Thank you for standing by and welcome to 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 Patti 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 Patti, 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 a $1.05. And we no longer expect to issue equity in 2021.

We continue to see rate-based growth of 8 1/2% 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 PS algorithm year-over-year. In fact, when we back cast our current models to the previous utility cost fires between 2012 and 2020, we would have prevented 96% of the structure damage had the current model then in place.

This year, we also implemented enhanced power lines safety settings to address wildfire risks 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 and high-fire threat districts. And an 80% reduction and 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 4 with how we've improved our QPS, WPS programs 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 analyzing devices to better pinpoint exactly where we need to initiate PSPS. Our 2021 PSPS algorithms are informing -- are informed by more granular weather forecasting.

And we're using Technosylva 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 5, our model shows that by back casting our new 2021 PSPS algorithm onto 2012 to 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 fires 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 and E. We implemented additional Wildfire Mitigation in our high-fire threat area.

You can see the results of our safety focus on slide six. We've compared the data since we implemented our enhanced power lines safety settings against the most recent 3-year averages. What we've seen is a 46% reduction in CPUC reportable admissions in our high-fire threat districts from the end of July to mid October.

On the specific circuits where we first implemented the enhanced power line safety settings, we've seen an 80% decrease in ignitions 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 lines safety settings, and we've adjusted our circuit restoration procedures. These enhancements are making out into smaller and faster to restore, while still removing the admission 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 zones, in 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 7, with our enhanced inspections. As you can see, we're on track to complete our enhanced inspections on $0.5 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 3 years for all assets in Tier 2. At the bottom of this slide, you'll see a couple of 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 under grounding 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 are engaging stakeholders through our undergrounding advisory group with representatives from environmental groups, labor, telecom, consumer advocacy groups, county of Tri -Eds 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 projects 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 1200 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 more, 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 of fire hit on all of our customers. I'll repeat what we 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 results 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 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 life.

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 time frame ranging from 16 inches at Mt. Tam to 5 inches in Downtown Sacramento.

The strongest wind gust recorded was 92 miles per hour -- from miles per hour -- in Alameda County with at least a dozen other locations experiencing gust greater than 69 miles per hour. Even in the face of 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..

Thank you, Patti. As Patti referenced earlier, our financial plan remains on truck, and is supported by a regulatory construct. I'll cover the highlights first, then go into more detail. Today we're announcing that we no longer see a need for equity in 2021, for this year, and we anticipate issuing our 2022 guidance on our Q4 earnings call.

Additionally, we're seeing progress on recoveries related to prior well by our risk reduction investments to help the Balance Sheet.

Let's start with the share count used for Q3 2021, and year-to-date GAAP and non-GAAP core earnings per share were a GAAP loss position for both Q3, 2021, as well as year-to-date 2021, due to our granter trust election this quarter.

As a result, we're required to use basic shares outstanding to calculate both GAAP, EPS and non-GAAP core EPS for Q3 and year-to-date. Our full-year guidance, as always assumed, a GAAP positive year and our full-year non-GAAP core EPS of $0.95 to a $1.05 per share reflects our fully diluted share count. So there's no impact there.

I'll start with our Q3 results. We continue to be on track for the 2021 non-GAAP operating EPS of $0.95 to $1.05. This is calculated using our fully diluted share count I just mentioned, consistent with our assumption when we initiated guidance. Slide 9 shows the results for the third quarter.

Non-GAAP core earnings per share for the quarter came in at $0.24. We recorded a GAAP loss of $0.55 including non-core items. This quarter we recorded a $1.3 billion charge, we've previously guided to as a result of our grantor trust election. As you recall, this charges expected to reverse over time, as the fire within and trust sells shares.

Moving to slide 10, as Patti mentioned, we took a $1.15 billion charge this quarter for the Dixie fire. We also recorded a 1.15 billion of offsetting receivables. And the receivables reflect our confidence to recover costs based on the facts and information available to us today.

