address the Financing Order Application.

Proceeding with the Financing Application under the current schedule, moreover, is consistent with the statutory intent of SB 901 which established securitization authority for certain wildfire costs to “reduce the bill shock associated with [wildfire] damages,” by “minimiz[ing] borrowing costs in order to qualify for better credit ratings well below the rate available in the marketplace which would otherwise apply to other long-term debt.”¹⁶

Accordingly, timely recovery of stress test costs via securitization serves to avoid harming ratepayers. Proceeding with the Financing Order under the current schedule supports that goal. Nothing in the statutes cited by Movants constrains the Commission’s discretion to proceed with the currently effective schedule for resolving the Financing Order Application even though a decision in A.20-04-023 was not finalized prior to the filing of A.21-01-004. Accordingly, the motion to dismiss is denied.

¹⁴  See, RT at 17:7-23 in A.20-04-023.

¹⁵  RT at 1338:3-27 in A.20-04-023.

¹⁶  Senate Rules Committee Analysis (Aug. 31, 2018), at 15, at https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=201720180SB901> [as of February 16, 2021].

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2.3. Parties’ Objections to the Financing Order on Substantive Grounds

Independent from objections in the motion to dismiss, various parties also oppose approval of PG&E’s application on substantive grounds. Citing the evidentiary record in A.20-04-023, and based on briefs filed in A.21-01-004, they claim that PG&E has failed to meet the requirements of Section 451.2 and Section 850.1. TURN and Wild Tree, in particular, took the lead in actively opposing approval of PG&E’s application. EPUC and A4NR also raised objections relating to PG&E’s revenue allocation and rate design proposals, which we address later in the Financing Order.

Wild Tree claims that PG&E has not and cannot meet its burden of proof that it has $7.5 billion of costs from 2017 wildfire claims eligible for securitization under Sections 451.2 and 850, et seq. Wild Tree argues that the Financing Order application is thus not just and reasonable and its approval would be against the public interest.

TURN likewise opposes PG&E’s application and argues that it should be denied. Opposing parties generally contend that PG&E failed to show that it has satisfied the applicable requirements for a securitization, in particular, the requirement to satisfy the “just and reasonable” and “consistent with the public interest requirements” of Section 850.1(a)(1)(A)(ii)(I) and (II).

If the Commission is nevertheless inclined to approve a securitization over TURN’s objections, TURN makes the following recommendations:

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• TURN proposes that PG&E be required to provide a full monthly credit to ratepayers of any servicing and administrative fees paid to PG&E or any other entity that are included in FRCs. TURN recommends that annual Financing Costs (other than PG&E’s servicing fees) be capped at $400,000 per year based on the amounts modeled by PG&E witness Allen in A.20-04-023. PG&E would thereby be required to absorb any costs above this amount, with the opportunity to recover these costs out of any surplus CCT funds shared with PG&E shareholders once all Recovery Bonds have been fully paid.

• TURN opposes PG&E’s proposal for a Tier 1 Issuance Advice Letter for seeking Commission authorization of the final terms of Recovery Bonds. TURN advocates for instead requiring a Tier 2 Advice Letter with a 20-day period for protests or responses, to afford interested parties a meaningful opportunity to review and comment upon the proposed terms of any bond issuance and any associated financing costs for which Commission approval is sought. TURN proposes that the Issuance Advice Letter should be a Tier 2 advice letter so that any member of the public can submit a response or protest the final terms of the Recovery Bonds.

• If a securitization is approved in A.20-04-023 on terms that materially differ from the terms reflected in PG&E’s proposed financing order, TURN argues that parties be allowed to present briefs on how PG&E’s proposed financing order needs to change – after the decision in A.20-04-023 is issued.

• TURN proposes that the Commission should require a Commission Finance Team be established to review and direct changes to any securitized bond issuance and associated transactions prior to any issuance. The Finance Team’s composition and authority should be the same as that authorized in D.20-11-007 and include authority to review and direct changes to the proposed CCT Trustee and CCT Trustee Fees. The Finance Team’s review would supplement, not replace, affording intervenors a meaningful opportunity in a Tier 2 advice letter process to review and comment on the final proposed elements of any bond issuance and CCT Trustee agreement, including any associated financing costs.

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2.3.1. Disposition of Parties’ Objections to the Financing Order

As a starting point for addressing parties’ objections, we note that the objections to the Financing Order are based largely upon disputes resolved in disposition of A.20-04-023. Accordingly, for disposition of parties’ objections, we take note of our order issued in A.20-04-023 (Decision (D.) 21-04-030), which addresses rate neutrality issues in disposition of A.20-04-023. Objections to the issuance of a Financing Order based on rate neutrality concerns are correctly addressed in A.20-04-023.

TURN argues that PG&E has failed to show that ongoing Financing Costs associated with the proposed Securitization are just and reasonable. TURN proposes that the Commission cap ongoing Financing Costs at $400,000 per year based on its assertion that PG&E’s Monte Carlo modeling used $400,000 per year for ongoing Financing Costs other than servicing and administration fees and TURN’s concern that multiple issuances could generate incremental costs of up to $500,000 for each additional series of Recovery Bonds.¹⁷

We conclude that a cap is not necessary. As noted by PG&E, its Monte Carlo modeling incorporates high-end estimates, and only amounts that are actually incurred will be recovered through the FRCs. Financing Costs estimates will be provided in the relevant Issuance Advice Letter, and any necessary adjustment to the FRCs to ensure the FRCs are sized appropriately to pay for all actual Financing Costs will be addressed in True-Up Mechanism Advice Letters. Accordingly, we decline to adopt TURN’s proposal for the cap.

¹⁷  TURN Brief at 10-13.

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TURN and Wild Tree argue that lower Bond Issuance Costs would reduce the amount to be securitized. As PG&E explained, Bond Issuance Costs will not be added to the amount to be securitized.¹⁸ The $7.5 billion principal amount of the Recovery Bonds will not change based on the final amount of Bond Issuance Costs.

PG&E will include Bond Issuance Costs in the Issuance Advice Letter for transparency and informational purposes only. The reference in PG&E’s Application to “up to” $7.5 billion is to account for potential multiple series of bonds, not because of any potential variances in Bond Issuance Costs.

We also decline to adopt TURN’s proposal to impose a Tier 2 advice letter requirement for the Issuance Advice Letter. Imposing Tier 2 advice letter requirements is unnecessary to protect ratepayers, and could delay or impede the marketing, pricing, and closing of the transaction. Once the Recovery Bonds are priced, the transaction must close within a matter of days. Otherwise, it would have to be re-priced after resolution of the Tier 2 advice letter process and evaluation of market conditions at that subsequent time (requiring another advice letter).

PG&E has proposed to keep the Commission updated throughout the structuring and pricing process to ensure timely final approval of the transaction. In addition, as discussed in further detail below, we have directed that a Finance Team be established to review and approve the material terms of the Recovery Bonds prior to submission of the Issuance Advice Letter. Given these considerations, we conclude that PG&E’s proposal for a Tier 1 Issuance Advice Letter process is reasonable and is adopted.

¹⁸  See A. 20-04-023: Ex. 3.2 to PGE-03.

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We agree with TURN and Wild Tree that a Financing Team should be implemented for purposes of overseeing the Recovery Bond issuance process. We address the details of how this will be implemented in Section 3.7 below.

We have considered TURN’s objections arguing that PG&E fails to satisfy the “consistent with the public interest” requirement due to the administrative burdens involved with multiple new regulatory submissions every year for 30 years. The new submissions include annual Routine True-Up Mechanism Advice Letters to adjust the FRCs and separate annual advice letters to adjust the Customer Credits. In any of the 30 years, additional interim advice letters to adjust the FRCs and Customer Credits may also need to be submitted.

TURN argues that approval of PG&E’s proposal would entail 30 years of burdensome annual (or more frequent) advice letter submissions and ongoing monitoring and auditing of a new balancing account. TURN argues that future Commissions would face potential resource-intensive controversies of an unknown amount and frequency over three decades. To the best of TURN’s knowledge, PG&E’s proposal contains no provision to fund increased ongoing resources that the Commission would need if its application is approved.

We are not persuaded by TURN that the scope of administrative resources required to review and process future regulatory submissions rise to the level that they negate the public interest benefits of approving this Financing Order.

In approving a Finance Team, we have considered the arguments of parties in this regard. In particular, Wild Tree and TURN claim that PG&E’s underwriter does not have a vested interest in maximally reducing the Recovery Bond’s interest rate, that the Commission would only be provided notice of the details of the process but not be engaged in the process, and that PG&E is proposing a process that would not be in keeping with Commission past

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practice.¹⁹ PG&E denies there is any basis for assertions that its underwriters on this transaction would have a conflict of interest. PG&E argues that its proposal with respect to the material terms and conditions of the Recovery Bonds is reasonable, and has been designed in conformance with industry standards to ensure the lowest-cost, highest-rated bonds, targeting the utility securitization market. To that end, PG&E intends to rely upon the advice of experienced professional advisors and underwriters.

In any event, PG&E agrees that its proposal does not preclude the creation of a Finance Team, and PG&E has no objection to a Finance Team if the Commission determines that one should be established. Commission precedent for authorizing the use of such a Finance Team exists.²⁰

Having addressed parties’ substantive objections, we consider next whether PG&E’s proposal conforms to the statutory requirements for approval.

3. Approval of the Financing Order

As discussed below, we conclude that the instant Financing Order, with the modifications to PG&E’s proposal that we adopt herein, satisfies the requisite statutory requirements for approval.

3.1. The Cost and Expenses Identified by PG&E for Recovery in the Application Related to the Catastrophic Wildfires Will be Determined Pursuant to Subdivision (c) of Section 451.2

In A.20-04-023, PG&E demonstrated that at least $7.5 billion of its costs and expenses relating to wildfires with an ignition date in 2017 should be allocated pursuant to Section 451.2 and, subsequent to review, should be determined to exceed the threshold as determined by the Stress Test, and therefore constitute catastrophic wildfire amounts that may be recovered by issuing the Recovery Bonds, and this question is determined by the results of that proceeding.

¹⁹  Here, we expressly note D.20-11-007 (SCE’s Financing Order) and D.04-11-015 (our earlier Financing Order decision for a similar utility bond securitization).

²⁰  Most recently, we authorized such action in D.20-11-007 (in approving a Financing Order for SCE, the SCE Securitization Decision) and earlier in D.04-11-015.

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3.2. The Issuance of Recovery Bonds is Just and Reasonable

The issuance of Recovery Bonds is just and reasonable because the material terms and conditions of the Recovery Bonds, including without limitation, interest rates, rating, maturity, and the imposition and collection of Fixed Recovery Charges described in detail in Chapter 3 of A.20-04-023, are designed in conformance with industry standards to ensure the lowest-cost, highest-rated bonds, targeting the utility securitization market described in Chapter 2 of A.20-04-023. In addition, after issuance of this Financing Order, the Commission staff will review the complete terms and conditions of the Recovery Bonds in any Issuance Advice Letter. PG&E will provide a Customer Credit pursuant to the terms of CPUC orders issued in A.20-04-023 that is expected to equal the Fixed Recovery Charges in each billing period such that Consumers will not pay any net charges related to the Recovery Bonds.

3.3. The Issuance of Recovery Bonds is Consistent with Public Interest

For the reasons mentioned above, including determinations made in A.20-04-023 regarding the appropriateness of allocating certain costs to ratepayers via Recovery Bonds, the issuance of Recovery Bonds as described in this Financing Order, including all material terms and conditions of the Recovery Bonds, including without limitation, interest rates, rating, maturity, and the imposition and collection of Fixed Recovery Charges, is consistent with the public interest.

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3.4. The Recovery of Recovery Costs Through the Designation of the Fixed Recovery Charges, and any FRTAs, and the Issuance of Recovery Bonds Would Reduce, to the Maximum Extent Possible, Rates on a Present Value Basis that Consumers Within PG&E’s Service Territory Would Pay as Compared to the Use of Traditional Utility Financing Mechanisms

PG&E has demonstrated that recovery of Recovery Costs through the designation of the Fixed Recovery Charges, and any FRTAs, and the issuance of Recovery Bonds would reduce, to the maximum extent possible, rates on a present value basis that Consumers within PG&E’s Service Territory would pay as compared to the use of traditional utility financing mechanisms. As described in Chapter 7 of A.20-04-023, issuance of the Recovery Bonds would reduce Consumer rates by approximately $4.2 billion on a present value basis as compared to traditional utility financing of the Catastrophic Wildfire Amounts.²¹

Importantly, as described in more detail below, we are directing a Finance Team be created and it will, at the appropriate time (necessarily after this Financing Order has issued) be responsible for review and approval of the material terms and structure of the Recovery Bonds as described in this Financing Order. The Finance Team’s review and approval of each Recovery Bond series will be evidenced by a letter from the Finance Team to PG&E delivered on or before the date of the pricing of the relevant Recovery Bonds. Approval of the Finance Team will be required in order to meet the statutory requirement set forth in § 850.1(a)(1)(A)(ii)(III).²²

²¹  $4.2 billion of present value savings reflects a strict reading of the requirements of the statute, which are not reflective of the facts and circumstances of this situation given PG&E’s pledge not to recover such amounts. However, we believe this structure maximizes net present value (NPV) savings to the maximum extent possible under the existing circumstances in addition to meeting the strict statutory requirements.

²²  We reject arguments put forth by intervenors (see, e.g., TURN Opening Comments at 3-4, Wild Tree Opening Comments at 6-7) that would have us reject all Section 451.2 costs pursuant to Section 850.1(a)(1)(A)(ii)(III). Intervenors erroneous interpretation of the statute fails to parse the statutory language with respect to utility financing mechanisms. Further, we have interpreted the statutory provisions here in the same manner we did in the SCE Securitization Decision, D.20-11-007 at 43 and n.28, and have previously determined PG&E may apply to securitize these costs, D.20-05-053 at 75, D.21-04-030 at 20, 84-85 (FOF 6 and 11)

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3.5. Compliance with Sections 701.5 and 816 et seq.

The fourth condition that must be satisfied is set forth in Section 850.2(f), which states, in relevant part, as follows:

The approval by the commission in a financing order of . . . recovery bonds shall include the approvals, if any, as may be required by Article 5 (commencing with Section 816) and Section 701.5. Section 851 is not applicable to the transfer or pledge of recovery property, the issuance of recovery bonds, or related transactions approved in a financing order.

We interpret Section 850.2(f) as requiring this Financing Order to include the approvals, if any, as may be required by Sections 701.5 and 816, et seq. and that Section 851 is inapplicable to the transaction, including PG&E’s sale of Recovery Property. Sections 701.5 and 816, et seq. state, in relevant part, as follows:

Section 701.5: [N]o electrical, gas, or telephone corporation, whose rates are set by the commission on a cost-of-service basis, shall issue any bond, note, lien, guarantee, or indebtedness of any kind pledging the utility assets or credit for or on behalf of any subsidiary or affiliate. The commission may, however, authorize an electrical, gas, or telephone corporation to issue any bond, note, lien, guarantee, or indebtedness pledging the utility assets or credit [f]or or on behalf of a subsidiary or affiliate if it engages in activities which support the electric, gas, or telephone corporation in its operations or service, these activities are, or will be, regulated either by the commission or a comparable federal agency, and the issuance of the bond, note, lien, guarantee, or indebtedness is specifically approved in advance by the commission.

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Section 817: A public utility may issue bonds, notes, and other evidence of indebtedness payable at periods of more than 12 months after the date thereof, for any of the following purposes and no others [f]or the discharge or lawful refunding of its obligations[;] [f]or the reorganization or readjustment of its indebtedness or capitalization upon a merger, consolidation, or other reorganization[;] [f]or the retirement of or in exchange for one or more outstanding stocks or stock certificates or other evidence of interest or ownership of such public utility, or bonds, notes, or other evidence of indebtedness of such public utility, with or without the payment of cash[;] [f]or the reimbursement of moneys actually expended from income or from any other money in the treasury of the public utility not secured by or obtained from the issue of stocks or stock certificates or other evidence of interest or ownership, or bonds, notes, or other evidences of indebtedness of the public utility, for any of the aforesaid purposes except maintenance of service and replacements . . . .

Section 818: No public utility may issue [debt] . . . unless it shall first have secured from the commission an order authorizing the issue, stating the amount thereof and the purposes to which the . . . proceeds thereof are to be applied, and that, in the opinion of the commission, the money, property, or labor to be procured or paid for by the issue is reasonably required for the purposes specified in the order, and that such purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income.

Section 823(d): No note payable at a period of not more than 12 months after the date of issuance of such note shall, in whole or in part, be refunded by any issue of stocks or stock certificates or other evidence of interest or ownership, or of bonds, notes of any term or character, or any other evidence of indebtedness, without the consent of the commission.

We conclude that the Recovery Bonds do not require the Commission’s approval pursuant to Section 701.5, as PG&E will not “issue any bond, note, lien, guarantee, or indebtedness of any kind pledging the utility assets or credit for or on behalf of any subsidiary or affiliate.” Rather, each SPE, which will not be an electrical, gas, or telephone corporation, will issue the Recovery Bonds, and the Bond investors will have no recourse to PG&E. The Bonds will be secured by Recovery Property, and it will be the Commission’s duty under Article 5.8 to set the Fixed Recovery Charges at a level sufficient to make timely payments of the principal and interest on the Recovery Bonds, and certain other Financing Costs identified, infra.

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Similarly, we conclude that Sections 817 and 818 are inapplicable to the Recovery Bonds. Those provisions apply to the issuance of long-term debt by a public utility, but the Recovery Bonds will be issued by the SPE, not PG&E as a public utility. However, even if Sections 817 and 818 were to apply, the Recovery Bonds are consistent with their requirements. With respect to Section 817, the Recovery Bonds approved by this Financing Order comply with Section 817(d), (f), (g) and (h). Proceeds from the issuance of the Recovery Bonds will be used by the SPE to purchase Recovery Property from PG&E and pay certain other Bond Issuance Costs. PG&E will then use the proceeds from the sale of the Recovery Property to pay or to reimburse PG&E for the payment of Catastrophic Wildfire Amounts. Catastrophic Wildfire Amounts were paid pursuant to PG&E’s Plan and related agreements in order for PG&E to emerge from Chapter 11. Some of these costs and expenses were financed with $6 billion in temporary utility debt before the issuance of Recovery Bonds. As a result of the transaction, PG&E will retire the $6 billion of temporary utility debt and pay or reimburse the $1.35 billion in cash payments to the Fire Victim Trust. A fundamental purpose of the Recovery Bonds is to allow PG&E to retire the temporary utility debt that helped enable PG&E to reorganize and emerge from bankruptcy. Section 817(f) provides that the Commission may authorize a utility to issue debt for the “readjustment of its indebtedness or capitalization upon a merger, consolidation, or other reorganization.” Similarly, Section 817 also authorizes the issuance of debt for the discharge or lawful refunding of a utility’s obligations (Section

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817(d)); for the retirement of or in exchange for existing debt (Section 817(g)); and for the reimbursement of moneys actually expended from income or from a utility’s treasury for other statutory purposes except maintenance of service and replacements (Section 817(h)). Therefore, the Recovery Bonds comply with Sections 817(d), (f), (g) and (h). The Bond transaction also complies with Section 818 because the purpose of issuing the Recovery Bonds is to support PG&E’s path to an investment-grade issuer credit rating, and this purpose is in the public interest and not reasonably chargeable to operating expenses or income. In addition, to the extent the temporary utility debt constitutes short-term debt within the meaning of Section 823(d), PG&E should be authorized to retire that debt in connection with the issuance of the Recovery Bonds.

3.6. Approval of the Recovery Bonds

We conclude for the previously stated reasons that the Recovery Bonds proposed by PG&E in A.21-01-004 satisfy all the conditions for approval established by Article 5.8. Because issuance of the Recovery Bonds will provide demonstrated benefits to PG&E’s Consumers, we will authorize the issuance of Recovery Bonds.

3.7. Requirement to Employ a Finance Team

The task of ensuring the sale of Recovery Bonds issued pursuant to this Financing Order so as to reduce rates on a present value basis to the maximum extent possible compared to the use of traditional utility financing mechanisms requires a process that is optimized for transparency and in line with best practices. For these reasons, we approve the creation of a Finance Team.

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Prior to the issuance of each series of Recovery Bonds, each Recovery Bond series and the associated Recovery Bond transactions shall be reviewed and approved by the Commission’s Finance Team consisting of the Commission’s General Counsel, the Director of the Energy Division, other Commission staff, outside bond counsel, and any other outside experts that the Finance Team deems necessary. The other outside expertise may include, for example, independent legal counsel and an independent financial advisor to assist the Finance Team in overseeing and reviewing the issuance of a series of Recovery Bonds. Any costs incurred by the Finance Team in connection with its review and approval of a series of Recovery Bonds shall be treated as a Bond Issuance Cost. The purpose of the Finance Team is to provide oversight over the structuring, marketing, and pricing of each Recovery Bond transaction and to review and approve the material terms of such transaction in light of the goal to reduce rates on a present value basis to the maximum extent possible pursuant to AB 1054’s directives.

In a pre-issuance review process, the Finance Team will have the right to review all material terms of the Recovery Bonds and other items the Finance Team determines are appropriate to perform its role, which may include, without limitation, (1) the underwriter and syndication group size, selection process, participants, allocations, and economics; (2) the structure of the Recovery Bonds; (3) the Recovery Bonds’ credit rating agency application; (4) the underwriters’ preparation, marketing, and syndication of the Recovery Bonds; (5) the pricing of the Recovery Bonds and certifications provided by PG&E and the lead left underwriter(s) regarding pricing; (6) all associated Recovery Bond costs (including Bond Issuance Costs and other Financing Costs), servicing and administrative fees and associated crediting, (7) maturities, (8) reporting templates, (9) the amount of PG&E’s equity contribution to the related SPE, (10) overcollateralization and other credit enhancements and (11) the initial calculation of the related Fixed Recovery Charges. The foregoing and other items may be reviewed during the entire course of the Finance Team’s process. We expect PG&E will resolve material terms and structuring issues with the

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Finance Team prior to commencing marketing (subject to any modifications required as a result of such marketing process). This pre-issuance review process is intended to create Recovery Bonds with material terms that can meet the statutory requirements; in particular, that the Recovery Bonds reduce on a present value basis to the maximum extent possible, the rates that Consumers would pay as compared to the use of traditional utility financing mechanisms. The Finance Team’s review will continue until the related Issuance Advice Letter becomes effective as described below. The Finance Team has the ability to be included and participate in all calls, meetings, e-mails, and other communications relating to the structuring, marketing, pricing and issuance of each series of Recovery Bonds.

The Finance Team’s pre-issuance review and approval of the material terms and structure of a series of Recovery Bonds will be evidenced by a letter from the Finance Team to PG&E delivered on or before the date of the pricing of the relevant Recovery Bonds. PG&E shall also be required to include such letter as an attachment to the Issuance Advice Letter relating to such series of Recovery Bonds. Such approval letter shall be a condition precedent to the issuance of such series of Recovery Bonds.

However, this approach does not obviate the requirement for PG&E to describe the final structure and terms of the Recovery Bonds in an Issuance Advice Letter submitted to the Commission and subject to the Commission staff’s review and ability to reject the Issuance Advice Letter, i.e., with four business days’ notice and the Commission staff’s opportunity to halt the sale. While the Finance Team will review the process by which PG&E determines the final structure and terms of the Recovery Bonds preceding and during its marketing efforts and consultations with rating agencies, the final structure and terms of the Recovery Bonds should be described in detail in the Issuance Advice Letter submitted to the Commission and subject to the Commission staff’s review and ability to reject the Issuance Advice Letter, and otherwise the sale would automatically proceed.

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4. Description of the Approved Recovery Bonds

We next describe the Recovery Bonds authorized by this Financing Order. The authorized Bonds are identical to those described in the form of the Financing Order included with A.21-01-004 (except as otherwise identified by the Commission herein) and consistent with Article 5.8. Where appropriate, we adopt additional conditions and restrictions applicable to the Bonds.²³

4.1. No Recourse to the State

Pursuant to Section 850.1(f)(1), the Recovery Bonds authorized by this Financing Order do not constitute a debt or liability of the State of California or any political subdivision thereof; nor do the Bonds constitute a pledge of the full faith and credit of the State or any political subdivisions. In addition, pursuant to Section 850.1(f)(2), the issuance of the Recovery Bonds shall not directly, indirectly, or contingently obligate the State or any political subdivision to levy or to pledge any form of taxation to pay any obligations associated with the Bonds or to make any appropriations for their payment.

As required by Section 850.1(f), all Recovery Bonds shall have written on them a statement to the following effect: “Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond.”

²³  As noted above, the terms Recovery Bonds and Bonds are used interchangeably throughout to describe the bonds authorized by this Financing Order.

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4.2. Up to Three Series of Recovery Bonds

Depending on market conditions at the time, the Recovery Bonds may be issued in up to three series on or prior to December 31, 2022. This time frame is consistent with the public interest and the time frame contemplated by A.20-04-023 to put PG&E on a path to investment grade credit ratings. This result does not preclude PG&E from seeking additional Financing Orders if required to complete the securitization transactions contemplated in A.20-04-023. This Financing Order authorizes up to three series of Recovery Bonds. Each series of Recovery Bonds will be subject to a separate issuance approval process, including a separate Issuance Advice Letter, separate Finance Team review and approval process and separate PG&E and lead left underwriter(s) certification requirement.

To attract a broad range of investors, each series of Recovery Bonds may be divided into several tranches. Each tranche may have a different scheduled final payment date and legal maturity date. PG&E and the SPE shall select the final number, type, and size of bond tranches to reduce, to the maximum extent possible, the rates on a present value basis that PG&E’s Consumers will pay compared to traditional utility financing mechanisms.

The latest maturing tranche of Recovery Bonds shall have a scheduled final payment date of approximately 30 years from the date of issuance, and a legal maturity of approximately 32 years from date of issuance. PG&E states that a legal maturity longer than the scheduled final payment date is a standard feature that allows for delays in scheduled principal payments due to variations in the cash flows from the Recovery Property.

The Recovery Bonds may have fixed or floating interest rates as determined at the time of issuance to provide lower all-in cost of Bonds. In the event the Recovery Bonds have floating interest rates, the SPE will convert any floating rate to a synthetic fixed rate with interest-rate swaps so Consumers will not have significant floating-rate risk. The interest costs recovered in the rates shall be based on the resulting synthetic fixed rate. We authorize floating-rate

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Bonds only if the all-in cost of the Bonds, including the cost of creating a synthetic fixed rate, is less than what would have been available had these Bonds been issued with comparable maturities in the fixed-rate market and if the swap does not reduce in any way the overall credit rating for the Recovery Bonds. Finally, PG&E has agreed to comply with the conditions and restrictions set forth in D.12-06-015 and reporting pursuant to GO 24-C (described below) with respect to the Recovery Bonds and any interest-rate swaps in connection therewith.

4.3. Authorized Amount of Recovery Bonds

The Commission authorizes the issuance of Recovery Bonds in an aggregate principal amount of up to $7.5 billion to fund Catastrophic Wildfire Amounts and Bond Issuance Costs (in each case subject to Finance Team review and approval and Commission staff review of the Issuance Advice Letter).

4.4. Receipt of Additional Insurance Proceeds, Tax Benefits, or Other Amounts that Reimburse PG&E for Recovery Costs

The Recovery Costs will include $7.5 billion of costs associated with Catastrophic Wildfire Amounts and Bond Issuance Costs. PG&E has already accounted for all applicable insurance proceeds in calculating the Catastrophic Wildfire Amounts.

4.5. Obligations of Customers to Pay Fixed Recovery Charges

PG&E’s failures to pay the Customer Credit pursuant to the CPUC orders issued in A.20-04-023 shall not change the obligations of Consumers to pay Fixed Recovery Charges. In accordance with Section 850.1(e) the Commission shall not rescind, amend or alter the financing order, or otherwise revalue or revise for ratemaking purposes the recovery costs or the costs of recovering, financing, or refinancing the recovery costs, in any way to reduce or impair the value of

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Recovery Property, including by either directly or indirectly taking Fixed Recovery Charges into account when setting other rates for PG&E. Finally, PG&E’s failure to pay the Customer Credit pursuant to the CPUC orders issued in A.20-04-023 shall not impair the characterization of the sale, assignment, or transfer of the recovery property to the SPE as an absolute transfer and true sale or affect or impair the SPE’s ownership of the Recovery Property or the SPE’s separateness from PG&E and PG&E Corporation.

4.6. The Bond Transaction

In accordance with Article 5.8, the Recovery Bonds will be issued by one or more SPEs owned by PG&E.²⁴ For purposes of this Financing Order, the description of the Bond transaction shall apply to each SPE established to issue a particular series of Recovery Bonds. The Bonds will be secured by “Recovery Property,” which Section 850(b)(11) defines as the right, title and interest of PG&E: (i) in and to Fixed Recovery Charges, including all rights to obtain adjustments to Fixed Recovery Charges in accordance with Article 5.8 and this Financing Order, and (ii) to be paid the amount that is determined in this Financing Order to be the amount that PG&E is lawfully entitled to receive pursuant to the provisions of Article 5.8 and the proceeds thereof, and in and to all revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges. Article 5.8 requires the Commission to set these rates at a level that provides sufficient funds to make timely payments of Bond principal, interest, and other “Financing Costs.”²⁵

²⁴  Article 5.8 authorizes the use of one or more subsidiary SPEs to issue the Recovery Bonds. See, e.g., §§ 850(b)(5), 850.2(a) and (b), 850.4(a), (b), (c) contemplate that the Recovery Bonds will be issued by one or more SPEs.

²⁵  § 850.1(e). The definition of “Financing Costs” is set forth in Section 850(b)(4).

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PG&E shall transfer the Recovery Property via a true sale and absolute transfer to an SPE that, notwithstanding any PG&E obligation to pay the Customer Credit, is legally separate and bankruptcy remote from PG&E. For the avoidance of doubt, any failure by PG&E to pay the Customer Credit or any failure by PG&E to provide the Initial Shareholder Contribution, Additional Shareholder Contribution or any other voluntary or required contribution to the Customer Credit Trust pursuant to the CPUC orders issued in A.20-04-023 shall not affect or impair the SPE’s ownership of the Recovery Property. This ensures that if PG&E ever becomes bankrupt, the Recovery Property will not be included in PG&E’s bankruptcy estate. Rather, the revenues from the Recovery Property will continue to be available to pay the debt service on the Recovery Bonds.

The Recovery Bonds will be issued under an indenture and administered by a Bond Trustee. The Recovery Property as well as all other rights and assets of the SPE (Bond Collateral) will be pledged to the Bond Trustee for the benefit of the holders of the Recovery Bonds and to secure payment of debt service and other Financing Costs.

