Pacific Gas & Electric Co.

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 limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. Thank you. I would now like to hand the conference over to Matt Fallon, Senior Director, Investor Relations, PG&E. Mr. Fallon, please go ahead.

Good morning. Thank you for participating in PG&E's fourth quarter 2020 earnings conference call. Joining us today are Patty Poppe, our chief executive officer, and Chris Foster, vice president and interim chief financial officer. I want to remind you that our discussion 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. Some of the important factors that could affect the company's actual financial results are described on the second page of today's fourth 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 annual report on Form 10-K for the year ended December 31st, 2020. With that, let's move on to the person you all want to hear from. Patty Poppe.

Thank you, Matt. And good morning, everyone. I am so delighted to be with you for my very first PG&E earnings call today. I've been here almost two months and have learned a lot by engaging with my coworkers and many external stakeholders. I'll highlight today our 2020 results, our 2021 and long-term outlook, and what I've learned so far from careful listening, and importantly, what we're doing about it right now. We delivered solid Q4 non-GAAP core earnings of $0.21 per share in the fourth quarter and $1.61 for the full year. We're affirming non-GAAP core earnings of $0.95 to $1.05 per fully diluted share for 2021. In addition, we're rolling forward our five-year plan, which takes us through 2025. I'm happy to report that we successfully executed the sale of our transmission tower wireless licenses, delivering on our goal to reduce our 2021 equity needs. Our 2021 equity needs are now down to a range of $0 to $400 million. We have visibility on our investments, and we're increasing the quality of the plan and our guidance. Today, we're introducing a 2021 to 2025 non-GAAP core EPS CAGR of 10%. As we bring our new leadership team into place, we're building a clear sky playbook based on a lean operating system and delivering a regionalized hometown experience. We're evaluating our work plan focused on what's best longer term for our customers. We're already acting on all of this and we're happy to share more with you today. You'll hear more about this in future quarters as well. Chris will provide an update and more details on the financials in just a minute. First, a recap of 2020. It was a challenging year, and I am so impressed with how our PG&E team stepped up. I'd like to take a second just to thank Bill Smith for serving as our interim CEO and Michael Lewis for his tireless effort serving as interim utility president. My coworkers made great progress on many fronts under their leadership, and I'll quickly touch on a few. The team continued to make progress on wildfire risk reduction. while also significantly improving the execution of our public safety power shutoff events through better coordination and support for our customers and our communities. My coworkers successfully resolved key regulatory cases, and while no one could have predicted the impact of COVID-19, the team has stood up for the challenge, delivering energy to our friends, families, and neighbors. I spent a good portion of my first week listening, listening to you, listening to our customers, policymakers, regulators, coworkers, shareholders, and many, many more. What you've said is direct, and you've communicated both disappointment and encouragement. Thank you for your honest feedback. I've also spent time engaging with our federal monitor and our operational observer from the governor's office. We want what they want, a safer system. We've embraced their feedback and have continued to implement improvements to our wildfire mitigation work with an unwavering focus to reduce the risk of utility ignited wildfires. One such example includes our evolution from a 2020 wildfire mitigation plan that was primarily activity-based, focused on miles completed for our key wildfire safe measure, such as enhanced vegetation management and system hardening. We're moving to a 2021 wildfire mitigation plan that is risk-focused, addressing the highest risk areas for mitigation on our topmost priority, informed by enhanced predictive wildfire risk models. We've developed and implemented machine learning capabilities, enabling an evolution from static to dynamic risk models. These models are informed by fire ignition probability and potential wildfire consequence, considering fast-burning fuels, predictive fire behavior, and buildings and population density impacts. Additionally, we're leveraging state-of-the-art remote sensing capabilities to obtain an understanding of both the fuel type and condition that contribute to a fire spread in our high-risk areas. While we continue to perform the longer-term work of enhanced vegetation management and system hardening using a risk-informed approach, Our PSPS event implementation remains an important tool of last resort to keep our customers safe. We'll continue to focus on improving the PSPS program for our customers and our communities, keeping in mind that preventing electric equipment-caused wildfires and associated damage is the highest priority. For 2020, I'm happy to share that our enhanced weather forecasting, our generation islanding capabilities, and sectionalizing devices, many of which were installed in 2020, led to more targeted PSPS events in 2020 versus 2019 for similar weather conditions. We identified a number of reported damages and hazards to our equipment from high wind conditions during six PSPS events in 2020. Any one of these instances could have potentially caused a wildfire if our system had not been proactively de-energized. In addition, our weather stations, along with our high-definition cameras and satellite detection capabilities, enable us to determine when high fire risk has dissipated and when we can begin safely restoring power. These factors, along with our increased aerial surveillance, helped us reduce patrol and restoration times by nearly 40% in 2020. We were also able to improve our notification accuracy for impacted customers in advance of the PSPS event, from levels below 90% in 2019 to 99.5% in 2020. This was enabled through the deployment of an innovative records and information management integration platform, where we are partnering with Talenteer to quickly and seamlessly consolidate data for our electric assets and customers from separate and disparate data sets. This has been a game changer for us, and we're expanding this technology solution to serve as the core enabling technology for building our centralized data system, bringing together physical, operational, lifecycle, and environmental data elements to drive data-informed decisions for our wildfire mitigation programs and beyond. The substantial improvements in 2020 over 2019 in our PSPS event implementation were noticed by many, and yet we are still dissatisfied. and we've already begun implementing improvements for our 2021 wildfire mitigation and PSPS programs. In fact, during my first few weeks on the job, I had the opportunity to see the team in action during a very unusual January PSPS event. The team quickly sprang into action, enabling a cross-functional focus on an end-to-end process. I saw our emergency