Q1 2021 PG&E Corp Earnings Call
We also encourage you to review our quarterly report on form 10-Q for the quarter ended March 31 2021.
Before I turn it over to Patty I'm excited to announce that we will be hosting you for our Investor day on August nine here in California.
<unk> keep an eye out for the invite.
With that I'll turn it over to Patty.
Thank you Matt Good morning, everybody. It's so great can be with you for our first quarter earnings call.
We delivered solid Q1, non-GAAP core earnings of 23 per share on our first quarter.
This morning, we're reaffirming our 2021 non-GAAP core earnings per share guidance of <unk> 95 to $1 five.
We're also maintaining our longer term, 2021% to 2025 non-GAAP core earnings per share CAGR of 10% that we gave on the Q4 comp.
We're holding our equity guidance range for 2021, net zero to $400 million, we're taking a conservative approach as we await a final decision on the securitization order from the CPUC and as we continue to make progress on legacy issues rest assured Chris and I are laser focused on minimizing our 2021 equity needs. We want you to have <unk>.
<unk> in our forecast and we have several more months this year to make progress on the equity range, Chris will describe the financials a bit more in a few minutes.
As I finished up my first 100 day listening tour, we've accelerated our move from listening to action our priorities fall into three categories first two and utility cost of catastrophic wildfires by demanding excellence of ourselves and our wildfire prevention work.
Second to create a culture of performance by deploying our lean operating system across the enterprise during 2021 and third by continuing to lead in the clean energy transition due to the latest technologies and battery storage electric vehicle infrastructure and micro grid solutions.
Our near and long term financial performance is inextricably linked to these three focus areas. We can deliver on these objectives and thereby serve our customers and our investors better than ever before.
Thankfully I don't need to do this alone I've hired key senior leaders, who represent the best in the business. We added some very experienced senior leaders to the PGE and the team who we highlighted on the Q4 call. Since then we've announced additional new senior leaders to round out our team, including Chris Foster our CFO.
Jason Glickman as EVP of engineering planning and strategy Carla Peterman as EVP of corporate Affairs, and Wade Smith as head of electric operations.
I'm pleased with the team that we have here at PGE knee and I would stack, our operating experience up against anyone the common thread in all of our leaders is of tenacity to perform and the skills to deliver.
Before diving into the substantial changes, we're making here at PGE theres, something I'd like to address right upfront.
Earlier this month, the Sonoma County District Attorney filed criminal charges related to the kincade fire against the company.
We do not agree with these charges and will defend them and legal proceedings in the meantime, we'll make it right by working to resolve victims claims fairly and justly and each day, we will continue to make it safe by prioritizing the work that needs to be done to deliver energy to our customers.
One organizational enhancement I'd like to highlight is our interim wildfire risk organization announced last month led by <unk>.
This team has been instrumental in responding to the criticism, we faced on our enhanced vegetation work as a part of our lean operating system implementation. The federal monitor in the Governor's operational Observer are included in our daily operating reviews. The associated with wildfire work you may wonder won't lean take years to implement the.
The answer is no we've already started our implementation on our most important work in the system will provide benefits immediately as well as for years to come as we grow our capability and our maturity.
One simple example happen in the very first week of our daily operating reviews. We we're off track on our distributions sexualizing device installations, we completed 12 devices as compared to the goal of 30 and as a result of the daily operating review, we gained visibility of the problem and built a recovery plan, that's been outlined and manage to make sure we do.
Back on track.
Look it may sound very simple, but this is the sort of thing that gets lost without an operating system next thing. We know the problem snowballs were too late to visit another commitment missed.
Great operators keep their promises and have a system to manage them, we will be of great. Operator, thanks to our lean operating system, we have the right team implementing the lean system on this critical work and there'll be a valuable resource as we implement lean across the enterprise throughout the year.
On that point in early March I attended the CPUC workshop on our regionalization filings.
He was able to share my thoughts on how PGE need could benefit from implementing of lean operating process on a localized level will leverage the benefit of the lean system and the regionalized teams focused on engaging customers and communities and incorporating their input.