PG&E shall contribute equity to the SPE in an appropriate and legally necessary amount. Such proceeds will be pledged as Bond Collateral to secure the Recovery Bonds and will be deposited into an account held by the Bond Trustee. This equity contribution is a requirement of the Internal Revenue Service (IRS) in order to characterize the Recovery Bonds as obligations of PG&E for federal income tax purposes.²⁶

²⁶  See, IRS Rev. Proc. 2005-62, available at: http://www.irs.gov/pub/irs-drop/rp-05-62.pdf (as of April 1, 2021).

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To fund the acquisition of the Recovery Property, the SPE will issue Recovery Bonds to investors. The Bonds will be secured by the Bond Collateral held by the Bond Trustee. Holders of Recovery Bonds secured by this Bond Collateral may exercise all remedies pursuant to this security interest if there is a default. The proceeds (net of Bond Issuance Costs) from the Recovery Bonds will be transferred from the SPE to PG&E as payment of the purchase price for the Recovery Property.

The Commission shall have full access to the books and records of the SPE. PG&E shall not make any profit from the SPE; provided that, PG&E should be permitted to receive a rate of return on its equity contribution equal to the weighted average interest rate on the Recovery Bonds, which should be payable as a Financing Cost from the Fixed Recovery Charges and be distributed to PG&E on each Bond payment date, after payment of debt service on the Recovery Bond and other Financing Costs on such date. PG&E shall credit electric Consumers the amount of this rate of return on its equity contribution paid to PG&E regardless of the balance of the Customer Credit Trust.

4.7. Bond Transaction Structure

The following diagram illustrates the Bond transaction structure approved by this Financing Order:

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4.8. Credit Rating Issues

To obtain the highest possible credit ratings, the SPE and its assets, including the Recovery Property, must be legally separate from PG&E’s bankruptcy estate. To ensure legal separation, the SPE shall: (1) include one or more independent members on its board of directors or managing members in the case of a corporation or a limited liability company, or an independent trustee in the case of a trust; (2) restrict its ability to declare bankruptcy or to engage in corporate reorganizations; and (3) limit its activities to those related to acquiring and owning the Recovery Property and issuing and paying the Recovery Bonds.

In connection with the transaction, PG&E will provide to the credit rating agencies an opinion from its legal counsel that: (1) the transfer of the Recovery Property from PG&E to the SPE constitutes a “true sale” for bankruptcy purposes, and (2) the SPE will not be substantively consolidated with PG&E for bankruptcy purposes. This legal opinion will provide assurance to the credit rating agencies that the SPE’s assets (including Recovery Property) will not be part of PG&E’s bankruptcy estate, and thus not be available to creditors, should PG&E subsequently commence bankruptcy.

The SPE may obtain credit enhancements for the Recovery Bonds in the form of an overcollateralization subaccount if the credit rating agencies require overcollateralization to receive the highest possible credit rating on the Bonds or the all-in cost of the Bonds with the overcollateralization is less than without. ²⁷ The required amount of overcollateralization, if any, may be collected via the Fixed Recovery Charges. Absent extraordinary circumstances, PG&E does not anticipate being required by the credit rating agencies to establish an overcollateralization subaccount, but to the extent such an account is required, the exact amount and timing of its collection via the Fixed Recovery Charges will be determined before each series of Bonds is issued.

²⁷  To overcollateralize the Bonds means to secure them with Recovery Property or other assets in an amount larger than the total principal amount of the Bonds. Overcollateralization provides further assurance that bondholders will receive all principal and interest due them.

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The overcollateralization requirement, if any, would be sized based upon input from the rating agencies indicating the amount necessary to achieve the highest possible credit rating.

Any overcollateralization collected from Consumers in excess of total debt service and other Financing Costs will be the property of the SPE. Upon payment of the principal amount of all Recovery Bonds and the discharge of all Financing Costs, all funds then held by the SPE (except the amount of PG&E’s equity contribution on deposit in the capital subaccount) shall be returned to PG&E to be credited to Consumers through normal rate making processes.

PG&E may also obtain the following types of credit enhancements, but only if required by the rating agencies to achieve the highest possible credit rating on the Recovery Bonds or if the all-in cost of the Recovery Bonds with these other credit enhancements is less than without the enhancements: bond insurance, letters of credit, and similar instruments. In addition, the equity contribution held by the Bond Trustee will be available as a credit enhancement. If the equity contribution is drawn upon, it may be replenished from future Fixed Recovery Charges. Investment earnings on the equity contribution will also be available to pay for Bond principal, interest, fees and expenses.

4.9. Bond Issuance Costs

PG&E estimates the Bond Issuance Costs to be between $36 million and $57 million (excluding Finance Team expenses). An itemization of the estimated Bond Issuance Costs is provided in the following table.

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Estimated Bond Issuance Costs28
Underwriter Fees and Expenses	$	26,500,000 – 41,250,000
Legal Fees and Expenses		5,000,000 – 7,000,000
Securities and Exchange Commission (SEC) RegistrationFees1		973,500
Rating Agency Fees		1,650,000 – 3,000,000
Accounting Fees and Expenses		50,000 – 250,000
Section 1904 Fees2		756,000
Printing/Edgarizing Costs		45,000 – 85,000
Bond Trustee Fees and Expenses		50,000 – 150,000
Original Issue Discount		TBD
PG&E’s Advisory Fee		750,000 – 1,600,000
Miscellaneous		200,000 – 500,000
Commission’s Costs and Expenses		500,000 – 1,600,000
Total	$	36,474,500 – 57,164,500
Note 1: Calculated at current SEC registration rate of $129.80 per $1,000,000
Note 2: Section 1904 Fees computed by today’s Order.

4.10. Tax Issues

The authorized Bond transaction will be structured to be a “Qualifying Securitization” pursuant to IRS Revenue Procedure 2005-62 to achieve two important tax objectives. First, to lower overall taxes, the SPE will be treated as part of PG&E for federal income tax purposes, and not as a separate entity responsible for paying its own taxes. Second, to avoid an immediate taxable gain when PG&E transfers the Recovery Property to the SPE, the transfer will not be treated as a sale for federal income tax purposes. Instead, the Recovery Bonds will be treated as PG&E’s own debt for federal income tax purposes. The Bond transaction will be legally separate and distinct from the Customer Credit, and therefore the Customer Credit should be legally irrelevant to the Bond transaction’s status as a “Qualifying Securitization.” As materially relevant to the Bond transaction, California income and franchise tax law generally conforms to U.S. federal income tax law, including, but not limited to, IRS Revenue Procedure 2005-62.

²⁸  This assumes one issuance of Recovery Bonds. Actual costs for each issuance shall be included in the Issuance Advice Letter for the relevant series.

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This Financing Order authorizes PG&E to structure the Bond transaction to meet the elements of a “Qualifying Securitization” pursuant to IRS Revenue Procedure 2005-62 such that:

(1) each SPE shall be a wholly owned subsidiary of PG&E capitalized with an equity interest as deemed appropriate and legally necessary by the Finance Team; (2) the Recovery Bonds shall be secured by the Recovery Property; (3) the Fixed Recovery Charges shall be nonbypassable and payable by Consumers within PG&E’s Service Territory; and (4) payments on the Recovery Bonds shall be on a semiannual basis except for the initial payment period which may be shorter or longer.

4.11. Use of Bond Proceeds

This Financing Order directs PG&E to use the proceeds from the sale of the Recovery Property to pay or reimburse PG&E for the payment of costs and expenses relating to catastrophic wildfires ignited in 2017.

4.12. Sale of Recovery Bonds

PG&E has proposed that each series of Recovery Bonds be sold pursuant to an underwriting agreement with one or more underwriters in a negotiated offering, which shall be subject to this Financing Order’s discussions regarding the Finance Team and Issuance Advice Letter.

5. Description of the Approved Bond Charges

Article 5.8 authorizes PG&E to recover Bond principal, interest, associated taxes, franchise fees, or license fees imposed on Fixed Recovery Charges, and other Recovery Costs via the Fixed Recovery Charges, and to the extent applicable, the FRTAs. This Financing Order authorizes PG&E to implement Fixed Recovery Charges.

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We next describe the Fixed Recovery Charges. The new surcharges are identical to those described in the form of financing order included with A.21-01-004 (except as otherwise specified by the Commission herein) and consistent with Article 5.8. Where appropriate, we adopt additional conditions and restrictions applicable to the Fixed Recovery Charges.

5.1. Summary of Fixed Recovery Charges

The purpose of the Fixed Recovery Charges authorized by this Financing Order is to recover the following Recovery Costs associated with the Recovery Bonds:

1. Principal, interest, and any redemption premiums that are payable on Recovery Bonds;

2. Payments required under an ancillary agreement, including related to interest-rate swaps, if any;

3. Credit enhancements;

4. Costs related to issuing and servicing Recovery Bonds or the application for the Financing Order, including without limitation, servicing fees and expenses, legal fees and expenses, accounting fees, administration fees, underwriting and placement fees, financial advisory fees, original issue discount, capitalized interest, rating agency fees, and any other related costs that are approved for recovery in the Financing Order;

5. Amounts required to fund or replenish capital subaccounts or other accounts or subaccounts

6. established under an indenture, ancillary agreements, or other financing documents relating to the Recovery Bonds;

7. Bond Trustee fees and other Bond costs incurred by the Bond Trustee and the SPE;

8. License fees imposed on, or associated with recovery of, Fixed Recovery Charges, and

9. Approved Bond Issuance Costs not funded with Bond proceeds.

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In addition to Fixed Recovery Charges but without duplication, PG&E shall be permitted to recover any FRTAs for federal and State of California income and franchise taxes associated with the Fixed Recovery Charges not approved as Financing Costs financed from the proceeds of Recovery Bonds.²⁹

Each series of Recovery Bonds will have its own Fixed Recovery Charges, and, to the extent applicable, FRTAs. All of the revenues from Fixed Recovery Charges will be transferred to a Bond Trustee for the benefit of the SPE, to be applied against the repayment for that series of Bonds in accordance with the related indenture.

Except for those Consumers exempt pursuant to Section 850.1(i), the Fixed Recovery Charges and any FRTAs will be paid by existing and future electric Consumers in PG&E’s Service Territory. Pursuant to Article 5.8, the Fixed Recovery Charges and any FRTAs will be both irrevocable and nonbypassable, which assures Bond investors that the Fixed Recovery Charges will not be interrupted, eliminated, or avoided by Consumers in PG&E’s Service Territory.

To implement the Fixed Recovery Charge for each series of Recovery Bonds, PG&E shall submit an Issuance Advice Letter no later than one business day after the Bonds are priced. The Issuance Advice Letter will include the final issuance details and a request that the Fixed Recovery Charges be set based on the actual amount and price of the Recovery Bonds. To determine the Fixed Recovery Charges, the Issuance Advice Letter will use the cash flow model described in Attachment 1, applied to that series of Recovery Bonds, along with the most recent PG&E sales forecast for the relevant time period. The Issuance Advice Letters submitted by PG&E should be based on the pro forma example contained in Attachment 2 of this Financing Order.

²⁹  See, A.21-01-004 Scoping Memo at 2-3. Consideration of FRTAs including adjustments in the unlikely event of shortfalls is within the scope of this proceeding. We have factored the potential impact of the FRTAs in our overall evaluation of the terms of this decision. See, Finding of Fact 6 infra. See also¸ Section 4 and associated Findings of Fact in D.21-04-030.

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In connection with the submission of the Issuance Advice Letter and the letter to be delivered by the Finance Team, PG&E and the lead left underwriter(s) for the Recovery Bonds shall provide a written certificate to the Finance Team and the Commission on or before the date of the pricing of any Recovery Bonds (and shall be required to provide a bring down certificate dated as of the pricing date if such certificate is provided earlier) confirming that the issuance of such Recovery Bonds complies with (i) this Financing Order and (ii) all other applicable legal requirements (including all requirements of Article 5.8 of the California Public Utilities Code) and that the issuance of Recovery Bonds, would reduce, to the maximum extent possible, the rates on a present value basis that Consumers within PG&E’s Service Territory would pay as compared with the use of traditional utility financing mechanisms. Such certificates shall be a condition precedent to the issuance of such Recovery Bonds and all associated Commission staff approvals. PG&E may request that such certificates be provided on a confidential basis.

Unless, before noon on the fourth business day after pricing, the Commission staff rejects the Issuance Advice Letter, the Issuance Advice Letter and the Fixed Recovery Charges established by the Issuance Advice Letter will be effective automatically at noon on the fourth business day after pricing, and pursuant to Section 850.1(h), the Recovery Property, established by this Financing Order, will be created simultaneously with the sale of the Recovery Property to the SPE. PG&E shall file the Fixed Recovery Charge tariff based on the pro forma tariff as described in Appendix A of Chapter 8 of A.20-04-023 no later than 10 days after this Financing Order is mailed. The tariff shall be effective simultaneously with the first Fixed Recovery Charges.

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Article 5.8 requires the Commission to adjust the Fixed Recovery Charges at least annually, and more often if necessary, to ensure timely recovery of Bond principal, interest, and other Financing Costs. ³⁰ To satisfy this statutory requirement for a periodic true-up adjustment of the Fixed Recovery Charges, this Financing Order adopts, with some modifications, the True-up Mechanism proposed by PG&E in A.21-01-004 that will allow the Fixed Recovery Charges to be adjusted (i) annually to correct any overcollection or undercollection of Fixed Recovery Charges and (ii) more frequently, if necessary, to ensure that the Fixed Recovery Charges provide sufficient funds to make timely payments of Bond principal, interest, and other Financing Costs. PG&E requested that the Commission approve use of an advice letter process to implement the periodic true-up adjustment. This well-established approach has been used for PG&E’s prior issuances of Energy Recovery Bonds and Rate Reduction Bonds and will create efficiencies for the Commission and its staff. For the avoidance of doubt, the Commission’s authority under Article 5.8 and pursuant to Section 850.1(g) to authorize periodic true-up adjustments persists until the Recovery Bonds and all Financing Costs are fully paid and discharged, and does not expire like the Commission’s authority to issue financing orders in the first instance under Section 850.6.

PG&E, or any successor servicer, shall submit annual Routine True-Up Mechanism Advice Letters at least 50 days before the last day of February until all principal, interest, and other related costs have been paid in full. These annual Routine True-Up Mechanism Advice Letters should be based on the pro forma example in Attachment 3 of this Financing Order and shall also address any FRTAs. These advice letters are meant to ensure that the actual Fixed

³⁰  §§ 850.1(e) and (g).

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Recovery Charge revenues are neither more nor less than required to repay Bond principal, interest, and related costs. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges and any FRTAs should automatically go into effect the March 1^st immediately following the submission.³¹

PG&E, or a successor servicer, should also implement, if it deems necessary, a semi-annual true-up adjustment. The semi-annual true-up adjustment shall be used if PG&E, or a successor servicer, forecasts that Fixed Recovery Charge collections will be insufficient to make all scheduled payments of Bond principal, interest, and other Financing Costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount. If PG&E, or the successor servicer, determines a semi-annual true-up adjustment is necessary, PG&E, or the successor servicer, may submit an interim Routine True-Up Mechanism Advice Letter at least 50 days before August 31 to adjust the Fixed Recovery Charges, and they are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision of the Fixed Recovery Charges should automatically go into effect the September 1^st immediately following the submission.³²

³¹  See, General Order 96-B.

³²  Id.

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PG&E, or a successor servicer, may also submit interim Routine True-Up Mechanism Advice Letters at such other times as PG&E, or the successor servicer, deems necessary. For example, if PG&E, or the successor servicer, forecasts that Fixed Recovery Charges collections may be insufficient to make scheduled payments of Bond principal, interest, and other Recovery Costs on a timely basis during the current or next succeeding payment period, PG&E, or the successor servicer, may submit an interim Routine True-Up Mechanism Advice Letter instead of waiting until the next normally scheduled date for submitting such advice letter. PG&E may submit an interim Routine True-Up Mechanism Advice Letter at least 50 days before the proposed effective date (which, for efficacy of reporting, will be the first day of a month), and they are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision of the Fixed Recovery Charges should automatically go into effect on the proposed effective date. The interim Routine True-Up Mechanism Advice Letters should be based on the pro forma example in Attachment 3 of this Financing Order.³³

PG&E, or any successor servicer, may submit annual, semi-annual and interim Routine True-Up Mechanism Advice Letters until the Bonds and other Financing Costs are paid off. All true-up adjustments to the Fixed Recovery Charges shall ensure that the Fixed Recovery Charges generate sufficient revenues to make timely payments of all scheduled (or legally due) payments of principal (including, if any, prior scheduled but unpaid principal payments), interest, and other Financing Costs to be paid with Fixed Recovery Charge revenues. Such amounts are referred to as the “Periodic Payment Requirement.” True-up submissions shall be based upon the cumulative differences, regardless of the reason, between the Periodic Payment Requirement and the actual amount of Fixed Recovery Charge remittances to the Bond Trustee for the series of

³³  Id.

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Recovery Bonds. This will result in adjustments to the Fixed Recovery Charges to correct for overcollections or undercollections. In the case of any adjustments occurring after the final scheduled payment date for a series of Bonds, there will be no less frequently than quarterly adjustments to the Fixed Recovery Charges to correct for overcollections or undercollections by the earlier of the next Recovery Bond payment date or the legal maturity date for the series.

All annual, semiannual, and interim Routine True-Up Mechanism Advice Letters would be subject to protest, review, and correction to the extent allowed by § 850.1(e). However, any protest, review, and correction will be limited to the correction of mathematical errors in the Routine True-Up Mechanism Advice Letters. No protest, review or required modification to correct an error in a Routine True-Up Mechanism Advice Letter would delay its effective date, and any correction or modification which could not be made prior to the effective date would be made in the next Routine True-Up Mechanism Advice Letter.

PG&E, or a successor servicer, may also submit Non-Routine True-Up Mechanism Advice Letters to propose revisions to the logic, structure, and components of the cash flow model described in Attachment 1. Non-Routine True-Up Mechanism Advice Letters will be Tier 2 Advice Letters and submitted at least 90 days before the date when the proposed changes would become effective. The Energy Division should prepare for the Commission’s consideration a resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model. The public will have an opportunity to review and protest a Non-Routine True-Up Mechanism Advice Letter in accordance with Commission procedures to the extent allowed by Section 850.1(e). If the Commission provides a resolution adopting the proposed changes in the Non-Routine True-Up Mechanism Advice Letter, PG&E, or a successor servicer, may implement Fixed Recovery Charge adjustments proposed in such Non-Routine

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True-Up Mechanism Advice Letter on the effective date identified in the letter. Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model, PG&E or a successor servicer may implement the adjustments on the effective date identified in the Non-Routine True-Up Mechanism Advice Letter if that date is at least 90 days after the date of submission.³⁴

The Routine True-Up Mechanism Advice Letters and Non-Routine True-Up Mechanism Advice Letters shall calculate a revised Fixed Recovery Charge for each series of Recovery Bonds using the cash flow model specified in Attachment 1 of this Financing Order or the Non-Routine True-Up Mechanism Advice Letter as applicable, except that:

1) The Periodic Payment Requirement for the next year would be (i) increased or decreased by the amount by which actual remittances of Fixed Recovery Charge revenues to the Bond Trustee collection account through the end of the month preceding the month of calculation was less than or exceeded the Periodic Payment Requirement for the prior period, and (ii) to the extent not included in (i), decreased by the amount projected to be held in the excess funds subaccount at the beginning of the next payment period.

2) Forecasted sales for the remainder of the current year and of the subsequent year, if applicable, of the transaction would be revised to reflect PG&E’s latest estimate of sales.

3) Estimated Financing Costs will be modified to reflect changed circumstances.

4) Assumed uncollectibles will be modified to equal the percentage of losses actually experienced during the most recent 12-month billing period for which such information is available.

³⁴  Id.

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5) An adjustment will be made to reflect collections that will be received at the existing tariff rate from the end of the month preceding the date of calculation through the end of the month in which the calculation is done.

5.2. Benefits to be Addressed in Ratemaking Proceedings

There are benefits associated with the Recovery Bonds that will be flowed through to Consumers of electricity via other ratemaking processes. The specific benefits that will be addressed in other rate making proceedings are:

1. The benefit of servicing and administration fees paid to PG&E. PG&E will be the initial servicer for the Recovery Bonds. That means that PG&E will bill Consumers, collect the revenues, and remit the Fixed Recovery Charge revenues to the Bond Trustee. In addition, PG&E will be the administrator for the SPE. The Bond Trustee will pay PG&E for these servicing and administration services. Regardless of the balance of the Customer Credit Trust to pay the Customer Credit, PG&E will credit these servicing and administration fees to Consumers through normal ratemaking methods.

2. The benefit of any surplus funds held by the Bond Trustee. The Bond Trustee will hold the Fixed Recovery Charge revenues used to repay the Recovery Bonds. To the extent the Bond Trustee earns interest in excess of its obligations under the financing agreements, that interest will be held in the excess funds subaccount and used to reduce future Fixed Recovery Charge requirements. Upon repayment of the Recovery Bonds and payment of all Financing Costs, if a balance remains in the collection account, or any subaccount (except the amount of PG&E’s equity contribution on deposit in the capital subaccount), that balance will be returned to Consumers via PG&E’s next base-rate case.

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5.3. Consumer Responsibility for Fixed Recovery Charges

As required by Article 5.8, Sections 850(b)(7), 850(b)(8), and 850.1(b), the Fixed Recovery Charges and any FRTAs shall be nonbypassable and recovered from existing and future Consumers in PG&E’s Service Territory other than those Consumers participating in the California Alternative Rate for Energy or Family Electric Rate Assistance programs pursuant to Section 850.1(i). The Fixed Recovery Charges and FRTAs will be set on an equal cents per kilowatt-hour (kWh) basis; however, for residential rates, PG&E proposes to retain the rate relationships by tier determined by D.15-07-001 with the addition of the Fixed Recovery Charges, any FRTAs and Customer Credit.

Chapter 9 of A.20-04-023 shows an illustrative Fixed Recovery Charge of $0.00541 per kWh for 2024. For 2024, PG&E estimates that assuming all Bonds are issued with an interest rate as of the date of filing A.21-01-004, the aggregate of the Fixed Recovery Charges will be equal to $0.00541 per kWh. Pursuant to our findings in A.20-04-023, the Customer Credit is designed to equal the amount of the Fixed Recovery Charges such that the net effect on Consumer bills should be zero dollars.

PG&E’s testimony provided in Chapter 7 of A.20-04-023 demonstrated that the recovery of Catastrophic Wildfire Amounts through the issuance of Recovery Bonds would reduce the rates, on a present value basis, that Consumers within PG&E’s Service Territory would pay as compared to traditional utility financing mechanisms available to PG&E. Based on the assumptions presented in Chapter 7 of A.20-04-023, PG&E calculates that, using a discount rate of 7.34 percent, the present value of Consumer savings would be approximately $4.2 billion.³⁵

³⁵  $4.2 billion of present value savings reflects a strict reading of the requirements of the statute, which are not reflective of the facts and circumstances of this situation given PG&E’s pledge not to recover such amounts. However, we believe this structure maximizes NPV savings to the maximum extent possible under the existing circumstances in addition to meeting the strict statutory requirements.

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5.4. Bill Presentation

PG&E may combine all Fixed Recovery Charges into a single line item presented monthly on Consumers’ bills in the electric charges portion of the bill. Out of administrative convenience, this Financing Order also provides that PG&E may combine the Customer Credits in a single line item presented monthly on Consumers’ bills in the electric charges portion of the bill. In accordance with PG&E’s proposal, the back of the bill shall display the Fixed Recovery Charge as the “Recovery Bond Charge” and the Customer Credit as the “Recovery Bond Credit” and shall state as follows:

“Recovery Bond Charge: Your bill for electric service includes a charge that has been approved by the CPUC to repay bonds issued for certain costs related to catastrophic wildfires. The Recovery Bond Charge (RBC) rate is currently $[##} per kWh. PG&E has also contributed certain amounts to a trust fund which is used provide a customer credit equal to $[##} per kWh (Recovery Bond Credit). The right to recover the RBC has been transferred to one or more Special Purpose Entities that issued the bonds and does not belong to PG&E. PG&E is collecting that portion of the RBC on behalf of the Special Purpose Entities.”

5.5. Revenue Accounting

PG&E shall separate the revenues from the Fixed Recovery Charges into multiple components for accounting purposes. The Fixed Recovery Charge revenue for each series of Recovery Bonds will be determined in accordance with the Fixed Recovery Charge Electric Preliminary Statement.

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5.6. Billing, Connecting, and Remitting the Fixed Recovery Charges

As contemplated by Article 5.8,³⁶ PG&E will act as the initial servicer for the Recovery Property that will be pledged to secure the Recovery Bonds. As servicer, PG&E will be responsible for reading customer meters, for submitting true-up adjustment letters, and for billing, collecting and remitting the Fixed Recovery Charge. PG&E’s rate proposal is that the FRCs be imposed on all non-exempted customers on an equal cents per kWh basis across all customer classes. Under this approach, all customers obligated to pay the FRC would pay the same cents per kWh rate. This approach is consistent with the approach used for both the Department of Water Resources (DWR) bond charge and the Energy Recovery Bonds (ERBs) previously issued for PG&E. From a credit rating perspective, this approach is preferable to a flat charge or a charge imposed on a limited number of consumer classes. This is because an equal cents per kWh charge may reduce the impact of the securitization charges on the total bill for residential customers (which certain rating agencies are particularly focused on). An equal cents per kWh charge is also beneficial in that it would remain equal for all customers regardless of shifts in the relative size of customer classes because there is no restriction on how much of the total FRC revenues must come from a particular customer class. Exhibit 9.1 of A.20-04-023 provides an illustration of the proposed revenue allocation and rate design impact of the FRCs and Customer Credits.

³⁶  §§ 850.1(b), 850.1(e), and 850.2.

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EPUC disputes PG&E’s proposal and recommends use of a System Average Percent Change (SAPC) allocation, which it claims is regularly used to allocate costs among customer classes. As explained by PG&E witness Mr. Pease during evidentiary hearings in A.20-04-023, an SAPC allocation “calculate[s] revenues as if all customers were bundled.” The item that is allocated “is done in equal percent to that calculated revenue.” EPUC argues that the SAPC allocation would lead to a more moderate impact compared to the differences between PG&E’s proposal and EPUC’s initial proposal in testimony.³⁷

We adopt PG&E’s revenue allocation approach. We find no evidence to support the SAPC allocation proposed by EPUC. The equal cents per kWh approach is generally consistent with past securitizations and preferable from a rating agency perspective.

A4NR argues that PG&E’s proposal discriminates against CARE and FERA customers. Consistent with Section 850.1(i), and the SCE Securitization Decision, CARE and FERA customers will be exempt from the FRC.

CARE and FERA rates both increase and decrease proportionately such that the net impact for all customers is zero. Accordingly, we find no discrimination relative to CARE/FERA customer rates under the PG&E proposal.

To the extent Consumers of electricity in PG&E’s historic Service Territory are billed by Electric Service Providers (ESPs) or another utility or entity, PG&E will bill these ESPs, utilities or entities, as the case may be, for the Fixed Recovery Charges, and the ESPs, utilities and entities will be obligated to remit Fixed Recovery Charge revenues to PG&E.

³⁷  RT at 527:3-9 in A.20-04-023.

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5.7. Servicing Cash Flows

As servicer, PG&E will remit estimated Fixed Recovery Charge revenues, on behalf of the SPE, to the Bond Trustee. The Bond Trustee will be responsible for making principal and interest payments to Bond investors and paying other Financing Costs. These other Financing Costs include, among other costs, servicing fees, administration fees, Bond Trustee fees, legal fees, accounting fees, ongoing rating agency fees, and other financing costs. PG&E expects the ongoing Financing Costs (excluding third party servicing fees) plus an allowance for uncollectibles to be approximately $4.1 million in the first year, $5.3 million in the second and third years, and $5.6 million per year thereafter.

As servicer, PG&E will remit Fixed Recovery Charge revenues in accordance with the servicing agreement to the Bond Trustee. An SPE will own legal title to, and all equitable interest in, the Recovery Property, including the Fixed Recovery Charges, and PG&E will be legally obligated to remit all Fixed Recovery Charge revenues to the Bond Trustee. PG&E expects the rating agencies to require PG&E to remit the estimated Fixed Recovery Charge revenues to the Bond Trustee on a daily basis to avoid an adverse impact on the Recovery Bond credit ratings.

Over the life of the Recovery Bonds, PG&E will prepare a monthly report for the Bond Trustee that shows the estimated Fixed Recovery Charge revenues by month over the life of the Recovery Bonds. Estimated Fixed Recovery Charge collections will be based on historic Consumer payment patterns. Six months after each monthly billing period, PG&E will compare actual Fixed Recovery Charge revenues to the estimated Fixed Recovery Charge revenues that have been remitted to the Bond Trustee for that month during the intervening 6-month period.

The difference between the estimated Fixed Recovery Charge collections and the actual Fixed Recovery Charge collection will be netted against the following month’s remittance to the Bond Trustee. The 6-month lag between the first remittance of estimated Fixed Recovery Charge revenues and the final determination of actual Fixed Recovery Charge cash collections allows for the collection process to take its course and is consistent with PG&E’s practice of waiting six months after the initial billing before writing off unpaid customer bills.

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The Bond Trustee (acting on behalf of the SPE) will have a legal right to only the amount of actual Fixed Recovery Charge cash collections. Amounts collected that represent partial payments of a Consumer’s bill will be allocated between the Bond Trustee and PG&E based on the ratio of the billed amount for the Fixed Recovery Charge to the total billed amount. PG&E states that this allocation is an important bankruptcy consideration in determining the true sale nature of the transaction.

The Bond Trustee will hold all Fixed Recovery Charge collections received from PG&E in a collection account and distribute these funds to make scheduled principal and interest payments and to pay servicing fees and other Financing Costs. PG&E anticipates that the collection account will have two subaccounts: (1) the capital subaccount to hold the capital contribution made by PG&E and (2) the excess funds subaccount to hold any funds that remain in the collection account or any subaccount after distributions are made on a Bond payment date (other than an amount up to PG&E’s equity contribution on deposit in the capital subaccount and any amounts required for overcollateralization).

The Bond Trustee will invest all funds in investment-grade short-term debt securities that mature on or before the next Bond payment date. Investment earnings will be retained in the collection account (and each related subaccount) to pay principal, interest or other Financing Costs. Any funds that remain in the collection account or any subaccount after distributions are made on a Bond payment date (other than an amount up to PG&E’s equity contribution on deposit in the capital subaccount and any amounts required for overcollateralization) will be credited to the excess funds subaccount of the

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collection account. All amounts in the collection account, including these amounts in the excess funds subaccount as well as the capital subaccount, will be available to pay principal, interest or other Financing Costs as they come due. At the time of the next scheduled true-up submission, the excess funds subaccount balance will be used to offset the revenue requirement for the Fixed Recovery Charge true-up calculation. PG&E should be permitted to receive a rate of return on its equity contribution equal to the weighted average interest rate on the Recovery Bonds, which should be payable as a Financing Cost from the Fixed Recovery Charges and be distributed to PG&E on each Bond payment date, after payment of debt service on the Recovery Bond and other Financing Costs on such date. PG&E shall credit electric Consumers the amount of this rate of return on its equity contribution paid to PG&E regardless of the balance of the Customer Credit Trust.

