Ladies and gentlemen, thank you for standing by and welcome to the PG&E Corporation Third Quarter 2020 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Matt Putnam, Senior Director, Investor Relations. Thank you. Please go ahead.

Thank you, Rob. And thanks to those of you on the phone for attending. Joining us this morning are Bill Smith, our Interim Chief Executive Officer, and Chris Foster, Vice President and Interim Chief Financial Officer. Also joining us today are John Simon, Executive Vice President General Counsel and Chief Ethics & Compliance Officer; Michael Lewis, Interim President of Pacific Gas and Electric Company and Robert Kenney, Vice President of Regulatory and External Affairs. I want to remind you that our discussion today will include forward-looking statements about our outlook for future financial results, which are based on assumptions, forecasts, expectations, and information currently available to Management. Some of the most important factors that could affect the Company's actual financial results are described on the second page of today's third quarter earnings call presentation. The presentation also includes the reconciliation between non-GAAP and GAAP measures and could be found online along with other information at investor.pgecorp.com. We also encourage you to review our quarterly report on Form 10-Q that was filed with the SEC earlier today and the discussion of risk factors that appears there in our Q2, 10-Q and in the 2019 Annual Report on Form 10-K. With that, I'll turn it over to Bill.

Thanks, Matt, and good morning everyone. Thank you for joining us today. Before I cover the priorities for the quarter, I want to express our sympathy for all of those impacted by the devastating wildfires we’ve experienced in California. It’s been a history and very challenging wildfire season for our customers. We’ve seen over 4 million acres burned in California with nearly 3 million acres burned in our service area. We thank the Governor’s office, CAL FIRE, California Office of Emergency Services and all the first responders for their tireless efforts in keeping out new lease safe. We continue to focus on executing a series of important changes at PG&E. These changes will help us live up to the commitments made as a part of our chapter 11 emergency plan including our efforts to improve our operations and safety outcomes, reduce risk and enhance our customer focus. This morning I’ll touch on three key areas of focus for PG&E. First, improvements to our wildfire mitigation plan; second, our operational updates and third, our executive leadership recruitment progress. Chris will then cover our financial updates and key regulatory cases. Looking at our wildfire mitigation plan, our highest priorities remain mitigating ignition risk, enhancing our situational awareness and implementing public safety power shutoff or PSPS advance. We will initiate these events when absolutely necessary to protect public safety. As you can see on slide 4, we continue to be on track or ahead of our 2020 targets for system hardening, enhanced vegetation management and installation of weather stations and high definition cameras. Our efforts over the last quarter have our weather station and camera installations back on track. We will respond -- judge all such request for information in the monitor report PG&E’s unit vegetation management inspections next week share the monitoring…

Thank you Bill and good morning everyone. I plan on covering four items which are highlighted as the key takeaways on 53. First we are on track and reaffirming the five-year earnings guidance we set last quarter. This is reflective of the consistent growth we anticipate over the coming years. Second, I'll provide an update on our insurance coverage, the impact of COVID and our financing needs. Third, I'll highlight meaningful progress on our regulatory cases that provide additional revenue clarity. Lastly, I'll briefly cover the third quarter results. Starting with our earnings guidance elements, they're highlighted on slide 10. We've updated our GAAP earnings guidance range slightly for 2020 to reflect a loss between $1 and $1.06 per share. We are reaffirming non-GAAP core earnings per share guidance as well as our earnings factors for both 2020 and 2021. Specifically in 2020, we are guiding to non-GAAP core earnings of $2 billion for the year or approximately a $1.62 - $1.63 per share. This is based on weighted average shares of roughly 1.25 billion in 2020. The drivers of variants from earning our authorized return remain unchanged. Also noted here are the key assumptions underlying 2020 guidance. This includes receiving a final decision in the 2020 general rate case in the fourth quarter. Our guidance is also consistent with the TO20 formula rate settlement and assumes Fed’s approval of our separate AFUDC waiver request reflected in this settlement in the fourth quarter. I'll come back to these regulatory items to provide more color. Moving to non-core earnings guidance which is broken out on the same slide. We've made a couple of adjustments to these items. Our range for bankruptcy and legal costs increased $30 million to the range of $2.66 billion to $2.7 billion. The increase to the range…

[Operator Instructions] Your next question comes to the line of Stephen Byrd from Morgan Stanley. Your line is open. Stephen Byrd your line is open. Your next question comes from the line of Julien Dumoulin-Smith from Bank of America. Your line is open.

