Good afternoon, and welcome to the Edison International Third Quarter 2020 Financial Teleconference. My name is Michelle, and I will be your operator today. When we get to the question and answer session, if you have a question press star then one on your phone. Today's call is being recorded. I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.
Thank you, Michelle, and welcome everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro, and Executive Vice President and Chief Financial Officer, Maria Rigatti. Also on the call are other members of the management team. I would like to mention that we are doing this call with our executives in different locations, so please bear with us if you experience any technical difficulties. Materials supporting today's call are available at www.edisoninvestor.com. These include a Form 10-Q, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we'll make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully.
The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure. During the question and answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.
Well, thank you, Sam, and good afternoon, everyone. Today, Edison International reported core earnings per share of $1.67 for the third quarter of 2020. That was up $0.17 compared to the same period last year. This increase was primarily due to higher CPUC-related revenue from the 2018 GRC escalation mechanism and lower expenses from regulatory deferrals related to wildfire mitigation activities, partially offset by equity share dilution. Reflecting our strong year-to-date performance and our confidence in the outlook for the year, we are narrowing our 2020 guidance range to $4.47-$4.62 by raising the low end $0.10. Maria will discuss our financial performance in detail in her report. We continue to address the numerous impacts of COVID-19 on our operations, customers, and communities.
At the same time, we recognize that climate change is driving unprecedented weather conditions and catastrophic wildfires in California, and the state is in the midst of another active wildfire season. Our thoughts are with the communities and families impacted, and we are thankful for the first responders who have worked tirelessly to contain the fires and protect the lives and property of Californians. At Edison, safety remains our first and highest priority. SCE continues implementing measures to reduce wildfire risk, working closely with local first responders and emergency managers, and communicating regularly with customers to improve awareness and promote preparedness. On the California legislative front, this year's session was shortened due to COVID-19. The legislature prioritized the state's COVID-19 response and wildfire risk reduction. The governor signed several pieces of legislation that build on the state's investments in firefighting personnel and technology and fuels management projects.
I am also pleased that two issues advocated by SCE, clarifying the AB 1054 insurance policy year and obtaining the opportunity to securitize revenue under collections and bad debt expense due to COVID-19 in 2020, were both addressed by the legislature through the unanimous passage of Assembly Bill 913. During this wildfire season, we have seen near record deployments of firefighters to contain major wildfires throughout the state. With over 19,000 first responders at the peak, which was the highest since 2008. Firefighters from CAL FIRE, the US Forest Service, and numerous cities and counties have done a tremendous job this year, despite being stretched due to significant lightning-driven wildfire complexes and having to work with COVID precautions. This reflects the work done over the past couple of years to significantly increase firefighting resources and enhance the ability to model and forecast fire progression to better position ground and aerial assets.
SCE's wildfire mitigation efforts augment those of state and local agencies. For example, SCE has improved its situational awareness and that of local fire authorities by installing 161 cameras. In late September, SCE contributed $2.2 million to the Orange County Fire Authority to secure the largest heavy lift heli-tanker in the world for this fire season, capable of nighttime flying and making water drops of 3,000 gallons. This helicopter was working all through last night and today on the Silverado Fire in Orange County. As of this morning, the Orange County Fire Authority reported that this fire has burned over 11,000 acres and is 5% contained with no structure losses. Tragically, two firefighters have been seriously injured battling the blaze. SCE filed an electric safety incident report, or ESIR, yesterday on the Silverado Fire.
As noted in the ESIR, there was no activity on a nearby SCE power line, nor evidence of any downed power lines prior to the reported start of the fire. While SCE's investigation is at an early stage. I would like to note that preliminary investigation suggests that a lashing wire attached to a third-party-owned telecommunication line that sits beneath SCE's power line may have contacted SCE's power line above it, possibly igniting the fire. However, it is early to draw any definitive conclusions at this point. I've mentioned before that covered conductor is the most effective and expeditious way for SCE to buy down public safety risk by preventing ignitions that can lead to catastrophic wildfires. SCE is on track to meet or exceed the target of 700 miles of installed covered conductor set in the 2020 Wildfire Mitigation Plan.
Our utility made substantial enhancements over the past year to its Public Safety Power Shutoff, or PSPS program. SCE has enhanced communication and coordination with government and communities and improved its capabilities to sectionalize circuits to reduce the number of customers impacted when a preventive de-energization is initiated. In addition to our efforts to help reduce the risk of wildfires, the company continues to work to resolve wildfire-related litigation. As we noted on September 23rd, SCE resolved all insurance subrogation claims for the Thomas and Koenigstein fires and Montecito Mudslides. With this and other information in hand, we were able to move our accounting research from the low end of the estimable range to a best estimate, providing investors greater clarity on this and our related equity need.