We accept PG&E’s representation that in order to obtain the necessary true sale and bankruptcy opinions, the SPE must pay a servicing fee to PG&E that is set at a level estimated to cover the servicer’s out-of-pocket costs and expenses in servicing the Recovery Bonds including, without limitation, the costs and expenses of billing, monitoring, collecting, and remitting Fixed Recovery Charges, and reporting requirements imposed by the Servicing Agreement. PG&E represents that annual servicing fees for utility asset backed securitization transactions range from 0.05 percent to 0.10 percent of the initial principal amount of the Bonds, which is consistent with the costs of servicing similar assets.

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Therefore, we authorize PG&E to charge an annual servicing fee of 0.05 percent of the initial principal amount of the Recovery Bonds.³⁸ Regardless of the balance in the Customer Credit Trust to pay the Customer Credit, PG&E shall separately credit to electric Consumers the amount of this servicing fee.

In the event that PG&E fails to perform its servicing functions satisfactorily, as set forth in the Servicing Agreement, or is required to discontinue its billing and collecting functions, a successor servicer acceptable to the Bond Trustee, acting on behalf of the Bond holders will replace PG&E; provided that in such an event, we task the Commission’s Energy Division with determining the appropriate annual fees to be paid to the new servicer, and any such fee agreement with the new servicer must be approved by the Commission through a resolution.

The credit quality and expertise in performing servicing functions will be important considerations when appointing a successor servicer to ensure the credit ratings for the Recovery Bonds are maintained. Therefore, the Commission does not intend to approve a new servicer without first determining that the appointment of the selected servicer will not cause the then- current rating of any then outstanding Recovery Bonds to be withdrawn or downgraded. This will provide assurance to the credit rating agencies that the Bonds’ rating will not be undermined in the future because of a third-party servicer.

Although PG&E will act as servicer, it is possible that ESPs or other entities will bill and collect the Fixed Recovery Charges and any FRTAs from some Consumers. These ESPs or other entities should meet minimum billing and collection experience standards and creditworthiness criteria. Otherwise, the rating agencies might impose additional credit enhancement requirements or assign lower credit ratings to the Bonds. Therefore, ESPs or other entities that bill and collect the Fixed Recovery Charges and FRTAs will have to satisfy the creditworthiness and other requirements applicable to ESPs that meter and bill electric Consumers as set forth in PG&E’s Electric Rule 22.P. “Credit Requirements.”

³⁸  Based on a Bond principal amount of $7.5 billion, the servicing fee would be $3.75 million per year.

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6. General Order 24-C and Financing Rule

GO 24-C requires utilities to submit a periodic report to the Commission that contains, among other things, the following information: (1) the amount of debt issued by the utility at the end of the period; (2) the total amount of debt outstanding at the end of the prior period; and (3) the commissions paid and total proceeds received from debt issued during the prior period.

The Commission’s Financing Rule adopted in D.12-06-015 (as amended in D.12-07-003) likewise imposes certain requirements and reporting obligations in connection with the issuance of debt securities and use of swaps and hedges. PG&E states that it will comply with the Financing Rule and GO 24-C with respect to the Recovery Bonds, and we authorize PG&E, on behalf of the SPE, to provide periodic reports pursuant to GO 24-C and the Financing Rule regarding the Recovery Bonds to the Commission staff.

7. Fees

Whenever the Commission authorizes a utility to issue debt, the Commission is required to charge and collect a fee in accordance with Section 1904(b), which states, in relevant part, as follows:

Section 1904(b): For a certificate authorizing an issue of bonds . . . two dollars ($2) for each one thousand dollars ($1,000) of the face value of the authorized issue or fraction thereof up to one million dollars ($1,000,000), one dollar ($1) for each one thousand dollars ($1,000) over one million dollars ($1,000,000) and up to ten million dollars ($10,000,000), and fifty cents ($0.50) for each one thousand dollars ($1,000) over ten million dollars ($10,000,000), with a minimum fee in any case of fifty dollars ($50). No fee need be paid on such portion of any such issue as may be used to guarantee, take over, refund, discharge, or retire any stock, bond, note, or other evidence of indebtedness on which a fee has theretofore been paid to the commission. (Emphasis added.)

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We conclude that Section 1904(b) applies to the Recovery Bonds, as there is nothing in Article 5.8 that exempts the Bonds from Section 1904(b). The Recovery Bonds will be used to pay or reimburse PG&E for the $6 billion in temporary utility debt, which PG&E will retire as a result of the transaction. Since PG&E has already paid fees on the temporary utility debt, no Section 1904(b) fees are due on $6 billion of the $7.5 billion issuance of Recovery Bonds. The following table shows the calculation of the fee required by Section 1904(b):

Step 1: Amount of Debt on which the Fee is Owed
Recovery Bonds Authorized by this Order	$	7,500,000,000
Less: Use of Bond Proceeds to Retire Debt Authorized by D.20-05-053	($	6,000,000,000	)
Less: Use of Bond Proceeds to Retire Common Stock	($	0	)
Net Debt Subject to Fee	$	1,500,000,000
Step 2: Computation of Fee
Fee on First $1 Million	$	2,000
Fee on $1 Million—$10 Million	$	9,000
Fee on $10 Million to $7.5 billion	$	745,000
Total Fee	$	756,000
Note 1: PG&E to pay the Section 1904(b) fee pursuant to this Financing Order

PG&E shall remit the required fee of $756,000 by wire to the Commission’s Fiscal Office no later than 10 days after all conditions for the issuance of the Bonds have been satisfied and, in any event, prior to the first issuance of the Bonds. This fee will be a Bond Issuance Cost.

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8. Irrevocable Financing Order

This Financing Order is irrevocable to the extent set forth in Section 850.1(e). Pursuant to Section 850.1(e), the State of California through this Financing Order pledges and agrees with PG&E, owners of Recovery Property, the SPE(s), and holders of the Recovery Bonds, that the State shall neither limit nor alter, except with respect to the True-Up Mechanism, the Fixed Recovery Charges, any FRTAs, Recovery Property, this Financing Order, or any rights thereunder until the Recovery Bonds, together with the interest thereon and other associated Financing Costs, are fully paid and discharged, and any associated taxes have been satisfied or, in the alternative, have been refinanced through an additional issue of Recovery Bonds.

However, nothing shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of PG&E and the owners and holders of Recovery Bonds. The SPE is authorized to include this pledge and undertaking for the state in the Recovery Bonds.

As required by Sections 850(b)(13) and 850.1(g), the Commission shall adjust the Fixed Recovery Charges, as necessary, to ensure timely recovery of all Recovery Costs that are the subject of this Financing Order, and the costs associated with the recovery, financing, or refinancing thereof, including servicing and retiring the Recovery Bonds authorized by this Financing Order. When setting other rates or charges for PG&E, nothing in Article 5.8 shall prevent the Commission from taking into account the collection of Fixed Recovery Charges in excess of the amount required to pay Recovery Costs financed or refinanced by the Recovery Bonds or any FRTAs.

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9. PG&E’s Written Consent to Be Bound by the Financing Order

In accordance with Section 850.1(d), this Financing Order shall become effective only after PG&E files its written consent to all the terms and conditions of this Financing Order.

PG&E shall file and serve within 10 days from the date this Financing Order is mailed a written statement that provides notice of whether or not PG&E consents to all terms and conditions of this Financing Order. If PG&E declines to provide its consent, PG&E’s written statement shall identify the specific terms and conditions it finds objectionable and explain why it does not consent to these terms and conditions.

10. Rehearing and Judicial Review

This Financing Order construes, applies, implements, and interprets the provisions of Article 5.8. Therefore, applications for rehearing and judicial review of this Financing Order are subject to Sections 1731 and 1756. These laws provide that any application for rehearing of this Financing Order must be filed within 10 days of the final Financing Order. The Commission must issue its decision on any application for rehearing within 210 days of the filing for rehearing. Within 30 days after the Commission issues its decision denying the application for a rehearing, or, if the application was granted, then within 30 days after the Commission issues its decision on rehearing, or at least 120 days after the application for rehearing is granted if no decision on rehearing has been issued, any aggrieved party may petition for a writ of review in the court of appeal or the Supreme Court for the purpose of having the lawfulness of the Financing Order or decision on rehearing inquired into and determined. If the writ issues, it shall be made returnable at a time and place specified by court order and shall direct the Commission to certify its record in the case to the court within the time specified.

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11. Comments on Proposed Decision

This proposed Financing Order was mailed to the parties in accordance with § 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission’s Rules of Practice and Procedure. Comments were filed on April 26, 2021, by EPUC, PG&E, TURN, and Wild Tree, and reply comments were filed on May 3, 2021, by PG&E and TURN. In response to comments on the proposed decision, corrections and clarifications have been made throughout this decision as appropriate to aid in understanding the features of the transaction and regulatory structure we approve herein. These are explained in the decision and we direct the parties to the provisions we have included, and chose to rely on our existing regulatory procedures because they are self-explanatory.³⁹ For example, TURN claims we fail to address arguments it made with respect to the “Just and Reasonable” and “Public Interest” requirements of Section 850.1(a)(1)(A)(ii)(I) and (II).⁴⁰ TURN’s arguments ignore the determinations we made in D.21-04-030⁴¹ and speculate about potential future Commission actions.⁴² As noted in Finding of Fact 6, we evaluate the overall transaction we approve herein and conclude that, on the whole, that transaction will be just and reasonable and is in the public interest.

12. Assignment of Proceeding

Marybel Batjer is the assigned Commissioner and Robert Haga is the assigned ALJ and presiding officer for the proceeding.

³⁹  E.g., Section 3.4, infra.

⁴⁰  See, TURN Opening Comments at 5-6.

⁴¹  E.g., D.21-04-030 at 48-49, 53-75, Finding of Facts 13, 17-18.

⁴²  See, TURN Opening Comments at 5.

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Findings of Fact

1. The $7.5 billion of Recovery Bonds proposed by PG&E in A.21-01-004 possess all of the following characteristics required or authorized by Article 5.8:

i. The Bonds will be secured principally by the right to receive revenues from an irrevocable and nonbypassable Fixed Recovery Charge designed to provide timely and sufficient funds to pay for Bond principal, interest (including interest-rate swaps, if any), any credit enhancements and other Financing Costs. This right is part of Recovery Property.

ii. The proceeds of the Bonds will be used to (a) pay Catastrophic Wildfire Amounts and (b) finance Bond Issuance Costs.

iii. The Bonds may be issued in up to three series and in the aggregate amount of up to $7.5 billion on or prior to December 31, 2022.

iv. PG&E will not issue the Bonds. The Bonds will be issued by one or more bankruptcy remote SPEs that are (a) formed and wholly owned by PG&E, and (b) separate from PG&E. Each SPE will purchase the Recovery Property in an absolute transfer and true- sale and own the Recovery Property, including the right to receive Fixed Recovery Charge revenues.

v. PG&E’s obligations and commitments under this Financing Order, and PG&E’s ability to pay the Customer Credit and PG&E’s ability to provide the Initial Shareholder Contribution, Additional Shareholder Contributions or any other voluntary or required contribution to the Customer Credit Trust pursuant to the CPUC orders issued in A.20-04-023, shall neither (i) impair the characterization of the sale, assignment, or transfer of the Recovery Property as an absolute transfer and true sale nor (ii) impair each SPE’s status as an entity that is separate from PG&E and PG&E Corporation nor (iii) limit or alter the Fixed Recovery Charges, the Recovery Property, this Financing Order, or any rights under this Financing Order.

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vi. Financing Catastrophic Wildfire Amounts through issuing the Recovery Bonds will result in Consumer benefits because there is present value difference of approximately $4.2 billion through issuance of Recovery Bonds when compared to traditional recovery methods for the Catastrophic Wildfire Amounts.

vii. The Bonds of each series will be amortized on a modified mortgage style basis as determined at the time of issuance in the Issuance Advice Letter, such that principal payments may be made at a reduced amount for the first several payment periods. The legal maturity of the latest maturing tranche of Bonds will be no later than 32 years from the date of issuance.

viii. The Bonds will be issued pursuant to enacted legislation (i.e., Article 5.8) that is satisfactory to PG&E and the Commission.

2. Catastrophic Wildfire Amounts were initially partially financed with $6 billion in temporary utility debt before issuance of the Recovery Bonds. In I.19-09-016, PG&E requested authority to issue the $6 billion in temporary utility debt either as long-term debt or short-term debt under Sections 817, 818 and 823. In D.20-05-053, the Commission approved PG&E’s Plan, which went effective on July 1, 2020, including the issuance of $6 billion in temporary utility debt. As a result of this securitization transaction, PG&E will retire this temporary utility debt.

3. The purpose of issuing the Recovery Bonds is to pay or reimburse PG&E for the payment of Catastrophic Wildfire Amounts and to support PG&E’s path to an investment-grade issuer credit rating. The Recovery Bonds will allow PG&E to retire the temporary utility debt that helped enable PG&E to reorganize and emerge from bankruptcy, and facilitate and accelerate the payment of $1.35 billion to the Fire Victim Trust.

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4. Section 850.1(a)(1)(A) directs the Commission to determine that (i) the Recovery Costs identified by PG&E in its application A.21-01-004 to be paid or reimbursed from the Recovery Bonds be allocated to ratepayers pursuant to subdivision (c) of Section 451.2 and (ii) the issuance of the Recovery Bonds and the imposition and collection of Fixed Recovery Charges (A) are just and reasonable, (B) are consistent with the public interest, and (C) will reduce, to the maximum extent possible, the rates on a present value basis that Consumers within PG&E’s Service Territory would pay as compared to the use of traditional utility financing mechanisms. Calculated using a discount rate of 7.34 percent, the present value of these Consumer benefits is approximately $4.2 billion.

5. The cost of the Recovery Bonds authorized by this Financing Order might be reduced if PG&E is able to attract a broad range of investors by dividing each series of Bonds into several tranches with different legal maturity dates.

6. Prior to the issuance of each series of Recovery Bonds, each Recovery Bond series and the associated Recovery Bond transactions shall be reviewed and approved by the Commission’s Finance Team consisting of the Commission’s General Counsel, the Director of the Energy Division, other Commission staff, outside bond counsel, and any other outside experts that the Finance Team deems necessary. The other outside expertise may include, for example, independent legal counsel and an independent financial advisor to assist the Finance Team in overseeing and reviewing the issuance of a series of Recovery Bonds. Any costs incurred by the Finance Team in connection with its review and approval of a series of Recovery Bonds shall be treated as a Bond Issuance Cost.

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a. The purpose of the Finance Team is to provide oversight over the structuring, marketing, and pricing of the transaction and to review and approve the material terms of the transaction in light of the goal to reduce rates on a present value basis to the maximum extent possible pursuant to AB 1054’s directives.

b. In a pre-issuance review process, the Finance Team will have the right to review all material terms of the Recovery Bonds and other items the Finance Team determines are appropriate to perform its role, which may include, without limitation, (1) the underwriter and syndication group size, selection process, participants, allocations, and economics; (2) the structure of the Recovery Bonds; (3) the Recovery Bonds’ credit rating agency application; (4) the underwriters’ preparation, marketing, and syndication of the Recovery Bonds; (5) the pricing of the Recovery Bonds and certifications provided by PG&E and the lead left underwriter(s) regarding pricing; (6) all associated Recovery Bond costs (including Bond Issuance Costs and other Financing Costs), servicing and administrative fees and associated crediting, (7) maturities, (8) reporting templates, (9) the amount of PG&E’s equity contribution to the related SPE, (10) overcollateralization and other credit enhancements and (11) the initial calculation of the related Fixed Recovery Charges. The foregoing and other items may be reviewed during the entire course of the Finance Team’s process. We expect PG&E will resolve material terms and structuring issues with the Finance Team prior to commencing marketing (subject to any modifications required as a result of such marketing process). This pre-issuance review process is intended to create Recovery Bonds with material terms that can meet the statutory requirements; in particular, that the Recovery Bonds reduce on a present value basis to the maximum extent possible, the rates that Consumers would pay as compared to the use of traditional utility financing mechanisms. The Finance Team’s review will continue until the related Issuance Advice Letter becomes effective as described in Ordering Paragraph 17. The Finance Team has the ability to be included and participate in all calls, meetings, e-mails, and other communications relating to the structuring, marketing, pricing, and issuance of each series of Recovery Bonds.

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c. The Finance Team’s pre-issuance review and approval of the material terms and structure of a series of Recovery Bonds will be evidenced by a letter from the Finance Team to PG&E delivered on or before the date of the pricing of the relevant Recovery Bonds. PG&E shall also be required to include such letter as an attachment to the Issuance Advice Letter relating to such series of Recovery Bonds. Such approval letter shall be a condition precedent to the issuance of such series of Recovery Bonds.

7. To enhance the credit quality of the Recovery Bonds, PG&E requests that, in the event of a default by PG&E, as servicer, in remitting the Fixed Recovery Charge revenues to a SPE, the Commission, upon application by the Bond Trustee, order the sequestration and payment to the Bond Trustee for the benefit of the SPE of revenues arising with respect to Recovery Property.

8. PG&E requests authority for the SPE to provide credit enhancement in the form of overcollateralization, if required by the rating agencies to achieve the highest possible credit rating for the Recovery Bonds.

9. PG&E estimates total Bond Issuance Costs for one issuance to be between $36 million and $57 million, including estimated costs of the Commission (but excluding Finance Team expenses). Actual costs for each issuance shall be included in the Issuance Advice Letter for the relevant series.

10. PG&E represents that an equity contribution (i.e., credit enhancement) in an appropriate and legally necessary amount is required in order to assure that the Recovery Bonds will be treated as debt of PG&E for tax purposes.

11. It is important to review Bond Issuance Costs because Section 850.1(e) limits the Commission’s authority to adjust, after-the-fact, any Bond Issuance Costs that are unjust or unreasonable.

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12. PG&E requests authority to use net Bond proceeds to pay or reimburse PG&E for the payment of Catastrophic Wildfire Amounts.

13. Each SPE, not PG&E, will “issue any bond, note, lien, guarantee, or indebtedness of any kind pledging the utility assets or credit for or on behalf of any subsidiary or affiliate” under Section 701.5. Furthermore, the Customer Credit and the Customer Credit Trust created pursuant to A.20-04-023 are for the benefit of Consumers, not for or on behalf of any subsidiary or affiliate.

14. PG&E proposes to recover the following Financing Costs via the Fixed Recovery Charges: credit enhancements, if required, interest rate swaps, servicing fees, administration fees, Bond Trustee fees, and other Financing Costs.

15. PG&E proposes to collect any FRTAs that are needed to recover any federal and State of California income and franchise taxes associated with the Fixed Recovery Charges but not approved as Financing Costs to be financed from the proceeds of the Recovery Bonds.

16. The True-Up Mechanism adopted by this Financing Order will allow PG&E to make timely adjustments to the Fixed Recovery Charges to account for variations in actual Fixed Recovery Charge revenues from those originally forecast and, if necessary, to collect and adjust FRTAs.

17. The Recovery Bonds will be issued using an offering through a negotiated sale with underwriters because of the complex nature of the highly structured transaction and to minimize interest costs.

18. In its capacity as servicer, PG&E will be responsible for (i) reading customer meters, (ii) submitting true-up adjustments, (iii) billing and collecting the Fixed Recovery Charges, and (iv) remitting the Fixed Recovery Charge revenues to the Bond Trustee.

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19. It is reasonable for the Bond Trustee to pay an annual servicing fee charged by PG&E in an amount of 0.05 percent of the initial principal amount of each series of Bonds. Furthermore, it is reasonable for the Bond Trustee to pay a servicing fee at a level sufficient to induce another entity to take over the servicing function from PG&E should this become necessary; provided that in such an event, we task the Commission’s Energy Division with determining the appropriate annual fees to be paid to the new servicer, and any such fee agreement with the new servicer must be approved by the Commission through a resolution.

20. It is reasonable for the Bond Trustee to pay an administration fee of $100,000 per annum to PG&E for each series of Recovery Bonds.

21. The credit quality and expertise in performing servicing functions will be important considerations when approving the appointment of a successor servicer to ensure the credit ratings for the Recovery Bonds are maintained.

22. It is possible that ESPs or other entities will bill and collect the Fixed Recovery Charges and any FRTAs from some Consumers, but PG&E will remain primarily responsible for these collections. The ESPs or other entities will be obligated to remit Fixed Recovery Charges and any FRTAs to PG&E.

23. The Fixed Recovery Charges and any FRTAs will be nonbypassable and payable by all existing and future Consumers in PG&E’s Service Territory, except for those Consumers participating in the California Alternative Rates for Energy or Family Electric Rate Assistance programs.

24. Except in the case of municipalization, consumers that no longer take transmission and distribution retail service from PG&E after the date of this Financing Order, or that meet relevant criteria in the applicable tariff, shall be treated as departing load (DL) Consumers using applicable tariffs for DL Consumers, including E-DCG, and will be subject to pay the Fixed Recovery Charges and any FRTAs and entitled to receive the Customer Credit. DL Consumers shall pay the Fixed Recovery Charges and any FRTAs (and be

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eligible to receive the associated Customer Credit) based on one of the following: (i) the last 12 months of the Consumer’s recorded pre-departure use; (ii) an average derived from the last three years of recorded use; or (iii) actual use. In the event that residents of a municipality no longer take transmission and distribution retail service, new municipal DL Consumers would pay the Fixed Recovery Charges and any FRTAs⁴³ based on one of the following: (i) the last 12 months of the Consumer’s recorded pre-departure use; or (2) actual use.

25. If a third-party meters and bills for the Fixed Recovery Charges, PG&E needs access to information on kWh billing and usage by Consumers to provide for proper reporting to the SPE and to perform its obligations as servicer.

26. If electric Consumers in PG&E’s Service Territory fail to pay their utility bills in full, any shortfall in revenues must be allocated pro rata among the Fixed Recovery Charges, FRTAs and other charges to avoid PG&E favoring its own interests.

27. PG&E anticipates that the Bond Trustee’s collection account will have at least two subaccounts: (i) the capital subaccount to hold equity contributed by PG&E and (ii) the excess funds subaccount to hold any funds that remain in the collection account or any subaccount after distributions are made on a Bond payment date (other than an amount up to PG&E’s equity contribution on deposit in the capital subaccount and any amounts required for overcollateralization).

28. In accordance with Section 850.1(i), Fixed Recovery Charges and FRTAs shall not be imposed upon Consumers participating in the California Alternative Rates for Energy or Family Electric Rate Assistance programs.

⁴³  The determination of the Customer Credit applicable to new municipal DL Consumers, however, will be determined by the Commission in a future proceeding, if any, regarding municipalization.

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29. In recent years the Commission has authorized utilities to report the information required by GO 24-C.

30. It is reasonable to establish a Finance Team, as set forth in this Financing Order, for the Recovery Bonds.

31. The requirements set forth in Attachment 5 are included herein out of necessity to ensure they are consistent with the true-up mechanisms adopted herein for the Fixed Recovery Charges, as specifically contemplated by A.20-04-023.

Conclusions of Law

1. The Catastrophic Wildfire Amounts have been determined and allocated to Consumers in PG&E’s Service Territory pursuant to subdivision (c) of Section 451.2, and therefore are Recovery Costs pursuant to Section 850(b)(10).

2. For purposes of Section 850(b)(11), the Recovery Property will be established by this Financing Order, and pursuant to Section 850.1(h), such Recovery Property shall be created simultaneously with the sale of such Recovery Property to the SPE. For the purposes of Section 850.2(d), the Recovery Property will continue to exist until the date on which all Recovery Bonds and Financing Costs are paid in full.

3. Although the Bonds will be issued by an SPE, and not by PG&E, each SPE will be a wholly owned separate subsidiary of PG&E that will be established for the purpose of carrying out this Financing Order.

4. The SPEs responsible for issuing the Recovery Bonds are exempt from the new affiliate requirements established in D.20-05-053.

5. The Recovery Bonds and the imposition and collection of Fixed Recovery Charges and any FRTAs proposed by PG&E in A.21-01-004 (with the modifications and additional provisions required by the Commission herein) satisfy all the conditions established by Article 5.8.

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6. Because issuance of the Recovery Bonds, in accordance with this Financing Order and with the oversight of the Finance Team, will provide substantial benefits to PG&E’s Consumers, the issuance of the Recovery Bonds and the imposition and collection of Fixed Recovery Charges is just and reasonable and consistent with the public interest, so the SPE should be authorized to issue the Bonds. Further, as informed by Commission findings in A.20-04-023, PG&E has demonstrated that the recovery of the Recovery Costs and Bond Issuance Costs through the designation of Fixed Recovery Charges and the issuance of the Recovery Bonds employing the review and approval of the Finance Team, and in conformance with the requirements set forth in this Financing Order, should reduce, to the maximum extent possible, the rates to Consumers on a present value basis.

7. By structuring the offering of Recovery Bonds to be a “Qualifying Securitization” under IRS Revenue Procedure 2005-62, PG&E is not required by this Financing Order to obtain a ruling from the IRS. PG&E expects this offering of Recovery Bonds to be a “Qualifying Securitization.”

8. The Recovery Bonds authorized by this Financing Order do not: (i) constitute a debt or liability of the State of California or any political subdivision thereof; (ii) constitute a pledge of the full faith and credit of the State or any political subdivision; or (iii) directly, indirectly, or contingently obligate the State or any political subdivision thereof to levy or to pledge any form of taxation to pay any obligations associated with the Recovery Bonds or to make any appropriations for their payment.

9. All Recovery Bonds should contain a legend to the following effect: “Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of the principal of, or interest on, this bond.”

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10. If appropriate, each series of Recovery Bonds should be divided into several tranches with different legal maturity dates, with the final number, type, and size of Bond tranches selected to reduce, to the maximum extent possible, the rates on a present value basis that PG&E Consumers will pay compared to traditional utility financing mechanisms.

11. The Recovery Bonds do not require the Commission’s approval pursuant to Section 701.5 because PG&E will not “issue any bond, note, lien, guarantee, or indebtedness of any kind pledging the utility assets or credit for or on behalf of any subsidiary or affiliate” under that provision.

12. The Recovery Bonds also do not require approval pursuant to Sections 817 and 818 since the SPE, not PG&E as a public utility, will be the issuer. Even if Section 817 and 818 were to apply, issuance of the Recovery Bonds is consistent with those provisions.

13. The Recovery Bonds will be used to pay or reimburse PG&E for the payment of the Catastrophic Wildfire Amounts. PG&E is incurring this obligation in order to emerge from Chapter 11 and has financed this payment partially with $6 billion in temporary utility debt until the issuance of Recovery Bonds. Accordingly, the Recovery Bonds approved by this Financing Order comply with Section 817(d), (f), (g) and (h), to the extent those provisions apply.

14. The Bond transaction complies with Section 818, to the extent that provision applies, because the purpose of issuing the Recovery Bonds is to finance Catastrophic Wildfire Amounts and to support PG&E’s path to an investment-grade issuer credit rating. This purpose is in the public interest and not reasonably chargeable to operating expenses or income.

15. Since PG&E will retire its temporary utility debt as a result of issuing the Recovery Bonds, to the extent the temporary utility debt constitutes short- term debt within the meaning of Section 823(d), PG&E should be authorized to refund that debt in connection with the issuance of the Recovery Bonds pursuant to Section 823(d).

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16. The scheduled final payment date of the latest maturing tranche of any series shall be no later than 30 years after the date of issuance and the legal maturity of the latest maturing tranche of any series of Bonds should be no later than 32 years after the date of issuance.

17. The Recovery Bonds should have fixed or floating interest rates as determined at the time of issuance to provide a lower all-in cost for the Bonds. Any floating rate should be converted to a synthetic fixed rate with interest-rate swaps so Consumers do not have any significant floating-rate risk. The interest costs recovered via the Fixed Recovery Charges should be based on the synthetic fixed rate so long as the interest-rate swap remains in effect.

18. Floating-rate Bonds should be issued only if the all-in cost of the Bonds, including the cost of creating a synthetic fixed rate, is less than what would have been available had these Bonds been issued with comparable maturities in the fixed-rate market.

19. Any interest rate-swaps should be subject to the conditions described in the body of this Financing Order.

20. The Commission should have full access to the books and records of the SPE. PG&E should not make any profit from the SPE; provided that PG&E should be permitted to receive a rate of return on its equity contribution equal to the weighted average interest rate on the Recovery Bonds, which should be payable as a Financing Cost from the Fixed Recovery Charges and be distributed to PG&E on each Bond payment date, after payment of debt service on the Recovery Bond and other Financing Costs on such date. PG&E shall credit electric Consumers the amount of this rate of return on its equity contribution paid to PG&E regardless of the balance of the Customer Credit Trust.

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21. In accordance with Section 850.1(e) the Commission shall not rescind, amend or alter the financing order, or otherwise revalue or revise for ratemaking purposes the recovery costs or the costs of recovering, financing, or refinancing the recovery costs, in any way to reduce or impair the value of Recovery Property, including by either directly or indirectly taking Fixed Recovery Charges into account when setting other rates for PG&E.

22. PG&E’s obligations and commitments under this Financing Order, and PG&E’s ability to pay the Customer Credit and PG&E’s ability to provide the Initial Shareholder Contribution, Additional Shareholder Contributions or any other voluntary or required contribution to the Customer Credit Trust pursuant to the CPUC orders issued in A.20-04-023, shall neither (i) impair the characterization of the sale, assignment, or transfer of the Recovery Property as an absolute transfer and true sale nor (ii) impair each SPE’s status as an entity that is separate from PG&E and PG&E Corporation nor (iii) limit or alter the Fixed Recovery Charges, the Recovery Property, this Financing Order, or any rights under this Financing Order. PG&E’s failure to pay the Customer Credit pursuant to the CPUC orders issued in A.20-04-023 also shall not impair the characterization of the sale, assignment or transfer of the Recovery Property to the SPE as an absolute transfer and true sale or affect or impair the SPE’s ownership of the Recovery Property or the SPE’s separateness from PG&E and PG&E Corporation.

23. Upon the issuance of the Recovery Bonds, PG&E should contribute equity to the SPE, as necessary, for tax purposes and to satisfy the conditions established by the credit rating agencies; provided, however, that PG&E has no obligation to pay the amounts owed by the SPE on the Recovery Bonds or to make any additional equity contributions to the SPE to facilitate the SPE’s repayment of the Recovery Bonds.

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24. PG&E should sell the Recovery Property identified in the Issuance Advice Letter to the SPE identified in such Issuance Advice Letter. The SPE identified in the Issuance Advice Letter will constitute a Financing Entity for all purposes of Article 5.8.

25. Once Recovery Property is established by this Financing Order, it should not be adjusted in response to protests, the failure to pay the Customer Credit or the failure of PG&E to make the Initial Shareholder Contribution, Additional Shareholder Contributions or any other voluntary or required contribution to the Customer Credit Trust pursuant to the CPUC orders issued in A.20-04-023. Any mathematical errors or other errors or irregularities regarding the amount of established Recovery Property should be corrected in a subsequent submission of a Routine True-Up Mechanism Advice Letter or Non-Routine True-Up Mechanism Advice Letter.