Hey good morning. Can you hear me now?

Yes we can hear you Julien. Good morning.

Good morning. Thank you. So perhaps if I can go back here thank you for all the details, can we talk about the wildfire certification process and just your expectations here? I mean clearly both of your peers have it, certainly you had articulated some forthcoming deadlines here on obtaining it. Any specific context that you would provide to us and thinking about nuances as to delays or otherwise as to the process itself just given where we stand today and have a follow-up?

Sure Julien. No problem. Again I think as Bill laidout, we have filed all the information that we think is relevant that the commission was seeking at this stage. We filed that on July 29th. So we do still anticipate a decision from the commission by the end of the month. What I would offer just in terms of context around it because I think there's been a little bit of confusion is maybe a couple ways to think about it. First it's important to keep in mind that while the commission's -- that decision the prior safety certificate remains in place. If we run into a scenario where the commission were not to approve you'd have a couple of things occurring. First we would have the ability to continue to have access to the AB 1054 wildfire fund but we would lose the protections of the shareholder liability cap and the improved prudency construct. So just wanted to provide that. We don't anticipate that being the outcome Julien, but I just wanted to provide that as a way for to help you think about what the other scenario could look like.

Got it. All right. Excellent. Thank you. If I can go back can you talk a little bit about the scenarios here with the Zogg fire, I know it's difficult to speak to it at this point in time but can you speak a little bit to the context and the decision making around PSPS and I know you all provided this context earlier but can you give a little bit more as to the events as to why you did not engage in PSPSP in that specific context there? Again how that fits into the certification framework as well?

Sure Julien. This is Chris. I think the safety certificate we would consider largely separate and apart. There was a fairly straightforward set of criteria that the commission was evaluating as it related to the certificate itself. If you look at the situation in terms of the data points around the Zogg fire, there were three different weather stations that were in the general vicinity which is what we shared with Judge Alsup in our filing this week and there I think what you saw is generally speaking the sustained winds were roughly 15 miles per hour in that area with gusts at certain publicly owned weather stations at up to around I think 32 miles an hour. That deviates from what we have in terms of our own planning. As you know our public safety power shutoff approach consists of a number of different considerations from relative humidity to the moisture in the fuels in the ground to wind speeds as well. The wind speeds in those areas did not meet the general requirements that we have in place. You could consider those as roughly 25 miles per hour in terms of sustained winds and generally speaking an exceedance of 45 miles per hour in terms of purposes when we typically consider shutting off an area that customers are being served by.

Got it. Thank you for that clarification. Lastly, sorry for another one but if I can squeeze it in just on insurance I obviously the market is dynamic. You've obtained more here. Going forward in the next year what are your options around different avenues here if you can just elaborate very quickly the intent of which that it may not necessarily perpetuate as it has this year?

Sure. I guess I would start with I have to acknowledge it's been a pretty dramatic year as Bill talked about in terms of statewide impacts from the August heat, storm, fires and other elements. So it's obviously Julian the market's going to continue to evolve I think from a cost recovery standpoint we do think that we have achieved what is reasonable in terms of insurance coverage before this year. In terms of next year, I think there are probably a few things at play. Our understanding as we read the statute is that AB 1054 does contemplate the wildfire safety administrator the entity that oversees the wildfire fund to contemplate a level of coverage for the industrial utilities in the state. Absent any kind of explicit guidance there we'd be looking at it next year to determine what would be the most cost effective coverage options for our customers everything from multi-year plan components, some different structures to the insurance itself as well as certainly trying to compete as best we can for the best price possible for customers. So at this stage for this year, we do have a total of a billion five in comprehensive coverage, 868 million of that is for wildfire coverage at a total cost of the one five which comes to roughly $ 860 million.

Thanks for that. Appreciate all the time.

