The operator introduces the PG&E Corporation Second Quarter 2024 Earnings Release and hands the call over to Jonathan Arnold, Vice President of Investor Relations. He reminds listeners that the discussion will include forward-looking statements and provides information on where to find the presentation and other relevant information. CEO Patty Poppe reports a solid quarter with core earnings per share of $0.31 and reaffirms the company's 2024 guidance and longer-term earnings growth goals.

PG&E remains committed to no new equity in 2024 and there have been no changes to their five-year financing plan. At their investor event in New York, they discussed their message of a decarbonized energy future at a lower societal cost. The company sees new load as a key enabler in achieving this goal and recently received authorization for $2.3 billion in capital investment for energization. The CPUC also approved an increase in return on equity. PG&E's layers of protection strategy has significantly reduced wildfire risk in their service area.

The recent heat and wind events in California have posed challenges for PG&E, but the company has been able to maintain consistent execution and reliability. Despite the longest-duration excessive heat warning ever issued, there were no flex alerts or serious safety incidents. The state has added significant capacity and battery storage to support the grid during extreme weather. In terms of wildfire risk, PG&E has had no fires of consequence and has been proactive in planning and preparing for potential power shutoffs.

PG&E is facing increased risk in 2023 due to a 48% increase in circuit mile days under high-risk conditions and a higher number of CPUC reportable ignitions. To prevent ignitions, the company has implemented various layers of protection, including inspections, vegetation management, and system hardening. In the event of an ignition, PG&E has improved situational awareness tools and a team of firefighters and public safety specialists to respond quickly. Additionally, a third-party risk assessment found that the company's mitigations have reduced the risk of economic loss from wildfires by 93%.

The company will now use a third-party benchmark to measure risk, which is more comprehensive and comparable. They have implemented financial risk mitigations through Assembly Bill 1054, including access to liquidity and a cap on shareholder exposure. The company has passed the $1 billion threshold for settled claims related to the Dixie Fire and will begin the reimbursement process in the third quarter. The company is confident in their safety measures and the differentiated safety posture in California for both citizens and investors.

In the paragraph, the speaker discusses the company's power pyramid and their simple affordable model, which they use to make investments while keeping bills low for customers. They also share an update on their inspection process, which has resulted in significant cost savings. The speaker then transitions to discussing the company's first half results, which have shown an increase in earnings compared to the previous year. They also mention their regulatory progress.

The company's results for the first half of 2023 are up $0.10 year-over-year due to higher customer capital investments and non-fuel O&M savings. However, $0.05 was reinvested back into the business for emergency response and corrosion maintenance. The company's CapEx and rate-based guidance remains unchanged, but the recent GRC Phase 2 decision has increased confidence in potential upside. The company's capital plan focuses on distribution and transmission and aims to provide safety, support the clean energy transition, and improve reliability and resiliency. The company is also looking to bring in an additional $5 billion of T&D investment in the future. The GRC Phase 2 decision was approved, allowing for up to $2.3 billion in incremental spend for new energization projects through 2026, with the potential for further increases in 2025 and 2026.

The company's recent decision has increased their rate-based percentage and demonstrates their ability to work with the commission to balance customer needs with affordability. They have not yet included the full authorized amount in their plan and are awaiting approval for another $900 million of rate-based. They have a strong financing plan in place and are focused on executing their simple affordable model. The company has also beaten their target for reducing operating and maintenance costs and is confident they will continue to meet or exceed their goal. Large enterprise level programs have helped them achieve this success.

The company plans to focus on planning, execution, and automation to improve their capital to expense ratio and make costly repairs more affordable for customers. They are also in a unique position for beneficial load growth due to their location in Silicon Valley and the increasing need for electrification. This will help them achieve industry-leading rate-based growth and keep customer bills at or below inflation.

The company expects data centers and electric vehicles to bring in additional revenue that will offset the cost of necessary capital investments. They also plan to close a securitization issuance next week, which will provide financing savings to customers. The company is also making progress with policymakers and stakeholders, and their performance has led to improved credit ratings. The company's value proposition is based on customer-centric performance and aims for significant growth in rate-based and earnings per share through 2028.

Patricia Poppe, the CEO of the company, explains that their power pyramid is focused on safety and managing wildfire-related risks while also delivering for customers and investors. She mentions their commitment to undergrounding in high-risk areas and discusses the ongoing process of their 10-year filing with OEIS. The timing of the filing will depend on the requirements and expectations of OEIS.

The speaker discusses the progress of the company's GRC and plans for future filings. They also address the recent Park Fire in Butte County and assure that there are no indications of the company's equipment being involved. They express gratitude for their situational awareness and partnership with CAL FIRE.

The speaker expresses gratitude for the team's readiness and mentions the success of managing risks this year. They mention the possibility of investing in additional capital and state that there are certain guidelines that must be met, such as affordability for customers and being accretive to EPS.

The company's current financing plan includes equity issuance and aims to meet 10% growth this year and 9% in the years 2025 to 2028. The plan is balanced and provides flexibility, with a focus on ramping up dividends and paying down debt. The company will continue to follow its authorized regulatory structure and be mindful of market conditions. The company is seeing growth in data center and electric vehicle adoption in its region.