26. The Recovery Bonds should be secured by the Recovery Property, SPE equity held by the Bond Trustee, and other Bond Collateral held by the Bond Trustee.

27. The SPE should transfer the Bond proceeds (net of estimated Bond Issuance Costs) to PG&E to purchase the Recovery Property.

28. The following will occur or exist as a matter of law upon the sale by PG&E of Recovery Property to the SPE: (i) the SPE will have all of the rights originally held by PG&E with respect to the Recovery Property, including the right to exercise any and all rights and remedies to collect any amounts payable by any Consumer in respect of the Recovery Property, including the Fixed Recovery Charges, and to obtain true-up adjustments to the Fixed Recovery Charges pursuant to the True-Up Mechanism, notwithstanding any objection or direction to the contrary by PG&E; (ii) any payment by any Consumer of owed Fixed Recovery Charges will discharge such Consumer’s obligations in respect of

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the Recovery Property to the extent of such payment, notwithstanding any objection or direction to the contrary by PG&E; and (iii) PG&E will not be entitled to recover the Fixed Recovery Charge associated with the Recovery Property other than for the benefit of the SPE or of holders of the associated Recovery Bonds in accordance with PG&E’s duties as servicer with respect to such Bonds.

29. The SPE, as the owner of the Recovery Property, may pledge the Recovery Property as collateral to one or more indenture trustees to secure payments of principal, interest, servicing and administration expenses, credit enhancements, interest rate swap agreements, and other amounts payable under an indenture pursuant to which Recovery Bonds are issued. A separate and distinct statutory lien described in Section 850.3(g) shall exist on the Recovery Property then existing or thereafter arising that is described in an Issuance Advice Letter and shall secure all obligations, then existing or subsequently arising, to the holders of the Bonds described in such Issuance Advice Letter and the indenture trustee for such holders. There shall be no statutory liens of the type described in Section 850.3(g) except as provided in this Conclusion of Law.

30. To ensure that each SPE is legally separate and bankruptcy remote from PG&E, the SPE should be authorized to: (i) include one or more independent members on its board of directors or members in the case of a corporation or a limited liability company, or an independent trustee in the case of a trust; (ii) have restrictions on its ability to declare bankruptcy or to engage in corporate reorganizations; and (iii) limit its activities to those related to acquiring and owning the Recovery Property and issuing and paying the Recovery Bonds.

31. In the event of a default by PG&E in remitting the Fixed Recovery Charge revenues to the SPE, the Commission may order the sequestration and payment to the Bond Trustee for the benefit of the SPE of revenues arising from the Recovery Property.

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32. In the event of a default by PG&E in remitting the Fixed Recovery Charge revenues to the SPE, the following parties may petition the Commission to implement the remedy described in the previous Conclusion of Law: (i) the holders of the Recovery Bonds and the Bond Trustees or representatives thereof as beneficiaries of any statutory or other lien permitted by the Public Utilities Code; (ii) the SPE or its assignees; and (iii) pledgees or transferees, including transferees under Section 850.4, of the Recovery Property.

33. The SPE should be authorized to provide credit enhancements for the Recovery Bonds in addition to the True-Up Mechanism, but only if such credit enhancements are required by the rating agencies to receive the highest investment-grade rating or the all-in cost of the Bonds with the credit enhancements is less than without the credit enhancements.

34. Any revenue for credit enhancements that is collected as part of the Fixed Recovery Charge, in excess of total debt service and other Financing Costs, should be the property of the SPE. Upon payment of the principal amount of all Recovery Bonds and the discharge of all Financing Costs, all funds then held by the SPE (except the amount of PG&E’s equity contribution on deposit in the capital subaccount) shall be returned to PG&E to be credited to Consumers through normal rate making processes.

35. Total Bond Issuance Costs for one issuance are estimated to range from $36 million to $57 million, including estimated costs associated with the Commission (but excluding Finance Team expenses). Actual costs for each issuance shall be included in the Issuance Advice Letter for the relevant series.

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36. The Bond Issuance Costs, including, inter alia, underwriters’ fees and expenses, rating agency fees, Section 1904 fees, accounting fees and expenses, SEC registration fees, printing/edgarizing expenses, legal fees and expenses, Bond Trustee’s fees and expenses, original issue discount, costs of the Commission and the Finance Team, and other Bond issuance costs, are “financing costs” as defined in Section 850(b)(4) and should be treated as Recovery Costs for purposes of Section 850(b)(10) .

37. When an SPE issues a series of Recovery Bonds, the SPE should include the Bond Issuance Costs in the Issuance Advice Letter.

38. PG&E should be authorized to use the proceeds from its sale of the Recovery Property to the SPE to pay or reimburse itself for the payment of Catastrophic Wildfire Amounts and Bond Issuance Costs.

39. To ensure that PG&E and each SPE structure the Bond transaction for each series of Bonds in a reasonable manner, the Bond transaction for each series of Bonds should be reviewed by the Commission staff upon the submission of the Issuance Advice Letter for compliance with Article 5.8 and this Financing Order.

40. PG&E should be authorized pursuant to Article 5.8 to bill and collect Fixed Recovery Charges that are designed to recover the following Recovery Costs: (i) Bond principal and interest; (ii) allowance for uncollectibles; (iii) costs for credit enhancements; (iv) servicing and administration fees; (v) Bond Trustee fees; (vi) other Financing Costs; and (vii) replenishment of the capital subaccount that is used to pay for any previously listed items.

41. PG&E should establish a separate Fixed Recovery Charge and separate FRTAs for each Bond series.

42. The Fixed Recovery Charge revenues for each series of Bonds should be transferred to the Bond Trustee for the benefit of the SPE. The Bond Trustee should apply the Fixed Recovery Charge revenues only for the purposes identified in COL 40.

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43. To implement the Fixed Recovery Charges and any FRTAs for each series of Recovery Bonds, PG&E should submit an Issuance Advice Letter based on the pro forma example contained in Attachment 2 of this Financing Order not later than one business day after that series is priced. The Commission staff’s review of each Issuance Advice Letter shall be limited to the arithmetic accuracy of the calculations and compliance with (i) Article 5.8, (ii) this Financing Order and (iii) the requirements of the Issuance Advice Letter (including the attached Finance Team approval letter). The Issuance Advice Letter for each Bond series should use the cash flow model described in Attachment 1 of this Financing Order, applied to that series of Recovery Bonds, along with the most recent PG&E sales forecast, to develop the initial Fixed Recovery Charges and any FRTAs for that series of Recovery Bonds.

44. The initial Fixed Recovery Charges, any FRTAs and final terms of the series of Recovery Bonds set forth in the Issuance Advice Letter shall automatically become effective at noon on the fourth business day after pricing unless before noon on the fourth business day after pricing the Commission staff rejects the Issuance Advice Letter. Once established, the Fixed Recovery Charge will constitute Fixed Recovery Charges subject to Section 850.1(e).

45. No later than 10 days after this Financing Order is mailed, PG&E should file a Fixed Recovery Charge tariff based on the pro forma example in Appendix A of Chapter 8 of A.20-04-023. The Fixed Recovery Charge tariff should be effective simultaneously with the effective date of the Fixed Recovery Charge and FRTA, if any, specified in the first Issuance Advice Letter. The Fixed Recovery Charge tariff should be updated to reflect any additional issuances of Recovery Bonds in the Issuance Advice Letter for such series of Recovery Bonds.

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46. Each Issuance Advice Letter should identify the “Recovery Property,” as that term is defined by Sections 850(b)(11) and 850.2(d), that is subject to the Issuance Advice Letter.

47. In accordance with Section 850.1(h), Recovery Property established by this Financing Order and identified in the Issuance Advice Letter shall be created simultaneously with the sale of such Recovery Property to the SPE and will constitute a current property right and will thereafter continuously exist as property for all purposes.

48. The owners of Recovery Property will be entitled to recover Fixed Recovery Charge revenues in the aggregate amount equal to the principal amount of the associated series of Recovery Bonds, all interest thereon, any credit enhancements, and all other ongoing Financing Costs in respect of the scheduled payment of the associated series of Recovery Bonds, as well as other amounts payable under any interest rate swap agreement or the indenture pursuant to which the associated series of Recovery Bonds is issued.

49. The transfer of the Recovery Property by PG&E to the SPE in accordance with Section 850.4 shall be treated as an absolute transfer of all of PG&E’s right, title, and interest, as in a true sale, and not as a pledge or other financing, of the Recovery Property, other than for federal income tax and state income and franchise tax purposes.

50. The characterization of the sale, assignment, or transfer of the Recovery Property as an absolute transfer and true sale and the corresponding characterization of the property interest of the SPE shall not be affected or impaired by, among other things: (i) the Customer Credit or PG&E’s ability to pay the Customer Credit, or PG&E’s ability to provide the Initial Shareholder Contribution, Additional Shareholder Contributions or any other voluntary or required contribution to the Customer Credit Trust pursuant to the CPUC orders

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issued in A.20-04-023; (ii) commingling of Fixed Recovery Charge revenues with other amounts; (iii) the retention by PG&E of either of the following: (a) a partial or residual interest, including an equity interest, in the SPE or the Recovery Property, whether direct or indirect, subordinate or otherwise or (b) the right to Recovery Costs associated with taxes, franchise fees, or license fees imposed on the collection of Fixed Recovery Charges; (iv) any recourse the SPE may have against PG&E; (v) any indemnification rights, obligations, or repurchase rights made or provided by PG&E; (vi) the obligation of PG&E to collect Fixed Recovery Charges, as servicer, on behalf of the SPE; (vii) the treatment of the sale, assignment or transfer of Recovery Property for tax, financial reporting, or other purposes, or (viii) the True-Up Mechanism as provided in this Financing Order.

51. Sections 850.1(e) and 850.1(g) require the Commission to adjust the Fixed Recovery Charge at least annually, and more often if necessary, to ensure timely recovery of the amounts identified in COL 40. The Commission’s authority under Article 5.8 and pursuant to Section 850.1(g) to authorize periodic true-up adjustments persists until the Recovery Bonds and all other Financing Costs are fully paid and discharged and does not expire like the Commission’s authority to issue financing orders in the first instance under Section 850.6. It is appropriate for PG&E to submit True-Up Mechanism Advice Letters and use an advice letter process to implement the periodic true-up adjustment. The annual Routine True-Up Mechanism Advice Letters shall also address any FRTAs.

52. Any default under the documents relating to the Recovery Bonds will entitle the holders of Recovery Bonds, or the Bond Trustees or representatives for such holders, to exercise the rights or remedies such holders or such Bond Trustees or representatives therefore may have pursuant to any statutory or other lien on the Recovery Property.

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53. The advice letters submitted as part of the True-up Mechanism to adjust the Fixed Recovery Charges, as described in the body of this Financing Order, constitute “application[s] . . . to implement a true-up adjustment” pursuant to Section 850.1(g). This mechanism will adjust the Fixed Recovery Charges annually, and semi-annually or more frequently, if necessary, to ensure that the Fixed Recovery Charges provide sufficient revenues to pay in a timely manner all the amounts identified in COL 40.

54. Annual Routine True-Up Mechanism Advice Letters, semi-annual Routine True-Up Mechanism Advice Letters and more frequent interim Routine True-Up Mechanism Advice Letters should be submitted no later than (i) 50 days before the last day of February, in the case of annual Routine True-Up Mechanism Advice Letters, (ii) 50 days before the last day of August, in the case of semi-annual Routine True-Up Mechanism Advice Letter and (iii) 50 days before the proposed effective date (which, for efficacy of reporting, will be the first day of a month), in the case of interim Routine True-Up Mechanism Advice Letters. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges and any FRTAs shall automatically go into effect (i) the March 1^st immediately following the submission, in the case of annual Routine True-Up Mechanism Advice Letters, (ii) the September 1st immediately following the submission, in the case of semi-annual Routine True-Up Mechanism Advice Letters and (iii) the proposed effective date, in the case of interim Routine True-Up Mechanism Advice Letters. These advice letters shall be based on the pro forma example contained in Attachment 3 of this Financing Order.

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55. The Routine True-Up Mechanism Advice Letters shall calculate a revised Fixed Recovery Charge using (i) the cash flow model in described in Attachment 1 of this Financing Order, modified as described in the body of this Financing Order, and (ii) the adjustments to the cash flow model listed in the body of this Financing Order. Protests, review, or correction to a Routine True-Up Mechanism Advice Letter should only address mathematical errors.

56. PG&E shall be allowed to submit Non-Routine True-Up Mechanism Advice Letters based on the pro forma example contained in Attachment 4 of this Financing Order to revise the cash flow model described in Attachment 1 of this Financing Order, as modified in the body of this Financing Order, to meet scheduled payments of Bond principal, interest, and other Financing Costs. Non-Routine True-Up Mechanism Advice Letters will be Tier 2 Advice Letters and submitted at least 90 days before the date when the proposed changes would become effective. The Energy Division should prepare for the Commission’s consideration a resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model. The public will have an opportunity to review and protest a Non-Routine True-Up Mechanism Advice Letter in accordance with Commission procedures to the extent allowed by Section 850.1(e). If the Commission provides a resolution adopting the proposed changes in the Non-Routine True-Up Mechanism Advice Letter, PG&E, or a successor servicer, may implement Fixed Recovery Charge adjustments proposed in such Non-Routine True-Up Mechanism Advice Letter on the effective date identified in the letter. Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model, PG&E or a successor servicer may implement the adjustments on the effective date identified in the Non-Routine True-Up Mechanism Advice Letter if that date is at least 90 days after the date of submission.

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57. PG&E’s proposed mechanisms for establishing and adjusting the Fixed Recovery Charges are reasonable, including the pro forma Issuance Advice Letters, True-Up Mechanism Advice Letters, and tariffs.

58. The Fixed Recovery Charges and FRTAs should be: (i) nonbypassable, (ii) set on an equal cents per kWh basis and (iii) recovered from all existing and future Consumers in PG&E’s Service Territory except for those Consumers participating in the California Alternative Rates for Energy or Family Electric Rate Assistance programs pursuant to Section 850.1(i).

59. PG&E’s proposal to combine all Fixed Recovery Charges and Customer Credits into single line items identified on Consumers’ monthly bills titled “Fixed Recovery Charge” and “Customer Credit” respectively in the electric charges portion of the monthly bills, as further described in Ordering Paragraph 41, is consistent with the requirement of Section 850.1(g) that the Fixed Recovery Charge “appear on the Consumer bills,” and should be approved.

60. Departing Load (DL) Consumers, other than new municipal DL Consumers, shall be obligated to pay Fixed Recovery Charges and any FRTAs using applicable language under existing tariffs and entitled to receive the Customer Credit. In the event that residents of a municipality no longer take transmission and distribution retail service, new municipal DL Consumers would pay the Fixed Recovery Charges and any FRTAs based on one of the following: (i) the last 12 months of the Consumer’s recorded pre-departure use; or (2) actual use. The determination of the Customer Credit applicable to such new municipal DL Consumers will be determined by the Commission in a future proceeding, if any, regarding municipalization.

61. PG&E and the SPE should account for Fixed Recovery Charges in the manner described in the body of this Financing Order.

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62. PG&E should act as the initial servicer for Fixed Recovery Charges on behalf of the SPE.

63. To the extent Consumers of electricity in PG&E’s Service Territory are billed by other entities, PG&E (as servicer for the Recovery Property) should bill such Consumers directly or may require these other entities to bill for the Fixed Recovery Charges and FRTAs, and to remit the Fixed Recovery Charge and FRTA revenues to PG&E on behalf of such Consumers.

64. ESPs and other entities that bill and collect the Fixed Recovery Charges and FRTAs from PG&E’s Consumers should satisfy the requirements set forth in PG&E’s Electric Rule 22.P., “Credit Requirements.”

65. Pursuant to Sections 851 and 854, the Commission must authorize any future voluntary or involuntary change in ownership of assets from an electrical or gas corporation to a public entity.⁴⁴ In the event such an ownership change affects the payment of rates to PG&E by any Consumers in PG&E’s Service Territory, the Commission shall, in the course of authorization, ensure that the new asset owner either (a) continues to bill and collect Fixed Recovery Charges from Consumers and remit such collections to PG&E or a new servicer for the Recovery Bonds or (b) ensures the upfront funding of the Fixed Recovery Charges that would otherwise be paid by Consumers where Fixed Recovery Charge payment would be affected by the ownership change. The Commission’s authorization on those terms will effectuate the State’s pledge and agreement that the State shall not limit nor alter the Fixed Recovery Charges, Recovery Property, this Financing Order, or any rights under this Financing Order until the Recovery Bonds and Financing Costs are fully paid and discharged.⁴⁵

⁴⁴  §§ 851(a), (b)(1), 854.2(b)(1)(F).

⁴⁵  § 850.1(e).

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66. The Bond Trustee (acting on behalf of the SPE) will have a legal right to only the amount of actual Fixed Recovery Charge cash collections. As servicer, PG&E will be legally obligated to remit Fixed Recovery Charge revenues, on behalf of the SPE, to the Bond Trustee. PG&E should remit the Fixed Recovery Charge revenues in accordance with the procedures described in the body of this Financing Order and the following two Conclusions of Law.

67. Amounts collected by PG&E that represent partial payments of a Consumer’s bill should be allocated pro rata between the Bond Trustee and PG&E based on the ratio of the amount of the Fixed Recovery Charges and any FRTAs billed to the total billed amount. In the event Recovery Bonds are issued in multiple series with different SPEs, the Fixed Recovery Charges should be allocated pro rata between the Bond Trustees for each series.

68. PG&E, as servicer, is obligated to forward to the Bond Trustee (on behalf of the SPE) only Fixed Recovery Charge cash collections as described below. PG&E will remit the estimated Fixed Recovery Charge revenues to the Bond Trustee on a daily basis to avoid an adverse impact on the Recovery Bond credit ratings. Over the life of the Recovery Bonds, PG&E will prepare a monthly report for the Bond Trustee that shows the estimated Fixed Recovery Charge revenues by month over the life of the Recovery Bonds. Estimated Fixed Recovery Charge collections will be based on historic customer payment patterns. Six months after each monthly billing period, PG&E will compare actual Fixed Recovery Charge revenues to the estimated Fixed Recovery Charge revenues that have been remitted to the Bond Trustee for that month during the intervening 6-month period. The difference between the estimated Fixed Recovery Charge collections and the actual Fixed Recovery Charge collection will be netted against the following month’s remittance to the Bond Trustee. The 6-month lag between the first remittance of estimated Fixed Recovery Charge revenues and the final determination of actual Fixed Recovery Charge cash collections allows for the collection process to take its course and is consistent with PG&E’s practice of waiting six months after the initial billing before writing off unpaid customer bills.

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69. The Bond Trustee should hold all Fixed Recovery Charge collections received from PG&E in a collection account. The Bond Trustee should use the funds held in the collection account to pay the following on a timely basis: (i) Bond principal and interest; (ii) costs for credit enhancements; (iii) servicing fees and administration fees; (iv) Bond Trustee fees; and (v) other Financing Costs.

70. The Bond Trustee should invest all funds held in the collection account in investment-grade short-term securities that mature on or before the next Bond payment date. Investment earnings should be retained in the collection account to pay debt service and other Financing Costs.

71. All subaccount funds should be available to pay debt service or other Financing Costs. Any funds that remain in the collection account or any subaccount after distributions are made on a Bond payment date (other than an amount up to PG&E’s equity contribution on deposit in the capital subaccount and any amounts required for overcollateralization) will be credited to the excess funds subaccount of the collection account. At the time of the submission of the next Routine True-Up Mechanism Advice Letter, the excess funds subaccount balance should be used to offset the revenue requirement for the Fixed Recovery Charges, including but not limited to replenishing the balance of the capital subaccount if necessary.

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72. PG&E should be permitted to receive a rate of return on its equity contribution equal to the weighted average interest rate on the Recovery Bonds, which should be payable as a Financing Cost from the Fixed Recovery Charges and be distributed to PG&E on each Bond payment date, after payment of debt service on the Recovery Bond and other Financing Costs on such date. PG&E shall credit electric Consumers the amount of this rate of return on its equity contribution paid to PG&E regardless of the balance of the Customer Credit Trust. Upon payment of the full principal amount of all Recovery Bonds and the discharge of all obligations that may be paid by use of Fixed Recovery Charges, the Bond Trustee is authorized to release an amount from the capital subaccount up to PG&E’s equity contribution to PG&E.

73. PG&E should be authorized to charge an annual servicing fee of 0.05 percent of the initial Bond principal amount, a level estimated to cover the servicer’s out-of-pocket costs and expenses in servicing the Recovery Bonds. PG&E should be authorized to charge an annual administration fee of $100,000 per series. Regardless of the balance of the Customer Credit Trust, PG&E should separately credit electric Consumers the amount of the servicing fee and the administration fee paid to PG&E.

74. PG&E should not resign as servicer without prior Commission approval.

75. In the event that PG&E fails to perform its servicing functions satisfactorily, as set forth in the Servicing Agreement, or is required to discontinue its billing and collecting functions, a successor servicer acceptable to the Bond Trustee acting on behalf of the Bond holders will replace PG&E; provided that in such an event, we task the Commission’s Energy Division with determining the appropriate annual fees to be paid to the new servicer, and any such fee agreement with the new servicer must be approved by the Commission through a resolution. The new servicer should bill and collect only the Fixed Recovery Charge.

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76. Before approving a third-party servicer, the Commission should determine that the appointment will not cause the then-current rating of any then outstanding Recovery Bonds to be withdrawn or downgraded.

77. PG&E should serve a copy of the advice letters authorized by this Financing Order on any party that requests service.

78. The Fixed Recovery Charge and any FRTAs should be imposed on all non-exempt Consumers on an equal cents per kWh basis except for residential rates which shall retain the rate relationships by tier determined by D.15-17-001.

79. Although the Bonds will be issued by the SPE, and not by PG&E, the SPE will be a wholly owned finance subsidiary of PG&E established for the purpose of carrying out this Financing Order of the Commission.

80. PG&E should remit to the Commission’s Fiscal Office the required Section 1904(b) fee of $756,000 by wire. The SPE should reimburse PG&E for this fee as a cost of issuing the Bonds.

81. Notwithstanding Section 1708 or any other provision of law, any requirement under Article 5.8 or this Financing Order that the Commission take action with respect to the subject matter of this Financing Order is binding on the Commission, as it may be constituted from time to time, and any successor agency exercising functions similar to the Commission, and the Commission will have no authority to rescind, alter or amend that requirement in this Financing Order. Notwithstanding the foregoing, the Customer Credit Trust, Customer Credits and related mechanics are referenced herein for pragmatic reasons due to the interplay of the Customer Credits and the Fixed Recovery Charges. However, (i) except for the Customer Credit true-up provisions set forth in Attachment 5 and the Customer Credit bill presentation provisions set forth in Section 5.4, all establishment, governance, funding, distribution, liquidation, regulatory authority and other material provisions relating to the Customer

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Credit Trust and Customer Credits are governed by the terms of CPUC orders issued in A.20-04-023, and (ii) the irrevocability of this Financing Order and the Fixed Recovery Charges shall not be extended to or apply to any aspect of the Customer Credit Trust and Customer Credits (including the Customer Credit bill presentation provisions in Section 5.4 and the requirements set forth in Attachment 5, which are included herein out of necessity and, in the case of the Customer Credit true-up provisions in Attachment 5, to ensure they are consistent with the true-up mechanisms adopted herein for the Fixed Recovery Charges, as specifically contemplated by A.20-04-023).

82. This Financing Order is irrevocable to the extent specified in Section 850.1(e).

83. This Financing Order may be supplemented upon the Commission’s own motion or a petition by a party to this proceeding, so long as such supplements are not inconsistent with the terms and provisions herein.

84. PG&E should be allowed to set its electric rates and charges, including any FRTAs but excluding the Fixed Recovery Charges, at levels designed to allow PG&E to recover franchise fees associated with, or imposed on the Fixed Recovery Charges, and PG&E should pay such franchise fees.

85. It is appropriate to apply GO 24-C and the Commission’s Financing Rule to the Recovery Bonds.

86. PG&E should be authorized to report, on behalf of the SPE, all information required by General Order 24-C and the Commission’s Financing Rule regarding the Recovery Bonds.

87. Pursuant to Section 824 and General Order 24-C, PG&E should maintain records that: (i) identify the specific Recovery Bonds issued pursuant to this Financing Order, and (ii) demonstrate that the proceeds from the Recovery Bonds have been used only for the purposes authorized by this Financing Order.

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88. Pursuant to Section 850.1(d), this Financing Order will become effective in accordance with its terms only after PG&E provides the Commission with PG&E’s written consent to all the terms and conditions of this Financing Order.

89. There is no need for an evidentiary hearing in this proceeding.

90. The Motion to Dismiss the Financing Order Application should be denied. No good cause has been shown as a basis to delay the adopted schedule for concluding this proceeding as argued in the Motion to Dismiss sponsored by multiple parties. Timely disposition of the Financing Order Application under the currently adopted schedule is consistent with statutory and due process limitations.

91. This Financing Order complies with the provisions of Article 5.8 of the Public Utilities Code that was enacted by SB 901, as amended by AB 1054 and AB 1513.

92. This Financing Order construes, applies, implements, and interprets the provisions of Article 5.8. Therefore, applications for rehearing and judicial review of this Financing Order are subject to Sections 1731 and 1756. These laws provide that any application for rehearing of this Financing Order must be filed within 10 days of the final Financing Order. The Commission must issue its decision on any application for rehearing within 210 days of the filing for rehearing.

93. The following order should be effective immediately in order to comply with statutory deadlines mandated by Article 5.8.

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ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company (PG&E) is granted authority pursuant to Division 1, Part 1, Chapter 4, Article 5.8 of the Public Utilities Code, subject to the terms and conditions in this Financing Order, to do the following:

i. Recover Catastrophic Wildfire Amounts and other Recovery Costs which have been determined by this Commission and allocated to ratepayers pursuant to subdivision (c) of Section 451.2 through the issuance of Recovery Bonds (referred to herein as Recovery Bonds or Bonds).

ii. Arrange for the issuance of Recovery Bonds as defined by Section 850(b)(9). The total principal amount of the Recovery Bonds shall not exceed $7.5 billion. All Recovery Bonds shall be issued on or prior to December 31, 2022 in no more than three series. Each series of Recovery Bonds will be subject to a separate issuance approval process, including a separate Issuance Advice Letter, separate Finance Team review and approval process and separate PG&E and lead left underwriter(s) certification requirement.

iii. Arrange for the issuance of the Bonds through one or more Financing Entities as that term is defined by Section 850(b)(5). Each Financing Entity shall be a Special Purpose Entity (SPE) that is formed and wholly owned by PG&E.

iv. Apply the Bond proceeds to recover, finance, or refinance Recovery Costs as that term is defined by Section 850(b)(10).

v. Arrange for the recovery, via nonbypassable rates and charges, of Fixed Recovery Charges (Fixed Recovery Charges) as that term is defined by Section 850(b)(7) and Fixed Recovery Tax Amounts (FRTAs) as that term is defined by Section 850(b)(8).

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vi. PG&E’s commitment to provide or PG&E’s ability to provide the Customer Credit, or PG&E’s ability to provide shareholder tax benefits cash flows or other amounts to the Customer Credit Trust, shall not limit or alter the Fixed Recovery Charges, the Recovery Property, the SPE’s ownership of the Recovery Property, the SPE’s separateness from PG&E and PG&E Corporation, this Financing Order, or any rights under this Financing Order.

2. Prior to the issuance of each series of Recovery Bonds, each Recovery Bond series and the associated Recovery Bond transactions shall be reviewed and approved by the Commission’s Finance Team consisting of the Commission’s General Counsel, the Deputy Executive Director for Energy and Climate Policy, other Commission staff, outside bond counsel, and any other outside experts that the Finance Team deems necessary. The other outside expertise may include, for example, independent legal counsel and an independent financial advisor to assist the Finance Team in overseeing and reviewing the issuance of a series of Recovery Bonds. Any costs incurred by the Finance Team in connection with its review and approval of a series of Recovery Bonds shall be treated as a Bond Issuance Cost. The purpose of the Finance Team is to provide oversight over the structuring, marketing, and pricing of each Recovery Bond transaction and to review and approve the material terms of such transaction in light of the goal to reduce rates on a present value basis to the maximum extent possible pursuant to Assembly Bill 1054’s directives.

3. In a pre-issuance review process, the Finance Team will have the right to review all material terms of the Recovery Bonds and other items the Finance Team determines are appropriate to perform its role, which may include, without limitation, (1) the underwriter and syndication group size, selection process, participants, allocations, and economics; (2) the structure of the Recovery Bonds; (3) the Recovery Bonds’ credit rating agency application; (4) the underwriters’ preparation, marketing, and syndication of the Recovery Bonds;

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(5) the pricing of the Recovery Bonds and certifications provided by Pacific Gas and Electric Company (PG&E) and the lead left underwriter(s) regarding pricing; (6) all associated Recovery Bond costs (including Bond Issuance Costs and other Financing Costs), servicing and administrative fees and associated crediting, (7) maturities, (8) reporting templates, (9) the amount of PG&E’s equity contribution to the related SPE, (10) overcollateralization and other credit enhancements and (11) the initial calculation of the related Fixed Recovery Charges. The foregoing and other items may be reviewed during the entire course of the Finance Team’s process. We expect PG&E will resolve material terms and structuring issues with the Finance Team prior to commencing marketing (subject to any modifications required as a result of such marketing process). This pre-issuance review process is intended to create Recovery Bonds with material terms that can meet the statutory requirements; in particular, that the Recovery Bonds reduce on a present value basis to the maximum extent possible, the rates that Consumers would pay as compared to the use of traditional utility financing mechanisms. The Finance Team’s review will continue until the related Issuance Advice Letter becomes effective as described in Ordering Paragraph 17. The Finance Team has the ability to be included and participate in all calls, meetings, e-mails, and other communications relating to the structuring, marketing, pricing, and issuance of each series of Recovery Bonds.

4. The Finance Team’s pre-issuance review and approval of the material terms and structure of a series of Recovery Bonds will be evidenced by a letter from the Finance Team to Pacific Gas and Electric Company (PG&E) delivered on or before the date of the pricing of the relevant Recovery Bonds. PG&E shall also be required to include such letter as an attachment to the Issuance Advice Letter relating to such series of Recovery Bonds. Such approval letter shall be a condition precedent to the issuance of such series of Recovery Bonds.

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5. The Bonds shall be amortized on a modified mortgage style basis to be determined at the time of issuance in the Issuance Advice Letter, such that principal payments may be made at a reduced amount for the first several payment periods. The legal maturity date of the latest maturing tranche of Bonds shall be no later than 32 years after the date of issuance.

6. Pacific Gas and Electric Company may elect to establish one or more Special Purpose Entities to issue up to three series of Recovery Bonds.