Moving to regulatory actions at the CPUC, we are very pleased to see continued timely decisions and progress on our key filings as originally scheduled. This is a significant improvement in action and progress under the leadership of President Batjer. We commend the commission and its staff for their continuing efforts in ensuring that proceedings are staying on schedule despite challenges from the new remote working environment during the pandemic. During this quarter, the CPUC issued decisions in several of SCE's key filings. These include the 2020 safety certification, the Charge Ready 2 program, and the WEMA application, authorizing $505 million of wildfire insurance cost recovery and supporting continued treatment of insurance as a reasonable cost of service. We also received a proposed decision on our initial AB 1054 CapEx securitization application and see timely progress on Track One of the 2021 GRC proceeding.
Furthermore, SCE has reached a settlement in principle to resolve all issues pending in Track Two of the GRC. SCE and numerous other parties filed their 2020 integrated resource plans. One of the principal objectives of this IRP is to help California meet its 2030 and 2045 GHG reduction targets. In SCE's plan, we urge the Commission to adopt a 38 million metric ton target for 2030 to put California on a viable trajectory towards meeting its decarbonization goals. SCE also reiterated and highlighted a substantial CAISO system capacity need of 5,400 MW in the 2024 through 2026 timeframe due to planned power plant retirements. To address this, SCE has recommended that the Commission update its reliability planning methodology, including increasing the planning reserve margin, to better reflect the state's evolving electricity market and ensure system reliability.
These recommendations are consistent with the conclusions found by the CAISO, the CPUC, and the California Energy Commission in their recent preliminary root cause analysis of the August rotating outages. Last month, the governor issued an executive order that moves up the timeframe to have all new vehicles sold in California be emission-free to 2035. The order aligns with our Pathway 2045 work, in which electric vehicles are an important element to achieve carbon neutrality. I am really proud that Edison has been recognized as a thought leader on this front. I want to underscore the importance of making necessary investments today to ensure that we have a strong, safe, reliable, and resilient grid to accommodate the increasing electrification of the economy. This drives substantial investment opportunities to meet increased electricity usage and increased system complexity, including more distributed energy resources, higher levels of renewable resources, and energy storage.
Importantly, our analysis shows that this transition will also be affordable, since the greater efficiency of the electric motors and appliances will reduce customers' total costs across all energy commodities by one-third by 2045. With that, turn it over to Maria to provide her financial report.
Thank you, Pedro. Edison International reported core earnings of $1.67 per share for the third quarter of 2020, an increase of $0.17 per share from the same period last year. This increase was primarily due to higher CPUC-related revenue due to the 2018 GRC escalation mechanism and lower expenses from regulatory deferrals related to wildfire mitigation activities. These were partially offset by equity share dilution. Reflecting our solid results for the first nine months of the year, we are once again narrowing our guidance range by raising the low end of our 2020 EPS estimate. I will discuss this in more detail later in my remarks. On page two, you can see SCE's key EPS drivers on the right-hand side. I would like to highlight four items that accounted for much of the variance. First, EPS increased by $0.43 related to higher revenue.
CPUC related revenue contributed $0.25 of this increase due to the escalation mechanism from the 2018 GRC decision. FERC and other operating revenue had a negative variance of $0.05, largely because of the true-up for the 2018 formula rate case we recorded last year. There was also a positive variance of $0.23, primarily related to the balancing accounts for the GSRP settlement that was approved in April. However, there were offsets and expenses related to this variance. Second, O&M had a positive variance of $0.08, primarily due to recognizing lower wildfire mitigation expenses as a result of deferrals to regulatory assets. Third, income taxes had a negative impact of $0.13, primarily reflecting lower tax benefits captured through our tax balancing account. Lastly, SCE's EPS in the quarter was lower by $0.16 because of dilution from the increase in shares outstanding.
On page three, you will see SCE's capital expenditure and rate base forecast. CapEx is consistent with last quarter's forecast for 2021 through 2023, with a slight increase to 2020. Additionally, we updated the rate base forecast primarily for Charge Ready 2 and GRC rebuttal testimony. We continue to see significant opportunities to grow rate base over time, driven by investments in electric infrastructure, and this is reflected in our robust capital program of $20 billion-$21 billion over this period. This request level represents a compound annual growth rate of 7.6% in rate base over two rate case periods. After applying a 10% reduction to the total capital forecast to reflect our experience of previously authorized amounts and other operational considerations, the low end of the range still reflects a strong rate base growth of 6.6%. Please turn to page four.