The company is conducting a cluster study to assess the potential impact of adding data center demand to their pipeline. They want to ensure that any additions will be beneficial for customers, particularly in terms of cost savings. The study is expected to be completed soon and results will be shared. Electric vehicle sales continue to be strong in California, with the state's regulations driving adoption. The company is seeing growth in EV load and this is beneficial for both customers and the company.

Jeremy Tonet asks Patricia Poppe about the process for securing more CapEx and she explains that they will make filings reflecting their actual completion up to the $2.3 billion cap set by the commission. She also mentions the possibility of making additional applications this year to show real demand and potentially exceed the cap. Tonet then asks about the uptick in ignition rates and Poppe explains that high moisture levels and dry conditions are contributing factors. She also mentions the importance of their layers of protection post-ignition.

The speaker discusses the layers of protection in place to prevent and respond to wildfires. These include AI-enabled cameras that can alert first responders, a Hazard Awareness Center that monitors the cameras, and CAL FIRE, which has seen an increase in budget and staffing and has the largest aerial firefighting fleet in the world. The speaker emphasizes the importance of this statewide effort and the positive changes that have been made to improve the response to wildfires.

The speaker expresses gratitude for partnerships in California and emphasizes the state's differentiated safety posture with financial and physical protections against catastrophic wildfires. They also mention their involvement in discussions for a national policy on wildfires, but note that it may be a longer process for other states to support such a solution. They argue that wildfire preparedness should be treated as a climate resilience infrastructure standard and that a federal backstop could benefit smaller states.

Julian Dumoulin Smith asks Patricia Poppe about her thoughts on committing to another contract extension as she nears the end of her current five-year deal. Poppe expresses her honor to lead PG&E and her commitment to building a strong team and system that will last beyond her tenure. She believes there is still a lot of work to be done and is focused on creating a sustainable and successful company.

The speaker discusses the importance of having a solid performance playbook and a strong team in place before stepping down. The conversation then shifts to the timeline for improving the company's financial health, including extending the deadline for corporate debt reduction and the potential for increasing capital expenditures. The speaker also mentions positive momentum in credit ratings and the potential impact of SB410.

The company is on track to meet their O&M savings and EPS growth targets, as well as increase operating cash flow. They have built a balanced and flexible financing plan, which includes paying down $2 billion of parent debt by the end of 2026. This provides them with the flexibility to bring in new capital, such as the additional $1.3 billion for SB410. The company has a choice in how they ramp up their dividend to facilitate additional capital. In order to incorporate the additional capital, the company needs to plan the work and ensure it is done at the lowest cost.

The speaker discusses the need for a simple and affordable model to materialize, along with O&M savings and efficient financing pathways. They mention building out a work plan and securing financing to make the plan affordable for both the company and customers. They express optimism about the regulatory constructs in California and the potential for prosperity. The next question asks about the path to reaching the O&M target and the speaker mentions that three years of meeting or exceeding the 2% target would be proof of successful execution of the performance playbook. They also mention seeing smaller and larger initiatives contribute to savings.

The speaker, Patricia Poppe, is pleased with the company's progress and is confident in their 2% waste elimination target. She explains how the company is teaching employees to identify and eliminate waste through a lean playbook and weekly operating review. This has led to thousands of ideas for efficiency and a culture of performance. The company is also recognizing and rewarding employees for their efforts.

PG&E CEO Patricia Poppe discusses the company's plans to address the backlog of new connection requests in response to a question about timing. She explains that the company will file incremental requests for funding as needed based on customer demand and that they are already working on their work plan for the next few years. Poppe also mentions that demand is outstripping the current funding and that the company needs to build a work plan to make a strong filing. In response to a question about potential bill increases, Poppe states that some interveners, specifically Cal Advocates, do not yet understand the simple affordable model and that PG&E will prove that they can maintain rate increases below the rate of inflation.

The speaker is discussing the potential impact of electrification on PG&E's gas system, stating that so far there has been a flat trend in throughput. They mention targeted electrification projects and how PG&E is well-equipped to handle these changes.

During a recent call, PG&E executives discussed their 10-year plan and the expected changes in gas throughput. They also mentioned a capital to expense ratio that is similar for both gas and electric segments. When asked about the progress on the percentage of rate base authorized, they explained that it is mostly due to the SB410 cap spending and the OGO approval. They also mentioned that there are two other factors that will further increase the percentage, including the upcoming approval of OGO and a filed gas AMI application.

Patricia Poppe, CEO of PG&E, confirms that the company's CapEx will continue beyond 2026. She also mentions that the internal PG&E Fire Protection Index is showing more high-risk days due to dry conditions, but the company is well-prepared to handle them. CFO Carolyn Burke clarifies that they will be issuing the third AB1054 fund next week. During a Q&A session, an analyst asks about the progress of O&M savings and notes that year-to-date savings are only at 25% of the targeted amount. The analyst asks if this is due to summer conditions or a planned acceleration for the second half of the year.

Patricia Poppe, CEO of the company, explains that it is common for ideas to materialize in the second half of the year after being developed in the beginning of the year. She also reaffirms the company's target of undergrounding 250 miles this year and assures that summer conditions will not affect their progress. She thanks the investors for joining the call and expresses her confidence in the company's growth and success.

The operator concludes the conference call and thanks the participants for tuning in and reminds them to stay safe. The operator then gives permission for the participants to disconnect.

This summary was generated with AI and may contain some inaccuracies.