Pacific Gas & Electric Co.

Ladies and gentlemen, thank you for standing by, and welcome to the PG&E Corporation second quarter 2020 earnings release conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. We ask that you please limit yourself to one question and a follow-up. You may press star 1 to rejoin the queue. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Chris Foster, Vice President, Treasury and Investor Relations, PG&E Corporation. Thank you. Please go ahead.

Thank you, Stephanie, and thanks to those of you on the phone for joining us. Before I turn it over to Bill Smith, I want to remind you that our discussion today will include forward-looking statements about our outlook for future financial results which are based on assumptions, forecasts, expectations, and information currently available to management. Also joining us this morning are John Simon, Executive Vice President, Law, Strategy, and Policy, and Jason Wells, Executive Vice President and CFO. Some of the important factors that could affect the company's actual financial results are described on the second page of today's second quarter earnings call presentation. The presentation also includes a reconciliation between non-GAAP and GAAP measures, and can be found online along with other information at investor.pgecorp.com. We also encourage you to review our quarterly report on Form 10-Q that was filed with the SEC earlier today, and the discussion of risk factors that appears there, and in the 2019 annual report on Form 10-Q. With that, I'll hand it over to Bill.

Thanks, Chris, and good morning, everyone. We're excited to return to our traditional format. Today's call marks a milestone for us, and we're excited to share our post-emergence vision for the coming years. We've emerged from bankruptcy as a stronger company. The complex legal matters are now resolved, and major regulatory cases establishing our revenues are either approved or settled. We also have a good line of sight on our regulatory framework for the next three years. Our financial plan displays strong growth and enables a path for the company to get back to investment grade. My remarks today will focus on changes we've made on governance, progress on our wildfire plan, and preparations ahead of the 2020 wildfire season. I will conclude with an update on key regulatory matters. Jason will then cover the financials, including updated guidance and a walkthrough of the quarterly financial results. Our focus now turns to building on the many changes we've put in place during bankruptcy, which set the foundation for an improved company. At the same time, we will never forget the impacts to the communities we serve and those who lost their lives as a result of catastrophic wildfires in recent years. Our mandate is to rebuild the trust of our customers while delivering operational excellence. We'll do that by focusing on responsive customer service and system investments that focus on risk reduction, safety, and reliability. Organizational changes to help deliver on this mandate are already well underway. First, at the board level, 11 new directors were seated at the start of this month. These directors were carefully chosen based on their individual skills and backgrounds and are well suited to guide our company for years to come. One of our initial priorities as a board is to hire the next permanent CEO, and that process is ongoing. We've had recent changes that we've announced among our leadership ranks, and I want to thank each of them for all their contributions to PG&E. With our emergence from Chapter 11, this is a natural inflection point for leaders to evaluate their future and their roles at the company. We'll continue to build our team through both internal development programs and external hires. A couple of recent additions to the team include Francisco Benavides as our Chief Safety Officer and Sumit Singh as our Chief Risk Officer, and I'm delighted to say we'll be announcing a CIO soon. We have a seasoned team in place that is well suited to execute on our operational improvement plans developed during the bankruptcy process. For example, the core electronic operations team members that manage our wildfire mitigation efforts and successfully achieved our goals during the last wildfire season remain in place. This group has consistently improved our tools and evolved our capabilities each year. I have confidence that this team, and others will add to deepen the bench, will lean on their extensive experience to manage the evolving wildfire threat. And we will take the necessary steps to keep our customers safe. If you go to slide three of our presentation, you can see we're progressing well on our four key wildfire mitigation plan targets. I'll cover a few areas on the wildfire preparedness front. First, I'll touch on our operational work plan status. I'll also showcase some of the technology we continue to deploy to better understand our assets and reduce risk. Then I'll touch on our Public Safety Power Shutoff, or PSPS program, evolution. Knowing a number of the program goals are longer term in nature, we continue to stand ready to shut off power when extreme weather conditions present themselves. So let's start with this year's mitigation work. Behind these numbers, the annual work plan is on track to meet all of our 2020 targets. We had some supply chain issues early on in the stages due to COVID-19, which slowed our progress on the installation of weather stations and HD cameras. We've since resolved those issues and fully expect to meet the program goals. Turning to slide four, you'll see a snapshot of how we're making foundational investments in technology that we're excited about. On our enhanced inspection work, we're evaluating new programmable flight options to ensure greater consistency and efficiency of the drone inspections we do. We've also started a partnership with one of the country's most advanced data analytics companies. We're working