And as a reminder, we recognize the receivable if we believe recovery is profitable under the applicable accounting standard. And due to the fact currently available, we're not in probable for recovery of amounts exceeding insurance for the 2019 Kincaid in 2020 dog fires. Therefore, we haven't recorded offsetting receivables for either of those fires.

On Slide 11, we show the quarter-over-quarter comparison for non-GAAP core earnings of $0.24 per share for Q3 2021 versus $0.22 per share for Q3, 2020. EPS increased due to $0.03 of growth and re-based earnings, $0.02 from using basic share count as a result of the GAAP loss I mentioned earlier. And a penny from lower Wildfire Mitigation costs.

Partially offset by a penny decrease due to timing of taxes that will net to 0 over the year. We expect a stronger fourth quarter due to timing of regulatory revenue and efficient work execution.

Moving to Slide 12, we are reaffirming our non-GAAP core EPS of $0.95 to a $1.5 on the debt side, we expect to complete an initial 80, 10-54 securitization transaction this month for $860 million.

Our separate rate-neutral securitization is also good approved by the CPUC and 1, 3 resolve the final legal steps, we anticipate we'll start issuing bonds early next year.

Now some updates on regulatory matters, off specifically highlight important filings reflecting both our focus on timely cost recovery for historical spend, and our focus on the planet supporting California's clean energy future. Turning to slide 13.

At the end of the third quarter, we've requested cost recovery for approximately 80% of the unrecovered wildfire related costs in our Balance Sheet. And we already have final decisions, settlement agreements, or interim rates for roughly 60%.

In September, we filed a settlement agreement for our 2020 Wildfire Mitigation and Catastrophic Event application. Our request is $1.28 billion comprised of prior wildfire expense, including costs that were incurred in 2018.

Given some of these costs predated Wildfire Mitigation Plan construct, we feel the settlement of $1.04 billion is a reasonable outcome. Most recently on this front in September, we filed for recovery of $1.4 billion of additional Wildfire Mitigation and Catastrophic Event costs.

Most of the costs are incurred last year and under our proposal, most of the revenue would be recovered in 2023 and 2024, you should expect to see similar filings in coming years as we seek timely recovery of any incremental spend in these areas. Next, I will cover a brief update on our cost of capital application.

In late August, we filed a cost of capital application for rate increase in cost of capital for California utilities, as seen from higher interest costs and equity issuance costs.

At this stage will follow the recent direction by the administrative law judge and file materials that would have been included in the cost of capital adjustment mechanism advice letter by next Monday.

The filing will include calculations of the ROE, half the debt, and the resulting overall return on rate base from the operation of the adjustment mechanism. The ALJs order [Indiscernible] admit the relevant information into the cost of capital proceeding, rather than requesting as to file an advice letter.

Our focus on the triple bottom line of people, plan it and prosperity is also not flowing down. Just the adoption for under staffed communities, and of course, support California 's greenhouse gas reduction goals [Indiscernible] extension of our fully subscribing successful EV charged network program.

We request [Indiscernible] a total revenue requirement, roughly $225 million from 2023 through 2030 to provide the infrastructures to support 16 16,000 new charging ports, which is just scratching the surface to meet the demands of our customers, who today are driving nearly 20% of the electric vehicles in the country.

We are proud to serve the largest base of customers owning and purchasing EV s in the U.S. -- clinical need to reduce wildfire risk in the near-term while running the business effectively for the long term. And we've eliminated our 2021 equity needs. We'll continue to -- in the right investment to deliver clean energy safely to our customers.

And with that, I'll hand it back to Patti..

Thanks Chris. Every day we are more and more excited about the future we're creating here at PG&E. We can see the difference that's being made and the value to be unlocked.

We continue to reduce wildfire risk and we're encouraged by the [Indiscernible] calls are the right solutions on high wind days and our enhanced power lines safety settings are necessary and effective in reducing ignitions and the resulting damage given our current drought conditions. We're focusing our work to make our system safer every day.

We're adapting based on what we learned so we can best serve our customers and you, Our investors. We'll deliver on the financials and we will continue to implement the necessary processes to run a high performing utility. Jenny, please open the line for Q&A..

Your first question is from Jonathan Arnold with Article of Research..

Morning guys. Thank you for the update..

Good morning, Jonathan..

A couple of questions.

Chris picking up on your comment on cost of capital, the fact that the ALJ didn't require the [Indiscernible] resolution of the applications or is it a little early to tell and we need to wait for the scoping memo or some other directive on that?.

Sure. Good morning, Jonathan. And again this is a reminder for everyone, that trigger mechanism itself would have implied a 60 basis point reduction, which for us is roughly $0.6 of EPS.

In terms of the current state of affairs, we'll be filing this next set information next Monday, but it is true, Jonathan, that our position is that the rates are not adjusted, January 1st, 2022 by the ALJs ruling, and so that's the scoping memo, but we do think that was a good development in terms of how the judge is treating that next step..

Okay. Great. Thank you.

And then just I guess sort of stepping back a little bit and considering the taking in at the equity out of the -- this year and then the securitization you're about to do, what point in the -- in your forward outlook does the utility arrive at a point where it can stop paying a dividend to the parent and then we can start to think about some strategy levering?.

Absolutely. We're looking forward to that, Jonathan. Again, our commitment is really two-fold right? First delay on that period in which we would have non-GAAP core earnings exceeding it, a cumulative $6.2 billion dividend and certainly we'll be partnering.

And Patti and myself partnering with our board to the reinstatement level and growth rate at that stage..

Matt [Indiscernible] that restriction is on the common that the parent Company dividend range but does the utility stock dividend to the parent before that or is it also..

At this stage, you may have seen that we have disclosed this quarter actually in inter-Company loan. So I think at this point, we've got the path to make sure that we're really stable be it mid-year 2023..

Okay. Thank you..

Sure Thing..

Your next question is from Steve Fleishman with Wolfe Research..

Hi. Good morning.

Can you hear me?.

Morning Steve. Yes we can hear you Steve. Good morning..

Thanks. Curious on the -- last week we got the proposals from the democrats in their infrastructure bill, the way we want to call it. And wanted proposals, is this minimum effective tax rate.

And I know it's early on, I know it's not pass ed, but is there any risk that that could kind of impact the ability to get all your NOL and also the securitization tied to the NOL?.

Sure, Steve. Good morning. Thanks for the question. I think in its highest level it is -- it's definitely a little bit early in terms of our initial read of this, just given a draft was provided, I believe last Thursday, there's really a couple of things going on.

First is that the tax NOLs are derived separately are not impacted by book minimum tax and the proposal really is focused on book and wealth. And then second, as you can imagine, just kind of going forward very traditionally, these costs are considered costs that are part of cost of service and are passed through the customers.

So it's a bit early to know exactly how this will play out. And certainly the draft again and DC could change again, but at this stage, I don't see an immediate impact coming through from the [Indiscernible] and the minimum tax..

Okay. Great. And then question just on the 0 equity this year, it does also look like the contribution -- the billion dollar contribution to -- for securitization was moved to next year.

Does that mean the equity could have been moved to next year then or not clear yet?.

Not necessarily, Steve. We've consistently articulated that our focus has been on resolving really prior legacy legal issue that has driven some of the equity needs. And as we disclosed today, we made some progress in particular on the Zalk fire.

What I would say is, it is true and we've been signaled pretty clearly here that the -- any additional impact there as it relates specifically to the customer credit trusts would be something that would move into 2020 meaning that first billion payment, right? Would be only occurring after we have completed the securitization itself.

So don't see a risk there..