We've listened and we've seen that we need to improve our local presence and our performance and we are going to do just that.
As we implemented lean operating system will continue to uncover opportunities to improve and take actions to close the gap.
In addition to getting our senior leadership team in place, establishing our lean operating system and ensuring our hometown experience, we're able to begin measuring our performance to the triple bottom line of people planet and California's prosperity.
For <unk> and per California, serving our planet means continuing our leadership role delivering clean energy to our customers in.
In 2020, 88% of our bundled sales were from greenhouse gas free sources of energy more than twice the average across the U S utilities, we're not resting there and we're working to bring on over 900 megawatts of additional battery storage by this August assuring that we have both adequate supply and cleaner resources.
I'm, particularly excited about the storage opportunities in fact earlier this month I visited the Moss landing projects, where we have one of the largest utility owned storage facilities in the world and the Great example of of brownfield conversion from fossil fuels to batteries leveraging the existing transmission resources.
We'll continue to evaluate opportunities to add battery storage across our territory, including opportunities in high fire threat areas.
Another major initiative is in fact, our micro grid program. There are many locations across our high fire threat service area, where micro grids make a lot of sense. One example of an there post the county, where we had five customers that loss of power in 2019, when the line serving them was destroyed.
There were deploying of utility owned hybrid renewable standalone power system to energize. These isolated customers. This option is designed to reliably repower of the customer without the need to rebuild the overhead lines.
The remote grid offers an alternative at a lower lifetime costs and importantly at a lower risk of future fire.
As you can see we've got a lot going on here at PGE. The company has embraced the new vision. The senior leadership team is focused on achieving what all 25000 PGE in years and all of our other stakeholders in California alone.
The company that delivers clean affordable reliable energy sales.
Safely.
We'll meet that objective through our relentless focus on people planet and prosperity underpinned by performance with that I'll turn it over to Chris.
Thank you Patty.
As Patti mentioned earlier, we've started the year focused on execution against the goals, we set forth in 2021, including on financial and regulatory matters.
I plan to cover our Q1 results and then cover regulatory update.
But just to provide a few highlights upfront.
First we're on track for a year and earnings per share guidance.
We're maintaining our 2021 equity guidance range.
We've obtained our wildfire liability insurance coverage early this year totaling $900 million.
And we continue to gain financial clarity through progress on our key regulatory cases.
As I mentioned, we're on track for the 2021 non-GAAP core earnings per share range, we set out at 95.
Two of $1 five.
You can see here on slide eight our results for the first quarter.
Non-GAAP core earnings for the quarter came in at $487 million or 23.
We recorded GAAP earnings of $120 million or <unk>, including non core items also shown here.
Moving to slide nine.
This shows the quarter over quarter comparison for non-GAAP core earnings of 23 per share for Q1 2021 versus the 89 per share for Q1 2020.
The 27 per share after adjusting for the increase in share is outstanding.
EPS decreased <unk> <unk> related to Unrecoverable interest expense.
<unk> from the timing of nuclear refueling outages.
<unk> <unk> from the timing of taxes that will net to zero over the year.
The <unk> from wildfire mitigation costs of authorized.
And <unk> from miscellaneous items.
The decreases were partially offset by <unk> <unk> of growth in rate base earnings.
Moving to slide 10.
Our guidance for some of our non core items of changed.
I'll start with bankruptcy in legal costs.
We've increased the high and low ends of our range by $30 million.
To one four to $1 5 billion, reflecting.
Reflecting the increase in legal and other fees as we work through the final bankruptcy stages.
Now I'll cover the updates on the 2019 to 2020 wildfire related costs.
On 2019, Kincade fire costs, we have increased the claims accrual by $175 million to a total of $800 million.
This reflects increased claims data as well as recent interactions with insurance providers and public entities.
Our guidance also now includes $10 million for cleanup and repair costs related to the 2000 Twenty's dog fire.
While not reflected in our guidance because we have sufficient insurance to offset the costs.
I'll also note that we increased our accrual for claims related to the dog fire by $25 million.
To a total of $300 million.
This is primarily due to our conversations with public entities and other litigation plaintiffs.