Your next question comes from a line of Steve Fleishman from Wolfe Research. Your line is open.

Hi, excuse me, good morning. Just I guess a question on the fire victim fund. Have you gotten any indication from them on their intentions in terms of the shares they own and any plans for basically what the plans are for those shares going forward?

Hi, good morning Steve. We haven't at this point. What you'll see in our queue is that we did point out that as of October 20th the information the company has is that the trust has not sold any shares. So that really is the update on that for. I think at this stage obviously given the fire victims trust is a substantial shareholder of the company we do our best to communicate openly with them as well to help make sure that they're aware of events around the company but at this stage can't really speculate on how they're thinking about share issuances in the future.

Okay. Can you clarify whether they were blacked out at all or anything or just not?

No, sure Steve, I think it's a fair question the dynamics there that you should think about going forward are that the registration rights agreement that we do have with the trust provides for blackout periods some demand rights provisions and other things but largely those attributes would not be really in the public domain. Those would be exchanges of information between the company and the fire victims’ trust. Certainly at this stage our interests are very aligned and so we would want to collaborate with the trust as appropriate should they undertake an unwritten offering.

Okay, second question just and this is I don't know how well you can answer this but we've had a lot of events this season and you've done several PSPS and obviously most of them work very well. We do have this Zogg event, but then a lot of successful events in terms of avoiding issues. So could you, is there any color you can give on just kind of political regulatory feedback you're getting on your activities so far?

Hi Steve. This is Bill Smith. Thanks for the question. I think that generally speaking people understand the nature of the challenge that we are facing and feedback has been relatively good from our key stakeholders. No one likes to see us have to do this, but I've seen in fact some articles that kind of recognize that this is about public safety and I think as unfortunate as this season has been if you look at the early part of the season and the number of wildfires we had that had, nothing to do with utilities of any kind I think it showed the public in general that this is a much broader issue than PG&E. And I think the state of California has said something approaching 9,000 fires so far this year. So I think there's a better acceptance this year of the nature of the challenge. We've been getting some pretty good feedback from all the key stakeholders that were executing well and I would like to say that in the events that we've had this year while we're still doing some of the final tallies from this latest event. But there have been well over a hundred cases where we found debris and other things into our lines that had we not taken the proactive steps to implement a PSPS could have or would have likely started a fire. So I think that obviously you point out the Zogg issue we've got to learn more about that but I would say generally speaking what we're doing is working and I think people appreciate that it's for their safety and the safety of the communities.

Great. Just one last quick one, just on the management hires that you're working on. I know can't probably give specifics but just given that these are obviously three very important roles, could you give us some color on the types of people you're looking at for these different roles or at least are we going to know these people any color there would be helpful?

Yes. Well without giving any detailed specifics, I think what I would say is we're looking for people with experience and a strong commitment to safety and operational effectiveness and basically operational excellence. So I'm really pleased at how that whole process is coming along. So just stay tuned, but it's come along quite well and very much according to our plan.

Great. Thank you.

Your next question comes from the line of Jonathan Arnold from Vertical Research. Your line is open.

Hi good morning guys. Quick question on the TO20 and just sort of how to think about this going forward. I see it looks from the slides as though you're sticking with the rule of thumb sort of guidance modeling assume the CPUC cap structure and return across the end. But one feature of the settlement here is that you're getting to learn on this hypothetical cap structure. So sort of curious whether there is some sort of help embedded within there versus how you were suggesting we approached this before or whether it could have fit just within the general tolerance?

It's consistent Jonathan. Thanks for the question. I know that the TO20 case has some unique elements to it but at this stage the way, the thing that I would focus on is the assumption that we've called out. If you specifically look at our 2020 factors I think you'd want to focus on the AFUDC waiver because that's the piece at this stage. The other elements are fairly straightforward they're not changing relative to where we were before you. You'd want the AFUDC waiver piece to be handled by the FERC accounting staff reasonably and a general way to think about that if it's helpful Jonathan is you'd probably be looking at a $0.03 swing roughly depending on how that turns out but our assumption as we call out here implies that we think that we'll have that FERC accounting staff final view by the end of the year.