7. Any offering of Recovery Bonds shall be structured to be a “Qualifying Securitization” under IRS Revenue Procedure 2005-62.

8. The Bonds issued pursuant to this Financing Order shall contain a legend to the following effect: “Neither the full faith and credit nor the taxing power of the State of California is pledged to the payment of principal of, or interest on, this bond.”

9. In accordance with Section 850.1(h), Recovery Property established by this Financing Order and identified in the Issuance Advice Letter shall be created simultaneously with the sale of such Recovery Property to the Special Purpose Entity, will constitute a current property right and will thereafter continuously exist as property for all purposes.

10. The transfer of the Recovery Property by Pacific Gas and Electric Company (PG&E) to a Special Purpose Entity shall be in accordance with Section 850.4, and notwithstanding PG&E’s obligation to provide the Customer Credit pursuant to Application 20-04-023, shall be treated as an absolute transfer of all of PG&E’s right, title, and interest, as in a true sale, and not as a pledge or other financing, of the Recovery Property, other than for federal and state income tax and franchise tax purposes.

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11. Upon the sale by Pacific Gas and Electric Company (PG&E) of Recovery Property to the Special Purpose Entity (SPE), the SPE will have all of the rights originally held by PG&E with respect to the Recovery Property, including the right to exercise any and all rights and remedies to collect any amounts payable by any Consumer in respect of the Recovery Property, including the Fixed Recovery Charges, and to obtain true-up adjustments to the Fixed Recovery Charges pursuant to the True-Up Mechanism, notwithstanding any objection or direction to the contrary by PG&E.

12. Acting as initial servicer for the Recovery Property, Pacific Gas and Electric Company shall recover the Fixed Recovery Charges on behalf of a Special Purpose Entity.

13. The owners of Recovery Property will be entitled to recover Fixed Recovery Charge revenues in the aggregate amount equal to the principal amount of the associated series of Recovery Bonds, all interest thereon, any credit enhancements, servicing and administration fees and all other ongoing Financing Costs with respect to the scheduled payments of the associated series of Recovery Bonds, as well as other amounts payable under any interest rate swap agreement or the indenture pursuant to which the associated series of Recovery Bonds is issued.

14. The Fixed Recovery Charges and Fixed Recovery Tax Amounts (FRTAs) shall be nonbypassable and recovered from existing and future Consumers, as defined in Section 850(b)(3), in Pacific Gas and Electric Company’s Service Territory except for Consumers participating in the California Alternative Rates for Energy or Family Electric Rate Assistance programs pursuant to Section 850.1(i). The Fixed Recovery Charges and any FRTAs shall be imposed on all non-exempted Consumers on an equal cents per kilowatt hour basis.

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15. Except in the case of municipalization, consumers that no longer take transmission and distribution retail service from Pacific Gas and Electric Company after the date of this Financing Order, or that meet relevant criteria in the applicable tariff, shall be treated as departing load (DL) Consumers using applicable tariffs for DL Consumers, including E-DCG, and will be subject to pay the Fixed Recovery Charges and any Fixed Recovery Tax Amounts (FRTAs) and entitled to receive the Customer Credit. DL Consumers shall pay the Fixed Recovery Charges and any FRTAs (and be eligible to receive the associated Customer Credit) based on one of the following: (i) the last 12 months of the Consumer’s recorded pre-departure use; (ii) an average derived from the last three years of recorded use; or (iii) actual use. In the event that residents of a municipality no longer take transmission and distribution retail service, new municipal DL Consumers would pay the Fixed Recovery Charges and any FRTAs based on one of the following: (i) the last 12 months of the Consumer’s recorded pre-departure use; or (2) actual use.

16. There shall be a separate Fixed Recovery Charge and separate FRTAs for each series of Bonds.

17. To implement the Fixed Recovery Charge and any Fixed Recovery Tax Amounts for each series of Bonds, Pacific Gas and Electric Company shall submit an Issuance Advice Letter in the form, timeframe, and manner described in the body of this Financing Order. The Issuance Advice Letter and the Fixed Recovery Charges established by such Issuance Advice Letter shall become effective at noon on the fourth business day after pricing unless before noon on the fourth business day after pricing the Commission staff rejects the Issuance Advice Letter. The Commission staff’s review of each Issuance Advice Letter shall be limited to the arithmetic accuracy of the calculations and compliance with (i) Article 5.8, (ii) this Financing Order and (iii) the requirements of the Issuance Advice Letter (including the attached Finance Team approval letter). The Special Purpose Entity, identified in the Issuance Advice Letter will constitute a Financing Entity for all purposes of Article 5.8.

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18. Once Recovery Property is established by this Financing Order, the Recovery Property, Fixed Recovery Charges, Fixed Recovery Tax Amounts and other terms and conditions in the Financing Order shall not be adjusted in response to protests, the failure to provide the Customer Credit or the failure of Pacific Gas and Electric Company to make contributions to the Customer Credit Trust as mandated by the terms of California Public Utilities Commission orders issued in Application 20-04-023.

19. Pacific Gas and Electric Company shall file a Fixed Recovery Charge tariff no later than 10 days after this Financing Order is mailed. The Fixed Recovery Charge tariff shall be based on the pro forma tariff contained in Appendix A of Chapter 8 of Application 20-04-023. The Fixed Recovery Charge tariff shall be effective simultaneously with the effective date of the Fixed Recovery Charges specified in the first Issuance Advice Letter.

20. If necessary to meet rating agency requirements or to address the timing of the initial period of Fixed Recovery Charge collections, the Recovery Bonds may have an initial payment period longer or shorter than other payment periods and amortization of principal may be deferred in part in connection with the scheduled payment of debt service on each series of Recovery Bonds during the first two- and one-half years to three years.

21. Total Bond Issuance Costs for one issuance are estimated to be between $36 million and 57 million (excluding Finance Team expenses). Estimated costs for the Commission are included in the estimate. Actual costs for each issuance shall be included in the Issuance Advice Letter for the relevant series.

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22. The Special Purpose Entity (SPE), may obtain credit enhancements for the Recovery Bonds, but only if: (i) the credit enhancements are required by the rating agencies, or (ii) the all-in cost of the Bonds with the credit enhancements is expected to be less than without the credit enhancements. Any credit enhancement costs collected through the Fixed Recovery Charge in excess of total debt service and other Financing Costs shall be the property of the SPE. After the Recovery Bonds are repaid, all amounts in the collection account, including each subaccount (other than an amount from the capital subaccount up to Pacific Gas and Electric Company’s equity contribution) will be returned to Consumers through a subsequent ratemaking proceeding.

23. If required by the rating agencies to obtain the highest possible rating, an overcollateralization subaccount may be established; the overcollateralization amount for such subaccount may be an amount required by such rating agencies. The overcollateralization amount for each series of Bonds, if required by the rating agencies, shall be: (i) set forth in the Issuance Advice Letter for each series of Bonds, and (ii) funded in equal amounts on each Bond payment date, or in other such amounts and in such a manner as required by the rating agencies.

24. Pacific Gas and Electric Company shall sell or assign all of its interest in Recovery Property arising from or constituting the Fixed Recovery Charge revenues that are the subject of this Financing Order to one or more SPEs as provided in Ordering Paragraph 1.

25. Subject to compliance with the specific requirements of this Financing Order, including those requirements set forth in the body of this Financing Order and the accompanying Findings of Fact and Conclusions of Law, including Finance Team review and approval and Commission staff review of the Issuance Advice Letter, Pacific Gas and Electric Company and the Special Purpose Entity, may establish the terms and conditions of the Bonds, including repayment schedules, terms, payment dates, collateral, credit enhancement, required debt service, reserves, indices and other Financing Costs and features and costs.

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26. The Special Purpose Entity, shall transfer the Bond proceeds (net of estimated Bond Issuance Costs) to Pacific Gas and Electric Company as payment of the purchase price of the Recovery Property.

27. The owner of Recovery Property shall have the right to recover principal, interest, and other Financing Costs associated with the Recovery Bonds through the Fixed Recovery Charge authorized in this Financing Order.

28. 0. The Special Purpose Entity, as the owner of the Recovery Property, may pledge the Recovery Property as collateral to an indenture trustee to secure payments of principal, interest, servicing and administration expenses, credit enhancements, interest rate swap agreements, and other amounts payable under an indenture pursuant to which Recovery Bonds are issued.

29. The Special Purpose Entities responsible for issuing the Recovery Bonds are exempt from the new affiliate requirements established in Decision 20-05-053.

30. The Special Purpose Entity shall: (i) include one or more independent members on its board of directors or members in the case of a corporation or a limited liability company, or an independent trustee in the case of a trust; (ii) have restrictions on its ability to declare bankruptcy or to engage in corporate reorganizations; and (iii) limit its activities to those related to the Recovery Bonds.

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31. After Pacific Gas and Electric Company (PG&E) has sold, assigned, or otherwise transferred its interest in Recovery Property to the Special Purpose Entity (SPE), PG&E shall: (i) operate its system to provide service to Consumers in its Service Territory, (ii) act as initial servicer under the transaction documents associated with the related Recovery Bonds, and (iii) as initial servicer, bill and collect amounts in respect of the Fixed Recovery Charges for the benefit and account of the SPE and account for and remit these amounts to or for the account of the SPE.

32. Pacific Gas and Electric Company (PG&E) shall contribute equity to the Special Purpose Entity (SPE). The SPE equity proceeds, equal to at least an appropriate and legally necessary amount shall be pledged to secure the Recovery Bonds and shall be deposited into a capital subaccount in the collection account held by the Bond Trustee. PG&E should be permitted to receive a rate of return on its equity contribution equal to the weighted average interest rate on the Recovery Bonds, which should be payable as a Financing Cost from the Fixed Recovery Charges and be distributed to PG&E on each Bond payment date, after payment of debt service on the Recovery Bond and other Financing Costs on such date. PG&E shall credit electric Consumers the amount of this rate of return on its equity contribution paid to PG&E regardless of the balance of the Customer Credit Trust. Upon payment of the full principal amount of all Recovery Bonds and the discharge of all obligations that may be paid by use of Fixed Recovery Charges, the Bond Trustee is authorized to release an amount from the capital subaccount up to PG&E’s equity contribution to PG&E.

33. The Commission shall have full access to the books and records of the Special Purpose Entity (SPE). Pacific Gas and Electric Company (PG&E) shall not make any profit from the SPE, except for an authorized return on PG&E’s equity investment in the SPE as described above in Ordering Paragraph 32. If the equity capital is drawn upon, it may be replenished via the Fixed Recovery Charges.

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34. Recovery Bonds will be sold in one or more negotiated offerings through one or more underwriters.

35. Pacific Gas and Electric Company shall use the amounts that it derives from the net Bond proceeds to reimburse itself for or pay Catastrophic Wildfire Amounts.

36. The Recovery Bonds do not require the Commission’s approval pursuant to Sections 701.5, 817 or 818 because those provisions apply to the issuance of debt by a public utility, and the Special Purpose Entity, not Pacific Gas and Electric Company, will issue the Recovery Bonds.

37. The Recovery Bonds approved by this Financing Order comply with Section 817(d), (f), (g) and (h) and Section 818, even if those provisions did apply.

38. Pacific Gas and Electric Company is authorized pursuant to Section 823(d) to refund its temporary utility debt in connection with issuance of the Recovery Bonds.

39. In accordance with Section 850.1(e) the Commission shall not rescind, amend or alter the financing order, or otherwise revalue or revise for ratemaking purposes the recovery costs or the costs of recovering, financing, or refinancing the recovery costs, in any way to reduce or impair the value of Recovery Property, including by either directly or indirectly taking Fixed Recovery Charges into account when setting other rates for Pacific Gas and Electric Company (PG&E). PG&E’s failure to pay the Customer Credit also shall not impair the characterization of the sale, assignment or transfer of the recovery property to the Special Purpose Entity (SPE) as an absolute transfer and true sale or affect or impair the SPE’s ownership of the recovery property or the SPE’s separateness from PG&E and PG&E Corporation.

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40. Beginning in the first month, the Fixed Recovery Charges and the Customer Credit will appear on the bill of each Consumer in the Service Territory as electric charges.

41. Pacific Gas and Electric Company’s (PG&E’s) monthly Consumer bill shall disclose the amount of the Fixed Recovery Charges and Customer Credits, that the Fixed Recovery Charge revenues are being transferred to the Special Purpose Entities (SPEs), that PG&E is collecting the Fixed Recovery Charges on behalf of the SPEs, and that the Fixed Recovery Charges do not belong to PG&E. PG&E shall be permitted to combine all Fixed Recovery Charges and Customer Credits into single line items identified on Consumers’ monthly bills as electric charges titled “Fixed Recovery Charge” and “Customer Credit” respectively. The back of the monthly bill shall provide a description of the “Fixed Recovery Charge” and “Customer Credit” as set forth in the body of this Financing Order either directly on the bill itself or at a uniform resource locator (URL) address on the bill to a PG&E website that includes further information on the definitions used on the bill. If the descriptions are not on the bill itself, PG&E shall also include the descriptions in an annual bill insert.

42. If, subsequent to the issuance of the Financing Order, Pacific Gas and Electric Company (PG&E) receives, for Catastrophic Wildfire Amounts included in the Recovery Costs addressed in this Financing Order, additional insurance proceeds, tax benefits other than shareholder tax benefits or other amounts or reimbursements, PG&E shall credit customers, in a manner determined at the time by the Commission and in accordance with the terms of California Public Utilities Commission orders issued in Application 20-04-023, but the Commission may not adjust, amend or modify the Recovery Costs, Fixed Recovery Charges, Fixed Recovery Tax Amounts, this Financing Order, the Recovery Property, or the Recovery Bonds.

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43. If a Consumer makes only partial payment of a bill, Pacific Gas and Electric Company and any successor servicer shall allocate amounts collected from that Consumer pro rata among the Fixed Recovery Charges, the Fixed Recovery Tax Amounts and other rates and charges.

44. If a Pacific Gas and Electric Company (PG&E) Consumer fails to pay the Fixed Recovery Charge or Fixed Recovery Tax Amounts, PG&E may shut-off power to such Consumer in accordance with Commission-approved shut-off policies; provided, however, that temporary changes in utility shut-off procedures due to emergencies, such as the current COVID-19 pandemic, will be permitted.

45. The True-Up Mechanism for adjusting the Fixed Recovery Charge that is described in the body of this Financing Order and the accompanying Conclusions of Law, including the use of an advice letter process, is adopted. The Commission’s authority under Article 5.8 and pursuant to Section 850.1(g) to authorize periodic true-up adjustments shall persist until the Recovery Bonds and all Financing Costs are fully paid and discharged, and shall not expire like the Commission’s authority to issue financing orders in the first instance under Section 850.6.

46. Pacific Gas and Electric Company shall submit annual Routine True-Up Mechanism Advice Letters, semi- annual Routine True-Up Mechanism Advice Letters and more frequent, if necessary, interim Routine True-Up Mechanism Advice Letters in the form, timeframe, and manner described in the body of this Financing Order and the accompanying Conclusions of Law. The adjustments to the Fixed Recovery Charges specified in these advice letters shall go into effect automatically in the timeframe as described in this Financing Order and the advice letter(s). Annual Routine True-Up Mechanism Advice Letters shall also address any Fixed Recovery Tax Amounts.

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47. Pacific Gas and Electric Company (PG&E) shall submit Non-Routine True-Up Mechanism Advice Letters to propose revisions to the logic, structure, or components of the cash flow model described in Attachment 1 of this Financing Order in the form, timeframe, and manner described in the body of this Financing Order and the accompanying Conclusions of Law. If the Commission provides a resolution adopting the proposed changes in the Non-Routine True-Up Mechanism Advice Letter, PG&E, or a successor servicer, may implement Fixed Recovery Charge adjustments proposed in such Non-Routine True-Up Mechanism Advice Letter on the effective date identified in the letter. Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model, PG&E or a successor servicer may implement the adjustments on the effective date identified in the Non-Routine True-Up Mechanism Advice Letter if that date is at least 90 days after the date of submission. The submission or approval of any Non-Routine True-Up Mechanism Advice Letter shall not affect or alter the finality or irrevocability of this Financing Order, or of any Fixed Recovery Charges approved hereunder.

48. All true-up adjustments to the Fixed Recovery Charge shall ensure the billing of Fixed Recovery Charges necessary to correct for any overcollection or undercollection of the Fixed Recovery Charges authorized by this Financing Order and to otherwise ensure the timely provision for all scheduled (or legally due) payments of principal (including, if any, prior scheduled but unpaid principal payments), interest, all amounts payable to any swap counterparty in connection with the related series of Bonds, and any other amounts due in connection with the related series of Bonds (including ongoing fees and expenses and amounts required to be deposited in or allocated to any collection account or subaccount) during the current or next succeeding payment period. Such amounts are referred to as the Periodic Payment Requirement. True-up submissions shall be based upon the cumulative differences, regardless of the reason, between the Periodic Payment Requirement and the actual amount of Fixed Recovery Charge collections remitted to the Bond Trustee for the series of Bonds.

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49. Pacific Gas and Electric Company and the Special Purpose Entity shall account for revenues and credits from the Fixed Recovery Charges, the Customer Credit Trust and the Customer Credit as described in the body of this Financing Order and the accompanying Conclusions of Law and the terms of the California Public Utilities Commission orders issued in Application 20-04-023.

50. Pacific Gas and Electric Company shall not resign as servicer without prior approval from the California Public Utilities Commission.

51. An annual servicing fee shall be paid to Pacific Gas and Electric Company (PG&E) or any successor servicer. The annual servicing fee paid to PG&E shall be 0.05 percent of the initial principal amount of the Bonds as estimated to cover out-of-pocket costs and expenses of PG&E, as servicer. PG&E shall credit electric Consumers the amount of these servicing fees paid to PG&E regardless of the balance of the Customer Credit Trust. The annual fee paid to a successor servicer shall be no greater than the amount required by the rating agencies to receive the highest possible Bond ratings; provided that in such an event, we task the Commission’s Energy Division with determining the appropriate annual fees to be paid to the new servicer, and any such fee agreement with the new servicer must be approved by the Commission through a resolution.

52. An annual administration fee will be paid to Pacific Gas and Electric Company (PG&E) as administrator of the SPE. The annual administration fee shall be $100,000 per series of Bonds. PG&E shall credit electric Consumers the amount of this administration fee paid to PG&E regardless of the balance of the Customer Credit Trust.

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53. If Consumers of electricity in Pacific Gas and Electric Company’s (PG&E’s) Service Territory are billed by other entities, PG&E (as servicer for the Recovery Property) shall bill the Consumers directly or may require these other entities to bill for the Fixed Recovery Charges and Fixed Recovery Tax Amounts and to remit the Fixed Recovery Charge and Fixed Recovery Tax Amount revenues to PG&E on behalf of such Consumers.

54. ESPs and other third parties that bill and collect the Fixed Recovery Charges and any Fixed Recovery Tax Amounts from Pacific Gas and Electric Company’s (PG&E’s) Consumers shall satisfy the requirements set forth in PG&E’s Electric Rule 22.P.

55. In the course of authorizing any future change in ownership of assets from Pacific Gas and Electric Company (PG&E) to a public entity as described in Conclusion Of Law 65, the Commission shall establish conditions which either: (i) ensure the up-front funding of the Fixed Recovery Charges that would otherwise be paid by Consumers in PG&E’s Service Territory whose rate payment would be affected by the ownership change; or (ii) establish procedures to ensure the continued billing and collection of Fixed Recovery Charges from those Consumers and remittance of such collections to PG&E.

56. The Commission will not approve the appointment of any third-party servicer of Recovery Property without first determining that: (i) such approval will not cause any then- current credit rating of any then outstanding Recovery Bonds to be withdrawn or downgraded, and (ii) the servicing fee paid to the third-party servicer is reasonable.

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57. Pacific Gas and Electric Company shall remit Fixed Recovery Charge revenues to the Bond Trustee, on behalf of the Special Purpose Entity, in accordance with the procedures described in the body of this Financing Order and the accompanying Conclusions of Law.

58. The Bond Trustee shall: (i) account for all funds as described in the body of this Financing Order and the associated Conclusions of Law; (ii) invest all funds in investment-grade short-term debt securities; and (iii) make principal and interest payments to Bond investors and pay other Financing Costs.

59. In the event of a default by Pacific Gas and Electric Company in transferring the Fixed Recovery Charge revenues to the Bond Trustee on behalf of the Special Purpose Entity (SPE), the following parties may petition the Commission to order the sequestration and payment to the Bond Trustee for the benefit of the SPE of revenues arising from the Recovery Property: (a) the holders of the Recovery Bonds and the Bond Trustees or representatives thereof as beneficiaries of any statutory or other lien permitted by the Public Utilities Code, (b) the SPE or its assignees, and (c) pledgees or transferees, including transferees under Section 850.4, of the Recovery Property.

60. All regulatory approvals within the jurisdiction of the Commission that are necessary for the securitization of the Fixed Recovery Charges associated with Recovery Costs that are the subject of Application 21-01-004, the issuance of the Recovery Bonds and all related transactions contemplated in the application consistent with the approved Financing Order are hereby granted.

61. Pursuant to Section 824 and General Order 24-C, Pacific Gas and Electric Company shall maintain records that: (i) identify the specific Recovery Bonds issued pursuant to this Financing Order, and (ii) demonstrate that the proceeds from the Recovery Bonds have been used only for the purposes authorized by this Financing Order.

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62. Pacific Gas and Electric Company shall report, on behalf of the SPE, all information required by General Order 24-C and the Commission’s Financing Rule regarding the Recovery Bonds.

63. The Joint Motion to Dismiss filed by multiple parties in this proceeding is denied.

64. The additional evidence offered on February 25, 2021 by The Utility Reform Network and Cal Advocates in this proceeding is admitted. The additional evidence offered on February 25, 2021 by Wild Tree is stricken.

65. This Financing Order shall become effective in accordance with its terms and conditions only when Pacific Gas and Electric Company (PG&E) provides its written consent to all terms and conditions of this Financing Order. This Financing Order shall be void and of no force or effect if PG&E does not provide its written consent to all terms and conditions of this Financing Order.

66. Pacific Gas and Electric Company (PG&E) shall file and serve within 10 days from the date this Financing Order is mailed a written statement that either: (i) PG&E consents to all terms and conditions of this Financing Order, or (ii) PG&E does not consent to all terms and conditions of this Financing Order. If the latter, PG&E’s written statement shall identify the specific terms and conditions it does not consent to and explain why it does not consent to these terms and conditions.

67. Following Pacific Gas and Electric Company’s (PG&E’s) written consent, this Financing Order, together with the Fixed Recovery Charges authorized by this Financing Order, shall become irrevocable to the extent specified in Public Utilities Code Section 850.1(e) and be binding upon PG&E and any successor to PG&E that provides electric distribution service directly to Consumers of electricity within PG&E’s Service Territory.

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68. On or after the effective date of this Financing Order, upon the request of Pacific Gas and Electric Company, the SPE, the indenture trustee in connection with a series of Recovery Bonds (Bond Trustee), or all of them, the Commission’s General Counsel shall execute and deliver the following to PG&E, the SPE, and/or the Bond Trustee: (i) a certificate that attaches a true, correct, and complete copy of this Financing Order and certifies such copy to be the act and deed of this Commission; (ii) a certificate that states this Financing Order has not been altered, rescinded, amended, modified, revoked, or supplemented as of the date of the closing of any series of Recovery Bonds authorized by this Financing Order; and (iii) a certificate that states the Commission has reviewed and approved each series of Recovery Bonds in accordance with this Financing Order.

69. Within 10 days from the date when all preconditions to the issuance of the Bonds have been satisfied, and in any event prior to the issuance of the first series of Bonds, Pacific Gas and Electric Company (PG&E) shall remit to the Commission’s Fiscal Office the amount of $756,000 by wire to pay fees related to Section 1904, and the SPE shall reimburse PG&E for such payment. The decision number of this Financing Order shall be written on the face of the check.

70. The requirements set forth in Attachment 5 are included herein out of necessity to ensure they are consistent with the true-up mechanisms adopted herein for the Fixed Recovery Charges, as specifically contemplated by Application 20-04-023.

71. Application 21-01-004 is granted as set forth in the previous Ordering Paragraphs.

72. Application 21-01-004 is closed.

This order is effective today.

Dated May 6, 2021, at San Francisco, California.

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MARYBEL BATJER

President

MARTHA GUZMAN ACEVES CLIFFORD RECHTSCHAFFEN GENEVIEVE SHIROMA DARCIE HOUCK

Commissioners

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Attachments to the Financing Order

Attachment 1

Description of Cash Flow Model

Introduction

The purpose of this attachment is to describe the cash flow model used to calculate the Fixed Recovery Charge (FRC) or the Fixed Recovery Tax Amount (FRTA) for electric customers.⁴⁶ FRC rates will be calculated separately for each series of Recovery Bonds (Bonds) issued.

The remainder of this attachment is organized as follows:

• Overview of the Bond Cash Flow Model; and

• FRC rate calculation.

Overview of the Bond Cash Flow Model

The Bond cash flow spreadsheet models the expected annual revenue requirement of the Bonds based on assumptions for the electric load forecast for the forthcoming year, annual debt service of the Bonds, losses on collections from customers, and ongoing expenses such as overcollateralization, servicing and trustee fees. The model determines the annual FRC revenue requirement and rate for electric customers necessary to collect sufficient funds to pay the interest and principal on the Bonds, as well as the servicing fees, trustee fees, credit rating agency fees, and other necessary fees.

FRC Rate Calculation

The Bond cash flow model will calculate one FRC rate that will apply to electric customers. The initial FRC rate will be determined as described below:

Step 1: Determine the electric sales forecast for eligible electric customers for the forthcoming year.

⁴⁶  The Cash Flow Model described in this Attachment 1 is applicable to both the FRC and the FRTA, and references to the FRC throughout this Attachment 1 include the FRTA.

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Step 2: Determine all components to be covered by FRC revenue requirement in each year. These components include Bond principal, interest, and other approved financing costs.⁴⁷

This model assumes that FRC collections will be remitted daily and held by the Bond Trustee in a collection account for distribution on semi-annual payment dates. The model also assumes a collection curve, such that when applied to the billed revenue for a given day the collection curve will map that day’s billed revenue into expected daily cash receipts over the following 180 days, with any amount unpaid at 180 days assumed to be uncollectible.

Step 3: The rate per kWh for the year will equal the sum of the components covered by the FRC for the year divided by the estimated eligible sales for that year:

For the forecast year, Rate/kWh = FRC Revenue Requirement / Estimated Sales

Pacific Gas and Electric Company (PG&E) has calculated an illustrative rate of 0.541 cents per kWh based on eligible sales of 72,933 gigawatt-hours and an annual revenue requirement of $394.7 million (the FRC Revenue Requirement). The actual rate implemented for recovery of the Bond would be based on PG&E’s then current estimate of eligible sales.

⁴⁷  Uncollectible billed FRC charge revenue and the timing of the remittances based on servicing procedures and delinquencies will each affect cash flow available to cover the tariff components and, consequently, will each be factored into the FRC charge as a component.

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Attachment 2

Form of Issuance Advice Letter

[date]

Advice -E

(Pacific Gas and Electric Company ID [ ])

Public Utilities Commission of the State of California

Subject: Issuance Advice Letter for Recovery Bonds

Pursuant to California Public Utilities Commission (CPUC) Decision (D.) [ ] (Decision), Pacific Gas and Electric Company (PG&E) hereby submits, one day after the pricing date of this series of Recovery Bonds, the initial Fixed Recovery Charges for the series. This Issuance Advice Letter is for the Recovery Bonds [series             , tranche(s)             ].

Purpose

This Issuance Advice Letter establishes initial Fixed Recovery Charges for rate schedules for Consumers. This Issuance Advice Letter also establishes the Recovery Property to be sold to the Recovery Property Owner (Special Purpose Entity or SPE).

Background

In Decision [ ], the Commission authorized PG&E to submit Issuance Advice Letters when final terms and pricing for Recovery Bonds have been established. Issuance Advice Letter submissions are those in which PG&E uses the bond sizing methodology and Fixed Recovery Charge formulas found reasonable by the Commission in Decision [ ] to establish initial Fixed Recovery Charges for a series of Recovery Bonds. Using the methodology approved by the Commission in Decision [ ], this Issuance Advice Letter establishes Fixed Recovery Charges.

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Issuance Information:

Decision [     ] requires PG&E to provide the following information.

Recovery Bond Name: ___________________

Recovery Property Owner (SPE): ___________________

Bond Trustee(s): ___________________

Closing Date: _____________________

Bond Rating: ______________________

Amount Issued: ___________________

Bond Issuance Costs: ___________________

Bond Issuance Costs as a Percent of Amount Issued: ___________________

Recovery Costs Financed: ___________________

Coupon Rate(s): ___________________

Call Features: _____________________

Expected Principal Amortization Schedule: See Exhibit 1

Scheduled Final Payment Date: ___________________

Legal Maturity Date: ___________________

Distributions to Investors (quarterly or semi-annually): __________________

Annual Servicing Fee as a percent of the issuance amount: _______________

Overcollateralization amount for the series, if any: ______________________

Principal Amount of Recovery Property Established: ____________________

Bond Issuance Costs

Bond Issuance Costs
Underwriter Fees and Expenses	$
Legal Fees and Expenses
SEC Registration Fees
Rating Agency Fees
Accounting Fees and Expenses
Section 1904 Fees1
Printing/Edgarizing Costs
Bond Trustee Fees and Expenses
Original Issue Discount
Finance Team Fees and Expenses
Miscellaneous
Costs of the Commission
Total	$
Note 1: Section 1904 Fees computed by today’s Order.

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True-Up Mechanism

Not less often than annually, the servicer will compare the actual principal amortization with the scheduled principal amortization as set forth in Exhibit 1. If the servicer forecasts that Fixed Recovery Charge collections will be insufficient to make all scheduled payments of bond principal, interest, and related costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount, a change to the Fixed Recovery Charges will be requested via a Routine True-Up Mechanism Advice Letter or Non- Routine True-Up Mechanism Advice Letter in accordance with Decision [     ] .

Ongoing Financing Costs

Estimated Ongoing Financing Costs
Servicing Fee (PG&E as Servicer) ([##]% of the initial Recovery Bond principal amount)	$
Administration Fee
Accountant’s Fee
Legal Fees/Expenses for PG&E’s/Issuer’s Counsel
Bond Trustee’s/ Bond Trustee’s Counsel Fees and Expenses
Independent Managers’ Fees
Rating Agency Fees
Printing/Edgarizing Fees
Miscellaneous
TOTAL ONGOING FINANCING COSTS (with PG&E as Servicer)	$
Ongoing Servicers Fee (Third Party as Servicer) (0.[##] % of initial principal amount)
TOTAL ONGOING FINANCING COSTS (Third Party as Servicer)	$

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Fixed Recovery Charges

Table 1 below shows the current assumptions for each of the variables used in the Fixed Recovery Charges calculation.