Next the net securitization of inception impact has been updated we expect assuming the language of both components of the preceding hold to record an approximately $150 million pick up for the year. Following the final non appealable decision and anticipate that the timing of the charge, we previously guided to the largely coincide.
Of the sale of shares by the fire of the construct over future periods.
Last year the prior period net regulatory recoveries item has decreased $80 million two of $60 million pick up for the year.
This reflects the impact of the FERC order denying our request for rehearing on <unk>.
Continuing the 2021 guidance.
On our financing plan as Patti mentioned, we're maintaining our equity guidance of zero to $400 million for the year.
We are evaluating various options such as an aftermarket equity program to provide flexibility to issue shares within the range if needed.
We will also be active in the debt capital markets. As you know we have two securitization proceedings pending at the CPUC.
First is our seven $5 billion rate neutral securitization application.
The CPUC issued its decision approving the costs under the stress test methodology on April 23, which justifies the amount we requested and the offsetting impacts from the creation of the customer credit Trust.
We expect the CPUC to vote out of the decision on the financing order on May six.
Giving us the authority to issue securitization bonds.
We plan to move expeditiously to issue the securitized debt once the decision to become final and non appealable.
The timing depends on whether there is a challenge of the decisions and if so how quickly it is resolved.
So we expect to complete the issuance later this year early 2022.
And as a reminder, the proceeds of the securitization will be used to retire $6 billion of <unk>.
Utility temporary day.
And also allow us to accelerate payments of the fire victims Trust.
One of our key principles in pursuing the structure is also maintained.
The transaction structure of that is expected to be rate neutral, while receiving off credit treatment for the benefit of the utility.
And our customers.
We also filed the request for a first tranche of wildfire safety and risk reduction securitization of the CPUC as authorized the Navy 10 to 54.
I'll request totaled roughly $1 2 billion.
<unk> reflects the work we've completed in 2020 and a forecast of expenditures for 2021.
We expect to receive the decision on the financing application in late June.
Along with our planned securitization issuances.
We'll have additional utility debt issuances over the rest of 2021, including potentially later this quarter.
Another key update is our early insurance renewal, which I touched on earlier, but this year, we decided to target obtaining insurance coverage well before the start of the traditional wildfire season.
In April we were successful in securing approximately $900 million of wildfire insurance for 2021 through 2022.
From a regulatory perspective, we remain on track to file our 2023 generate case by the end of June.
Our focused investments to reduce wildfire risk and enhanced public safety will continue to be highlighted in this case.
The structure of the filing will be different in two notable ways.
First we will incorporate both electric distribution and our gas transmission and storage business and second the case, we'll cover four years 2023 through 2026, rather than three years, providing certainty of revenues of our longer horizon.
This clarity underpins our longer term projections.
Our investment in critical safety and risk reduction efforts across our electric gas and generation systems is at the core of eight 5% rate base growth.
Our strong rate base growth.
A disciplined approach to delevering, our balance sheet, while managing our equity needs drives our 10% non-GAAP core earnings CAGR.
And with that I'll turn it over to Patty.
Thank you Chris.
And as I said it is an exciting time here at PGE, we will meet the challenges that lie ahead.
Such as ending catastrophic wildfires by demanding excellence of ourselves and our wildfire prevention work, creating culture of performance by building the lean operating system on a regional basis across the enterprise during 2021.
And continuing our focus on delivering clean energy to our customers to the latest technologies and battery storage electric vehicle infrastructure and micro grid solutions.
Our financial performance is driven by these three focus areas. We can deliver on these objectives and thereby serve our customers and our investors better than ever before we are on the path to a new era at PGE focused on people planet and prosperity under.
Pinned by performance of.
Operator, please open the line for questions.
As a reminder to ask a question that is star one on your telephone.
Asking the question that is star.
And your first question comes from the line of the Dairies.
Steve Thank.
Bank of America.
Hey, good morning, hopefully you guys can you hear me.
Thanks for the time.
And congrats on all of the continued progress here Kim.
At the outset of I can ask Chris maybe you mentioned <unk>.
