Good afternoon, and welcome to the Edison International first quarter 2020 financial teleconference. My name is Sue, and I will be your operator today. When we get to the question- and- answer session, if you have a question, press star one on your telephone. 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, Sue, 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 because of California's stay at home order. Please bear with us if you experience any technical difficulties on the call. Materials supporting today's call are available at www.edisoninvestor.com.
These include our 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.
Thanks, Sam, and good afternoon, everyone. Let me begin by saying that our thoughts go out to those here in California and elsewhere who have been directly impacted by COVID-19, including colleagues from our Edison team. We're all facing an experience that is unprecedented, and I know that your participation in today's earnings call is likely not the routine it has been in the past. One thing that hasn't changed in these times is our company's commitment to the health and the safety of the 13,000 women and men of Edison International and Southern California Edison, and the 15 million people in their communities who are served by SCE. This pandemic and stay at home orders put a spotlight on the role that the electric grid plays in all our lives.
The Edison team is demonstrating their incredible commitment to continue to deliver this essential service to our customers during this historic time. I could not be prouder of our team for the way they have worked together to carry out our mission. I will dedicate much of my prepared remarks to our response to COVID-19. First, let me give you the quick financial headlines. Today, Edison International reported core earnings per share of $0.63 for the first quarter 2020, flat compared to the same period last year. Higher core EPS at SCE was fully offset by an increase in core loss per share at EIX Parent and Other. Maria will discuss our financial performance in more detail in her report.
I will now turn to how the State of California has been responding to the COVID-19 crisis, how Edison has organized and responded, and how we are preparing and caring for our workforce. I will also share some of the ways in which SCE is helping customers navigate the effects of the stay at home executive order. Lastly, I will provide an update on the continued progress SCE has made on its wildfire mitigation work, which the CPUC and other state agencies have identified as essential work that must continue. The headline on this is that we are ensuring our wildfire mitigation work is not unduly impacted by COVID-19. In California, the governor and legislature have taken actions to provide emergency funding of up to $1 billion to increase hospital capacity, purchase medical equipment, assist schools, and protect facilities with the state's most vulnerable residents.
The state is expected to spend significantly more in total to address the emergency. When the legislature returns, it is expected to pass a scaled-down budget by the June 15th deadline and develop a more robust budget after the extended July 15th tax filing deadline. The governor's budget priorities are to address COVID-19 related impacts, wildfire prevention, and homelessness. We will continue to work closely with staff and senior government officials and maintain an open line of communication on the essential work that our company continues to undertake, particularly wildfire mitigation work. At Edison, our core focus is on ensuring the safety and health of our employees and providing them with the resources necessary to maintain critical operations for the benefit of our customers. Early on, SCE mobilized an incident management team or IMT to run day-to-day COVID-19 response.
The IMT is a group of individuals trained to respond to emergencies on our system utilizing protocols established by FEMA. I lead our crisis management council, made up of senior leaders from EIX and SCE, and we check in daily with the incident commander and key IMT staff to provide guidance and approve new needed corporate policies. While we already had a robust pandemic response plan and had tested it in planning exercises, the reality is that the scale of the COVID-19 crisis has required us to make a number of policy changes on the fly, and we continue to learn. Leveraging the experience and training of the IMT, we quickly transitioned about 2/3 of our workforce to teleworking. At the same time, we remain committed to the essential nature of the service SCE provides, which was also called out in the governor's stay at home executive order.
Frontline workers and employees who support critical functions remain in the field or at certain SCE facilities while observing appropriate safety measures. Furthermore, SCE has sequestered a small number of essential personnel to ensure their availability at designated critical facilities. Questions are already being asked about whether the COVID-19 pandemic will dramatically alter how we live, work, and socialize once the immediate crisis is behind us. It's probably just too early to say with any certainty, but Edison is already preparing for the potential of longer-term changes. Some of these will be positive changes. For example, I am certain that our learnings in how we telework will lead to improvements in how we do our work more flexibly and sustainably, even after we can rejoin our colleagues in physical offices.
To this end, we stood up a future planning cell to consider and plan for a possible changed reality and how the company, employees, and our customers can adjust and continue to thrive both socially and economically. I am honored to serve as the only utility representative on the Governor's Task Force on Jobs and Business Recovery. SCE is safely providing reliable power to critical facilities such as hospitals, medical labs, and grocery stores. As California begins to plan the future of work in a post-COVID-19 environment, clean energy can play a critical role in a just and equitable economic recovery with thousands of good jobs that also address the challenges of climate change and air quality. Since the implementation of statewide stay at home measures, SCE system load has declined by 6%.
