Pacific Gas & Electric Co.

Greetings. Thank you for standing by and welcome to the PG&E Corporation Third Quarter 2021 Earnings Call. I would now like to turn the conference over to Matt Fallon, Senior Director of Investor Relations. Please go ahead.

Thanks, Jenny. Good morning, everyone, and thank you for participating in PG&E's Third Quarter Earnings Call. Joining us today are Patty Poppe, our Chief Executive Officer, and Chris Foster, Executive Vice President and Chief Financial Officer. I want to remind you that today's discussion will include forward-looking statements about our outlook for future financial results. These statements 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 in the second page of today's third quarter earnings call presentation. The presentation also includes a reconciliation between non-GAAP and GAAP measures. The presentation 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 for the quarter ended September 30th, 2021. Before I hand it over to Patty, I would like to thank all of you who attended Investor Day, either in person or virtually, and we look forward to seeing you again at EEI.

Thanks, Matt. Hello, everybody. Thank you for joining us today. This quarter, we delivered non-GAAP core earnings of $0.24 per share. We're reaffirming our 2021 non-GAAP core earnings per share guidance of $0.95 to $1.05. And we no longer expect to issue equity in 2021. We continue to see rate-based growth of 8.5% and longer-term earnings per share growth of 10%. Chris will provide more details on the financials in just a bit. As you saw at Investor Day, Our experienced team is driven and focused on delivering clean energy safely every day. We have a very sophisticated and continually improving PSPS algorithm year over year. In fact, when we backcast our current models to the previous utility-caused fires between 2012 and 2020, we would have prevented 96% of the structure damage had the current model been in place. This year, we also implemented enhanced power line safety settings to address wildfire risk we face from extreme drought conditions. In fact, since the end of July through mid-October, we saw a 46% decrease in CPUC reportable ignitions in high-fire threat districts and an 80% reduction in ignitions on enabled circuits. These enhanced safety settings make our system and our customers safer. We're delivering on the 2021 wildfire mitigation plan with our lean operating system and deploying it across the entire company to deliver predictable outcomes for customers and investors. In addition to quarterly operational, financial, and regulatory updates, I'd like to spend some time on the work done and the changes made since 2019 that make our system safer and more resilient. Let's start on slide four with how we've improved our PSPS program since 2019. In 2019, we had seven events that impacted over 2 million customers. Since then, we've installed approximately 1,300 weather stations, 500 high-definition cameras, and over 1,100 sectionalizing devices to better pinpoint exactly where we need to initiate PSPS. Our 2021 PSPS algorithms are informed by more granular weather forecasting, and we're using TechnoSilva software to incorporate machine learning into our fire spread modeling so we can better predict where the risk is on our system in real time. Our continuous improvement approach applies to addressing safety risks while minimizing disruption to our customers. As you can see on slide five, Our model shows that by backcasting our new 2021 PSPS algorithm onto 2012 through 2020, we would have prevented 96% of the structure damage from fires caused by overhead electrical equipment in our service area. As you know, this year we experienced extreme drought conditions in our service area. Due to these conditions, we saw fire spread on non-red flag warning days. We assessed these risks and identified where we needed to focus. Guided by former CAL FIRE and local fire authority personnel who now work for PG&E, we implemented additional wildfire mitigation in our high fire threat areas. You can see the results of our safety focus on slide six. We've compared the data since we implemented our enhanced power line safety settings against the most recent three year averages. What we've seen is a 46% reduction in CPUC reportable ignitions in our high fire threat district from the end of July through mid-October. On the specific circuits where we first implemented the enhanced power line safety settings, we've seen an 80% decrease in ignition over the same time period. We're working hard to reduce the customer impact from these new necessary protocols. We've optimized our protective device settings on all circuits that have enhanced power line safety settings, and we've adjusted our circuit restoration procedures. These enhancements are making outages smaller and faster to restore, while still removing the ignition risk. We're communicating transparently our commitment to preventing fires of consequence to communities where enhanced power line safety settings are in place. Let me make it real with one story. On Monday, October 11th, we initiated a PSPS