Okay. That's great. And then just lastly, on the Dixie Fire cost, I know that was obviously a large fire in terms of the acreage, but the impact in terms of structures seem to be relatively small and so I'm a little surprised that the size of costs relative to the structures.

Could you just maybe give us a better sense of What might explain that?.

Sure. Traditionally, what we'll do, Steve, every quarter is we'll consistently update this at this stage. When you look at the totality of structures impacted, what's going on there is you have a mix of a few things. 1. It's the roughly 1400 structures that were damaged or destroyed, 2.

There's often good element of commercial area specific affinity, and 3. There are some areas where we have to contemplate the potential for private timber operations, which would have all on top of each other, you get to the point where we get in terms of those private claims recoveries in the charge we disclosed today of $1.15 billion..

Okay. In your ability, the AB 10-54 is what allows you to be able to offset the write-offs, which shows, I guess being prudent..

And Steve, just to add, acting as a reasonable operator. We look at the fact pattern. We've disclosed much of [Indiscernible] questions. A lot of the information we have is now public through his questions. And in fact pattern is very much [Indiscernible] operator.

And with the AB 1054 new prudent standard that is presumed that does gives us a [Indiscernible].

Great thank you so much for all those answers. Thank you..

Yeah..

Cheers, Steve. Thanks for those questions. And again, what we did in terms of the material this morning for everyone, is if you go to slide 10, we give a gentle recovery mechanism there. Certainly, AB 1054 and its key protections are there, but there are a few other -- this morning. Thanks for that question, Steve..

Your next question is from Julien Dumoulin-Smith with Bank of America..

Good morning, Julien..

Good morning.

So maybe to follow up on Steve's question there briefly, can you talk to a little bit more of the process just in terms of seeing that affirmed through the [Indiscernible] effectively truing it up with [Indiscernible] the $600 million plus of suppression costs would have even, when do we get that affirmation that the process under the AB 1054 Wildfire Fund "works", if you will? And I know it is [Indiscernible] here, but how do you practically see it from here given now that you've established receivable?.

Sure thing. First things first work our way through the claim themselves. It's very early in terms of any kind of claims interface we're having at this stage. And you traditionally had a time period that passes in terms of the first couple of years before the initial statute limitations stage.

At that stage, once we've resolved the claims, and as we resolve the claims, we only then would be maybe bringing things forward to the Wildfire Fund Administrator. Really the Wildfire fund to seek potential recovery. Any guide Julien, this could be a few years before we're having that explicit interaction.

And things related to fire suppression costs, other additional acreage impacted in national and state forest land.

Those are things we provided in the disclosures certainly today and we'll continue to take a look at and that's just something that every single quarter we consistently [Indiscernible] 1.15, and the recovery sources would be pretty limited in terms of the Wildfire fund impact [Indiscernible] appear you can imagine, it's just that amount over $1 billion, so roughly a 100 [Indiscernible].

Right. In deed. Excellent.

And then if I can give it to a slightly different subject here, if you don't mind, on the resource adequacy front, certainly we made it through the summer relatively unscathed when are you curious to see where you stand -- where the state stands against whether [Indiscernible] curious on your state of the shares after the summer..

Yeah, great question. It's definitely top of mind. We did see some delays, particularly a battery storage. However, we expect to have over 900 megawatts added to the system by the end of this year. And so that's all that's valuable for next year. In total, our plan is to have 40 megawatts by the end of 2023.

And we're working hard to get those [Indiscernible] we can make up for the delays that continue to plague the supply chain. I'll also our path forward that I think the state of California is actually doing a good job of looking statewide at who's responsible for procuring what. We've developed a strong working relationship with CAISO.

CAISO had some new leadership there and we're working together to make sure that we have the kind of transparency and visibility into what is required by when.

And so lots of I would say positive momentum and working together as a state to make sure we have adequate [Indiscernible] gets very important and we see the potential of distributed resources and clean energy resources in this unique time -- this unique moment in time, generational opportunity to clean the energy resources as we transition and provide more resource adequacy for the state.