We have seen an increase in residential load demand, but this is more than offset by decreases in the non-residential sectors. We are seeing reduced demand for power, I would like to remind you that California has a long-standing policy of decoupling revenue from electricity sales. We also have a mechanism already in place to track any over or under collections called the Base Revenue Requirement Balancing Account, so there is no net impact on revenue and earnings. The commission recently approved the establishment of a new memorandum account called the COVID-19 Pandemic Protections Memo Account to record costs associated with consumer protection efforts related to COVID-19, through which SCE can seek cost recovery in subsequent proceedings. Maria will address this topic in her remarks. We remain focused on supporting our customers and our communities.
SCE was one of the first utilities nationwide to voluntarily suspend service disconnections for non-payment for residential and commercial customers impacted by COVID-19 before it was mandated. SCE has waived late fees and is offering flexible billing arrangements. To further support our communities, Edison International has pledged $1 million to nonprofit organizations providing support to those facing economic hardship due to COVID-19. I am grateful and proud of the Edison employees who contributed more than $250,000 for COVID-19 relief. The funds they contributed will be matched by Edison International. In addition to our own efforts to support customers, the CPUC has continued to function during the pandemic and has itself identified initiatives to help utility customers. Some of these initiatives parallel what SCE had already implemented and which I covered earlier. Additionally, we are encouraged that the CPUC has moved on many of SCE's pending applications.
For instance, on April 16, the commission issued a final decision on SCE's Grid Safety and Resiliency Program, approving the settlement agreement without any changes. The decision authorizes $407.3 million in capital and $119.2 million in O&M for 2018 through 2020. Additionally, earlier this month, SCE received a proposed decision on its capital structural waiver application that seeks to exclude from SCE's common equity the previously recorded net charge of $1.8 billion and any future charges associated with the 2017 and 2018 wildfire events. The PD also excludes debt issuance for the purpose of paying claims related to these events. This waiver continues for the earlier of a two-year period or until 2017 and 2018 wildfire cost recovery claims are resolved. The CPUC also continues to move forward in the proceeding of the IOUs Wildfire Mitigation Plans, which are slated for approval as early as June.
On April 3rd, the Wildfire Safety Advisory Board issued its draft recommendations on the WMP, and t hose were approved on April 15th. Last month, SCE filed Track two of its 2021 GRC proceeding. The filing seeks reasonableness review of $810.5 million of incremental O&M and capital expenditures incurred for 2018 and 2019 wildfire mitigation activities and cost recovery of the associated revenue requirement of $500.1 million. Turning to operations. SCE continues to perform critical work related to public safety, wildfire mitigation, and reliability while deferring non-critical outages for as long as our communities are staying at home. SCE has also developed a 14-day look-ahead of planned outages across our service area to better coordinate with local jurisdictions and address any concerns. Additionally, SCE has made tremendous strides to mitigate wildfire risk in the last year.
We also filed our 2020 to 2022 Wildfire Mitigation Plan in February. This plan calls for SCE to continue to harden infrastructure, bolster situational awareness capabilities, and enhance operational practices, all while implementing enhanced data analytics and technology. We are executing these programs as quickly as possible as they are critical to ensuring the safety of our communities and are viewed as essential by the state and by us. At the same time, we continue to prepare for potential public safety power shutoffs or PSPS. This is one of the more significant areas of wildfire-related work, and SCE established another incident management team earlier this year to focus on further reducing the potential impacts of PSPS on our customers.
This dedicated team is working on measures like further automating the process to provide timely information to local jurisdictions and customers, developing more detailed playbooks to reroute power and minimize customer outages, and advancing customer care programs in our high fire risk areas, including use of backup generators. We remain committed to EIX's long-term strategy and its focus on clean energy, consistent with the state's policies and objectives. The foundation of our clean energy strategy is found in Pathway 2045, a blueprint for how California's broader economy and our company can combat the climate change that catalyzes extreme weather events and exacerbates wildfires. It calls for the transformation of our industry through clean energy, electrification of the transportation sector, where our deployment of electric vehicle charging stations plays a major role, and the electrification of building space and water heating.
I expect these areas will all be key elements as the governor's task force looks to reopen the California economy and position our state to prosper in the exciting decades ahead. I want to close my comments with an emphasis on the essential nature of the service we provide. We help power the economy. We power both life-saving machines and lifestyles. We support our employees. We serve and help protect the public. Once again, I am very proud of my 13,000 colleagues who are working so hard on doing all of this safely. I also thank our investors for your commitment and support, and I hope that all of you and your loved ones are staying safe, well, and healthy. With that, Maria will provide her financial report.