Actually I did want to follow up on that to understand that better. Does that have an ongoing earnings variance impact or it sounded like it might be more retroactive looking applying looking back but I'm not sure.

It'd be looking back Jonathan.

Okay. So that $0.03 you're talking about is just a swing factor in terms of what you would book as core earnings for 21 but ultimately doesn't really change the trajectory. Is that right?

So just to be clear Jonathan, we called it out as an assumption in 2020 specifically so that's where we would anticipate the impact if it were to go in a different direction.

Okay. Without going in a different direction would that change the go forward earnings power or just impact with 2020?

It would be an impact confined to 2020.

Okay. So that was it and I think just one thing on insurance I know you just gave us the total cost. Is there a data point on what you ended up paying for this incremental 100 million?

No. There is not specifically Jonathan. I do appreciate the question because there's been quite a bit of focus on the wildfire component of the coverage itself. We haven't provided any additional color at this stage. I certainly imagine we'll continue that discussion at the CPUC as we examine cost recovery there at this stage. Again this overlaps with the 2020 generate case proposed decision that we have and we do hope the commission ultimately in their final decision could land at the place where in the language that's reflected in our settlement agreement.

Okay. Thank you very much Chris.

Your next question comes from the line of Michael Lapides from Goldman Sachs. Your line is open.

Hi guys thank you for taking my question. Chris this one's probably for you, just curious there are lots of items that won't necessarily have a direct income statement impact but could lead to significant sources of cash inflow in the FEMA and [indiscernible] can you just walk us through those a little bit because some of these are starting to get pretty material and I'm just trying to think about things that would be kind of cash inflows for 2021/2022 that may be more cash flow statement versus income state drive stable drivers?

Sure Michael. Good morning. I think if you look at it we call them out as well in our disclosures in the queue, but the way I think about it is you have multiple different memorandum accounts that have been stacking up. I want to say it's I could be off on this number. So I'm going to be generic, but I think it was roughly in the neighborhood to $2.5 billion to $3 billion having been building up. So I think that's where your focus is. Ultimately if you step back though these cost recovery mechanisms and the memorandum accounts are something we've been planning around for a few quarters. So I wouldn't think about it as implying there's any kind of change of the financing plan that sits behind it to support it because I think ultimately if you really start with FEMA for example, it's been a fairly straightforward cost recovery mechanism for the company for years. We were pleased to see that the interim rate relief request came through that accelerated some of those recoveries Michael, but otherwise as you see those broken out we would contemplate that traditional regulatory lag that exists for Californians that wouldn't necessarily be impacting any kind of future financing.

Got it. And then last item can you guys think about the bill, what’s going to happen customer bill over the next couple years. Can you talk just directionally what do you think the level of bill in place of inflation you anticipate over the next three to four years three to five years could you look at your plan?

Sure. So stepping back a bit Michael I think it's a good question. We have substantial investments needed to mitigate wildfire risk. But in terms of the company's plan it's actually pretty straightforward. We have the combination of the GTNF, our cost of capital proceeding, the generate case and now that the TO20 case which really gives us a pretty good line of sight to what that's going to look like at least for the next three years and in most of those examples. As you start to look at that kind of three to five year range we're generally speaking looking at roughly four to just north of 4% average electric system bundled average rate impacts for our customers that puts us generally speaking in line with growth projections in our state. We are very fortunate to serve the area that we do and the economic diversity that exists here and I think there's another way we look at it as you can imagine as well. We also contemplate these growth rates as it relates to a percent of share of wallet for customers. We acknowledge that our customer base is very different from customers who may live in the central valley of California to northern California and those in the more moderate temperate areas in the coastal communities and so that's the range that we're generally speaking looking at for the next few years.

And finally are there any major cost savings areas where you think you could offset some of that bill inflation?

Thanks. This is Bill. I think there are a lot of areas. I wouldn't say there's a given major place, but there are a lot of opportunities that we think that we can do from taking approach to some of our contracting efforts. When we started after the events of 2017 and 2018, there was a very aggressive attempt to get as many resources on the ground as we could. I think there are ways for us to come back and look at that more effectively. I think one of the things I'm excited about is the point that I made about an issue that we're kicking off around some of our operational process improvements. I think there are ways that we can get much more effective at what we do, reduce lost time, take cycle time out which reduces inventory needs a lot of things. So I think it's a broad range of areas that can help us get costs out of the business not any one or two individual items.