So I would say very positive signals moving forward..

If you can just quickly [Indiscernible].

Hi Julien, it's Chris. There's not much more detail we can provide there. They do relate broadly speaking to the Dixie Fire.

What I would offer as well is that -- you can imagine, we have an enormous amount of information in the public domain at this stage through -- primarily due to the requests that have come through from Judge Alsup and the federal monitor, so quite a bit of information already out, we've shared certainly what we've seen at this stage and at this point, we'd certainly be compliant with any request from the U.S.

Attorney..

At the end of the day, we continue to say that the fact pattern reinforces, that we are reasonable operator, and will continue to cooperate..

Thank you for the responses, guys. Best of luck..

Thanks, Julien..

The next question is from Michael Lapides with Goldman Sachs..

Hey, guys. Thank you for taking my question. Just a high level one, commodity prices have moved a lot. That's just everybody can look every day of the week and yet they come down in the last couple of days a little bit. How are you thinking about the bill? Because you've got a pretty sizable General Rate Case request out there.

You've got all the various cost recovery related to Wildfire spins that are starting to flow to the bill, maybe not on the Income statement, but on the cash-flow statement and online customer sales. And then you've got the move in gas and purchase power costs, which have been pretty material lately.

How do you think about things that can help offset that to mitigate significant Bill creep for your customer base..

Michael, great question. This is -- obviously, top of mind affordability is always very important to us. And there's lots of things that we can do at PG&E to protect customers from bill increase. But just a couple -- just a couple of facts for you. Our average monthly gas fill is at around $50.

So a 10% increase in gas prices would increase the bill about 2%. The commodity portion of the bill is about 25% of the bill.

The impact is muted, but more importantly, I would say that because we have pipeline access to many gas production basins and we're able to -- that allows us to get the lowest cost gas as it's available and then we use our gas storage to then be able to protect customers from these unusual upticks in price and protect our customers in that way.

So that's an important thing. And I would also say that as gas fuels electric prices, a 50% increase in electric power prices would have less than a 10% increase on our customers' overall bill, so again, because we have limited exposure to natural gas for our customers' electric usage.

So I would say of many jurisdictions, our customers are well-positioned given the commodity prices.

But more importantly, I would suggest that we -- also with our lean operating system in place to protect customers' bills, making great investments in band-aid replacements for permanent long-term, higher-value capital replacements that serve customers very well and better than deliver for investors.

So that's definitely our game plan and our path forward..

Can you believe since material Millennium cost decreased potential in the Company in the next couple of years, or do you think it's more beyond that?.

Well, I think we're seeing cost improvements to bay by Oliver already some of our wells on the visibility that we have with our daily operating review cadence, or experienced executives on a routine annual basis, I suggest those cost savings will materialize and they are materializing now and they won't materialize for years and years and years to come.

I will share with you every moment that I spend of there being our operations, which is a lot of moments. I see great opportunities for waste elimination and costs savings for our customers..

Got it. Thank you, Patti. Much appreciated..

You're welcome, Michael..

Your next question is from Stephen Byrd with Morgan Stanley..

Hey, good morning. Thanks for taking my questions..

Good morning Stephen..

Morning. I wanted to step back on federal draft legislation again, building on Steve's question.

Just thinking about other provisions that I notice, certainly think about sort of that quite a bit of capital [Indiscernible] climate change impacts, what that might be able to do from both PG&E specific [Indiscernible] reducing fibers? And then maybe just second part of the question is just very broad, which is just other impacts from federal legislation that you're thinking about the [Indiscernible] what I've been thinking about a sort of climate [Indiscernible] things?.

Steve and we have been actively engaged very early on in the great resilience, the climate adaptation components of much of the infrastructure package and we want to make sure that there were a couple of things that were recognized in each one is making sure that we can have support for our customers on vegetation management, which has a high expense item for us, as well as other grid hardening solutions, micro grids, or even undergrounding, and we see those elements in the package today.