TABLE 1

Input Values For Fixed Recovery

Charges

kWh sales for the applicable period

Percent of revenue requirement allocated to Consumers

Percent of Consumers’ revenue written off

Percent of Consumers’ billed amounts expected to be uncollected

Percent of billed amounts collected in current month

Percent of billed amounts collected in second month after billing

Percent of billed amounts collected in third month after billing

Percent of billed amounts collected in fourth month after billing

Percent of billed amounts collected in fifth month after billing

Percent of billed amounts collected in sixth month after billing

Ongoing Financing Costs for the applicable period

Expected Fixed Recovery Charges outstanding balance as of__/__/____

Table 2 shows the initial Fixed Recovery Charges calculated for Consumers. The Fixed Recovery Charge calculations are shown in Exhibit 2.

TABLE 2
Consumers Fixed Recovery Charge48	¢/kWh

Exhibit 3 includes proposed changes to [Part I of PG&E’s Preliminary Statement] to show Fixed Recovery Charges to be effective ______, [year].

⁴⁸  For residential rates, PG&E proposes to retain the rate relationships by tier determined by D.15-07-001 with the addition of the Fixed Recovery Charges and Customer Credit.

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Recovery Property

Recovery Property is the property described in Public Utilities Code Section 850(b)(11) relating to the Fixed Recovery Charges set forth herein, including, without limitation, all of the following:

(1) The right, title and interest in and to the Fixed Recovery Charges set forth herein, as adjusted from time to time.

(2) The right to be paid the total amounts shown on Exhibit 2.

(3) The right, title and interest in and to all revenues, collections, claims, payments, money, or proceeds of or arising from the Fixed Recovery Charges, as set forth herein.

(4) All rights to obtain adjustments to the Fixed Recovery Charges under the True-Up Mechanism.

These Fixed Recovery Charges, as adjusted from time to time, shall remain in place until the total amounts in Exhibit 2 are paid in full to the owner of the Recovery Property, or its assignee(s).

Effective Date

In accordance with Decision [ ], unless before noon on the fourth business day after pricing the Commission staff rejects the Issuance Advice Letter, the Issuance Advice Letter and the Fixed Recovery Charges established by an Issuance Advice Letter will be effective automatically at noon on the fourth business day after pricing, and pursuant to Section 850.1(h), the Recovery Property established by the Financing Order, will come into being simultaneously with the sale of the Recovery Property to the SPE. The Fixed Recovery Charges will continue to be effective, unless they are changed by a subsequent True-Up Mechanism Advice Letter. All of the Recovery Property identified herein constitutes a current property right and will continuously exist as property for all purposes.

Description of Exhibits

Exhibit 1 to this Issuance Advice Letter presents the scheduled principal amortization schedule for the Recovery Bonds.

Exhibit 2 presents the Fixed Recovery Charges calculations.

Exhibit 3 provides proposed changes to Part I of PG&E’s Preliminary Statement.

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Exhibit 4 provides the approval of the Finance Team

Notice

In accordance with General Order 96-B, Section 4.4, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes should be directed to [     ] at (415) [ — ]. Advice letter submissions can also be accessed electronically at: http://www.pge.com/tariffs

Vice President - Regulatory Relations Attachments

cc: Service List for A.[     ].

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Exhibit 1

Expected Principal Amount Amortization

Series ____, Tranche ______

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Exhibit 2

Amounts Receivable And Expected Principal Amount Amortization

The total amount payable to the owner of the Recovery Property, or its assignee(s), pursuant to this issuance advice letter is a $_____ principal amount, plus interest on such principal amount, plus other Financing Costs, to be obtained from Fixed Recovery Charges calculated in accordance with D. [ ].

The Fixed Recovery Charges shall be adjusted from time to time, at least annually, via the Routine True-Up Mechanism Advice Letter or Non-Routine True-Up Mechanism Advice Letter in accordance with D. [ ].

The following amounts are scheduled to be paid by the Bond Trustee from Fixed Recovery Charges it has received. These payment amounts include principal plus interest and other ongoing costs.

Payment Date	Receipt Amount	Payment Amount	Outstanding Principal
[date 1]	[$receipt 1]	[$payment 1]	[$outstanding principal 1]
•	•	•	•
•	•	•	•
•	•	•	•
[date n]	[$receipt n]	[$payment n]	[$outstanding principal n]
			[$0]

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Exhibit 3

[Proposed changes to Part I of PG&E’s Preliminary Statement]

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Exhibit 4

Finance Team Approval Letter

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Attachment 3

Form of Routine True-Up Mechanism Advice Letter

[date]

Application-E

(Pacific Gas and Electric Company ID [     ])

Public Utilities Commission of the State of California

Subject: Routine [Annual] / [Semi-Annual] / [Interim] Advice Letter for Fixed Recovery Charges True-up Mechanism

Pursuant to California Public Utilities Commission (CPUC) Decision (D.) [     ] (Decision), Pacific Gas and Electric Company (PG&E), as servicer of the Recovery Bonds (Recovery Bonds) and on behalf of the Special Purpose Entity, hereby applies for adjustment to the Fixed Recovery Charge for series ____, Tranche(s). _____ of the Recovery Bonds.

Purpose

This advice letter establishes revised Fixed Recovery Charges and FRTAs for rate schedules for Consumers, as set forth in D. [     ].

Background

In D. [     ], the Commission granted PG&E authority to issue Recovery Bonds to pay Catastrophic Wildfire Amounts and associated financing costs, and consequently to reduce PG&E’s electric rates.

Recovery Bonds are securities that are backed by the cash flows generated by a specific asset that will be sold by PG&E to a Special Purpose Entity that issued the Recovery Bonds secured by this asset. The asset sold is Recovery Property, a current property right that was created by Article 5.8 as the right, title and interest in and to all (i) Fixed Recovery Charges established pursuant to the Financing Order, including all rights to obtain adjustments, and (ii) revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges that will cover debt service and all related Recovery Bond costs.

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In D. [     ], the Commission authorized PG&E to submit Routine True-up Mechanism Advice Letters at least annually, and more frequently as permitted in the Financing Order, (i) at least 50 days before the last day of February for annual submissions, (ii) at least 50 days before August 31 for semi-annual submissions and (iii) at least 50 days before the end of the month for interim submissions. These advice letters are intended to ensure that the actual revenues collected under the Fixed Recovery Charges will be sufficient to make all scheduled payments of Bond principal, interest, and other financing costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount. Routine True-up Mechanism Advice Letters are those where PG&E uses the method found reasonable by the Commission in D. [    ] to revise existing Fixed Recovery Charges and FRTAs.

Using the method approved by the Commission in D. [     ], this Advice Letter modifies the variables used in the Fixed Recovery Charge calculations and provides the resulting modified Fixed Recovery Charges.

Table 1 shows the revised assumptions for each of the variables used in calculating the Fixed Recovery Charges for Consumers. Exhibit 1 shows the revised payment schedule.

TABLE 1

Input Values For Revised Fixed Recovery Charges

kWh sales for the applicable period

Percent of Consumers’ revenue written off

Percent of revenue requirement allocated to Consumers

Percent of Consumers’ billed amounts expected to be uncollected

Percent of billed amounts collected in current month

Percent of billed amounts collected in second month after billing

Percent of billed amounts collected in third month after billing

Percent of billed amounts collected in fourth month after billing

Percent of billed amounts collected in fifth month after billing

Percent of billed amounts collected in sixth month after billing

Percent of billed amounts remaining less uncollectibles

Ongoing Financing Costs for the applicable period

Expected Fixed Recovery Charges outstanding balance as of     /     /

Over- or undercollection of principal from previous Fixed Recovery Charge collections to be reflected in the new Fixed Recovery Charges

Table 2 shows the revised Fixed Recovery Charges calculated for Consumers. The Fixed Recovery Charge and FRTA, if any, calculations are shown in Exhibit 2.

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TABLE 2
Consumer Fixed Recovery Charge49	¢/kWh
Consumers Fixed Recovery Tax Amount	¢/kWh

Exhibit 3 includes proposed changes to Part I of PG&E’s Preliminary Statement to show Fixed Recovery Charges and FRTAs, if any, to be effective March 1, [September 1, if semi-annual Routine True-Up Mechanism Advice Letter] [or month, if interim Routine True-Up Mechanism Advice Letter], [year].

Effective Date

[If annual Routine True-Up Mechanism Advice Letter] In accordance with D. [     ], Routine True-Up Mechanism Advice Letters for required annual Fixed Recovery Charge adjustments shall be submitted at least 50 days before last day of February. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect the March 1st immediately following the submission. Therefore, these Fixed Recovery Charges and any FRTAs shall be effective March 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].

[If semi-annual Routine True-Up Mechanism Advice Letter] In accordance with D. [     ], semi-annual Routine True-Up Mechanism Advice Letters for interim Fixed Recovery Charge adjustments shall be submitted at least 50 days before the end of [August]. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect the September 1st immediately following the submission. Therefore, these Fixed Recovery Charges shall be effective September 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].

[If interim Routine True-Up Mechanism Advice Letter] In accordance with D. [     ], interim Routine True-Up Mechanism Advice Letters for interim Fixed Recovery

⁴⁹  For residential rates, PG&E proposes to retain the rate relationships by tier determined by D.15-07-001 with the addition of the Fixed Recovery Charges and Customer Credit.

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Charge adjustments shall be submitted at least 50 days before the proposed effective date (which, for efficacy of reporting, will be the first day of a month). These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Fixed Recovery Charges shall automatically go into effect on the proposed effective date. Therefore, these Fixed Recovery Charges shall be effective [month] 1, [year] through February 28, [year], unless they are changed by an interim adjustment prior to February 28, [year].

Description of Exhibits

Exhibit 1 to this Advice Letter presents the revised principal amortization schedule for the Recovery Bonds.

Exhibit 2 presents the revised Fixed Recovery Charge calculations.

Exhibit 3 provides proposed changes to Part I of PG&E’s Preliminary Statement.

Notice

In accordance with General Order 96-B Section 4.4, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes should be directed to [     ] at (415) [- ]. Advice letter submissions can also be accessed electronically at: http://www.pge.com/tariffs

Vice President - Regulatory Relations

Attachments

cc: Service List for A.[     ].

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Exhibit 1

Revised Expected Principal Amount Amortization

Series __________, Tranche __________

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Exhibit 2

Revised Amounts Receivable And Expected Principal Amount Amortization

The total amount payable to the owner of the Recovery Property, or its assignee(s), pursuant to this letter is a $ principal amount, plus interest on such principal amount, plus other Financing Costs, to be obtained from Fixed Recovery Charge calculated in accordance with D. [     ].

The Fixed Recovery Charges shall be adjusted from time to time, at least annually, via the Fixed Recovery Charge True-Up Mechanism in accordance with D. [     ].

The following amounts are scheduled to be paid by the Bond Trustee from Fixed Recovery Charges it has received. These payment amounts include principal plus interest and other financing costs.

Payment Date	Receipt Amount	Payment Amount	Outstanding Principal
[date 1]	[$receipt 1]	[$payment 1]	[$outstanding principal 1]
•	•	•	•
•	•	•	•
•	•	•	•
[date n]	[$receipt n]	[$payment n]	[$outstanding principal n] [$0]

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Exhibit 3

[Proposed changes to Part I of PG&E’s Preliminary Statement]

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Attachment 4

Form of Non-Routine True-Up Mechanism Advice Letter

[date]

Application-E

(Pacific Gas and Electric Company ID [     ])

Public Utilities Commission of the State of California

Subject: Non-Routine Advice Letter for Fixed Recovery Charges True-up Mechanism

Pursuant to California Public Utilities Commission (CPUC) Decision (D.) [     ] (Decision), Pacific Gas and Electric Company (PG&E), as servicer of the Recovery Bonds (Recovery Bonds) and on behalf of the Special Purpose Entity, hereby applies for adjustment to the Fixed Recovery Charge for series , Tranche(s) of the Recovery Bonds.

Purpose

This Advice Letter establishes revised Fixed Recovery Charges for rate schedules for Consumers, as set forth in D. [     ].

Background

In D. [     ], the Commission granted PG&E authority to issue Recovery Bonds to pay Catastrophic Wildfire Amounts and associated financing costs, and consequently to reduce PG&E’s electric rates.

Recovery Bonds are securities that are backed by the cash flows generated by a specific asset that will be sold by PG&E to a Special Purpose Entity that issued the Recovery Bonds secured by this asset. The asset sold is Recovery Property, a current property right that was created by Article 5.8 as the right, title and interest in and to all (i) Fixed Recovery Charges established pursuant to the Financing Order, including all rights to obtain adjustments, and (ii) revenues, collections, claims, payments, moneys, or proceeds of or arising from the Fixed Recovery Charges that will cover debt service and all related Recovery Bond costs.

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In D. [     ], the Commission authorized PG&E to submit Non-Routine True-up Mechanism Advice Letters as permitted in the Financing Order, to propose revisions to the logic, structure and components of the cash flow model adopted by the Financing Order. These submissions are intended to ensure that the actual revenues collected under the Fixed Recovery Charges will be sufficient to make all scheduled payments of Bond principal, interest, and other financing costs on a timely basis during the current or next succeeding payment period or to replenish any draws upon the capital subaccount.

Using the cash flow model attached to this Non-Routine True-Up Mechanism Advice Letter as Exhibit 1, this Advice Letter modifies the variables used in the Fixed Recovery Charge calculations and provides the resulting modified Fixed Recovery Charges.

Table 1 shows the revised assumptions for each of the variables used in calculating the Fixed Recovery Charges for Consumers. Exhibit 2 shows the revised payment schedule.

TABLE 1

Input Values For Revised Fixed Recovery Charges

kWh sales for the applicable period

Percent of Consumers’ revenue written off

Percent of revenue requirement allocated to Consumers

Percent of Consumers’ billed amounts expected to be uncollected

Percent of billed amounts collected in current month

Percent of billed amounts collected in second month after billing

Percent of billed amounts collected in third month after billing

Percent of billed amounts collected in fourth month after billing

Percent of billed amounts collected in fifth month after billing

Percent of billed amounts collected in sixth month after billing

Percent of billed amounts remaining less uncollectibles

Ongoing Financing Costs for the applicable period

Expected Fixed Recovery Charges outstanding balance as of /        /

Over- or undercollection of principal from previous Fixed Recovery Charge collections to be reflected in the new Fixed Recovery Charges

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Table 2 shows the revised Fixed Recovery Charges calculated for Consumers. The Fixed Recovery Charge calculations are shown in Exhibit 3.

TABLE 2
Consumer Fixed Recovery Charge5050	¢/kWh

Exhibit 4 includes proposed changes to Part I of PG&E’s Preliminary Statement to show Fixed Recovery Charges to be effective on [Date].

Effective Date

In accordance with D.[ ], Non-Routine True-Up Mechanism Advice Letters for Fixed Recovery Charge adjustments shall be submitted at least 90 days before the date when the proposed changes would become effective. If the Commission provides a resolution adopting the proposed changes in the Non-Routine True-Up Mechanism Advice Letter, PG&E, or a successor servicer, may implement Fixed Recovery Charge adjustments proposed in this Non-Routine True-Up Mechanism Advice Letter on [Date].

Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions to the cash flow model, PG&E or a successor servicer may implement the adjustments on the effective date identified in the Non-Routine True-Up Mechanism Advice Letter if that date is at least 90 days after the date of submission.

Description of Exhibits

Exhibit 1 to this Advice Letter presents the new cash flow model for the Fixed Recovery Charges.

Exhibit 2 to this Advice Letter presents the revised principal amortization schedule for the Recovery Bonds.

Exhibit 3 presents the revised Fixed Recovery Charge calculations.

Exhibit 4 provides proposed changes to Part I of PG&E’s Preliminary Statement.

⁵⁰  For residential rates, PG&E proposes to retain the rate relationships by tier determined by D.15-07-001 with the addition of the Fixed Recovery Charges and Customer Credit.

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Notice

In accordance with General Order 96-B Section 4.4, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes should be directed to [     ] at (415) [- ]. Advice letter submissions can also be accessed electronically at: http://www.pge.com/tariffs

Vice President - Regulatory Relations

Attachments

cc: Service List for A.[     ].

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Exhibit 1

New Cash Flow Model for the Fixed Recovery Charges.

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Exhibit 2

Revised Expected Principal Amount Amortization

Series __________, Tranche __________

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Exhibit 3

Revised Amounts Receivable And Expected Principal Amount Amortization

The total amount payable to the owner of the Recovery Property, or its assignee(s), pursuant to this letter is a $ principal amount, plus interest on such principal amount, plus other Financing Costs, to be obtained from Fixed Recovery Charge calculated in accordance with D. [     ].

The Fixed Recovery Charges shall be adjusted from time to time, at least annually, via the Fixed Recovery Charge True-Up Mechanism in accordance with D. [     ].

The following amounts are scheduled to be paid by the Bond Trustee from Fixed Recovery Charges it has received. These payment amounts include principal plus interest and other financing costs.

Payment Date	Receipt Amount	Payment Amount	Outstanding Principal
[date 1]	[$receipt 1]	[$payment 1]	[$outstanding principal 1]
•	•	•	•
•	•	•	•
•	•	•	•
[date n]	[$receipt n]	[$payment n]	[$outstanding principal n] [$0]

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Exhibit 4

[Proposed changes to Part I of PG&E’s Preliminary Statement]

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Attachment 5

Customer Credit True-Up Mechanisms

Ordering Paragraph 9 of A.20-04-023 states that:

“The Customer Credits will, by subsequent Commission order be subject to true-up mechanisms that enable adjustments to the Customer Credits when the related Fixed Recovery Charges are adjusted pursuant to the Fixed Recovery Charge True-up mechanisms and in other situations. Such Customer Credit True-Ups will be consistent with the timing and approval requirements applicable to the related Fixed Recovery Charge True-Up mechanisms.”

To give effect to the foregoing, the Commission orders as set forth in this Attachment 5. However, the irrevocability of this Financing Order and the Fixed Recovery Charges shall not be extended to or apply to any aspect of the Customer Credit Trust and Customer Credits (including the orders set forth in this Attachment 5).

IT IS ORDERED that:

1. When PG&E submits annual Routine True-Up Mechanism Advice Letters to adjust the Fixed Recovery Charges, PG&E will also submit Tier 1 Advice Letters in the form of Exhibit A to adjust the Customer Credit to equal the adjusted Fixed Recovery Charges. PG&E would submit annual Tier 1 Advice Letters at least 50 days before the last day of February until all principal, interest, and other Financing Costs have been paid in full and the Fixed Recovery Charges cease. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s revision to the Customer Credits shall automatically go into effect the March 1^st immediately following the submission.

2. If PG&E submits an interim Routine True-Up Mechanism Advice Letter to adjust the Fixed Recovery Charges, PG&E will also submit a Tier 1 Advice Letter in the form of Exhibit A to adjust the Customer Credit to equal the adjusted Fixed Recovery Charges. In the case of a semi-annual interim Routine True- Up Mechanism Advice Letter, PG&E would submit an interim Tier 1 Advice Letter in the form of Exhibit A at least 50 days before August 31st to adjust the Customer Credit, and they are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision of the Customer Credit shall automatically go into effect the September 1^st immediately following the submission. In the case of any other interim Routine True-Up Mechanism Advice Letter, PG&E will submit an interim Tier 1 Advice Letter in the form of Exhibit A at least 50 days before the proposed effective date of the Customer Credit (which, for efficacy of reporting, will be the first day of a month), and they are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision of the Customer Credit shall automatically go into effect on the proposed effective date.

3. If PG&E submits a Non-Routine True-Up Mechanism Advice Letter to adjust the Fixed Recovery Charges, PG&E will also submit a Tier 2 Advice Letter in the form of Exhibit A to adjust the Customer Credit. A non-routine Tier 2 Advice Letter would be submitted at least 90 days before the date when the proposed changes would become effective. If the Commission provides a resolution adopting the proposed changes, PG&E may implement Customer Credit adjustments proposed in a non-routine Tier 2 Advice Letter on the effective date identified in the letter. Absent a Commission resolution that adopts, modifies, or rejects the proposed revisions, PG&E or a successor servicer may implement the adjustments on the effective date identified in the Non-Routine Tier 2 Advice Letter if that date is at least 90 days after the date of submission.

4. Each year, PG&E will project the balance of the Customer Credit Trust for the upcoming year. If the projected balance is less than the annual projected Fixed Recovery Charges for the year, PG&E would submit a Tier 1 Advice letter in the form of Exhibit B to reduce the Customer Credit such that the projected Customer Credit for the following 12 months would equal the projected balance of the Customer Credit Trust at the end of the year. PG&E will seek to submit this Tier 1 Advice letter at least 50 days before the end of February. These Tier 1 advice letters are to receive a Commission Energy Division negative or affirmative response within 20 days of submission. In the absence of a Commission Energy Division negative response, PG&E’s timely revision to the Customer Credits shall automatically go into effect the March 1st immediately following the submission.

Exhibit A

Form of Customer Credit Advice Letter to Match Fixed Recovery Charges

[Date]

ADVICE________-E

(Pacific Gas and Electric Company ID U 39 M)

Public Utilities Commission of the State of California

Subject: Revision of Securitization Customer Credit to Match the Fixed Recovery Charge

Purpose

Pacific Gas and Electric Company (PG&E) hereby submits this Advice Letter in compliance with the requirements in Decision (D.) 21-XX-XXX, which authorized PG&E to issue securitized bonds and established a dedicated rate component, the Fixed Recovery Charge (FRC), and also established true-up mechanisms for related Customer Credits. This Advice adjusts the Customer Credit rate to match the FRC proposed in Advice XXXX-E.

Background

In D.21-XX-XXX, the Commission established the FRC to recover the costs associated with the securitized financing. In D.21-XX-XXX, the Commission established an offsetting Customer Credit. PG&E has submitted Advice XXXX-E as a routine / non-routine Advice to revise the FRC rate to $0.XXXXX per kWh. This Advice Letter revises the Customer Credit to $-0.XXXXX per kWh effective [Date] to offset the revised FRC rate.

This Advice Letter will not affect any other rate or charge, cause the withdrawal of service, or conflict with any other rate schedule or rule.

Protests

Anyone wishing to protest this Advice Letter may do so by letter sent via U.S. mail, by facsimile or electronically, any of which must be received no later than [Date], which is 20 days after the date of this submission. Protests should be mailed to:

CPUC Energy Division

ED Tariff Unit

505 Van Ness Avenue, 4^th Floor

San Francisco, California 94102

Facsimile: (415) 703-2200

E-mail: EDTariffUnit@cpuc.ca.gov

Copies of protests also should be mailed to the attention of the Director, Energy Division, Room 4004, at the address shown above.

The protest also should be sent via U.S. mail (and by facsimile and electronically, if possible) to PG&E at the address shown below on the same date it is mailed or delivered to the Commission:

[Name]

Director, Regulatory Relations

c/o [Name]

Pacific Gas and Electric Company

77 Beale Street, Mail Code [Code]

P.O. Box 770000

San Francisco, California 94177

Facsimile: (415) 973-3582

E-mail: PGETariffs@pge.com

Effective Date

PG&E requests that this Advice Letter become effective on [Date]. As authorized in D.21-XX-XXX, PG&E submits this as a [Tier 1][Tier 2] Advice Letter.

Notice

In accordance with General Order 96-B, Section IV, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes to the General Order 96-B service list and all electronic approvals should be directed to email PGETariffs@pge.com. Advice letter submissions can also be accessed electronically at: http://www.pge.com/tariffs.

/S/

[Name]

[Title]

Exhibit B

Form of Customer Credit Advice Letter for Revisions per Trust Balance

[Date]

ADVICE______-E

(Pacific Gas and Electric Company ID U 39 M)

Public Utilities Commission of the State of California

Subject: Revision of Securitization Customer Credit to Match the Balance Available in the Customer Credit Trust

Purpose

Pacific Gas and Electric Company (PG&E) hereby submits this Advice Letter in compliance with the requirements in Decision (D.) 21-XX-XXX, which authorized PG&E to issue securitized bonds and established a dedicated rate component, the Fixed Recovery Charge (FRC), and also established true-up mechanisms for related Customer Credits. This Advice adjusts the Customer Credit rate to reflect the balance remaining in the Customer Credit Trust.

Background

In D.21-XX-XXX, the Commission established the FRC to recover the costs associated with the securitized financing. In D.21-XX-XXX, the Commission established an offsetting Customer Credit. PG&E established the Customer Credit Trust to accumulate amounts to fund the Customer Credit. As shown in Attachment A, PG&E forecasts that the balance in the Customer Credit Trust is insufficient to maintain the Customer Credit rate equal to the current FRC. As provided in D.21-XX-XXX, this Advice Letter adjusts the Customer Credit to $-0.XXXXX per kWh, which will utilize 100% of the forecast balance in the Customer Credit Trust.+

An illustrative estimate of the average bill impact on residential, non-CARE customers of this change is an increase in the monthly bill of $X.XX. Supporting documentation showing how these bill impacts were calculated is provided in the Attachment B to this advice letter.

PG&E’s explanation for the insufficiency in the Customer Credit Trust balance is as follows: [provide a detailed explanation of each and every reason for the insufficiency].

This Advice Letter will not affect any other rate or charge, cause the withdrawal of service, or conflict with any other rate schedule or rule.

Protests

Anyone wishing to protest this Advice Letter may do so by letter sent via U.S. mail, by facsimile or electronically, any of which must be received no later than [Date], which is 20 days after the date of this submission. Protests should be mailed to:

CPUC Energy Division

ED Tariff Unit

505 Van Ness Avenue, 4^th Floor

San Francisco, California 94102

Facsimile: (415) 703-2200

E-mail: EDTariffUnit@cpuc.ca.gov

Copies of protests also should be mailed to the attention of the Director, Energy Division, Room 4004, at the address shown above.

The protest also should be sent via U.S. mail (and by facsimile and electronically, if possible) to PG&E at the address shown below on the same date it is mailed or delivered to the Commission:

[Name]

Director, Regulatory Relations c/o [Name]

Pacific Gas and Electric Company 77 Beale Street, Mail Code [Code]

P.O. Box 770000

San Francisco, California 94177

Facsimile: (415) 973-3582

E-mail: PGETariffs@pge.com

Effective Date

PG&E requests that this Advice Letter become effective on [Date].

As authorized in D.21-XX-XXX, PG&E submits this as a Tier 1 advice letter.

Notice

In accordance with General Order 96-B, Section IV, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list. Address changes to the General Order 96-B service list and all electronic approvals should be directed to email PGETariffs@pge.com. Advice letter submissions can also be accessed electronically at: http://www.pge.com/tariffs.

/S/

[Name]

[Title]

EX-99.2

Exhibit 99.2

[                ], 2022

To the Persons Listed on the Attached Schedule I

Re: Federal and California Constitutional Issues related to PG&E Recovery Bonds

Ladies and Gentlemen:

We have served as counsel to Pacific Gas and Electric Company, a California public utility (“PG&E”), in connection with the issuance and sale on the date hereof by PG&E Wildfire Recovery Funding LLC, a Delaware limited liability company (the “Issuer”), of $[                ] aggregate principal amount of the Issuer’s Recovery Bonds (the “Bonds”), which are more fully described in the Registration Statement on Form SF-1 (File Nos. 333-263719 and 333-263719-01) filed on March 21, 2022 by PG&E and the Issuer with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as amended by Amendment No. 1 thereto filed on April 25, 2022 (collectively, the “Registration Statement”), and the prospectus (the “Prospectus”) included as part of the Registration Statement. The Bonds are being sold pursuant to the provisions of the Underwriting Agreement dated [                ], 2022 (the “Underwriting Agreement”) between PG&E, the Issuer, and underwriters named in Schedule I to the Underwriting Agreement. The Bonds are being issued under the provisions of the Indenture dated as of the date hereof (the “Indenture”) between the Issuer and The Bank of New York Mellon Trust Company, National Association, a national banking association, as indenture trustee (the “Indenture Trustee”) and account bank and securities intermediary. According to the Indenture, the Indenture Trustee holds the recovery property described below (the “Recovery Property”) as collateral security for the payment of the Bonds.

On July 12, 2019, Governor Gavin Newsom signed into law Assembly Bill No. 1054, which amended Division 1, Part 1, Chapter 4, Article 5.8 (commencing with Section 850) of the California Public Utilities Code. The California legislature later amended Article 5.8 with Assembly Bill No. 1513 (Article 5.8, as amended, is referred to herein as the “Wildfire Financing Law”). The Wildfire Financing Law authorizes “electrical corporations”¹ to file an application for “recovery of costs and expenses related to catastrophic wildfires,” including fire risk mitigation capital expenditures identified in subdivision (e) of Section 8386.3 that the California Public Utilities Commission (“CPUC” or the “Commission”) has found are “just and reasonable” for recovery.² In such event, the Wildfire Financing Law provides that the CPUC may issue an irrevocable “financing order” to provide for the recovery of “recovery costs” through the issuance of “recovery bonds” secured by a pledge of “recovery property.”³

www.HuntonAK.com

¹  As defined in Section 218 of the Public Utilities Code.

²  Pub. Util. Code § 850(a)(2).

³ Id. § 850(b)(6)–(11).

ATLANTA    AUSTIN    BANGKOK    BEIJING    BOSTON     BRUSSELS    CHARLOTTE    DALLAS    DUBAI    HOUSTON    LONDON    

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The term “recovery property” is defined in the Wildfire Financing Law as follows:

(A) “Recovery property” means the property right created pursuant to this article, including, without limitation, the right, title, and interest of the electrical corporation or its transferee:

(i) In and to the fixed recovery charges established pursuant to a financing order, including all rights to obtain adjustments to the fixed recovery charges in accordance with Section 850.1 and the financing order.

(ii) To be paid the amount that is determined in a financing order to be the amount that the electrical corporation or its transferee is lawfully entitled to receive pursuant to the provisions of this article and the proceeds thereof, and in and to all revenues, collections, claims, payments, moneys, or proceeds of or arising from the fixed recovery charges that are the subject of a financing order.

(B) “Recovery property” shall not include a right to be paid fixed recovery tax amounts.

(C) “Recovery property” shall constitute a current property right, notwithstanding the fact that the value of the property right will depend on consumers using electricity or, in those instances where consumers are customers of the electrical corporation, the electrical corporation performing certain services.⁴

Moreover, Section 10 of the Wildfire Financing Law—which amended Section 850.1 of the Public Utilities Code and is referred to herein as the “State Pledge”—reads, in relevant part:

The State of California does hereby pledge and agree with the electrical corporation, owners of recovery property, financing entities, and holders of recovery bonds that the state shall neither limit nor alter, except as otherwise provided with respect to the true-up adjustment of the fixed recovery charges pursuant to subdivision (i), the fixed recovery charges, any associated fixed recovery tax amounts, recovery property, financing orders, or any rights under a financing order until the recovery bonds, together with the interest on the recovery bonds and associated financing costs, are fully paid and discharged, and any associated fixed recovery tax amounts have been satisfied or, in the alternative, have been refinanced through an additional issue of recovery bonds, provided that nothing contained in this section shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the electrical corporation and of owners and holders of the recovery bonds. The financing entity is authorized to include this pledge and undertaking for the state in these recovery bonds.⁵

⁴  Id. § 850(b)(11). The “fixed recovery charges established pursuant to a financing order” under § (b)(11)(A)(i) are referred to herein as the “Charges.”