Keeping the zero to 400 million of equity range and sort of looking at the naphtha market can you talk about some of the updated puts and takes as to how you think about potentially need to access equity here. If you don't mind.
Sure thing Hi, Julien.
In short it's Rick.
Kind of to start with the start which is the CPUC has not completed yet the final decision on the financing order for our securitization case. So again, we're looking at soon here Thats may six certainly thats are really the first gating item there and then beyond that as we mentioned today, we're certainly still working through some legacy legal items, we did update for both Zarghon Kincaid.
And we are in ongoing discussions there as well so from a from an approach for this quarter, we wanted to be sure to be appropriately conservative as we work our way through some of those issues.
Got it excellent thanks, Chris and can you just elaborate a little bit more on what the issues you're working through there in the <unk>.
If you can elaborate anything at least expected timelines on resolution there as best you see it I I get that the it's always quite difficult.
Sure Julian hard to be specific as you can imagine we did note in our disclosures today that we are in live conversations of how I would think about it on both the kincade fire Amazon fire Kincaid in particular with the <unk>.
Related to the insurance claims of the summer getting claims as well as public entities and similarly on the dog fire with public entities as well as from individual plaintiffs. So obviously just the complexity of some of the cases, it's hard for me to be specific about timing of resolution of.
But certainly want to move forward.
As expeditiously as possible knowing the impact to the victims.
Alright best of luck guys talk to you soon.
Thanks Julien.
And your next question comes from Robert.
Steve.
Net.
Research.
Hi can you hear me.
Yes, we can hear you Steve good morning.
Hi, good morning.
Maybe first just the high level question.
The stock's been relatively weak and I think it's now trading at less more than a 50% discount to the average utility.
And so I guess just to somebody who.
With an outsider kind of coming in and now spend.
Months.
Getting very.
In tune with the company in California, and just the regulatory environment the structure environment et cetera, and then also.
The wildfire risk.
Would be curious your thoughts on the.
Does it make any sense that PGE with true.
More than 50% below the average utility.
Well, Steve you can.
And I ask myself that question quite routinely.
Yeah.
I have gotten on the ground here and really gotten on solid footing as income.
Things that I think about and I observe in and actually makes me very helpful. One is the regulatory construct in California was a pleasant surprise.
<unk> heard about the regulatory construct it's actually very good we've got multi year general rate cases pass through costs for commodity procurement the.
Coupling a separate cost of capital proceedings at the good contract that provides for reliable outcomes. The state of California recognizes and obviously sees and is experiencing the risk of wildfire the state and we at PGE knee as well as all of the Ious have learned a lot about wildfire mitigation.
<unk> I have a low thing associated with our lean operating system. The things you can't fix what you don't know about.
And we know a lot about what we're doing now under these conditions and the state of stepped up the.
Commitment to increase the equipment increased fire and forest fire prevention increased fire crews.
Think the Cal.
Cal fire and all of our firefighters across the state have demonstrated their incredible capacity and their improvement and everything they've done.
To fight wildfires. So it really comes down to the question I ask myself about us here at PGE can we in fact perform.
And I wouldn't be here Steve.
Believes that we can.
This lean operating system that we talk about all the time is because we talk about it all the time because it is how we will create this culture of performance. It is what we've deployed against our wildfire mitigation plan for this year, we're seeing results of that right now as we speak and so I.
Just have to tell you I think that.
On a lot of companies have a lot of different kind of risks and you can't say what you don't know about we know about this risk we've gotten incredibly sophisticated about dealing with this risk and we've got the team for the time to deliver on this risk and so I'm, a believer and I guess I'd, just say that as Bob.
I believe I think there's a lot of reasons for other people to believe and PSEG.
Great. That's helpful. Just on your comment on the <unk>.
Sonoma District attorney filing on Kincade fire.
Just have they given you any rationale for the criminal charges there.
What is the basis.
Well, they certainly outlined what the charges are and some of the basis for the charges that are somewhat implied.
On.
I would say this.
Sonoma County District Attorney has the.
Our constituency.
She is elected.
She has the job to do.