Now your guess is as good as mine of what they're actually going to get past, but they continue to be in the revisions that we see coming forward. So we think that's a good sign. We also are very [Indiscernible] Federal forest service. The U.S.

Forest Service has a very important role to play here in California and we're working in partnership with them on fire prevention and fire mitigation efforts, and making sure they have appropriate staffing so that in the event of fires, they're able to adequately respond and so, we're very supportive of additional funding for the U.S. Forest Service.

And then ultimately, obviously this clean energy transition. We've been leaders in that PG&E Today, we have an 85% greenhouse gas free generation mix and we're proud of that and we're proud of the leadership position we've shown nationally on that front.

We want to make sure that the infrastructure package continues to reflect early mover versus, if you will, people who have advanced in clean energy early. We want to make sure that the package definitely recognizes that.

So we've been working closely with our DC office and EEI and others to make sure that the clean energy components of any of the legislation is favorable..

That's really helpful.

Petty, maybe just building on the point about fire risk, cost mitigation, I guess I'm thinking a lot about that magical 8-to-1 ratio of CapEx to O&M and to the extent that O&M cost can be deferred by federal support, could that potentially allow you to accelerate the under grounding effort in a way that does not harm customer bills because of that total support or is it unclear at this point?.

I would say there's lots of reasons why our customers will not be harmed economically by our program. First and foremost, even without federal assistance, your point about the trade-off between OpEx to capital is a key enabler to funding that under-grounding program.

We know that the ongoing enhanced vegetation management and [Indiscernible] has a large expense to customers.

We $1.4 billion a year on vegetation management, being able to trade off some of that for our capital investments in hardening the system, or even -- so for under-grounding for sure but also for micro grids and other hardening solutions, depending on the circumstances.

That trade-off is very good for customers and we think there's a very -- and we'll start to demonstrate some of that in our longer-term financial plans and our Wildfire Mitigation Plan that you will see at the early part of 2022. We don't think that there's an economic trade-off for customers to safety.

We think they can both -- we can both have affordable energy and safe resilient energy and that's our path forward..

Understood. But I was thinking as well, but that could get accelerated even further. If you could get federal support that could lower your cost structure but I guess we'll stay tuned to see how the specific shape up for that..

Yeah. No, your intuition is right on that, Stephen, of course it is. There's -- certainly any support from this package will be good for customers and we've got ample capital to deploy that if we can defray some of the costs to federal support, we're off for it. There's definitely lots to be done out here in California..

Very good. Thank you so much..

Thanks, Stephen..

The next question is from Shar Pourreza with Guggenheim Partners..

Good morning, guys..

Morning Shar..

Morning Shar..

Just real quick on the equity.

Obviously, you guys removed the for this year, but I'd love to get a little bit of a sense on sort of the moving pieces as you're thinking about financing which seems to be a relatively ambitious CapEx plan rights as you're thinking about under grading, distributed generation micro grids would any of those programs push you to issue equity.

I guess the broader question is, what would push you from 0 or do you think sort of Patti with the amount of leverage that you have at your disposal, like on the O&M side, that you can leverage that opportunity versus having to mitigate -- versus having to actually raise future equity..

Hey Shar, it's Chris. I'll go ahead and take it..

Hey, Chris.

I think -- morning. So I think there's a couple of factors. First we'll be growing into our undergrounding plan a bit.

That's the way I would think about it as we start to reduce operating expense and work into that undergrounding plan, it will occur over time, we'll really start to disclose more details there as part of our 2022 Wildfire Mitigation Plan in February.

We haven't guided toward 2022 equity needs at this stage specifically, but we would intend to do so again at Q4 and provide more color at that stage.

I wouldn't necessarily just often consider, though what I'm getting at here, undergrounding or for that matter [Indiscernible] driving of an immediate equity need, there's going to be something we're really growing into this plan over time..