⁵  Id. § 850.1(e).

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On January 6, 2021, PG&E filed an application for a financing order with the Commission. Consistent with the Wildfire Financing Law, the Recovery Property was created in favor of PG&E pursuant to a financing order issued by the Commission as Decision 21-05-015 on May 11, 2021 (the “Financing Order”). The Financing Order became final and non-appealable on February 28, 2022. On the date hereof and simultaneous with the issuance of the Bonds, the Recovery Property was sold and assigned to the Issuer in accordance with the provisions of the Recovery Property Purchase and Sale Agreement dated as of DATE, 2022 between PG&E and the Issuer in consideration for the payment by the Issuer to PG&E of the proceeds of the sale of the Bonds, net of various issuance costs.

QUESTIONS PRESENTED

You have requested our reasoned opinion with respect to the following questions presented under the Federal and California Constitutions:

(A)(i) Whether the holders of the Bonds (the “Bondholders”), by virtue of the State Pledge, could successfully challenge under Article I, Section 10 of the United States Constitution (the “Federal Contract Clause”), the constitutionality of any legislative action of the State of California (the “State”), whether by legislation or voter initiative (either statutory or constitutional), that becomes law (“Legislative Action”) that limits, alters, impairs, or reduces the value of the Recovery Property or the Charges so as to impair (a) the terms of the Indenture or the Bonds or (b) the rights and remedies of the Bondholders (or the Indenture Trustee acting on their behalf) before the Bonds are fully paid and discharged;⁶

(ii) Whether the Bondholders could successfully challenge under Article I, Section 9 of the California Constitution (the “California Contract Clause”) the constitutionality of any Legislative Action that results in an Impairment; and

(iii) Whether preliminary injunctive relief would be available under federal law to delay implementation of Legislative Action that results in an Impairment pending final adjudication of a claim challenging such Legislative Action in federal court and, assuming a favorable final adjudication of such claim, whether permanent injunctive relief would be available to enjoin the implementation of the challenged Legislative Action.

(B)(i) Whether, under the Takings Clause of the Fifth Amendment to the United States Constitution (the “Federal Takings Clause”), the State could repeal or amend the Wildfire Financing Law or take any other action in contravention of the State Pledge without paying just compensation to the Bondholders, as determined by a court of competent jurisdiction, if taking such an action in contravention of the State Pledge (a) constituted a permanent appropriation of a substantial property interest of the Bondholders in the Recovery Property or denied all economically productive use of the Recovery Property; (b) destroyed the Recovery Property other

than in response to emergency conditions; or (c) substantially reduced, altered, or impaired the value of the Recovery Property so as to unduly interfere with the reasonable expectations of the Bondholders arising from their investments in the Bonds (a “Taking”); and

⁶  Any impairment described in clause (a) or (b) is referred to herein as an “Impairment.”

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(ii) Whether, under Article I, Section 19 of the California Constitution (the “California Takings Clause”) and as determined by a court of competent jurisdiction, the State could repeal or amend the Wildfire Financing Law or take any other action in contravention of the State Pledge, assuming such action constituted a Taking, without paying just compensation to the Bondholders.

OPINIONS

Based on our review of the relevant judicial authority, and subject to the qualifications, limitations, and assumptions set forth in this letter (including the assumption that any Impairment would be “substantial”), it is our opinion that a reviewing court of competent jurisdiction, in a properly prepared and presented case:

(1) would conclude, with respect to the questions presented above in (A)(i) and (ii), that the State Pledge constitutes a contractual relationship between the Bondholders and the State and that, absent a demonstration by the State that an Impairment is necessary to further a significant and legitimate public purpose, and upon a finding by the court that an evident and more moderate course would serve the State’s purposes equally well, the Bondholders (or the Indenture Trustee acting on their behalf) could successfully challenge under the Federal Contract Clause or the California Contract Clause the constitutionality of any Legislative Action determined by such court to cause an Impairment before the Bonds are fully paid and discharged;

(2) would conclude, with respect to the question presented above in (A)(iii), that sound and substantial arguments support the granting of preliminary injunctive relief and that permanent injunctive relief is available under federal law to prevent implementation of Legislative Action hereafter taken and determined by such court to cause an Impairment in violation of the Federal Contract Clause; and

(3) would conclude, with respect to the questions presented above in (B)(i) and (ii), that under the Federal Takings Clause and the California Takings Clause, the State is required to pay just compensation to the Bondholders if the State’s repeal or amendment of the Wildfire Financing Law or taking of any other action in contravention of the State Pledge constituted a Taking, provided that the California Takings Clause might take a more expansive view of emergency conditions, leading to correspondingly narrower restrictions on State action under the California Takings Clause.

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We note that this letter is limited to the laws of the United States of America and the State of California. Our opinions are based on our evaluation of existing precedent and arguments related to the factual circumstances likely to exist at the time of a challenge to Legislative Action (or other State action) based on the Federal or California Contract Clause or Takings Clause. Such precedent and such circumstances could change materially from those discussed below. Accordingly, the opinions herein are intended to express our belief as to the result that should be obtainable through the proper application of existing judicial decisions in a properly prepared and presented case. None of the foregoing opinions is intended to be a guaranty as to what a particular court would hold; rather, each such opinion is an expression as to the decision a court ought to reach if the issue were properly prepared and presented and the court followed what we believe to be the applicable legal principles under existing precedent.

In addition, we are not aware of any reported controlling precedent that is directly on point with respect to the questions presented above. Thus, our analysis is a reasoned application of judicial decisions involving similar or analogous circumstances. Moreover, the application of equitable principles (including the issuance of injunctive relief) is subject to the discretion of the court asked to apply them. We cannot predict the facts and circumstances that will be present in the future and may be relevant to the exercise of such discretion. As a result, there can be no assurance that a court will follow our reasoning or reach the conclusions that we believe are supported by current precedent. The recipients of this letter should assess these considerations in analyzing the risks associated with the subject transaction.

DISCUSSION

I. THE FEDERAL CONTRACT CLAUSE

The Federal Contract Clause provides that “[n]o State shall . . . pass any . . . Law impairing the Obligation of Contracts.”⁷ The United States Supreme Court has long instructed that this language serves “to encourage trade and credit by promoting confidence in the stability of contractual obligations.”⁸ Accordingly, “the [Federal] Contract Clause limits the power of the States to modify their own contracts as well as to regulate those between private parties.”⁹ While on its face the Federal Contract Clause appears to proscribe any law impairing the obligation of contracts, the Supreme Court has made clear that the Clause’s proscription “is not an absolute one and is not to be read with literal exactness like a mathematical formula.”¹⁰

Instead, the Supreme Court applies a three-part test to determine whether a legislative action violates the Federal Contract Clause:

(1) whether the legislative action operates as a substantial impairment of a contractual relationship;

⁷  U.S. Const. art. I, § 10.

⁸  U.S. Trust Co. v. New Jersey, 431 U.S. 1, 15 (1977).

⁹  Id. at 17.

¹⁰  Id. at 21 (internal quotation marks omitted); see also Energy Reserves Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410 (1983) (“Although the language of the Federal Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State ‘to safeguard the vital interests of its people.’”) (quoting Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 434 (1934)).

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(2) assuming such an impairment, whether the legislative action is justified by a significant and legitimate public purpose; and

(3) whether the adjustment of the rights and responsibilities of the contracting parties is reasonable and appropriate given the public purpose behind the legislative action.¹¹

In addition, in cases involving a contract with a state, there is an additional step known as the “reserved powers doctrine.” That doctrine requires a reviewing court to ask whether a state has “surrender[ed] an essential attribute of its sovereignty,” which the state is not permitted to do.¹²

The following subparts address: (1) whether a contract exists between the State and the Bondholders; (2) if so, whether that contract violates the “reserved powers” doctrine; and (3) the State’s burden in justifying an Impairment. The determination of whether a Legislative Action constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this letter expresses an opinion as to how a court of competent jurisdiction would resolve that issue with respect to the Financing Order, the Recovery Property, or the Bonds. Therefore, we assume for purposes of this letter that any Impairment resulting from a challenged Legislative Action would be substantial under the Federal Contract Clause.

A. The Existence of a Contractual Relationship

The law is clear that a contractual relationship may, in certain circumstances, arise from a legislative enactment. Courts have recognized, however, a general presumption that “absent some clear indication that [a] legislature intends to bind itself contractually, . . . ‘a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise.’”¹³ That presumption arises from the principle that a legislature’s primary function “is not to make contracts, but to make laws that establish the policy of the state.”¹⁴

The general presumption against a contractual relationship may be overcome where the language of the statute at issue indicates an intent to create contractual rights. To determine whether a contract has been created by a statute, courts have explained, “it is of first importance to examine the language of the statute.”¹⁵ On this score, the United States Supreme Court has held that a statute creates a contractual relationship between a state and private parties if the statute contains adequate language of contractual undertaking.¹⁶ According to the Court, a statutory contract is created “when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the State.”¹⁷

¹¹  Energy Reserves, 459 U.S. at 411–13; see also RUI One Corp. v. City of Berkeley, 371 F.3d 1137, 1147 (9th Cir. 2004) (citations omitted).

¹²  U.S. Trust, 431 U.S. at 23.

¹³  Nat’l R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 465–66 (1985) (quoting Dodge v. Bd. of Education, 302 U.S. 74, 79 (1937)).

¹⁴  Id. at 466 (citing Ind. ex. Rel. Anderson v. Brand, 303 U.S. 95, 104–05 (1938)).

¹⁵  Dodge, 302 U.S. at 78.

¹⁶  See Brand, 303 U.S. at 104–05 (noting that “the cardinal inquiry is as to the terms of the statute supposed to create such a contract”); U.S. Trust, 431 U.S. at 17–18, 18 n.14.

¹⁷  U.S. Trust, 431 U.S. at 18 n.14; see also Barcellos & Wolfsen, Inc. v. Westlands Water Dist., 899 F.2d 814, 821 (9th Cir. 1990) (same).

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Several Supreme Court decisions support the conclusion that the State Pledge creates a contractual relationship between the State and the Bondholders. For example, in U.S. Trust, the Supreme Court affirmed the trial court’s uncontested finding that a statutory covenant between two states that benefitted the holders of certain bonds gave rise to a contractual obligation between the states and those bondholders.¹⁸ The covenant at issue limited the ability of the Port Authority of New York and New Jersey to subsidize rail-passenger transportation with revenues and reserves pledged as security for various bonds. In finding the presence of a contract between the states and the bondholders, the Court emphasized that “[t]he intent to make a contract is clear from the statutory language: ‘The 2 States covenant and agree with each other and with the holders of any affected bonds.’”¹⁹

Similarly, in Brand, the Supreme Court held that the Indiana Teachers’ Tenure Act formed a contract between the state and specified teachers because the statutory language showed a clear contractual intent. Specifically, the Court based its decision on the legislature’s repeated and intentional use of the word “contract” throughout the statute to describe the legal relationship between the state and the impacted teachers.²⁰ “The title of the act,” too, was “couched in terms of contract,” and “[t]he tenor of the act indicate[d] that the word ‘contract’ was not used inadvertently or in other than its usual legal meaning.”²¹

¹⁸  Id. at 17–18.

¹⁹  Id. at 18 (quoting 1962 N.J. LAWS, c. 8, § 6; 1962 N.Y. LAWS, c. 209, § 6).

²⁰  Brand, 303 U.S. at 105. That said, the mere use of the word “contract,” without more, will not necessarily establish the requisite contractual intent. See Nat’l R.R., 470 U.S. at 470. Indeed, in National Railroad, the Court found that the use of the word “contract” in the Rail Passenger Service Act defined only the relationship between the newly created nongovernmental corporation Amtrak and the railroads, not a contractual relationship between the United States and the railroads. The Court made clear that “[l]egislation outlining the terms on which private parties may execute contracts does not on its own constitute a statutory contract.” Id. at 467.

²¹  Brand, 303 U.S. at 105.

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Like the language of the covenants considered in U.S. Trust and Brand, the language of the State Pledge manifests the California legislature’s intent to bind the State. In particular, the State Pledge provides, in pertinent part, that “[t]he State of California does hereby pledge and agree with the electrical corporation, owners of recovery property, financing entities, and holders of recovery

bonds that the state shall neither limit nor alter. . . .”²² Similar to the terms “covenant” and “agree” quoted in U.S. Trust, and the word “contract” in Brand, the terms “pledge” and “agree” evince a desire to create private rights of a contractual nature enforceable against the State. And “[t]he tenor” of the State Pledge, as in Brand, indicates that those words were “not used inadvertently or in other than [their] usual legal meaning.” Also consistent with the language at issue in U.S. Trust, the State Pledge names the beneficiaries of the State’s pledge and agreement. Finally, it bears mention that the State authorized an issuer of recovery bonds to include the State Pledge in contracts with the holders of recovery bonds (such as the Bondholders). On this record, there is ample evidence to overcome the general presumption against statutory contracts and to conclude that the State Pledge creates a contractual relationship between the State and the Bondholders under the Federal Contract Clause. Perhaps equally important, we are unaware of any circumstances surrounding the enactment of the Wildfire Financing Law suggesting that the California legislature did not intend to bind contractually the State through the State Pledge.

B. The Reserved Powers Doctrine

As noted, the reserved powers doctrine limits the State’s ability to contract away an essential attribute of its sovereignty.²³ According to this doctrine, if a contract purports to capitulate a state’s “reserved powers,” such a contract is void as a matter of law. Although the scope of the reserved powers doctrine has not been precisely defined by courts, Supreme Court case law has established that a state cannot enter into contracts that forbid the exercise of the state’s police powers or the state’s power of eminent domain.²⁴ On the other hand, the Court has made clear that a state’s “power to enter into effective financial contracts cannot be questioned,” and promises that are “purely financial” do not necessarily compromise a state’s reserved powers.²⁵

In our view, the State Pledge does not purport to surrender any reserved powers of the State. Although the State’s commitment not to “limit [or] alter . . . the fixed recovery charges, . . . recovery property, financing orders, or any rights under a financing order” is arguably broader than the commitment in U.S. Trust that revenues and reserves securing bonds would not be depleted beyond a certain level,²⁶ the State Pledge does not purport to contract away or forbid the future exercise of the State’s power of eminent domain or police power to protect public health and safety. Through “financing order[s]” (like the Financing Order), the State will authorize electric utilities to issue “recovery bonds” (such as the Bonds) and pledges not to impair the value of the “recovery property” (i.e., the Recovery Property) securing such instruments. In other words, the State Pledge constitutes an agreement made by the State not to impair the financial security for recovery bonds to foster the capital markets’ acceptance of such bonds, which are expressly authorized and will be issued to facilitate the recovery of the costs of catastrophic wildfires. As such, we believe that the State Pledge is akin to the “financial contract” involved in U.S. Trust, and therefore would not be viewed as an impermissible surrender of an essential attribute of state sovereignty.

²²  Pub. Util. Code § 850.1(e).

²³  U.S. Trust, 431 U.S. at 23.

²⁴  Id. at 23–24, 24 nn.20–21 (citing Stone v. Mississippi, 101 U.S. 814, 817 (1880); W. River Bridge Co. v. Dix, 47 U.S. 507, 525–26 (1848)).

²⁵  Id. at 24; see also Cont’l Ill. Nat’l Bank & Trust Co. v. Washington, 696 F.2d 692, 699 (9th Cir. 1983) (“Thus, insofar as the purely financial aspects of the agreement are concerned, reservations are not to be lightly inferred.”).

²⁶  U.S. Trust, 431 U.S. at 25.

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C. The State’s Burden to Justify an Impairment

To survive scrutiny under the Federal Contract Clause, a substantial impairment by a state of a statutory contract can be justified only with “a significant and legitimate public purpose . . . such as the remedying of a broad and general social or economic problem.”²⁷ In addition, the state must show that its action causing a substantial impairment is “reasonable and necessary to serve” such a public purpose. Admittedly, this analysis is case- and fact-specific, but the contours of the analysis are illustrated by several decisions of the United States Supreme Court.

For instance, in Home Building & Loan Association v. Blaisdell—“the leading case in the modern area of [Federal] Contract Clause interpretation”²⁸—the Court assessed a challenge to a Minnesota law that, in response to economic conditions caused by the Great Depression: (1) authorized county courts to extend the period of redemption from foreclosure sales on mortgages “for such additional time as the court may deem just and equitable,” subject to certain limitations; and (2) regulated actions for deficiency judgments.²⁹ In upholding the Minnesota law, the Court relied on the following factors: (1) an economic emergency threatened the loss of homes and land that provided state residents with necessary shelter and means of subsistence; (2) the law was not enacted for the benefit of specific individuals but for the protection of a broad interest of society; (3) the relief provided by the law was appropriately tailored to the emergency and could only be granted in reasonable conditions; (4) the conditions on which the law extended the period of redemption were not unreasonable; and (5) the law was temporary in operation and limited to the emergency on which it was based.

During the same term, the Supreme Court qualified its decision in Blaisdell, emphasizing the importance of the last factor analyzed—i.e., “the temporary and conditional relief which the legislation granted.”³⁰ In W.B. Worthen Co. v. Thomas, the Court addressed a challenge to an Arkansas law providing that money paid to any Arkansas resident as the insured or beneficiary designated under an insurance policy would be exempt from liability or seizure under judicial process.³¹ The Court struck down the Arkansas law under the Federal Contract Clause, and in so

²⁷  Energy Reserves, 459 U.S. at 411–12 (citation omitted). We are aware of no authority supporting the proposition that the will of the people, in and of itself, constitutes a broad and significant public purpose sufficient for a substantial impairment by a state of a statutory contract to survive a challenge under the Federal Contract clause.

²⁸  U.S. Trust, 431 U.S. at 25.

²⁹  290 U.S. 398, 415–18 (1934).

³⁰  W.B. Worthen Co. v. Thomas, 292 U.S. 426, 434 (1934).

³¹  Id. at 429–30.

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doing noted that the Arkansas law was not a temporary emergency measure like the Minnesota law at issue in Blaisdell. Two other contemporaneous opinions issued by the Supreme Court vacated laws passed in response to the economic emergency created by the Great Depression, thereby reinforcing the notion that, to be justified, an impairment must be the result of a reasonable, necessary, and tailored response to a broad and significant public concern.³²

Relatedly, the deference that courts give to a legislature’s determination of the need for an impairment has turned on whether the contract at issue is a private one or whether the state is a contracting party. In fact, any deference, the Supreme Court has instructed, to legislative judgment as to the necessity and reasonableness of a particular action, “is not appropriate” when the state is a party to the contract at issue.³³ In that circumstance, a “stricter standard” should apply, for as the Court in Energy Reserves pointed out, “[i]n almost every case, the Court has held a governmental unit to its contractual obligations when it enters financial or other markets.”³⁴ The Ninth Circuit, too, has held that “[c]ourts defer to a lesser degree when the State is a party to the contract because the State’s self-interest is at stake.”³⁵

The leading case involving the impairment of contracts to which the state is a party is U.S. Trust. There, two states agreed not to deplete the revenues and reserves securing certain bonds below a specified level. The states thereafter repealed that promise, justifying the repeal with the purported need to finance new mass transit projects in order to promote and encourage additional use of public transportation in light of energy shortages and environmental concerns.³⁶ The Court ruled that the states’ action was invalid under the Federal Contract Clause because repeal of the covenant was “neither necessary to achievement of the plan nor reasonable in light of the circumstances.”³⁷ The Court further stated that a modification less drastic than total repeal would have permitted the states to achieve their plan to improve commuter rail service, and, in fact, the states could have achieved that goal without modifying the covenant at all. For example, the states could have “discourage[d] automobile use through taxes on gasoline or parking, [ ] and use[d] the revenues to subsidize mass transit projects.”³⁸

³²  See Treigle v. Acme Homestead Ass’n, 297 U.S. 189 (1936); W.B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935).

³³  U.S. Trust, 431 U.S. at 25–26.

³⁴  459 U.S. at 412–13 n.14.

³⁵  RUI One, 371 F.3d at 1147 (internal quotation marks omitted); Apartment Ass’n of Los Angeles Cnty v. City of Los Angeles, 10 F.4th 905, 913 (9th Cir. 2021) (“A heightened level of judicial scrutiny is appropriate when the government is a contracting party. . . . But when the government is not party to the contract being impaired, courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.”) (internal citations and quotation marks omitted) (upholding eviction moratorium during COVID-19 pandemic on a finding that its provisions constituted “an appropriate and reasonable way to advance a significant and legitimate public purpose”).

³⁶  431 U.S. at 28–29.

³⁷  Id. at 29.

³⁸  Id. at 30 n.29.

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Moreover, the Court contrasted the legislation under consideration with the statute challenged in City of El Paso v. Simmons, which limited to five years the reinstatement rights of defaulting purchasers of land from the state.³⁹ For many years prior to the enactment of that statute, defaulting purchasers were allowed to reinstate their claims upon written request and payment of delinquent interest unless the rights of third parties had intervened. In U.S. Trust, the Court opined that this older statute “had effects that were unforeseen and unintended by the legislature when originally adopted” in that “speculators were placed in a position to obtain windfall benefits.”⁴⁰ Thus, according to the Court, the state’s adoption of a statute of limitations was reasonable to restrict parties to gains expected from the contract when the original statute was adopted. By comparison, the need for mass transportation in New York and New Jersey was not a new development and the likelihood that publicly owned commuter railroads would produce substantial deficits was well known when the states adopted the covenant.⁴¹

The U.S. Trust Court also distinguished its prior holding in Faitoute Iron & Steel Co. v. City of Asbury Park,⁴² which was, at that point, the “only time in th[e 20th] century that alteration of a municipal bond contract ha[d] been sustained.”⁴³ Faitoute involved a state municipal reorganization act under which bankrupt local governments could be placed in receivership by a state agency. The holders of certain municipal revenue bonds received new securities bearing lower interest rates and later maturities. As recounted in U.S. Trust, the Faitoute Court rejected the bondholders’ Federal Contract Clause claims on the ground that the “old bonds represented only theoretical rights; as a practical matter the city could not raise its taxes enough to pay off its creditors under the old contract terms,” and thus the plan “enabled the city to meet its financial obligations more effectively.”⁴⁴ U.S. Trust explained that the obligation in Faitoute was “discharged, not impaired” by the plan.⁴⁵

³⁹  316 U.S. 502 (1942).

⁴⁰  U.S. Trust, 431 U.S. at 31.

⁴¹  Id. at 31–32.

⁴²  316 U.S. 502 (1942).

⁴³  U.S. Trust, 431 U.S. at 27.

⁴⁴  Id. at 28.

⁴⁵  Id.

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At bottom, then, the case law demonstrates that the State bears a substantial burden in attempting to justify a significant impairment of a contract to which it is a party. As the Supreme Court put it, “[i]n almost every case, the Court has held a governmental unit to its contractual

obligations when it enters financial or other markets.”⁴⁶ That is because a state action that impairs contracts to which it is a party must further a significant, legitimate, and broad public purpose. And that public purpose must be served by a reasonable, necessary, and carefully tailored measure, since “a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well.”⁴⁷

Subject to the qualifications, limitations, and assumptions set forth in this letter, it is our opinion that a reviewing court of competent jurisdiction, in a properly prepared and presented case, would conclude that the State Pledge constitutes a contractual relationship between the Bondholders and the State. We are also of the view that, absent a demonstration by the State that an Impairment is necessary to further a significant and legitimate public purpose, and upon a finding by the court that an evident and more moderate course would serve the State’s purposes equally well, the Bondholders (or the Indenture Trustee acting on their behalf) could successfully challenge under the Federal Contract Clause the constitutionality of any Legislative Action determined by such court to limit, alter, impair, or reduce the value of the Recovery Property or the Charges so as to cause an Impairment before the Bonds are fully paid and discharged.

II. THE CALIFORNIA CONTRACT CLAUSE

The California Contract Clause mirrors the Federal Contract Clause in its proscription of laws “impairing the obligation of contracts.”⁴⁸ It is therefore unsurprising that “[t]he California Supreme Court uses the federal Contract Clause analysis for determining whether a statute violates the parallel provision of the California Constitution.”⁴⁹ This is no less true in cases involving a California statute that purports to repudiate the State’s own contractual obligations.⁵⁰

⁴⁶  Energy Reserves, 459 U.S. at 412 n.14 (citing U.S. Trust, 431 U.S. at 25–28); see also, e.g., Kavanaugh, 295 U.S. 56; Murray v. Charleston, 96 U.S. 432 (1878).

⁴⁷  U.S. Trust, 431 U.S. at 31.

⁴⁸  Cal. Const., Art. I, § 9.

⁴⁹  Calfarm Ins. Co. v. Deukmejian, 48 Cal. 3d 805, 827–28 (1989); see also 20th Century Ins. Co. v. Superior Court, 90 Cal. App. 4th 1247, 1269 n.24 (2001) (“It is appropriate to rely on federal precedent in analyzing violations of both the California and United States contract clauses. This was the approach utilized in Calfarm Ins. Co. v. Deukmejian.”); Campanelli v. Allstate Life Ins. Co., 322 F.3d 1086, 1097 (9th Cir. 2003) (similar).

⁵⁰  See, e.g., California Teachers Ass’n v. Cory, 155 Cal. App. 3d 494, 511–12 (1984) (relying on the “leading case” of U.S. Trust in the “special context . . . [of] the alteration of the state’s own obligation of payment”); Sonoma Cnty. Org. of Pub. Emps. v. Cnty. of Sonoma, 23 Cal. 3d 296 (1979) (relying on U.S. Trust and other federal cases in determining that section 16280 of the California Government Code, which invalidated agreements granting cost-of-living increases by local public agencies, was an invalid impairment of contract in violation of both the state and federal constitutions); Hermosa Beach Stop Oil Coalition v. City of Hermosa, 86 Cal. App. 4th 534 (2001) (similar).

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That said, the California Court of Appeal in Hermosa Beach Stop Oil Coalition v. City of Hermosa⁵¹ interpreted U.S. Trust in a different manner than have many federal courts. Specifically, although U.S. Trust purports to address the reserved powers doctrine in the context of evaluating the validity of a contract with a public utility, the court in Hermosa Beach viewed U.S. Trust as standing for the proposition that, assuming a contract with a public entity is valid, a different standard of review applies to laws impairing that contract if the law is in furtherance of the state’s police powers. In the court’s words: “If the legislation has been enacted pursuant to the state’s reserved police powers, rather than its taxing and spending powers, traditional standards of deference to the legislature’s judgment in economic and social matters must be observed.”⁵² The impact of that holding, of course, is to dampen the heightened scrutiny applied to laws impairing contracts with the State when the law at issue is an exercise of the State’s reserved police powers.

Notwithstanding Hermosa Beach, California courts have often been more protective of contract rights than their federal counterparts. For one thing, state courts have held that the California Contract Clause applies not only to legislative action but also to judicial action.⁵³ For another, California courts held that, unlike the federal decisions noting that a statute must evince an explicit intent to confer contract rights, under California law “a legislative intent to grant contractual rights can be implied from a statute if it contains an unambiguous element of exchange of consideration by a private party for consideration offered by the state.”⁵⁴ The Third District Court of Appeal has also instructed that “failure to perform pursuant to the terms of the contract . . . can only be viewed as an impairment of the contract.”⁵⁵ Said differently, there appears to be no legal distinction between a “breach” of the State Pledge and an “impairment” of the State Pledge for purposes of California Contract Clause analysis. Finally, the Third District even went as far as explaining that U.S. Trust imposed a “strict scrutiny” standard (as opposed to merely “heightened” scrutiny) when the State seeks to justify an impairment of its own contractual funding obligations,⁵⁶ although the court Hermosa Beach later rejected such a reading of U.S. Trust and applied a “careful examination” standard for such impairments.⁵⁷

⁵¹  86 Cal. App. 4th 534 (2001).

⁵²  Id. at 561.

⁵³  See Bradley v. Superior Court, 48 Cal. 2d 509, 519 (1957) (“Neither the court nor the Legislature may impair the obligation of a valid contract.”); White v. Davis, 30 Cal. 4th 528, 548 (2003) (same).

⁵⁴  California Teachers, 155 Cal. App. 3d at 505; see also Ret. Emps. Ass’n of Orange Cnty., Inc. v. Cnty. Of Orange, 266 P.3d 287, 296 (Cal. 2011) (“Although the intent to make a contract must be clear, our case law does not inexorably require that the intent be express.”).

⁵⁵  Id. at 510.

⁵⁶  Id. at 511–512; see also Bd. of Admin. of the Pub. Emps.’ Ret. Sys. v. Wilson, 52 Cal. App. 4th 1109, 1155 (1997).

⁵⁷  86 Cal. App. 4th at 569.

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In addition, California courts have cited favorably the Supreme Court’s analysis in Energy Reserves. To give but one example, the court in 20th Century Insurance held that legislation reviving expired insurance claims arising out of a particular earthquake did not violate the California Contract Clause. The court premised that holding on the fact that the insurance industry, like the industry at issue in Energy Reserves, was an actively regulated industry:

In determining whether legislation amounts to a substantial impairment, one factor to be considered is “whether the industry the complaining party has entered has been regulated in the past.” Whether the state actively regulates the industry at issue frames the parties’ reasonable expectations and minimizes any potential statutory impairment. In California, the insurance business “is a highly regulated industry, and one in which further regulation can reasonably be anticipated.” The Calfarm court noted that by at least 1988, “insurers were well aware of the possibility that initiatives or ordinary legislation might be enacted that would affect existing policies.”⁵⁸

As is true with federal courts, California courts have invalidated impairments of public and private bonds. In Islais Co. v. Matheson, the California Supreme Court struck down legislation that retroactively changed the interest and penalty rates for reclamation district bonds.⁵⁹ At the time the bonds were issued, the California Political Code set the relevant interest rate at twelve percent and the penalty rate at twenty percent. In 1931, after the bonds were issued, the State amended the California Political Code, reducing the interest rate to seven percent and the penalty rate to ten percent. The court held that the “obligations of the contract are determined by the law in effect at the time the contract was made,” and that the contract rate for the bonds at issue should therefore be the statutory rate prior to the 1931 amendment.⁶⁰ The court also found that the amendment was not justified as a “police power measure[ ],” that the penalties and interest reduced by the amendment were “an integral part of the fund constituted by law as security for the payment of [the] outstanding bonds,” and that the amendment thus could not be applied retroactively.⁶¹

Similarly, in Schuhart v. Pinguelo, the California Court of Appeal invalidated a state contractual impairment on the ground that the State failed to offer adequate justification.⁶² The case involved bonds issued by the Pleasanton Township County Water District under the Improvement Act of 1911 to construct public improvements for the benefit of certain parcels of real property. In accordance with the Improvement Act, assessments were levied against each parcel of real property benefitting from the improvements, and the assessment became a lien against the parcel. A separate bond representing each unpaid assessment could be issued to finance

⁵⁸  90 Cal. App. 4th at 1269.