We disagree with those charges. We don't think there is a criminal basis for those charges, we will fight those charges.
And again the whole thing comes back to the same every every every rock I find Steve every everything I learn every time I see an opportunity. Its the same answer the same answer is improve our performance implement on wildfire mitigation plan prevent these disasters from happening in the future.
B of company that can be relied upon to deliver and prevent incidents and thats. What we are doing and that is the <unk>.
The exclusive focus from myself and my team is on making sure that we create the culture of performance and that we make it safe here in California, and and catastrophic wildfires caused by our equipment.
Okay.
Okay, Great and one last question just any update on the.
The status of this grantor trusts the election and then just.
Any update on intention of.
The fire victims trust with the per stake in the company.
Sure Hi, Steve, It's Chris I'll take that.
It's we're on a good path is the short answer at this stage, we do have the private letter ruling is positive from the IRS.
Have good alignment in terms of shared share benefit for both of the fire victims of trust in the company toward completing this work and just yesterday, we had approval in the bankruptcy court for the motion that came forward for our share exchange. So that was the good data point literally from yesterday going forward I think there's probably a couple of gates to think about.
And considerations of the first would be that was mentioned yesterday on core that theres of California entity, where there needs to be approval, which is I believe in the third week of May for the approach then we'll be working on finalizing some of the definitive documents that were pursuing and so ultimately I think at this stage, we continue to be on a good path.
And larger kind of looking at that may timeframe to ideally be able in a position to elect.
Okay, and just to clarify that the.
The exchange of stock with the new does not require the trust to sell stock to the market. That's just an exchange.
Yes.
Thank you for that question, because I think theres been a little bit of confusion right that is correct.
You can almost think about it as an instantaneous exchange.
So with the company. So it's not actually does not create a mandate to sell.
Great. Thank you.
Thanks, Steve.
And your next question comes from the line of Ryan Lynch.
With the city.
I guess wanted to start off around the increased drought risk since the wildfire mitigation plan was submitted.
In light of some of the recent developments is there any opportunities to amend or derisk the wildfire risks.
Coming season.
Eight of some of the changing weather and weather conditions within your service territory.
Yes.
One of the things good morning, Ryan Nice to hear your voice.
One of the things that we're doing is we're drilling earlier.
We have this excellent partnership with our community safety.
Organizationally, our firefighters and we are drilling doing those drills in preparation for the wildfire season earlier, given the drought conditions and so.
We're going to be doing south and central in May and we will do the drills in the north in July that's the important part of getting ready for and being aligned and coordinated during an emergency response.
That coordination is incredibly important and delivers better outcomes. So I'd say, that's one thing that we're doing but.
More than everything anything we're executing to our plan and much of our plan is scheduled to be in place.
Early by September one some of our work will be complete but we're doing work every single day. So we're de risking the system every single day with our hardening efforts in our equipment upgrades and so.
We're just we're absolutely zeroed in.
Okay.
And then in terms of the 900 million dollar of wildfire insurance cost that Chris had highlighted that you had purchased can you kind of out of color as to why you made the election earlier this year.
What the pricing and terms where are the.
To the extent you're able to comment.
For that insurance purchase.
Sure thing Hi, Ryan.
The way I would think about this as we were just looking at the situation where in previous years. Our policy ran from July 31, excuse me from August one until July 31 of any given year end of things.
It was if we were able to move that just strategically earlier in the year, we give ourselves from space from the start of the traditional fire season, and so what we saw as a result of if you look at the year over year, we have an increased amount of insurance from about $868 million up to 900 for this year, we have greater policy coverage in and of itself in terms of the elements of the policy that we have on.
Our improved <unk>.
And we were able to achieve this increase at a lower cost relative to last year's coverage. So we think it was.
The team did a lot of work there to make sure. We're in a good position for this fire season. So again it gets us to 900 million for this year.
Okay. Appreciate it and then what about in terms of the pricing on the $900 million.
Sure we've got a good amount.
Yes, sure exactly we're looking at pricing there will be breakout because it's the multiple policy towers, Ryan one of the multiyear tower of that's about $600 million. It runs for multiple years and then we have a breakout specifically for the incremental above that that gets us to $900 million for this year and we're happy to follow up on any of the specific tower details 40 of feed.
Two we have provided today additional disclosure.
Within our 10-Q that I would point you to is well, it's a little bit more detail than we've done in the past to try to give you help there.
Okay, Great and then.
Then maybe just one clarifying question around the equity issuance plan.
Is there any.
Outside of the highlighted the.
The securitization proceedings and the.
The legacy claim.
<unk> is there any changes in working capital that we should keep in mind.
Given the pace of.
COVID-19 or exit from Cowen.
No I appreciate that question.
Ryan as I think about other factors just kind of more broadly speaking in terms of cash it's not really if there is no real working capital shifts here certainly a meaningful effort that we're undertaking right now is the.
Execution of the sale of our San Francisco headquarters, So certainly thats the cash impacting items, both from a timing standpoint, and the magnitude and the team is underway now with the broker.
As well.
We will be moving forward. So at this stage again, just kind of working through those details hard to be more specific on that given where certain currently evaluating bids but excited to get that moving forward as well.
Okay I appreciate it thank you.
Thanks Ryan.
And your next question comes from the line of Jonathan Arnold with vertical research.
Good morning, Jonathan.
One quick one for Chris.
Approval of the question of.
Chris on the well.
Could you just.
Explain the reasons of the change in the timing of when you would recognize as the law.
Loss of <unk>.
The previously expected to be more upfront.
Thought that you'd you would expecting the grantor trusts the election, when you updated last quarters of this trying to figure out what changed in the timing the.
Absolutely Jonathan what I would start with the half to say just kind of framing. This if you take a step back we have been.
We have been appreciative of the pace with which the CPUC has moved on our securitization cases.
And explicitly as you can see in the decision there is a recognition of the benefits to customers to the fire victims Trust.
And it's aligned with the goals of this as the state of their for both SB 901 of $10 54 in terms of improving the company's business risk profile. So I think that that's important just to be aware of in the back so as we <unk>.
<unk> evaluated and updated our accounting we wanted to be sure to give you the clearest picture possible of the net impacts across both of the Grantor trust treatment as well as the securitization outcome and so we would expect to record that $150 million pick up for the year following of final non appealable decision.
Then we would anticipate that the timing of the shareholder funded charge. We previously guided two of largely coincide with the sale of shares by the fire of a construct over future periods. So it's really for US. This is really about a change in timing for the expense itself that we're reflecting in updating today to the positive.
To assist the timing of how you are going to recognize it as opposed to when the cash flow may or may not occur and Thats correct.
Hey Ali.
Thank you for that and then just on the you've obviously mentioned you're going to host this analyst day in August.
We got 88.
<unk> expenses.
We will be hoping to accomplish there on what the.
The expected.
Well first of all we can't wait to have everybody here with us in California safely of course.
It all hinges on the.
The status of COVID-19, but we feel good that it's absolutely we want everybody to hold the day make your plans.
Look forward to the first introducing you to the team.
Demonstrating our wildfire mitigation planning in action gets you up calls on personal with the incredible technical talent that we have here at the company that I can't wait free to meet.
That gives me the confidence that I think will give you of the confidante as well and then also more broadly talking about our commitment to a culture of performance and talk about our clean energy plan. This is it's an exciting part of the PGE story that certainly is under reported right now and I understand that but we can't wait to give that some day.
And how people.
GAAP.
Exposed to and excited about the future of that PGE has here serving the people of California. So.
No substitute for face to face can't wait to see Ya.
That's great. Thank you very much.
Your next question comes from line of Steven Robert.
With Morgan Stanley.
Hi, good morning carry on doing.
The nice to hear your voice Steven Yes, Likewise likewise, thanks for your time.
The lots been covered I wanted to just talk about.
The CPUC and their assessment of the I guess, the long term future of natural gas and just curious sort of your your thoughts in dialog with the CPUC anything you would you would highlight the airline.
Sure.
You know.
I know, it's a question on People's minds.