event that affected about 20,000 people. The winds came in as forecasted, And in 33 instances outside of the PSPS zone and the highest wind areas, our lines automatically de-energized due to the unpredictable disturbances and potential risk was mitigated. We know our protocols are working. We will continue to work around the clock to make these solutions less disruptive to customers and know that we are keeping them safe while we do that. Our experience since implementing these settings in late July will serve as an important guide for our 2022 planning. As we continue to keep people safe each day, I want to talk a bit about the risk reduction work we've completed since 2019. Let's start on slide seven with our enhanced inspections. As you can see, we're on track to complete our enhanced inspections on half a million assets in 2021 in our high fire threat areas. These inspections are scheduled to be conducted every year on all assets in Tier 3 and every three years for all assets in Tier 2. At the bottom of this slide, you'll see a couple points on our routine inspection program, which gets a lot of attention internally but really isn't well known outside of PG&E. As you can see in the green box, we conduct vegetation management inspections across our entire system annually. And in high-fire threat areas, we patrol those conductors twice a year. In 2021, we plan to complete 1,800 miles of enhanced vegetation management work, combined with what we completed in 2019 and 2020 adds up to over 6,000 miles by the end of this year. While we're focused on keeping people safe with inspections and vegetation management, we're also focused on the longer-term hardening of our system. In the last three months, we've made great progress against our multi-year, 10,000-mile undergrounding program. Our engineering team is scoping out the work, as you'll begin to see in our 2022 wildfire mitigation plan. Our goal is to engage the entire community around the imperative of undergrounding, and we are succeeding. We're engaging stakeholders through our undergrounding advisory group with representatives from environmental groups, labor, telecom, consumer advocacy groups, counties, tribes, among others. and we're gathering ideas on innovations in engineering, equipment, and construction from the world's best through our RFI process. We're continuing to work on system hardening, as you can see here, and we'll provide an update on how we're thinking about that work as we further develop our undergrounding program. As a sneak peek, I'll share one project we completed this year In September, we completed undergrounding power lines in Santa Rosa, which resulted in 11,000 customers who will no longer be impacted by PSPS. This is one of many projects. This is the right solution for our customers in that area, and that's why we did it. Simple solutions based on customer needs. As I mentioned, more to come on our undergrounding plans as we move into early 2022. At PG&E, effective implementation of our wildfire mitigation plan is enabled by our lean operating system, which we're deploying across the entire company. Every day, we have over 1,200 daily operating reviews, beginning with our crews closest to the work first thing in the morning and cascading to our executive operating review. These brief 15-minute huddles provide daily visibility on the metrics that matter most, help us identify gaps, and quickly develop plans to support our teams closest to our customers, giving us control and predictability of our operations. As you know, this summer, we were challenged by the Dixie Fire and the impact the fire had on all of our customers. I'll repeat what we've said since Investor Day. Our actions around Dixie were those of a reasonable operator, and we're confident in the framework created by AB 1054. AB 1054 resulted in a wildfire fund to provide liquidity for resolved claims, a maximum liability cap for reimbursement by investor-owned utilities, and enhanced prudency standards when determining that reimbursement amount. We're reflecting that view in our financial statements, which show a gross charge of $1.15 billion. We've booked an offsetting $1.15 billion receivable that reflects our confidence to recover costs. As I highlighted, PG&E is working hard every day to deliver clean energy safely. We're building on the mitigation programs we started in 2019. We're staying nimble to respond to current conditions, and we are improving our performance enterprise-wide. For example, our team just last week responded to an atmospheric river weather event that included among the highest rainfall totals observed in a 48-hour timeframe. ranging from 16 inches at Mount Tam to 5 inches in downtown Sacramento. The strongest wind gusts recorded was 92 miles per hour from Mines Tower in Alameda County, with at least a dozen other locations experiencing gusts greater than 69 miles per hour. Even in the face of the returning service to 632,000 of the 851,000 customers impacted within 12 hours, I am very proud of the safe and rapid response of our team. Now I'll hand it over to Chris to cover financial and regulatory items.