response playbook in action, and it was good. The strong, gusty winds we forecasted and our assessment of the dry fuels and potential fire spread risk in localized areas of our service territory led us to shut off power to keep our customers safe while the dangerous weather passed. Let me be clear about this point. The goal is to prevent damage and destruction from our equipment, and we'll choose to protect our customers and our communities even when that means utilizing PSPS. I was impressed that we have the technology to pinpoint our highest risk areas and target the specific sections of our system to prevent potential wildfires that would hurt people. Now, moving into 2021, we will embrace the triple bottom line mindset of serving people, our planet, and California's prosperity. This mindset will find an intersection between the need to safely deliver energy and meet the clean energy aspirations of Californians. I'm optimistic that there is a bright path forward with a triple bottom line enabled by a laser-like focus on performance. Here are my initial observations and priorities to get us moving as we start 2021. We have a best-in-class emergency response playbook, and we're going to complement that by writing the PG&E Clear Sky Playbook so we can predictably deliver every day not just during and after a crisis. I'm putting together a team of senior leaders that's developing that Clear Sky playbook underpinned by a lean operating system that predictably delivers on our commitments and outcomes. We're bringing the best of a functional organizational design, standards, processes, and scale to deliver a regionalized hometown experience for the communities and customers we serve. And finally, our system requires substantial capital investment, and our customers deserve more disciplined cost performance. We'll adopt better processes that improve our safety, quality, delivery, and cost. Our work will deliver for customers and our investors. You know, on my first day at PG&E, I went to Paradise in Butte County to see the devastation caused from wildfires. I met with my coworkers who live in the community whose own lives were forever impacted by the Camp Fire. We're so grateful to those who have the strength and the courage to represent PG&E through the rebuilding effort. When I reflect on when PG&E first developed our skills in disaster response, I go back to San Bruno. I visited the city of San Bruno a couple weeks ago, and I met with our coworkers who served their community there. They expressed the disappointment they felt that day and the helplessness of not being the heroes for the very first time. It was frustrating not being able to deliver as our Blue Crew strives to do, delivering an essential service safely to our customers every day. PG&E has learned to respond to the challenges of emergencies and have developed a world-class playbook for emergency response. My passion is to capture that capability and focus to establish a clear sky playbook, a playbook to deliver the aid, disaster prevention, the basics of the building blocks for a safe, reliable, affordable, clean, and resilient system. You know, similar to before, processes that cause delays and leave our frontline teams having to explain to customers why we can't deliver as promised. Our daily performance is sometimes a mystery to the organization. We learn about issues when the customer tenaciously escalates their frustrations and then we jump to respond. We must enable our coworkers in the field to become problem preventers and solvers, not victims of poor processes. Improving the reliability of our day-to-day work will move us away from being just an emergency response company. We need and will implement a clear sky, lean operating system to effectuate this change because it works. We're assembling the team to do just that. Adam Wright is our new Chief Operating Officer. Adam joins PG&E after serving for 18 years at Berkshire Hathaway and for the past three years as President and CEO of MidAmerican Energy. Adam brings a strong track record of operational performance at MidAmerican, and he'll focus on safety, standardizing practices, and promoting excellent execution across the board. Adam's hand-on approach has already started to show its value. I love how he leads with his heart and his mind. We need that. Marlene Santos is our new Chief Customer Officer. Marlene joins us after an impressive career at Nextera Energy, most recently serving as President of Gulf Power. Marlene led the integration effort of the acquisition of Gulf Power, and she was able to deploy a best-in-class operating system to a new organization, which delivered meaningful results for the customers of Gulf Power. We're counting on Marlene to help us do the same here at PG&E. Julius Cox is our Chief Human Resources Officer and leader of our shared services and supply chain, a team charged with ensuring PG&E has the people, skills, resources, and tools to meet customers' expectations. Prior to joining PG&E, Julie has served as Chief Human Resource Officer at AET and Chief Transformation Officer at Dynagy. Joe Forline is our new SVP of Gas Operations. Joe joins PG&E after 35 years at PSEG, serving most recently as Vice President of Gas Operations and prior to that as Vice President of Customer Solutions. We're really excited for Joe to leverage his experience to enhance our focus on both gas operations and customer service. This team is coming for the mission, and more are on their way. They all had great jobs, and they were not looking to leave. I called them each, and they answered the call to serve. These clear eyes and fresh legs combined with the 25,000 dedicated, resilient, and smart PG&Eers that I found here will be the necessary ingredients to turn this company into a winning team. We're focusing on meeting and exceeding the expectations of those we are privileged to serve, our friends, our families, and our neighbors. The new team will establish a regionalized daily heartbeat that puts decision-making where it belongs, closest to our customers and communities. I've visited crews in many areas across our service area, and the themes are clear. We're showing up in our hometowns like a big company with a big company bureaucracy, and that needs to change. There are advantages to the scale of a big company and we'll leverage them through the best of functional expertise, high quality standards, and that will be delivered by our regional cross-functional teams. Our customers don't need to feel that big company mindset. They need to feel like their hometown is the only one that matters. Our hometown team can deliver for them by being empowered to solve the problems they see with the cross-functional team on which they work. A clear sky, lean playbook will be essential in transforming our culture, our processes, and our outcomes. Now you might ask, Patty, that all sounds great, but how will that deliver financial results? Well, this brings me to my final observation. We can accelerate the path to better financial health at PG&E by fixing the operational results we deliver. Our regulators, our legislators, our customers, my coworkers, and yes, you, our investors, can believe in PG&E again. Everyone can believe when we deliver, when we keep our promises, when we do what we say we will do. There's a playbook for a great utility, and we'll be writing ours here at PG&E. More to come. With that, I'll turn it over to Chris.