to migrate to predictive maintenance utilizing the enormous dataset we've collected from advanced visualization inspection tools. This year we'll likely add another 2.5 million images of our assets. We're utilizing machine learning tools to deploy computer vision models to compile asset inspection photos. This improves the quality and consistency of the analysis. All of this part is knowing our assets better and consistently improving our records and data. Stepping back with these early stage examples, we're evaluating a range of different technologies, much as we did with the methane leakage technology adopted by our gas business years ago. We're fortunate to be working with California-based companies on these emerging technologies that will reduce wildfire risk in our state. We've taken this partnership approach for years on the clean energy front. Our announcement yesterday that we're breaking ground on one of the world's largest battery energy storage systems with Tesla is just another example of that. There's one other aspect of the wildfire mitigation program that I'll give an update on, and that's our PSPS program. It's covered here on slide five. As we have in prior years, we'll continually evaluate conditions that include wind speed, humidity levels, fuel moisture, and other factors. When conditions warrant, we'll implement power shutoffs for public safety purposes. We have taken steps to minimize the impact of these events on our customers, and we're working hard to make the PSPS programs smaller, shorter, and smarter. To make our PSPS program smarter, our team will be using new weather modeling that has doubled the granularity of the data feeding our models. Our team will now use the improved insights to inform which circuits are considered for shutoff. The improved accuracy of the forecast should ultimately result in fewer customers being impacted. Our next priority to improve the PSPS program is to make the customer footprint smaller. To address this, we are pre-positioning about 460 megawatts of temporary generation in order to meet critical community needs in areas that have a high probability of an outage. These will be strategically placed at over 60 substations, mid-feeder locations, and secondary health facilities. We've also installed nearly 400 sectionalizing devices and plan to achieve our 2020 goal of 600 devices by the end of August. Both solutions allow us to keep power on in more places where it's safe to do so. In combination, these elements are expected to allow us to reduce the number of customers impacted by a third. In order to make the outages experienced by our customers shorter, we've increased our aerial patrol abilities through additional helicopters and fixed-wing aircraft. By using infrared cameras, we'll be able to conduct controls into the evening, unlike last year where our post-event inspections were limited daylight hours. This greatly advances our ability to meet our goal as a 50% faster restoration time this season. As I mentioned earlier, part of the improved financial foundation for the company is improved clarity on our key regulatory cases. I'll touch on a few of those. First, I'll cover some updates at the CPUC. Looking back to our previous gas transmission and storage rate case, we overspent on capital and sought recovery. Roughly $600 million of that spend was subject to audit, which was completed in May with no disallowances recommended. We are now authorized to seek recovery of the and we anticipate a decision on that filing in Q2 of 2021. As a reminder, we've reached an all-party settlement in our 2020 general rate case. The Commission recently updated the procedural schedule, and we expect a final decision by the middle of December. In our securitization filing, this week a scoping memo was released by the Commission, pointing to hearings at the end of November. Given this update, we would anticipate resolution around the start of 2Q next year. We are required to have our safety certificate renewed each year in order to access the AB 1054 wildfire fund. Our 2020 safety certification request is currently with the Commission for review, and our certificate from last year is valid while the review is underway. Moving to FERC, in our Transmission Owner 20 case, we are currently in settlement discussions, though we do not know the timing of potential resolution. I'll close by touching on COVID-19 and workforce impacts, and I'd be remiss not to mention other challenges that our employees and customers face given the broader backdrop of the issues that are part of our larger national discussion. We continue to make headway in the second quarter, even with the challenges created by COVID-19. The recent uptick in COVID cases in California has resulted in the state reinstituting measures to protect against further spread, compared to what we reported in May. During a period from mid-May to July, we've seen a 3% reduction in electric load, and a 4% reduction in core gas load on a weather-adjusted basis versus 2019. We also experienced higher cost in 2Q. These impacts have been offset by a regulatory asset that was recorded to a memorandum account created to track COVID-related costs. Given the challenge of our current operating environment, I want to take a second to express my appreciation for all PG&E frontline employees who continue to execute on our risk reduction, safety, and reliability programs across gas and electric systems. Our workforce is also engaged in the broader discussion around diversity and inclusion. We are fortunate to serve a customer base with extreme diversity. As a company that has weathered bankruptcy and still maintains a very low overall attrition rate, We're focused on this conversation with our employees and our suppliers over 50% of our hires in 2020, and we'll maintain a history of investing in diversity, including eight consecutive years of exceeding supplier spend. With that, I'll turn it over to Jason to cover financials.