I do think that in all of the clean energy scenarios of certainly in the near term on say the next decade next 15 years Theres a need for natural gas.
The bridge fuel.
And from a on LDC perspective.
Our customers still.
On what natural gas and we're going to have to figure out how to make sure that we minimize our methane emissions through our good practices and every time, we change the server.
Upgrade of service or change of main we're reducing our fugitive emissions, we feel great about that theres more to be done now to really think about what's the long term role of natural gas are here in California, specifically and so we're in the process of doing some strategic planning, where we're asking ourselves all of those questions and when the time is right we'll talk.
More about that publicly.
Okay.
The answer to your question Steven Okay. Thanks.
Yes.
Your next question comes from the line of Michael Lapides with Goldman Sachs.
Hey, guys. Thank you for taking my questions I think I have probably one for Patty and one or two parts of the path.
When we look at share Capex spend.
If I come back and look at the.
Your slides that you have in <unk>.
Youre very.
Progressive goal to eliminate all of the utility caused wildfires if I look at the gray bars on slide 11.
Are those funds that you need to spend to be able to hit those goals.
Or were those funds, meaning the embedded in the Gray bar things would actually spend if you didn't get state regulatory approval, but it would put that goal of eliminating the utility caused wildfires at risk.
Well.
I'd say theres, two things that help us mitigate utility cost.
Mention risk one is our hardening of our system.
And so obviously the investments that we're making there are very important and we have.
Finally, our alignment with the CPUC in the wildfire safety Division.
Impact the safety Division director spent three days with US just a week ago actually out in the field of observing our mitigation efforts and what we're doing to harden the system and the enhanced vegetation management efforts that we're taking on so I would say we broadly have alignment on.
Investments necessary to do our work, but we also mitigate risk and prevent ignition.
The specifically on catastrophic wildfire to Rps PFS program and so that's another important complement to our.
And we try and represent this notion that in the near term <unk> is our back staff and it needs to be an important measure that we take to protect people's safety and prevent fires of consequence.
But over time, our hardening investments as you've described will help to mitigate the actual source of the ignition in the first place and so I'm getting pretty excited about what we're learning about how to make that happen to new technologies as well as just some of the fundamentals of underground the right portions of the Grad doing these remote.
Grids where necessary.
Conductor.
<unk> as well as all of the other equipment that we're learning about and utilizing some of the quite traditional some of it new and exciting so.
Of that capital plan really does a major part of what we need to do to mitigate wildfire hazzard.
But if you didn't get approval for those gray bars in the upcoming case or in some of the the memo accounts with the spend it any way because they did the things that need to happen on the system to eliminate wildfire risk.
Hi, Michael It's Chris I'll go ahead, and just maybe build on that as well.
The vantage.
That we have in the state is really now we have annually file of wildfire mitigation plan.
So in essence it provides.
It's really good transparency into year over year, how we're adjusting our plan how our risk model allows us to evolve our work and it allows for greater alignment. The Patty is alluding to and so as you see there in those gray bars, we're trying to do our best to give that level of transparency at the same time, we have the full expectation of of recoveries of the work that directly tracks with what we filed on the <unk>.
<unk> previously so theres, a little bit of of regulatory lag in terms of the the cost recovery.
But ultimately the good news this year it doesn't experience the regulatory lag of of general rate case oriented request because of again annually. We're putting forward of wildfire mitigation plan committing that we're committing to the work of that we're going to do as long as we followed through on that we have a good level of confidence of the recovery of those of those items on the Greg.
Additionally, we have we're aiming at the end of June filing.
On our 2023 generate case and you can imagine that's a bit of of catch up opportunity there to give better line of sight to of multiyear investment prioritization, there as well so it from both angles and it's actually really good transparent process with the CPUC and for US. It's really just about executing the work we commit to.
Right.
Follow up Chris in your prepared remarks.
About the securitization of the timing and he made the comment of the end of year or beginning of 'twenty two of the actual issuance, but then followed that with.
Brief remark about.
Assuming all appeals of the mitigation of risks.