Just on under grounding. I'm curious, right? And I know you kind of mentioned it, but I'd love to get a little bit more of an early indication on sort of the cost and scaling up that 10,000 mile program, right? I mean, obviously the slides reiterate the plan through 26 with undergrounding remained, quote-on-quote, a potential opportunities bucket.

Are there, I guess -- Patti are there any changes to the scope or timing that you're contemplating for such an undertaking from your prior messaging as the CPUC is starting to more actively inquire by your plans.

So net-net, I guess, can you do more cheaper and faster?.

I would say we are very bullish on that Shire. We have started to have -- we get a global RFI for up construction and engineering firms and we received about 25 responses and we're very elaborate, we're doing face-to-face discussions with 7 of the firms and they're very affirming.

It's very exciting, we can't wait to share more details and we will, but I'll just tell you that we feel more convicted than ever that this is an important part of the solution.

And I will reiterate that our capital program is very expansive and under-grounding is a portion of it, we do think that it's an important portion of it, but I can tell you, I heard about just one example of a job last week where we're undergrounding as we speak and as we observe the work, we see tremendous opportunity to reduce the cost of doing that work, and when we're at scale.

And so -- and in fact that project was in about the $2.5 million to $2.7 million a mile range. And that's the current active projects that is not what I would describe at scale. We will be at scale and when we are the costs are inherently lower. And so we are very, very bullish.

And all of the feedback information and we have to respect the CPUC 's role to affirm that [Indiscernible] we know and what we can see moving forward we're very confident that as people see the numbers and the plan, they'll feel very excited just like we do..

Now that's helpful metric investors would like to see that 10,000 mile target tripled, but thank you for that.

And then just last thing, I apologize I had to hop on and off the call but, can you just maybe comment on the recent wildfire safety division resolution ratifying actions from the 21 WMT update, especially as the resolution would require the 22 WMP update to be included in the GRC proceeding including sort of an explanation of the undergrounding plans.

Does it complicate the proceeding or is it in line with sort of your GRC strategy? Thank you..

Yeah. I guess a couple of things, just to touch on. So the good news is, as you all remember, the Wildfire Mitigation Plan was approved by OEIS. The CPUC ratified that safety certificates, are ratified our plan on April 21st, 2021, and then we'll shortly file for our safety certificate.

We do have a required safety meeting on Wednesday, November 10th with the CPUC and OEIS. We look forward to that opportunity to continue to talk about our plans. And so then shortly there after we'll file our 2022 Wildfire safety certificate for OEIS.

Now, currently that Wildfire safety certificates that we currently have is in place until the following proceeding happens. So we feel very -- the process is happening as discussed. We think it's a great opportunity to talk more about our under grounding plans in our 2022 Wildfire Mitigation Plan, but we'll file that in February of next year.

So no red flags as far as we're concerned, we feel good about how it's progressing..

Fantastic. Thank you guys, see you in a few days appreciating. Appreciate.

Thanks, Shar..

Once again, if you have a question, press star [Operator Instructions] Your next question is from [Indiscernible]..

Good morning..

Morning, Jeremy..

Morning.

I think [Indiscernible] recent years and just wondering if this might be a faster weather conditions and how much might be evidenced of any mitigation that investments you've been doing so far are really starting to turn the corner?.

Well, Jeremy, I appreciate you asking the question because it's a good opportunity for us to reiterate that we believe that our safety measures that we've put in place, the investments that we've made, the vegetation management, fee inspections, and the enhanced power lines safety settings combined PSPS, has made our system safer and our customers are safer and therefore our investors are as well as a result.

Certainly, we were not disappointed to have a little early rain and rain is forecast today and later this week and that all makes us feel good. But as we look at our ignition rate, that is the most compelling statistic in my opinion, and I encourage everyone to look closely at it.