⁵⁹  3 Cal. 2d 657, 662 (1935).

⁶⁰  Id.

⁶¹  Id. at 666.

⁶²  230 Cal. App. 3d 1599 (1991).

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the improvements. At the time the bonds were issued, the statutory penalty rate was one percent. But the Legislature subsequently amended the statute by changing the rate to two percent. The Court of Appeal found that, because the law in effect at the time the bonds were issued provided for a one percent penalty rate and the face of the bonds stated the same, the change from one percent to two percent was “a substantial change in the obligation assumed” by the obligor.⁶³ The court ultimately held that the Legislature, in increasing the penalty rate, did not exercise police powers to protect a broad societal interest and therefore the impairment was not justified under the California Contract Clause.⁶⁴

In short, the great weight of authority instructs that courts in the State have interpreted the California Contract Clause consistent with the analysis applied by federal courts interpreting the Federal Contract Clause. For that reason, our assessment regarding the Federal Contract Clause generally applies to the California Contract Clause as well. In particular, the relevant case law demonstrates that the State bears a substantial burden when attempting to justify an impairment of a contract to which it is a party.⁶⁵ And a state action that impairs such contracts must further a significant, legitimate, and broad public purpose, not the interests of a narrow group, and that public purpose must be served by a reasonable, necessary, and carefully tailored measure.

Subject to the qualifications, limitations, and assumptions set forth in this letter, it is our opinion that a reviewing court of competent jurisdiction, in a properly prepared and presented case, would conclude that the State Pledge constitutes a contractual relationship between the Bondholders and the State. We are also of the view that, absent a demonstration by the State that an Impairment is necessary to further a significant and legitimate public purpose, and upon a finding by the court that an evident and more moderate course would serve the State’s purposes equally well, the Bondholders (or the Indenture Trustee acting on their behalf) could successfully challenge under the California Contract Clause the constitutionality of any Legislative Action determined by such court to limit, alter, impair, or reduce the value of the Recovery Property or the Charges so as to cause an Impairment prior to the time that the Bonds are fully paid and discharged.

III. INJUNCTIVE RELIEF

In a challenge to Legislative Action under the Federal or California Contract Clause, we expect that a plaintiff would seek, among other potential remedies, an injunction preventing state officials from enforcing the provisions of such Legislative Action.⁶⁶ A preliminary injunction

⁶³  Id. at 1605.

⁶⁴  Id. at 1606.

⁶⁵  It is also true, however, that in California the detrimental impact on contract beneficiaries must be more than theoretical to constitute an unconstitutional impairment. The challenger must present evidence demonstrating a detrimental impact. See, e.g., Cal. Redevelopment Ass’n v. Matosantos, 212 Cal. App. 4th 1457, 1494 (2013).

⁶⁶  Notably, if a plaintiff also sought money damages in federal court, the state defendant(s) could claim immunity. The Eleventh Amendment generally bars federal courts from granting money damages against the State, see Ariz. Students’ Ass’n v. Ariz. Bd. of Regents, 824 F.3d 858, 865 (9th Cir. 2016), unless the State waived that immunity, see Walden v. Nevada, 945 F.3d 1088, 1092 (9th Cir. 2019).

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would serve to delay the implementation of the Legislative Action pending the final resolution of the Contract Clause challenge, whereas a permanent injunction would prevent any future implementation of the Legislative Action once the court has resolved the merits of the litigation.

A. The Availability of Preliminary Injunctive Relief in Federal Court

A federal court balances the following equitable factors in deciding whether to grant preliminary injunctive relief: (1) whether the party seeking an injunction is likely to succeed on the merits; (2) whether the party is likely to suffer irreparable harm in the absence of injunctive relief; (3) whether the balance of equities tips in favor of the party seeking the injunction; and (4) whether an injunction is in the public interest.⁶⁷ The decision to grant or deny a preliminary injunction is committed to the sound discretion of a federal district court, and the court’s exercise of that discretion is reviewed on appeal under the deferential “abuse of discretion” standard.⁶⁸

Success on the Merits. For purposes this opinion, and consistent with the assumptions above, we assume that a reviewing court would find a strong likelihood of success on the merits, i.e., that the Legislative Action is likely an Impairment. Thus, we examine only the three remaining elements of the standard for a preliminary injunction.

Irreparable Harm. In evaluating the irreparable harm prong on a request for a preliminary injunction, courts in the Ninth Circuit evaluate whether (1) there is a sufficient causal connection between the alleged injury and the conduct sought to be enjoined;⁶⁹ (2) irreparable injury is likely in the absence of an injunction;⁷⁰ (3) the threat of harm to the plaintiff is immediate;⁷¹ and (4) litigation can offer monetary compensation instead, i.e., an availability of an alternative remedy.⁷²

⁶⁷  See, e.g., Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009). There is, in the Ninth Circuit, an alternative formulation of the test indicating that the greater the relative hardship to the party seeking the preliminary injunction, the less probability of success must be shown. See Stormans, 586 F.3d at 1127. In particular, under this “sliding scale” approach the trial court can “balance” the requirements for a preliminary injunction so that a stronger showing of irreparable harm to plaintiff may offset a lesser showing of likelihood of success on the merits. Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). But even under the “sliding scale” test, the mere possibility of irreparable injury to plaintiffs does not permit injunctive relief, since such relief still requires some proof of a likelihood of irreparable injury. See Stormans, 586 F.3d at 1127.

⁶⁸  Associated Press v. Otter, 682 F.3d 821, 824 (9th Cir. 2012) (internal quotation marks omitted).

⁶⁹  See Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 982 (9th Cir. 2011); Garcia v. Google, Inc., 786 F.3d 733, 745 (9th Cir. 2015).

⁷⁰  See Winter, 555 U.S. at 22.

⁷¹  See Caribbean Marine Servs. Co. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988).

⁷²  See Sampson v. Murray, 415 U.S. 61, 90 (1974); Idaho v. Coeur d’Alene Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015) (purely economic harms generally not irreparable, as money lost may be recovered later in litigation).

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Causation. To obtain a preliminary injunction, Bondholders would have to prove that enforcement of the Legislative Action caused harm to them, such as loss of expected payments or loss of bond value. Because an Impairment, by definition, is Legislative Action that operates to the detriment of Bondholders, we believe that Bondholders would be able to show causation.

Likelihood of Injury. Bondholders would also have to prove that their harm is likely in the absence of an injunction. Again, however, the presence of likely harm is what makes the Legislative Action an Impairment in the first place. Thus, we assume here that Bondholders could prove likely harm without an injunction.

Immediacy. If scheduled payments are disrupted or bond values are depressed by Legislative Action before a trial on the merits, then the Bondholders can prove immediate harm. If, however, a trial on the merits could take place before such harm occurs, then the harm may not be immediate enough to support a preliminary injunction.⁷³

Alternative Remedies. Unless the State waives immunity, the Eleventh Amendment bars federal courts from granting money damages against the State. Thus, absent such a waiver, money damages would be unavailable to redress the harm to the Bondholders from the Legislative Action. Moreover, where a “constitutional violation is established,” for instance a violation of the Federal Contract Clause, “usually no further showing of irreparable injury is necessary” to obtain a preliminary injunction.⁷⁴

Balance of Equities. In deciding whether to grant a preliminary injunction, courts typically identify the harm that a preliminary injunction might cause the defendant, and weigh that harm against the plaintiff’s threatened injury.⁷⁵ Here, a court will likely consider the balance of harm in the “public interest” step of the analysis because the balance of equities and the public interest often merge when the government is the party opposing the request for a preliminary injunction.⁷⁶

⁷³  See, e.g., Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 (7th Cir. 1984).

⁷⁴  11A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, FEDERAL PRACTICE AND PROCEDURE § 2944, at 94 (2d ed. 1995) (citing cases).

⁷⁵  See Winter, 555 U.S. at 24; Earth Island Inst. v. Carlton, 626 F.3d 462, 475 (9th Cir. 2010).

⁷⁶  See Nken v. Holder, 556 U.S. 418, 435 (2009); Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073, 1092 (9th Cir. 2014).

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Public Interest. In assessing the last element of a preliminary injunction request, courts “pay particular regard for the public consequences in employing the extraordinary remedy of injunction.”⁷⁷ In fact, “[a]ny time a State is enjoined by a court from effectuating statutes enacted by representatives of its people, it suffers a form of irreparable injury.”⁷⁸ But the law is also clear that there is no “blanket presumption in favor of the government in all preliminary injunction cases.”⁷⁹ And importantly, the government has no interest in enforcing unconstitutional laws,⁸⁰ and courts have instructed that financial concerns are not a paramount public interest.⁸¹ Thus, if a court determines that the Bondholders have established a substantial likelihood that a Legislative Action is unconstitutional under the Contract Clause—and, for the reasons explained above, we believe they can—then the “public interest” factor will counsel in favor of an injunction.

Based on the foregoing, the Bondholders likely could satisfy the standards for preliminary injunctive relief to prevent an unconstitutional Impairment, although much will depend on the particulars of the Legislative Action.

B. The Availability of Permanent Injunctive Relief in Federal Court

The requirements for a permanent injunction are more or less the same as those for a preliminary injunction. As noted above, the only meaningful difference is that, to obtain a permanent injunction, the Bondholders must show actual success on the merits, i.e., prevailing at trial.⁸² Because we expect that the Bondholders could obtain a preliminary injunction (subject to the caveats described above), we also expect that they could obtain a permanent injunction after succeeding at trial.

⁷⁷  Winter, 555 U.S. at 24; see also Salazar v. Buono, 559 U.S. 700, 714 (2010); Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 996–97 (9th Cir. 2011).

⁷⁸  Maryland v. King, 567 U.S. 1301, 1303 (2012) (internal quotation marks omitted).

⁷⁹  Rodriguez v. Robbins, 715 F.3d 1127, 1145–46 (9th Cir. 2013).

⁸⁰  See KH Outdoor, LLC v. City of Trussville, 458 F.3d 1261, 1272 (11th Cir. 2006); N. Y. Progress & Prot. PAC v. Walsh, 733 F.3d 483, 488 (2nd Cir. 2013).

⁸¹  See, e.g., Pashby v. Delia, 709 F.3d 307, 331 (4th Cir. 2013).

⁸²  See Perfect 10, 653 F.3d at 979–80.

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IV. THE FEDERAL TAKINGS CLAUSE

The Federal Takings Clause provides that private property shall not “be taken for public use, without just compensation.” The Federal Takings Clause is applicable to state action via the Fourteenth Amendment,⁸³ and the Clause covers both tangible and intangible property.⁸⁴ Rights under contracts can be property for purposes of the Federal Takings Clause,⁸⁵ but legislation that “disregards or destroys” contract rights does not always constitute a taking.⁸⁶ Where intangible property is at issue, state law will determine whether a property right exists. And if a court determines that an intangible asset is property, the court will then consider whether the owner of that property interest had a “reasonable investment-backed expectation” that the property right would be protected.⁸⁷

The United States Supreme Court has suggested that the Federal Takings Clause may be implicated by a diverse range of government actions, including when the government (1) permanently appropriates or denies all economically productive use of property;⁸⁸ (2) destroys property other than in response to emergency conditions;⁸⁹ and (3) reduces, alters, or impairs the value of property so as to unduly interfere with reasonable investment-backed expectations.⁹⁰ To decide whether a particular interference is “undue,” courts have considered the nature of the governmental action and weighed the public purpose served by the action against the degree to which it interferes with legitimate property interests and/or investment-backed expectations.⁹¹

The Supreme Court has identified two categories of regulatory action that constitute per se

takings: (1) regulations that require a property owner to suffer a permanent physical invasion of property, and (2) regulations that deprive the owner of all economically beneficial use of the

⁸³  See Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160 (1980).

⁸⁴  See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003 (1984).

⁸⁵  See Lynch v. United States, 292 U.S. 571, 577 (1934).

⁸⁶  See Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986).

⁸⁷  PruneYard Shopping Ctr. v. Robins, 447 U.S. 74, 83 (1980); see also 2 Ronald D. Rotunda & John E. Nowak, TREATISE ON CONSTITUTIONAL LAW: SUBSTANCE AND PROCEDURE § 15.12(a)(iii), at 971 (5th ed. 2012).

⁸⁸  See, e.g., Connolly, 475 U.S. at 225; Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001); Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1027–28 (1992); United States v. Sec. Indus. Bank, 459 U.S. 70, 77 (1982).

⁸⁹  The emergency exception to the just compensation requirement of the Federal Takings Clause often arises in cases involving the government’s activities during military hostilities. See, e.g., Nat’l Bd. of Young Men’s Christian Ass’ns v. United States, 395 U.S. 85 (1969); United States v. Cent. Eureka Mining Co., 357 U.S. 155 (1958). Of note, though, the exception is not limited to wartime activities. See Miller v. Schoene, 276 U.S. 272 (1928).

⁹⁰  See Connolly, 475 U.S. at 224–25; Cent. Eureka Mining, 357 U.S. 155.

⁹¹  See, e.g., Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 485 (1987)

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property.⁹² Beyond these two narrow categories, challenges to regulations that interfere with protected property interests are governed by the three-part test set forth in Penn Central Transportation Co. v. City of New York.⁹³ Under that test, a regulation constitutes a taking if it denies a property owner “economically viable use” of that property, which is, in turn, determined by three factors: (1) the character of the governmental action; (2) the economic impact of the regulation on the claimant; and (3) the extent to which the regulation has interfered with distinct investment-backed expectations.⁹⁴

The first Penn Central factor requires the Court to examine “the purpose and importance of the public interest underlying a regulatory imposition” with an “inquiry into the degree of harm created by the claimant’s prohibited activity, its social value and location, and the ease with which any harm stemming from it could be prevented.”⁹⁵

The second Penn Central factor incorporates the principle enunciated by Justice Holmes many years ago: “Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.”⁹⁶ Thus, “not every destruction or injury to property by governmental action has been held to be a ‘taking’ in the constitutional sense.”⁹⁷ Diminution in property value alone, for example, does not constitute a taking unless accompanied by serious economic harm.

The third and final Penn Central factor is “a way of limiting takings recovery to owners who could demonstrate that they bought their property in reliance on a state of affairs that did not include the challenged regulatory regime.”⁹⁸ The burden under this factor of showing interference with reasonable, investment-backed expectations is a heavy one.⁹⁹ Indeed, a reasonable, investment-backed expectation “must be more than a ‘unilateral expectation or an abstract need,’”¹⁰⁰ and “legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations.”¹⁰¹ To sustain a claim under the Federal Takings Clause, the

challenging party must show that it had a “reasonable expectation” at the time the contract was entered that the party “would proceed without possible hindrance” arising from changes in government policy.¹⁰²

⁹²  Lingle v. Chevron USA, Inc., 544 U.S. 528, 538 (2005).

⁹³  438 U.S. 104 (1978).

⁹⁴  Id. at 124.

⁹⁵  Maritrans Inc. v. United States, 342 F.3d 1344, 1356 (Fed. Cir. 2003) (internal quotation marks omitted).

⁹⁶  Penn. Coal Co. v. Mahon, 260 U.S. 393, 413 (1922).

⁹⁷  Armstrong v. United States, 364 U.S. 40, 48 (1960).

⁹⁸  Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1176 (Fed. Cir. 1994).

⁹⁹  DeBenedictis, 480 U.S. at 493.

¹⁰⁰  Monsanto, 467 U.S. at 1005–06 (quoting Webb’s Fabulous Pharmacies, 449 U.S. at 161).

¹⁰¹  Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 16 (1976).

¹⁰²  Chang v. United States, 859 F.2d 893, 897 (Fed. Cir. 1988).

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We are not aware of any federal case law that addresses the applicability of the Federal Takings Clause in the context of a purported exercise by a state of its police power to abrogate or impair contracts otherwise binding on the state. The outcome, thus, of any claim that interference by the State with the value of the Recovery Property without compensation is unconstitutional would likely depend on factors such as the State interest furthered by that interference and the extent of financial loss to the Bondholders caused by that interference. Also relevant to a court’s inquiry would be the extent to which the Bondholders had a reasonable expectation that changes in government policy and regulation would not interfere with their investment. With respect to the last factor, we note that the Wildfire Financing Law expressly provides for the creation of Recovery Property in connection with the issuance of the Bonds, and further provides that the Financing Order, once final, is irrevocable. Moreover, through the State Pledge, the State has “pledge[d] and agree[d] with the . . . holders of [the] recovery bonds” not to impair the value of such Recovery Property.¹⁰³ Given the foregoing, we believe that Bondholders very likely have reasonable investment-backed expectations in their investments in the Bonds.

Based on our analysis of relevant judicial authority, it is our opinion, as set forth above and subject to the qualifications, limitations, and assumptions in this letter, that under the Federal Takings Clause, a reviewing court of competent jurisdiction would hold that the State is required to pay just compensation to the Bondholders if the State’s repeal or amendment of the Wildfire Financing Law or any other action by the State in contravention of the State Pledge constituted a Taking. As noted earlier, in determining whether there is an undue interference, a court would consider the nature of the governmental action and weigh the public purpose served by that action against the degree to which the action interferes with the legitimate property interests and distinct investment-backed expectations of the Bondholders. There can be no assurance, however, that any such award of just compensation would be sufficient to pay the full amount of principal of and interest on the Bonds.¹⁰⁴

¹⁰³  Pub. Util. Code § 850.1(e).

¹⁰⁴  The State Pledge provides that “nothing contained in this section shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the electrical corporation and of owners and holders of the recovery bonds” Id. (emphasis added). In Federal Takings Clause jurisprudence, “adequate provision” refers to the existence of a procedure to seek “just compensation.” It does not create an additional or different standard for measuring the adequacy of the compensation. And, where a state has made an “adequate provision” for a party to seek such “just compensation,” a party will be unable to enjoin the government’s action. Knick v. Twp. of Scott, 139 S. Ct. 2162, 2176-77 (2019). But, under present law, to the extent that there is a Taking and the State’s procedures for seeking just compensation are inadequate, Bondholders (or the Indenture Trustee on their behalf) or the Issuer could seek to enjoin enforcement of the State action by suing individual state officers under Ex Parte Young, 209 U.S. 123, 155–56 (1908) and 42 U.S.C. § 1983.

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V. THE CALIFORNIA TAKINGS CLAUSE

The California Takings Clause provides that “Private Property may be taken or damaged for public use only when compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner.”¹⁰⁵ Because the provision includes the word “damaged” in its prohibition, the California Takings Clause “protects a somewhat broader range of property values” than the Federal Takings Clause.¹⁰⁶ “But aside from that difference, not pertinent here, [California courts] appear to have construed the clauses congruently.”¹⁰⁷ Courts have thus followed the United States Supreme Court’s holdings, including Ruckelshaus, Connolly, and Eastern Enters. v. Apfel, in assessing claims under the California Takings Clause.¹⁰⁸

Notably, in Action Apartment Association v. Santa Monica Rent Control Board,¹⁰⁹ the Court of Appeal held that apartment owners adequately pled a cause of action for a taking where the Rent Control Board required them to pay a higher rate of interest on security deposits than the rate of interest paid by banks. The court began by explaining that “[t]raditional takings principles did not develop with this scenario in mind.”¹¹⁰ “Even so, we find that current takings jurisprudence provides an adequate framework for analyzing the issue before us.”¹¹¹ The court found that the case did not fit either of the categorical takings scenarios, and hence analyzed the issue as a regulatory taking.

Applying federal precedent, the court then reviewed the three Penn Central factors. The court first found that the rent control law would require landlords to pay $2.3 million over three years, which amounted to each individual landlord, on average, paying $718 or $82.50 per rental unit.¹¹² Although not a large amount, the court noted that a “small taking is still a taking.”¹¹³ With respect to the second factor, the court found that payment of three percent interest was contrary to the landlords’ reasonable investment-backed expectations: “Landlords might have expected that, some day, they would have to pay security deposit interest to their tenants . . . , but they surely did not expect the payments would exceed the interest paid by banks.”¹¹⁴ Finally, the court found that the character of the action did not support its validity:

¹⁰⁵  Cal. Const., Art. I, § 19.

¹⁰⁶  San Remo Hotel L.P. v. City and Cnty. of San Francisco, 27 Cal. 4th 643, 664 (2002).

¹⁰⁷  Id.

¹⁰⁸  See, e.g., DVD Copy Control Ass’n, Inc. v. Bunner, 31 Cal. 4th 864, 878 (2003) (citing Ruckelshaus); Golden Cheese Co. v. Voss, 230 Cal. App. 3d 727 (1991) (following Connolly); Myers v. Philip Morros Cos., Inc., 28 Cal. 4th 828, 846 (2002) (following Eastern Enters. v. Apfel, 522 U.S. 1105 (1998)).

¹⁰⁹  94 Cal. App. 4th 587 (2001).

¹¹⁰  Id. at 601.

¹¹¹  Id.

¹¹²  Id. at 606.

¹¹³  Id.

¹¹⁴  Id.

22

[t]he provision[] of the ordinance requiring that interest on security deposits be paid [by landlords at a specified rate, regardless of market conditions, is] remote . . . from any concern with the health or safety of [Santa Monica residents], the quality of housing in [Santa Monica], or the welfare of [Santa Monica] as a whole. [The ordinance’s] only apparent rationale is to transfer wealth from landlords . . . to tenants—making [it] an unedifying example of class legislation . . . .¹¹⁵

Relatedly, in Customer Co. v. City of Sacramento,¹¹⁶ the California Supreme Court addressed a takings claim brought by the owner of a convenience store to recover for damage caused by efforts of police to apprehend a suspect who had taken refuge in the store. The court held that the owner was not entitled to just compensation, a conclusion bolstered by consideration of cases applying the “so-called emergency exception” to the just compensation requirement.¹¹⁷ As relevant here, the court also noted that:

Injury to property can and often does result from the demolition of buildings to prevent the spread of conflagration, from the abandonment of an existing highway, from the enforced necessity of improving property in particular ways to conform to police regulations and requirements. . . . And equally well settled and understood is the law that in the exercise of this same power property may in some, and indeed in many, instances be utterly destroyed. The destruction of buildings, of diseased animals, of rotten fruit, of infected trees, are cases that at once come to mind as applicable to both personalty and realty.¹¹⁸

In such cases, the court stated, where the State acts within the “the legitimate purview and scope of the police power,” it causes “damage without injury.”¹¹⁹ In addition to the federal authorities discussed above, the court referenced a prior state decision addressing what the court referred to as the “doctrine of noncompensable loss”: “This doctrine of noncompensable loss comes into play in connection with more direct ‘taking’ or ‘damaging’ of property only under ‘emergency’ conditions; i.e., when damage to private property is inflicted by government ‘under the pressure of public necessity and to avert impending peril.’”¹²⁰ The court concluded that the damage caused by the police was such a noncompensable loss.

¹¹⁵  Id. The California Supreme Court has interchangeably referred to an “emergency exception,” the “doctrine of noncompensable loss,” and the “police power exception” to the State Takings Clause.

¹¹⁶  10 Cal. 4th 368 (1995).

¹¹⁷  Id. at 383.

¹¹⁸  Id. (quotation omitted).

¹¹⁹  Id.

¹²⁰  Id. at 384 (quoting Holtz v. Superior Court, 3 Cal. 3d 296, 305 (1970)).

23

Finally, the California Supreme Court in Holtz v. Superior Court¹²¹ addressed a takings claim in connection with a city’s excavation work that damaged the lateral support of the plaintiff’s land. The court discussed the doctrine of noncompensable loss, which it also referred to as the “police power” exception:

[T]he “police power” doctrine “generally . . . operates in the field of regulation,” rendering “damages” occasioned by the adoption of administrative or legislative provisions noncompensable [internal citations omitted]; this doctrine of noncompensable loss comes into play in connection with more direct “taking” or “damaging” of property only under “emergency” conditions; i.e., when damage to private property is inflicted by government “under the pressure of public necessity and to avert impending peril.” Recognizing that a broad interpretation of this doctrine of noncompensable loss would completely vitiate the constitutional requirement of just compensation, the courts have narrowly circumscribed the types of emergency that will exempt the public entity from liability.¹²²

In so holding, the court offered as examples of noncompensable losses “the demolition of all or parts of buildings to prevent the spread of conflagration, or the destruction of diseased animals, or rotten fruit, or infected trees where life or health is jeopardized.”¹²³ Because the city excavation work at issue bore little resemblance to those examples, the court found the police power doctrine inapplicable as a matter of law.

Under the federal and state authorities discussed above, we reach the same opinion under the California Takings Clause that we expressed regarding the Federal Takings Clause, except to the extent that the emergency exception might apply comparatively more broadly under California law. There are, to be sure, few examples of the application of the “emergency” exception. But it is possible that a future State emergency could justify the destruction of the Recovery Property without compensation.

*         *         *         *         *         *         *

¹²¹  Holtz, 3 Cal. 3d 296.

¹²²  Id. at 305 (citations omitted).

¹²³  Id. at 305 n.10.

24

This opinion letter may not be relied on in any manner or for any purpose by any person other than the addressees listed on Schedule I hereto. Nor may you rely on this opinion letter for any purpose other than the transactions described herein. This opinion letter may not be quoted, published, communicated, or otherwise made available in whole or in part to any person (including, without limitation, any person who acquires a Bond or any interest therein from an Underwriter), other than the addressees listed on Schedule I hereto, without our specific prior written consent, except that each of the Underwriters may furnish copies of this letter (1) to any of its accountants or attorneys, (2) to comply with any subpoena, order, regulation, ruling, or request of any judicial, administrative, governmental, supervisory, or legislative body or committee or any self-regulatory body (including any securities or commodities exchange or the Financial Industry Regulatory Authority, Inc.), (3) to any other person for the purpose of substantiating an Underwriter’s due diligence defense, and (4) as otherwise required by law. Provided, however, that none of the foregoing persons is entitled to rely hereon unless an addressee hereof. While a copy of this opinion letter may be posted by or at the direction of PG&E or the Issuer to an internet website required under Rule 17g-5 promulgated under the Securities Exchange Act of 1934, as amended, and maintained in connection with the ratings on the Bonds solely for the purpose of compliance with such rule or undertakings pursuant thereto made by PG&E or the Issuer, such permission to post a copy of this letter to such website shall not be construed to entitle any person, including any credit rating agency, who is not an addressee hereof to rely on this opinion letter.

We hereby consent to the filing of this letter as an exhibit to the Registration Statement, and to all references to our firm included in or made a part of the Registration Statement. In giving the foregoing consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the related rules and regulations of the Commission.

This opinion letter is being issued as of the date hereof, and we assume no obligation to update or supplement this opinion letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the matters discussed herein, including any changes in applicable law which may hereafter occur.

Very truly yours,

25

Schedule I

Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Goldman Sachs & Co. LLC

200 West Street

New York, New York 10282

J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10179

As Representatives of the several Underwriters

Pacific Gas and Electric Company

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

PG&E Wildfire Recovery Funding LLC

c/o Pacific Gas and Electric Company

77 Beale Street

P.O. Box 770000

San Francisco, California 94177

The Bank of New York Mellon Trust Company, N.A.

2 N. LaSalle Street, Suite 700

Chicago, Illinois 60602

Attention: ABS Corporate Trust Administration

Moody’s Investors Service, Inc.

7 World Trade Center at

250 Greenwich Street, 24th Floor

New York, New York 10007

Attention: ABS/RMBS Monitoring Department

S&P Global Ratings, a division of S&P Global Inc.

55 Water Street, 40th Floor

New York, New York 10041

Attention: Structured Credit Surveillance

26

EX-FILING FEES

Exhibit 107.1

Calculation of Filing Fee Table

Form SF-1

(Form Type)

Pacific Gas and Electric Company (Exact name of registrant, sponsor and depositor as specified in its charter) PG&E Wildfire Recovery Funding LLC (Exact name of registrant and issuing entity as specified in its charter)

Table 1: Newly Registered Securities

	Security Type	Security Class Title	Fee Calculation or Carry Forward Rule	Amount Registered	Proposed Maximum Offering Price Per Unit	Maximum Aggregate Offering Price (1)	Fee Rate	Amount of Registration Fee (1)
Fees to Be Paid	Asset-Backed Securities	Senior Secured Recovery Bonds, Series 2022-A	457(o)	$3,000,000,000	100%	$3,000,000,000	0.0000927	$278,100.00
Fees Previously Paid	Asset-Backed Securities	Senior Secured Recovery Bonds, Series 2022-A	457(o)	$1,000,000	100%	$1,000,000	0.0000927	$92.70
Total Offering Amount						$3,000,000,000		$278,100.00
Total Fees Previously Paid								$92.70
Total Fee Offsets (2)								$31,703.49
Net Fee Due								$246,396.51

(1) Estimated solely for the purpose of calculating the registration fee.

(2) $92.70 was previously paid in connection with the initial filing of this Registration Statement. In addition, pursuant to Rule 457(p) of the Securities Act of 1933, as amended, the registration fee for this Registration Statement is being offset by the unused registration fee of $31,703.49 (the “Available Registration Fee”) associated with unsold Senior Secured Recovery Bonds, Series 2021-A (the “Unsold Securities”) offered pursuant to the Registration Statement Nos. 333-256944 and 333-256944-01 filed by PG&E Recovery Funding LLC, as registrant and issuing entity and Pacific Gas and Electric Company, as registrant, sponsor and depositor, initially filed on June 9, 2021 and which became effective on October 26, 2021 (the “2021 Registration Statement”). The Available Registration Fee is equal to $31,703.49 of registration fees associated with $343,001,000 of Unsold Securities registered under the 2021 Registration Statement. Pursuant to Rule 457(p) of the Securities Act of 1933, as amended, $131,290.94 of fees that were previously paid in respect of securities that were previously registered by PG&E Corporation and Pacific Gas and Electric Company, as registrants, pursuant to Registration Nos. 333-236629 and 333-236629-01, declared effective on June 9, 2020, and not issued or sold thereunder were carried forward and applied against the entirety of the registration fee used for the 2021 Registration Statement.

Table 2: Fee Offset Claims and Sources

	Registrant or Filer Name	Form or Filing Type	File Number	Initial Filing Date	Filing Date	Fee Offset Claimed	Security Type Associated with Fee Offset Claimed	Security Title Associated with Fee Offset Claimed	Unsold Securities Associated with Fee Offset Claimed	Unsold Aggregate Offering Amount Associated with Fee Offset Claimed	Fee Paid with Fee Offset Source
Rule 457(p)
Fee Offset Claims	Pacific Gas and Electric Company PG&E Recovery Funding LLC	SF-1	333-256944 333-256944-01	June 9, 2021		$31,703.49	Asset- Backed Securities	Senior Secured Recovery Bonds, Series 2021-A	$343,001,000	$343,001,000
Fee Offset Sources (1)					November 8, 2022						$31,703.49

(1) The Registrants have completed the offering that includes the Unsold Securities under the 2021 Registration Statement.