Track One of the 2021 GRC proceeding has been on schedule, and during the quarter, all related briefs were completed. We are now waiting for a decision and continue to expect that in first quarter 2021. To emphasize our previous statements, SCE's core business will require minimal equity to fund our ongoing capital expenditures program beyond 2020. We will be able to quantify these levels after we receive the final approval of the GRC. Page five summarizes our progress on SCE's cost recovery filing for incremental 2018 and 2019 wildfire mitigation costs. In April, SCE received CPUC approval for the GSRP settlement, which authorized recovery of $476 million of capital and $123 million of O&M. The decision approved a revenue requirement of $159 million, which went into rates on October 1st.
The balance of the capital costs that were approved will be recovered as we securitize amounts related to wildfire mitigation as authorized in AB 1054. In September, the WEMA application to recover $505 million of costs for wildfire insurance was approved. This is now included in rates and will be recovered over the next 24 months. Importantly, the CPUC noted in its decision that SCE had acted reasonably and prudently in its procurement of insurance policies. The commission also recognized that wildfire liability insurance serves as an important protection for customers against third-party legal claims invoking the inverse condemnation doctrine and allegations of negligence. These decisions enable SCE to recover approximately $665 million of cash over the next two years and further strengthen its balance sheet and credit metrics. In addition, the CPUC recently issued a proposed decision on SCE's application to securitize the GSRP capital noted above.
When the financing is completed, it will add approximately $335 million to the cash position. SCE and all interveners reached a confidential settlement in principle regarding all issues in Track Two of the 2021 GRC. Once a definitive settlement is executed, a motion will be filed with the CPUC seeking approval. SCE expects a proposed decision on the Track Two settlement in Q1 2021. We will record the impact of the settlement once the commission acts and do not expect a negative earnings impact. I will highlight a number of other pending filings and future applications related to wildfire mitigation costs. First, we are due to receive a decision on our FEMA filing for certain drought and restoration costs in first quarter 2021. In the next few months, we also anticipate filing a WEMA application for excess insurance premium costs for July through December 2020.
Finally, we will make our GRC Track Three filing in first quarter 2021 with a proposed decision expected a year later. As for other regulatory actions during the quarter, the CPUC approved SCE's Charge Ready 2 program, which supports approximately 38,000 light-duty EV charging ports. This is the largest light-duty EV charging program by an investor-owned utility in the U.S., and will add approximately $400 million to SCE's rate base by 2026. Turning to guidance, pages six and seven show our updated 2020 guidance and the key assumptions for modeling purposes. Let me highlight that we are once again narrowing our full year 2020 EPS guidance range to $4.47-$4.62 per share by raising the low end of the range. This also increases the midpoint of the EPS range by $0.05 - $4.55.
While most of the earnings assumptions are essentially unchanged from last quarter, there are a couple of factors driving the majority of this upward revision. First, we now expect SCE earnings to be $0.04 higher than our previous assumption. This is driven by improvements of $0.01 in rate base earnings and $0.03 from SCE's variances related to the timing of financing activities as well as operational items. Second, the EIX parent and other forecast has improved by $0.01 versus our previous estimate. These factors and our strong performance so far this year make us increasingly confident in our narrowed 2020 EPS guidance range. Last month, we issued a news release about the September 2020 subrogation settlement and noted that we anticipate issuing approximately $1 billion of equity to invest in SCE, enabling the utility to debt finance wildfire claims payments.
Since then, many of you have asked questions about the timing of the equity issuance. As we shared with you, we will provide an update on the fourth quarter 2020 earnings call. The timing of the equity issuance will be dependent upon the timing of future claims resolution and payments that exceed insurance. That concludes my remarks.
Michelle, please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow-up so everyone in line has the opportunity to ask questions.
Thank you. If you would like to ask a question, please press star one on your phone. Our first question comes from Jonathan Arnold with Vertical Research Partners. You may go ahead, sir.
Good afternoon, guys. Thank you.
Hi, Jonathan.
Could I just ask a question on the September announcement and which obviously you just mentioned now, and particularly, of the $6.2 billion that is now your accrual, can you give us any sense, Pedro, sort of what proportion of that is effectively settled or agreed, and how much is still subject to estimate or extrapolation? Just sort of some directional sense of how you arrive at that being the estimate as opposed to the low end these days?
Sure. Thanks, Jonathan. Maria can fill in the numbers here, but in terms of the categories, you've seen the major announcements so far. The various settlements that we have announced, the one last fall with the public entities, and now the subrogation parties in this latest settlement. In addition, we've shared that there's been settlements with a number of private parties, private plaintiffs. Those are small relative to the thousands of plaintiffs in the individual cases. Based on that, Maria can probably give you the precise number that we disclosed that's included in the settlements, but in arriving at the best estimate, what we did was have the benefit of now having those major settlements under our wings, right, and behind us. Then in addition to that, going through the discovery process on the rest of the claims. We're deeper into the discovery process.
We think have a better understanding of the facts at hand, and what our arguments would be. We have an understanding of some of the counterarguments that various classes of plaintiffs might have. That just gives us a better ability to now move from the low end to the best estimate. There's still assumptions in there, and we disclose that the final result could be higher or lower, and we're not able to disclose an uncertainty band around it, Jonathan. Our hope and expectation is that by now moving from the low end to a best estimate that we're no longer talking about being on one end of the roadway. We're now right down the middle of the roadway, and I know that investors will be probably making assumptions or having their own expectations about what that uncertainty band might be.
We're not in a place to be able to communicate that, but what we've given you is our best estimate or best sense of what a final outcome would look like on the benefit of not only things that we've locked down but facts that we now better understand through the litigation process. Maria, I don't know if you want to give Jonathan, if you have handy kind of percentage.
I think just the only thing, Jonathan, maybe the last piece of your question is you were, I think, asking about which portion of that amount is the subject. I think the way I interpret it is the subject of the subrogation claims settlement that we reached. That's about $1.2 billion.
I know that, Maria. I was looking for just overall how much of it is known versus estimated.
Yeah. Maria, I guess the answer to Jonathan's question would be that you take the $6+ billion gross amount and then point him to the settlement that we just entered for $1.2 billion, the settlement that we had last fall, which was on the order of a billion. The claims were a billion, and the settlement was call it 1/3 or so of that. Round numbers would be, Maria, you probably have a more precise number, 1.5 or so, one sixth.
Yeah. I guess I would probably just go back to what we have recorded on the books right now as the total recorded liability, Jonathan. The portion of that, the $1.2 approximately, is associated with the subrogation claims payment.
What I would say about your question, what's known and what's unknown, we took all of that into consideration in order to reach the best estimate. I don't think Pedro's comments earlier about kind of the process we went through, et cetera, we're not trying to break down between all of the different types of claims payments at this point.
Okay, understood. May I just sort of, on a related topic for my follow-up, the equity that you say you're going to talk to us on the fourth quarter. Would you comment at all on your sort of interest in using the current ATM that you have between now and then? Sort of also what's the thought process behind sort of waiting till you need to actually pay claims? Why not just sort of put this dilution behind you so that?
Sure.
For want of a better reason, 2021 will be a sort of a base that won't be further diluted?
In regards to both of those questions, I think your first question about thoughts about what I'll say, approaches or tactics or tools, I think we have a lot of flexibility around the tools, and all options I think are available to us running the gamut to ways we've done it before, ATM, et cetera. I think we have a lot of options when it comes to the tools, and we'll work that out as we progress closer to the point in time at which we will be issuing new equity. I think your second question around kind of why wait, I think we've described before that the way these processes work, we have changed our best estimate, but that doesn't mean that cash is going out the door right now.
In fact, the segregation settlement that we announced last month, really most of that was covered by insurance. We're really going to follow that pattern of when cash is actually required, and that will play into our decision about the timing of the equity issuance.
Okay. Fair enough. Thank you.
Let me put a fine point on it, Jonathan, because perhaps reading too much between the lines of your question, there could be an implication there that perhaps events might be happening within a certain timeframe. The reality is we just don't know what the timeframe will be for resolution of the remaining claims. I think as we've said all along, often these claims get resolved through settlement, but they need not resolve through settlement. If it goes through settlement, some have happened more quickly, like you saw the public entity's settlement and the subrogation claims. There's no guarantee that remaining claims outstanding will be settled on a similar sort of timeframe. It could take much longer for those to be resolved. If we ultimately ended up going all the way through litigation, that we would expect would be a multi-year process.
I think I was hearing into your question the idea, well, if you need it by X time, why not go ahead and issue the equity a little bit earlier? We don't know whether that would be a little bit or a lot earlier because we don't really know the timeframe, Jonathan.
Okay, fair enough. That makes sense. Thanks very much for all the help.
Thank you.
Thank you. Our next question comes from Julien Dumoulin-Smith from Bank of America. You may go ahead.
Hi, Julien.
Hey, good afternoon, team. Thank you very much for the time. If I can pivot to the Silverado Fire, if you don't mind. I appreciate the remarks at the outset here, can you help frame, as best you understand the liability statutes pertaining to third parties, such as those potentially involved with the telecom lines in the case? I appreciate all this is preliminary, how should one think about your direct exposure should the fact pattern that you guys just alluded to about a third party causing the fire be affirmed and most critically, that inverse condemnation would not apply to the utility, seeing that at least as best I physically understand what you're describing, that this wire basically flew up from below and actually presumably sparked your own wires there.
Sorry for a long-winded question, but I just want to be very clear to make sure we understand the statute here.
Sure. I'm going to give you a sadly unsatisfying answer because this fire is still raging. We know very little at this point, even what legal treatment would apply ultimately is still unclear. I know you're probably focusing, for example, on could inverse condemnation apply. Even with that, whether it applies would depend upon the facts of a particular case, ultimately would be determined by a court. We'd be speculating if we were try to opine on whether something like inverse would apply here. Likewise, in terms of liability potentially by other parties, I think you're understanding the picture as well as we do right now, right? As we shared, we're aware of this possibility of the lashing potentially having gone up and flown up into the power lines that were above that on that particular segment.
That could imply then some potential liability by that third-party telecommunications carrier. If the utility could show that there were causes like that, then the utility would be able to pursue a contribution from other responsible parties. That certainly is a possibility here, but it's just way too early to draw any conclusions at all, Julien. We probably have to leave it at that.
All right. Fair enough. I'll ask you a little bit of an easier one here, if you don't mind.
Sure.
Where do you stand on the ability to procure insurance as you look forward here? I'm asking this in light of continued elevated wildfire activity in the State, even if it's admittedly not been directly tied to utility matters, but rather broader environmental factors here.
Yeah, I'll start this and Maria will probably have even better detail, but I think I'd start by saying, you saw that we procured insurance successfully for this calendar year. It is a tighter market than it's been in the past. The disclosures you've seen of premiums and amounts that we've sought recovery of have indicated that the pricing for that product is a lot higher than it was three or four years ago. I wouldn't want to speculate on what the market will look like when we're back out in the market. I think we would expect that there would be product available, but that's discovery you go through every time that you go through the insurance cycle. Maria, what would you add there?
Sure. Julien, I think it was a tough market. It's been a tough market for a couple of years. We have had the ability to get the amount of capacity that we wanted, albeit at a higher and higher price. That is, of course, an issue for our customers. You may be aware that in our 2021 GRC, we've actually started to try and explore other alternatives that would help to lower the cost. Funded health insurance and things like that, balancing accounts so that if the market changes to the good or to the bad in terms of pricing, that we're not caught short, nor would our customers bear an undue burden if it actually turns out to be better than we were forecasting.
I think it's just something that we continue to monitor, and we continue to work hard to get it into our program at the most affordable price for our customers.
Maybe one more thing I would add, Julien, that might be helpful is, and again, this is a little bit of speculation here, but at the same time, I think it's important to reflect on the fire season that we've seen so far, which has been once again historic. We thought 2017 and 2018 were historic, but in terms of acres burned, we're seeing over 4 million acres burned across the state, with over half of that having been due to lightning strikes. The point I make here is one that I think I made already in my prepared remarks. The fire suppression effort has been really strong.
I'm going to speculate a little bit here, but I can't prove the negative here, but I would hazard a pretty good guess that if we had had this fire season three years ago, before the state has significantly increased its firefighting resources and capabilities, we might be seeing a much different level of damage across the state, regardless of the cause of the fire. We might have seen much more damage for the lightning-induced fires, and if there were utility-caused fires, we might see more damage stemming from those as well. I would hope that as insurance carriers look at their risk profile for California, they, I'm sure, will be taking into account some of the climate change related weather conditions, the winds, et cetera, that have contributed to the large fires this year.
I would also hope that they would be looking at the flip side, the fire suppression effort that helps bring the risk envelope down for everyone. At the same time, I would hope they would be looking at the efforts of all the utilities, certainly our utility, in executing the wildfire mitigation plan. The risk isn't zero. The risk will never be zero. I think the risk is very different today than it was three years ago. It will continue to change as we continue to harden the system, as we continue to use PSPS responsibly and the like.
Got it. Thank you, guys. I'll follow up offline here.
You bet. Hey, thanks, Julien.
Thank you. Our next question comes from Michael Lapides with Goldman Sachs. You may go ahead, sir.
Hey, guys. Thank you for taking my question.
Hi.
I have two things. One is just a payment level question for the 2017 and 2018 wildfires. If I just do back of the envelope, and I'm sure the 10-Q has more, and I'll hop in offline, but the $6.2 billion accrual, you've paid out about $1.6 billion. You have somewhere between $1.5 billion and $2 billion of insurance left, and you're getting around $225 million on FERC recovery. It's kind of rough. The cash out of pocket is somewhere in the $2.5 billion-$3 billion range from the 2017 and 2018 wildfires. Am I in the ballpark, Maria?
Yeah.
That's before tax benefit.
Yeah, that's about right. I have to go through the math a little bit. Went through it pretty quickly, but we had about six and two is four. I would say 2.5 seems a little low to me if I go through the numbers. If you're going all the way from the beginning, if you take all of the charges, including the ones that have already been paid for.
No.
Dividend to the settlements back here.
I'm just trying to think about cash going out from today onwards, the $6.2 billion.
Got it.
You've already paid $1.6 billion, roughly $1.6 billion.
You have some insurance still to collect, and I don't remember what that number is. The max is $2 billion, but I think you've already collected some.
If you're thinking about the go forward, that's probably about right, about $3 billion.
Okay. Thank you.
Embedded in the best estimate.
Understood. Pedro, I have a question just about the tone in California towards utilities, which is one of the major publications in Northern California today, or maybe it was last night, put out what seemed like a very harsh piece on one of your peers. It seems to have been relatively quiet coming out of Sacramento and other public officials about the role utilities play in wildfires and wildfire mitigation. Maybe that's because we're going through a harsh season, but could you just talk about how you manage the court of public opinion from here and the sentiment and how that impacts and kind of flows through policymakers and the coordination with policymakers?
That's a good question, and I'll try not to take up the whole rest of the earnings call on it because we probably could spend a whole afternoon on it. By the way, on your prior question, I'm glad you asked it. I think that your question was probably in the same zone as Jonathan's in looking for the slicing of the numbers. Hopefully that helped everybody. I think in terms of tone, look, I won't comment on the publication you just mentioned or other utilities out there. I'll make two comments. I'll make a general comment and then a more specific comment about Edison. The general comment is that, particularly with the 2020 wildfire season so far, the fact that over half of the acres burnt have stemmed from lightning-induced fires.
The issues that everybody in the population has seen around firefighting, and frankly, the great efforts by firefighters, et cetera. I think at some level, there's a deeper understanding that this is not just about the source of the fire, but it's about this convergence of factors, including climate change, including weather conditions, including fuel on the ground, including all of this, right? Including where homes have built, that adds up to this risk that the state bears and trying to do something about. That, I think, brings in maybe a little different tone overall. I'll make the second comment about our utility. One of the things we've tried to do through all of this is, name a few things we've done. One is we try to be really transparent, Michael.
As we have seen issues in the system, as we've gone through the 2017 and 2018 wildfire experience, you saw us be very transparent when we saw that there might have been issues related to our equipment that might have contributed to fires. First of all, I want to make sure that the public can have confidence and trust in the Edison company being forthright and not only working hard to improve things and reduce wildfire risk for our communities, but also in being transparent about when things might happen. The reality is we operate under a prudency standard, not a perfection standard, because we operate a system with a million and a half poles across 50,000 square miles with 27% of those 50,000 square miles being high-fire risk territory. The other thing we've tried to do is, there's two more things we've done.
The second thing has been to work really hard at continuing to learn, develop our wildfire mitigation plans, improve on them. Actually, even before there was the concept of the WMP, frankly, even before we'd seen the Thomas Fire in 2017, we started to work on the Grid Safety and Resiliency Program because we saw with the combination of the Wine Country fires in the fall of 2017 and the instability then in the regulatory framework after the CPUC San Diego Gas & Electric decision, we saw that the risk profile was very different, both physically and in regulatory space. That began our first iteration of radically rethinking of how we thought about wildfire risk on our system that led to the GSRP filing, and we haven't stopped since then. We try to communicate with our communities everything that we're doing around it.
The third and final thing I'll mention is, even as we focus most of our attention on this near-term issue and these risks, we've also kept the eye on the long-term ball here. That's why you've seen us continue to think hard about things like Pathway 2045 and what California needs to do to address climate change, both because we're seeing the climate change impacts manifest themselves in wildfires. It's important to take care of the wildfire risk, but we also have to help the states take care of the true long-term risk, which is doing something about climate change. Also because taking care of addressing greenhouse gas reduction, it turns out that you really need a strong utility to be a major partner with the state to have a strong grid to help access clean energy and electrify the economy.
That, I think that need for a strong utility for the long run to help the state achieve its climate goals is part of the fabric here. Right? It's part of the reason to ensure that the utility can have a compact to keep it healthy. It's part of the reason that you saw state government support AB 1054. It's part of the reason that you saw unanimous approval for AB 913 this year.
Sorry, a little long-winded here, but we really think a lot about this in terms of what do we do in the near term, but how do we think about the long term, and how do we help demonstrate to the state and to our public that we want to be a partner, and we need to be a strong partner for the long haul here in order to make California the great state that we all enjoy living in.
Got it. Thank you, Pedro. Much appreciated.
You bet. Thanks, Michael.
Hey, Michael, just one thing, because I was using my scratch pad while Pedro was going through it.
Yeah, I gave Maria time to work some numbers.
I think the number you're looking for is more like $3.5 billion-$3.7 billion, and we can go over how I did my math offline if you want.
That sounds great. Happy. Look forward to following up, Maria. Thank you.
Thanks, Michael.
The next question comes from Steve Fleishman with Wolfe Research. You may go ahead, sir.
Hi, Steve.
Hey, good afternoon. Just one technical question on the lashing wire and I guess the telecom wires and electric. Is the telecom company responsible for managing and servicing their own wires near your poles, or do you have to do that at all?
In general, they are responsible for managing their equipment. It gets even more complicated here because you can have multiple telco companies using the assets under joint pole agreements. In some cases, they might have a space on the pole designated for them, but they can then being that or dedicate it to other telco providers through transaction sale. It is their responsibility to maintain their physical assets. That said, when we go out and inspect our facilities, we look for any hazards that could interfere with the electrical system. While we don't do detailed inspection of their telco assets, if we see something, and we certainly keep an eye out for any hazards that the telco assets might pose to the electric system, and report those to the telco companies.
Okay. Just one other question on the GRC. It sounds like you feel pretty good on the timing of the Track One by early next year. Do you think there's any chance of settling the GRC Track One like you have Track Two, or should we assume that's going to go through the full litigated process?
Yeah. We're pretty far along in the process now. All we have left is really the ALJ to issue a proposed decision, and you could have oral arguments after that. I won't say you can never do something like that, but we are pretty far along in the process in terms of Track One. Track Two, on the other hand, obviously, we were much earlier in the process and hadn't yet gone through a lot of the different piece parts of the proceeding when we reached the settlement, in principle.
You'll wait for that to give 2021 guidance, the outcome of the GRC like you've done in the past?
Yeah, the Track One? Yes, we will.
Yep. Okay. Thank you.
Steve, we always remain open if parties want to discuss things, but I think Maria got it right. This one's pretty far down the path. Thanks a lot.
Thank you.
Thank you. Our next question comes from Jeremy Tonet with JPM organ. You may go ahead.
Hi, good afternoon.
Hi there.
Switching gears here to the Blue Ridge fire. Just wondering if you're able to share with us if any EIX assets reside within the vicinity of the Blue Ridge ignition point, or if that is not the case.
Jeremy, thanks for the question. I think the short answer I'll give you is that we have not filed an ESIR for Blue Ridge. At this point, we don't see any basis for needing to file an ESIR.
Got it. That's very helpful. Thank you.
Yeah. You bet.
When thinking about potential changes to California system planning, how should we think about incremental capital opportunities for EIX over the next few years? Just kind of a broader question there.
Yeah, no, that's a great question. I'll try and keep it brief. When we think about that, I think certainly the near-term pieces I talked about, right? The procurement needs that we foresee across the state for the 2024 to 2026 timeframe. I would suspect that much of that will continue to be served by competitive generators in the state, as the state has generally had a preference for that. There's always an opportunity for utility involvement. We have shared with investors before that we don't see SCE investing capital into traditional generation. It's just not the core business at this point. We like the generation that we do have in rate base, but we don't see dedicating new capital to new generation since we have a very vibrant third-party market here, and we have plenty of opportunities to invest capital in the wire system.
A little different with storage, because storage could well be part of that, not only that midterm procurement, but we certainly see storage being a big part of the story in California as we go out to 2030 and 2045. Just to remind you, our Pathway 2045 analysis suggests that California-wide, you'll see a need for 80 GW of new renewables and 30 GW of new storage at the bulk power level statewide. While I would expect that a lot of storage will also be done by third parties, we have seen certainly an interest in statutes in preserving the option for some utility-owned storage. You've seen in our current rate case, we had filed in there provisions for, not a large amount of capital, but some capital that got set aside.
Maria, I want to say it was around $60 million, if I remember correctly. Check me on that. $60 million, right, for potential utility-owned storage. Where we see storage being a more likely target for utility ownership would be where it can play a more integral role in grid operations. As an example, the 20 MW of batteries that we deployed at our Mira Loma substation a few years ago.
I'd say bigger picture, though, as we think about those near and midterm needs and in the longer-term energy transition, the big capital investment opportunity and need here is making sure we have a robust grid to be able to interconnect clean energy resources with the increase in uses across the economy as the economy electrifies and as we see load, which has been generally stagnant for the last decade, increase by 60% by the time we get out to 2045. We see a significant need for investment in the wire system, and that, along with potential upside opportunities in areas like the Charge Ready 2 program. There might be other opportunities like that as the environment evolves. Hope that covers it, Jeremy.
Got it. Really appreciate that. If I could slip one more in, just what's your current outlook for customer rates over the planning period with kind of incremental recoveries authorized as expected?
If you look at our current rate case, so the GRC, that's essentially the Track One, if everything were approved, which obviously, that never happens, but the average monthly residential bill would go up about $13 on average. Our CARE customers would go up to, I think it's about $8 a month.
Got it. Thank you very much for that.
Thanks.
Thank you. Our next question comes from Ryan Levine with Citi. You may go ahead, sir.
Good afternoon.
Hi, Ryan.
In the light of the blackouts in California over the last few months, can you comment around specifically blackout-related potential investment opportunities in transmission and storage that may address some of the problems of the last few months and reduce the risk for future seasons?
Yeah. Thanks for the question, Ryan. I think a lot of the answer in broad strokes is what I just shared with Jeremy. I don't think that we have a more precise beat right now on, here's a specific piece of equipment that might help with that. Remember that the rotating outages were not driven by the transmission or distribution system per se. They were driven by insufficiency in supply. A lot of the focus, therefore, is on the kind of near-term procurement that SCE advocated for and the CPUC approved last year. Recall that they approved something like 3,000 megawatts of procurement for the 2021 to 2023 timeframe.
Of that, I think SCE has done, that's a statewide number, and I think SCE has done something like 2,700 megawatts of procurement for that timeframe, largely with keeping some existing generators going for a few more years. That's been in tandem with the State Water Resources Control Board having extended the timelines for retirements due to once-through cooling restrictions. I think that's a lot of the very near-term action. In the midterm, that's what I was talking about earlier, we see that statewide need for around 5,400 MW of resources beyond current contracts statewide. Some of that may be met by, once again, existing plants being able to extend their lifetime. Some of that may be driven by new resources. Some of that could be combinations of storage additions that might provide greater effective capacity.
That I think could be something that some portion of which might end up being done through utility rate base. I think certainly it'll be a large portion of that that is done through competitive processes. On the transmission side, I don't know that I can point to any specific transmission deficiencies that would've contributed to the rotating outages. As we think about the system adding new resources, that of course will then lead to needs for transmission interconnection if those resources are landing in places that don't already have wire connections. Again, I don't think I have anything specific to share in terms of the near term.
I will tell you in terms of the longer-term view, heading out to 2045, in our Pathway 2045 white paper, when we tried to put a dollar figure around the resource needs, that 80 GW of renewables and 30 GW of storage, those new clean energy resources added up in our estimate, it's a rough estimate, to around $175 billion need for new investments statewide. Again, much of that may be done by third parties. The related transmission bulk power system investments through 2045 statewide will be something like $70 billion. There is significant investment need ahead, and I think some portion of that will need to be served by utilities.
Thank you.
Thanks, Ryan.
Paul Fremont from Mizuho. You may go ahead, sir.
Hi, Paul.
Hi. I guess my first question is, can you tell us a little bit more about the Bobcat Fire? I guess there were some news reports, with respect to the Bobcat Fire, that there may have been vegetation or tree branches that came into contact with the transmission lines.
Yeah.
To sort of give us any update there?
Sure. I don't think there are any major new updates beyond what we have reported already. Just to recap that, we have reported that this fire started on September 6th. The reported start time of the fire was 12:21. We did have a relay on our system on a 12 kV circuit around five minutes before that at 12:16. One of the high-definition cameras that we have out there saw or captured the initial stages of the fire and saw smoke as early as 12:10 P.M. six minutes before we saw any sort of activity in our circuit, and what is that, 11 minutes before the reported start of the fire. Now, the U.S. Forest Service is doing an investigation, and they removed a 23-ft section of overhead conductor from the area of interest, and we understand that they also removed and retained some tree branches.
They suggested they may be investigating if vegetation was involved in ignition of the fire. We don't know if the U.S. Forest Service is also looking at any other possible causes for the fire or if this equipment is their sole focus. SCE is doing its own review. It's still really early here. We will certainly be looking at any number of potential causes. The bottom line, Paul, is it's way too early, and we have reached no conclusions in either direction in terms of causation at this point.
My other question is, with respect to the Track Two settlement, you're making a statement that you don't expect a negative earnings impact. Can you elaborate on that? Is that relative to what?
I guess I will caveat everything by saying that since the settlement, go into a lot of detail. Didn't want people to think that there was anything in the settlement that would be untoward. We don't see any impact on earnings or anything like that. We've deferred some of the costs as being probable of recovery. Wanted to clarify that this is consistent with what we had previously thought.
Okay. That's not in any way any type of a signal on future EPS.
No. It was more to clarify, I guess it is a signal since I'm saying it's not going to have a negative impact on earnings. It was more to point to the fact that we had previously talked about how we were deferring costs. This settlement covers a number of those costs that we've been deferring.
Okay. Thank you very much.
Thanks, Paul.
That was the last question. I will now turn the call back over to Mr. Sam Ramraj.
Well, thank you for joining us today, and please call if you have any follow-up questions. That concludes the conference call.
Thank you. This concludes today's conference. You may go ahead and disconnect at this time.