In the areas where we implemented our EPS, we've had an 80% reduction in ignitions. I attribute that to that measure. I will also say that given the drought conditions that we experienced this year, historic extreme drought, we have fared extraordinarily well, and again, I -- in managing the vegetation and doing those inspections..

Got it. That makes sense.

And maybe just kind of picking up on your point there, given the success of these enhanced safety settings, what percentage of a high risk circuit can you expand these to, and how long might that take?.

Well, again, we can be very targeted about this. We know where [Indiscernible] dynamic tool that we can use. This year, we did around 50%.

Next year, we could do a 100%, and we -- but it doesn't have to -- it's not like an on-off [Indiscernible] We can be very, very targeted, and we've done some work to really optimize the device settings to shrink the impact.

The time to restore now is much closer to what the time to restore what's before we put it in the settings because we've shrunk the impact of each of the disturbances and our patrols have become more [Indiscernible] for our team's response this year has been extraordinary, particularly given the conditions and we know it's an important tool to have in our toolkit.

Long-term, we know the ultimate solution is a hardened system that is designed and built to be resilient to wildfire and that's why our under grounding and all of our other mitigations are a very important path forward. But in the meantime, today, every day, customers on our system are safer because of the measures that we have taken..

Got it. That's helpful.

And just one last one if I could here, and understanding that anything other that's top priorities into Wildfire Mitigation Plan filing?.

Yeah, I think it's really continuing to streamline our vegetation management and our hardening plan. I do think that you'll see more of these remote grid applications.

There's a lot of circumstances where we have a long radio running through a forest that we could just eliminate and don't even underground it, just equip those people at the end of that line with the distributed energy resource that is both cleaned and resilient to Wildfire and lower costs.

And so we do think there's a variety of solutions that you'll see more of in our Wildfire Mitigation Plan for 2022 and beyond..

Great, that's very.

The next question is from Ryan Levine with Citi..

Thanks for taking my questions. What portion of the gas [Indiscernible].

Hi, Ryan it's Chris, you can imagine, we don't disclose at that level of commercial decision-making for us, but I would just offer again to reiterate what Patti mentioned is, when you combine the gas storage, we've got, when you combine the availability from the basins that we have, you combine the hedging to limit volatility.

And the fact that we have costs trued up annually, it really is combined a really good solution for customers and clarity for investors..

Okay. But just to be clear, the 10% increase in gas and 2% impact on customer bill is on a hedge basis, and that to still confirm that. And then does that assume about 3 [Indiscernible].

I wouldn't think about that, Ryan, as netting a hedging impact. I would think about that just as a basic rule of thumb..

Okay. And [Indiscernible] that's being completed.

And how much more [Indiscernible] it's possible this year under the current regulatory construct?.

Well, that's what we're excited to share at the beginning of next year, we'll start to show the miles and we're so excited about that's why we're at a very project-by-project basis now and so we can't wait to be able to share with everyone what the ramp-up plans and get the economies of scale with that ramp..

Appreciate that. And then there is a mention of seven parties in more face to face conversation, is the intention for one party [Indiscernible] you're able to comment..

We're looking at it could be multiple, it could be one. We're not sure where that's the benefit of having these conversations with these folks will see it defies was a request for information. not a request for proposal, we're really working together to learn what is the best path forward..

And just that -- I think right for us, it's exciting scale it's natural to have a couple of large providers that you can create good, good competitive tension in there to get the best outcome possible for customers. We're definitely excited about what we're seeing so far.

To entrants and we're winning in that list down to some really good potential partners..

Appreciate the color. Thank you..

Thanks, Ryan..

At this time, there are no other questions.

Do you have any closing remarks?.

Yes, thanks Jenny. Hello, everyone. Thank you for joining us today. Our system is safer every day, and we want you to know that. It's both safer for our customers and for you, our investors. We look forward to sharing more details with you and having more conversations with you at EEI next week. It's right around the corner. Be safe, everybody..

Thank you for attending today's call, you may now disconnect..