Got it. Thank you guys. Much appreciated.

[Operator Instructions] Your next question comes the line of Jeremy [indiscernible] from JP Morgan Security. Your line is open.

Hi good morning. This is Rich on for Jeremy. Thanks for taking our questions. Just want to start off with circling back on the prior question. Could you provide a little bit more call around these enterprise-wide initiatives that you alluded to earlier maybe the magnitude of the impact of COVID over the next few years and how this fits with sort of driving earnings versus offsetting customer rates?

Sure Jeremy. So there's a few different ways to look at it. I think stepping back what I think, you're interested in and I want to be sure I'm responsible are kind of categories as a way to contemplate this. Some categories would be earnings impacting others would be more specific to benefits to customers. As we look forward to the next few years, some of those categories we've talked about include things like renewable energy credits. Anytime you look at kind of the energy side of the business in that way, we're always searching for savings to make sure that we're cost competitive on behalf of customers. So I think benefits that you would see there would accrue to customers. We also continue to evaluate additional surplus property assets largely similar treatment there in a number of those cases where if there's a developed area there. Many of those benefits would also accrue back to customers. You can imagine that conversation is really evolving in real time as we look at the COVID-19 impacts and how to think about the future state of kind of the footprint of the company. Obviously that's the case with our future move as well to Oakland and moving our primary headquarters there as well. As we think about some of these other elements of work process improvement that Bill alluded to, I think you could see a split there, but ultimately we see that as being a driver for us going forward in terms of achieving cost savings that will allow us to in the future earn our authorized return as we've guided to in 2022.

Great. Thank you and then just given the current focus on the elections right now can you provide any early thoughts around your financial plan and sensitive issue corporate tax rates increase?

Sure. Thank you Rich. Sorry, it's limited in short because of the NOLs that the company has I think if should there be a change and should there be a substantial change in terms of tax policy I think for at least PG&E you'll see limited impacts there.

Got it. Thank you very much.

Thank you.

Your next question comes from the line of Ryan Levine from Citi. Your line is open.

Good morning. Can you, sorry, what's the non-core assets the company is starting to sell and can you remind us the sharing mechanism between ratepayers and shareholders on the potential proceeds? Any more color your picture on it?

Sure Ryan. I appreciate the question and I'm really not able to be much more forthcoming than that. I think it's what emphasized there and where we were really last quarter’s we are really doing the internal work right now to evaluate some small non-core assets that we're evaluating. If you step back and just think about different what I'll call asset classes which are you can think about different asset classes in different ways. One of which is the land that the company owns the physical footprint that we have in different areas. Some of which is developed, some of which is not. Generally speaking the benefits of the crew from any sale will differ depending on that treatment as one example. As you look across other different asset classes there could be opportunities where the gain on sale treatment is slightly different and so at this stage we are very focused on this effort. I do think we can continue to make progress but don't want to be too specific because I don't want to get ahead of our internal work in any kind of outreach we'd otherwise be doing at a later stage.

Thanks and then changing gears what assumptions change that drove the higher estimate and given that you haven't received the Cal fire report are there any additional information changes that you're anticipating that we may see further revisions at this current estimate?

Sure Ryan. So this is really just an element of time passage and us getting better information over time. At this stage what we had referenced, we're having conversations as you can imagine with some of the different entities and in particular what we noted were the segregation claims themselves we have better data than we had before as you recall with prior, as you may recall with prior wildfires in prior years the California office of insurance had disclosed a greater level of granularity which provided one means by which to have additional input. In this situation we have now improved data as it relates to the segregation claims in particular and that allowed us to update our accrual at this stage.

Okay. Thank you.

Thank you.

There are no further questions at this time.

Well thank you all for your interest in PG&E and thank you for joining us on the call today. If you have any follow-up questions please don't hesitate to reach out to investor relations. Thank you.

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect.