Pacific Gas & Electric Co.

Ladies and gentlemen, thank you for standing by and welcome to the PG&E Corporation Third Quarter 2020 Earnings Release Conference Call. At this time, all participants are in 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 one on your telephone. 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, Matt Fallon, Senior Director, Investor Relations. Thank you. Please go ahead.

Matt Fallon Thank you, Rob, and thanks to those of you on the phone for attending. Joining us this morning are Bill Smith, our Interim Chief Executive Officer, and Chris Foster, Vice President and Interim Chief Financial Officer. Also joining us today are John Simon, Executive Vice President, General Counsel, and Chief Ethics and Compliance Officer, Michael Lewis, Interim President of Pacific Gas and Electric Company, and Robert Kenney, Vice President, Regulatory and External Affairs. I want to remind you that on our discussion today, we'll include forward-looking statements about our outlook for future financial results, which are based on assumptions, forecasts, expectations, and information currently available to management. Some of the most important factors that could affect the company's actual financial results are described on the second page of today's third 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 in our Q2 10Q and in the 2019 Annual Report on Form 10-K.

With that, I'll turn it over to Bill. Thanks, Matt, and good morning, everyone. Thank you for joining us today. Before I cover the priorities for the quarter, I want to express our sympathy for all of those impacted by the devastating wildfires we've experienced in California this year. It's been a historic and very challenging wildfire season for our customers. We've seen over 4 million acres burned in California, with nearly 3 million acres burned in our service area. We thank the Governor's Office, CAL FIRE, California Office of Emergency Services, and all the first responders for their tireless efforts in keeping our communities safe. We continue to focus on executing a series of important changes at PG&E. These changes will help us live up to the commitments made as a part of our Chapter 11 emergency plan, including our efforts to improve our operations and safety outcomes, reduce risk, and enhance our customer focus. This morning, I'll touch on three key areas of focus for PG&E. First, improvements to our wildfire mitigation plan. Second, our operational updates. And third, our executive leadership recruitment progress. Chris will then cover our financial updates and key regulatory cases. Looking at our wildfire mitigation plan, our highest priorities remain mitigating ignition risk, enhancing our situational awareness, and implementing public safety power shutoff, or PSPS, events. We will initiate these events when absolutely necessary to protect public safety. As you can see on slide four, we continue to be on track or ahead of our 2020 targets for system hardening, enhanced vegetation management, and installation of weather stations and high-definition cameras. Our efforts over the last quarter have our weather station and camera installations back on track. We will respond to Judge Alsup's request for information in the monitoring report of PG&E's enhanced vegetation management inspections next week. We share the monitor and the court's goals in ensuring we operate in a safe and reliable grid. While we acknowledge there are some areas where our comprehensive wildfire mitigation plan that we stood up in 2019 could improve, we do see some of the results somewhat differently than the letter provided by the monitor. We are unable to comment any further ahead of our response, which will be filed on November 3rd. There is one aspect of the wildfire mitigation program that I'll give a detailed update on, and that's our Public Safety Power Shutoff, or PSPS, program. We've done a lot since 2019 to increase cooperation with local authorities by hiring additional talent with emergency planning expertise. We also prioritize better communications with our customers this wildfire season. The technology improvements that will help us achieve our program goals are highlighted on slide five. As we have in prior years, we'll continually evaluate conditions that include wind speed, humidity levels, and fuels moisture, among other factors. When conditions warrant, we will implement power shutoffs as a last resort to keep our customers and communities safe. We have taken steps to minimize the impact of these events on our customers, and we've executed five events so far this year. We have made our events smarter through leveraging technology, smaller by implementing sexualization devices as well as temporary generation, and shorter by increasing our post-event inspection capabilities. We have engaged with our communities and our customers to implement changes that incorporate their feedback. While we have improved in 2020 versus 2019 in making these events less disruptive, we continue to learn from each event. To make our program smarter, we collect fuels moisture data and incorporate it into our fire spread modeling. This data is an important indicator along with wind speeds and assessing fire conditions in real time. We utilize the fuels data along with forecasting work we do in collaboration with the National Weather Service to determine where we need to implement a PSPS event. Our next priority to improve the program is to make the impacted customer footprint smaller. We have pre-positioned temporary generation in regions that are prone to shut-off events. We installed 600 sexualization devices, which were in place by the end of August. In addition, we've added an islanding configuration at the Humboldt Bay and Caribou generating stations, which allow almost 70,000 customers to stay online. Those customers would have been shut off in 2019. This is one example of how we've implemented lessons learned from previous wildfire seasons. These actions allowed us to meet our goal of a one-third reduction in customers impacted in our first events. In order to make outages shorter, we've increased our aerial patrol abilities through additional helicopters and fixed-wing aircraft. We now have access to more than 60 helicopters to help us meet our goal of a 50% faster restoration time versus 2019. I'd like to touch on a couple of other areas of PSPS implementation where we've increased our focus in 2020. This includes our coordination with county and city emergency managers and our outreach to customers. In December, we started holding town hall listening sessions with city managers, first responders, and residents. At these sessions, PG&E senior leaders listened to the local stakeholders and started working on plans to improve coordination for the 2020 PSPS events. Our team then held subsequent discussions where we walked through local plans for these events based on the information we learned in the listening sessions. As an example of change made resulting from these listening sessions, we increased the local presence of PG&E personnel who coordinate with emergency managers. These important employees serve as a single point of contact for individual counties and cities during a power shutoff event. On the customer side, we've also made significant changes in response to lessons learned in 2019. We conducted webinars focused on wildfire safety initiatives in the counties we serve. We asked questions and received valuable feedback, which we've used to address the concerns and needs of our customers on a county by county basis. We've worked hard on three specific areas related to customer engagement during PSPS events. The first is our notification system, the second is our website, and the third is customer resources provided by PG&E. With regard to our notification system, we work to notify customers with an initial watch notification message as early as 48 hours prior to event. The PSPS watch will be upgraded to a warning when forecasted conditions show that a safety shutoff will be necessary. Warning notifications are sent approximately 4 to 12 hours in advance of an event. These messages also include an expected restoration time. Outage and restoration information is updated throughout the event. We improved our messaging in direct response to customer feedback from last year. Second, on our website improvements, we have moved pge.com from our data centers to the cloud, where we tested the site to levels well beyond the demand we saw during our peak usage in 2019. Our enhanced web capability allows for customers to look up shutoff times and estimated restoration times by address. This information is available as early as two days before an event occurs. Also, we increased the number of our community resource centers during PSPS events. In our first event this year, we had 50 community resource centers available for analogy impacting 172,000 customers. By comparison, in 2019, we had 80 centers for 1 million customers impacted. These centers provide a place for customers to go during power shutoffs and are equipped with charging stations, bottled water, and other necessities. All of these locations comply with COVID safety protocols. We expect to have incremental opportunities to leverage technology to improve our wildfire mitigation plans and our PSPS implementation. We continue to incorporate feedback from our community leaders and our customers to improve these events. With respect to updates and next steps on wildfire filings, as we indicated before, we anticipate a decision on our safety certification request at the CPUC by the end of this month. We believe we provided all the necessary information and we hope to see that outcome any day now. As a reminder, the prior certification we received last year remains in place. Looking forward, we will take the learnings from our wildfire mitigation plans as well as our PSPS adjustments and will reflect them in our 2021 wildfire mitigation plan filing. Last week, the Wildfire Safety Division gave all three IOUs a February deadline for that submission. One additional note on operations. We were notified earlier in the month that CAL FIRE has taken possession of PG&E equipment as a part of their ongoing investigation into the cause of the Zogg fire, which was west of Redding, California. Given the early stage of the investigation and the fact that we haven't had an opportunity to review the assets retained by CAL FIRE, there is limited additional information to provide today. We are fully cooperating with CAL FIRE in its investigation and will provide more information on the Zog Fire at the appropriate time. In addition, on Monday, we filed a response to Judge Alsup's request for information on the Zog Fire. We will not comment any further as to we do not want to get ahead of the CAL FIRE investigation. While our electric operations are certainly an area of focus given our effort to mitigate wildfire risk, I also want to highlight the continued good work done by our gas operations team. One of the major initiatives to make our gas system safer is to enable inline inspections. This method is preferable to traditional hydrostatic testing in a couple of ways. It eliminates the need for a line to be taken out of service for testing, and it's safer than 100-static testing, which can compromise the strength of the pipe. In terms of day-to-day operations, our gas odor average response times and our third-party dig-in rates are at the upper end of industry standards. These are two areas of focus to ensure we provide safe and reliable gas delivery. I want to mention two facilities that we opened in 2017 that have helped us improve our gas operations. These centers were opened in direct response to a comprehensive evaluation of our operations. First, in 2017, we opened the Center for Gas Safety, which has expansive lab space that allows us to test new technologies. Second, we opened our Gas Safety Academy. Here we offer gas operations team a training space that simulates various gas emergencies we encounter in our territory. These two centers were open to ensure that we have given our operations team the necessary technology and training facilities to drive continuous improvement. We will look to the practices we have implemented in our gas business and our wildfire mitigation efforts to continue to inform our path forward. While we accomplished a lot in increasing safety and reducing risk, we continue to work hard to improve. The last item I'd like to cover is the progress we're making on open executive leadership roles. We remain on track to name a new CEO as well as a president of the utility by the end of the year. We have also kicked off a national search for a CFO. All three of these key senior leadership searches are being supported by the same firm that will help with the alignment of abilities and backgrounds. We're fortunate to have Chris Foster taking the lead as interim CFO. Chris is leading a very strong finance department while we conduct our search for a permanent CFO. These leaders will build off a few recent hires that are very exciting. Those include Francisco Benavides, our Chief Safety Officer, Sumit Singh, our Chief Risk Officer, and Ajay Wadre as our Chief Information Officer. These three recent additions to the PG&E team reflect our commitment to change. We will continue to operate with a focus on safety and risk while continuously looking for new ways to implement technology to increase efficiency. To build on that a bit, I'd like to share a recent initiative that we kicked off. We are taking a focused look at our operations. We will look to operate more efficiently and improve our relationship with our customers by creating an enterprise approach to asset management, adopting consistent work management practices, and implementing tools to measure, track, and monitor our customer experience. We'll have more to share on this initiative as we move into 2021. In closing, I want to express my appreciation for all PG&E frontline employees. Our employees are navigating a difficult operating environment, and they continue to execute on safety, risk reduction, and reliability programs across electric and gas systems. With that, I'll turn it over to Chris to cover our financials and some key regulatory cases. Chris?