If the litigation the delayed the issuance how does that impact a couple of things how does that impact when you make your 1 billion dollar payment to the wildfire victims of trust funds and how does that impact your kind of earnings guidance, which assumes you'd be paying down a lot of GAAP that theyre actually not recovering in the customer bill.
Sure again, it's a bit of the scenario, but I hear where it's coming from I think ultimately what we're trying to do our best to do is provide the understanding that in the situation where there is.
On an application for rehearing that would move forward or something of that sort of that we still envision a situation, where we're prepared to execute this year I did mentioned 2022, because the other factor that's in there Mike.
Michael is just the market and so at this size of the offering we want to make sure to give ourselves the flexibility on the $7 $5 billion. If we need to evaluate doing multiple tranches. There is a scenario where it could could move a portion of it could move into 2022. So really that's just the way our way of expressing.
In one sense, if theres a delay it would delay the.
The final payment to the fire victims trust it could delay the initial contribution but again still still looking at the situation, we're able to execute this year.
Got it. Thank you Chris Thank you Patti much appreciated.
Thank you.
And your next question comes from the line.
Bob.
Okay.
Alright.
Thank you very much.
I guess.
<unk>.
If you fight the criminal charges and the court.
Are you are we talking about months that we've had any of that years before you would potentially get a resolution out of the court.
On the on those matters.
First of all of its hard to say.
And there's a lot of contributing factors to that it could be.
It could be months it could also be up to potentially two years.
So I would just say there is a range and a lot of factors that will go into that.
And then I mean is it fair to say that if there are criminal charges that would potentially come out of the <unk> that we would know.
Either way until roughly a year from now just given the timeline of of when they acted on Kincaid.
Yes, it's really I guess I would say that those things would be linked P&L impact of word criminal charges we win.
Any of the stock we Wouldnt know what the outcome of that would be until that happened, but again, let me just reiterate that we don't agree with these charges and.
We definitely.
I'm going to fight them because.
We just don't agree and so thats really what our focus is right now.
Right no I'm, just trying to figure out because I.
I would think that the the.
The criminal charges, where the weekend your ability to recover under $10 54.
The fair assessment.
Yes.
The charges were upheld.
Paul I think Amy $10 54, it doesn't contemplate criminality in that way just to be clear.
If you if you think about you are accurate the timeframe. The time pass as you mentioned there between any theoretical potential criminal charges. It related on the dog fires of similar kind of timeframe. So it is accurate to think about the timing that way, but <unk> 54 does not contemplate criminality in that way to the negative.
But it does basically set of negligence standard right. So one could argue of your found criminally liable that it would be.
The more difficult for you to past sort of that negligence standard right.
Theres two tests. The first is at the CPUC in terms of cost recovery, which is essentially.
A substantial doubt construct the came about at <unk> 54, which is similar to the existing kind of FERC of oriented language and then the second David I think is what youre pointing to which is actually about replenishment of of the wildfire fund and so we're not necessarily in that scenario right now.
That's the question of willful disregard, which is what I think most people try to mixing the question of criminality. So there are actually two separate things Paul and Bob just to close this out just to be clear.
We can't speculate about all of these conditions, but the most important thing to remember is we don't agree we don't agree with the charges and so we're going to fight that.
Great and maybe the last question from me on Todd I guess I've seen different accounts with respect to whether the tree that was involved was mark per removal or not is there.
Any further clarification that you might be able to give on that tree.
Yes, there is no new information to share on on.
On that pump.
Great.
Thank you very much thank you.
Yeah.
Hi, Chris.
For today I would like to turn the call back over to Randy.
Bob for closing.
Thank you April well, thanks, everyone for joining us today.
Our future becomes significantly de risked as we deliver day in and day out. This is the long game and we're in it to win it by serving our customers and our investors. We really do look forward to having the safely with us in California on August nine for our Investor day at our Wildfire Command Center.
I want you to see the team that is in action and learn what I know we are entering a new era at PGE grounded in our triple bottom line that is underpinned by our performance.
We will see you soon in the meantime, stay safe and be well.
This concludes today's conference call. Thank you for your participation.
<unk>.
One of them.
On this.
[music].
Yeah.