Thanks, Pedro. My comments today will cover first quarter 2020 results, our capital expenditure and rate base forecast, 2020 EPS guidance, and other topics, including the impact of COVID-19 on our operations and financial performance. As we have said previously, quarterly year-over-year comparisons are less meaningful given the timing of the 2018 GRC decision. Please turn to page three. Edison International reported core earnings of $0.63 per share, which was flat compared to the same period last year. Higher core EPS at SCE was fully offset by an increase in core loss per share at EIX Parent and Other, primarily due to interest expense. From the table on the right-hand side, you will see that SCE had a core EPS variance of positive $0.04 year-over-year.
This was primarily driven by $0.12 of higher EPS from SCE core activities, which was partially offset by $0.08 of share count dilution. There are a few items that accounted for the majority of the EPS variance at SCE. To begin with, higher revenues had a positive variance of $0.42. This was primarily driven by $0.37 of higher CPUC revenues, mainly due to the adoption of the 2018 GRC final decision in Q2 2019. FERC revenues had a positive variance of $0.05, largely due to the increased equity layer, rate base growth, and higher expenses. Higher O&M expenses negatively impacted year-over-year EPS by $0.28. The largest component was a $0.15 increase in vegetation management cost. This is due to a combination of higher wages and training mandated by the state's new legislation, SB 247, and an increase in the number of trims.
We have discussed this in the past, but I want to pause here to summarize the methodology and impact of memo accounts. To begin, there are various expenses that qualify for tracking in the wildfire-related memo accounts. From the start of each year, we track actual costs incurred and compare that to the amounts authorized in the GRC for these same activities. Only costs that are incremental to the amounts authorized are eligible for deferral, and we have to incur the full annual amount authorized in the GRC before we record a regulatory asset for the incremental expenses probable of recovery. As a result, when considering quarterly results or comparing year-over-year results, impacts can be quite pronounced and not reflective of future quarters. The timing of the expenditures and the point at which the deferrals begin drive quarter-over-quarter variances.
Finally, as we've said previously, we will seek recovery of costs for which we have not recorded a regulatory asset due to a lack of precedent. Next, there was a $-0.04 impact due to the recovery of wildfire insurance expenses in the prior year, which was absent in 2020. There was also a $0.04 negative impact from costs related to short-term incentive compensation. Additionally, there was a $-0.07 variance primarily due to an increase in the estimated allowance for bad debts related to the economic impact of the COVID-19 pandemic and higher workers' comp and legal expenses. As Pedro mentioned earlier, the CPUC approved the establishment of the new COVID-19 Pandemic Protections Memo Account, the CPPMA, to track consumer protection costs for residential and small commercial customers.
SCE will seek authority to record bad debt expense in excess of GRC authorized amounts, and once we exceed the 2018 GRC authorized amount for bad debts, we will recognize a regulatory asset for the amount we conclude is probable of recovery. We will track these expenses and ultimately seek cost recovery in an applicable proceeding designated by the CPUC. We expect to file an advice letter tomorrow, including the overall scope of costs to be tracked in this account. Higher interest expense related to increased borrowing had a $-0.03 impact. Lastly, there was a positive $0.02 income tax variance related to benefits passed back to customers with no impact on earnings. EIX Parent and Other had a $-0.04 core variance in the quarter.
This was largely due to $0.05 of higher interest expense related to increased borrowings and was partially offset by the increase in shares outstanding. Page four shows SCE's capital expenditure forecast. This includes CPUC jurisdictional GRC capital expenditures, certain non-GRC CPUC capital spending, and FERC capital spending. We continue to execute a robust capital program of $19.4 billion-$21.2 billion from 2020 through 2023. This forecast is unchanged from what we shared with you in February. However, d ue to the COVID-19 pandemic, we are modifying our work practices to reduce the impact on customers as they comply with stay-at-home orders. We are working with local governments to ensure they have visibility into the essential work being planned, but we continue to have a strong focus on our wildfire mitigation efforts.
We are assessing the impact of this and the broader potential impacts of COVID-19 on our 2020 capital program, but are working to ensure that our customers' needs are met in the longer term, and we continue to see significant investment opportunities as we invest in the safety and resiliency of the grid and prepare for the clean energy future. On page five, we show SCE's rate base forecast. At the capital expenditure levels requested in the 2021 GRC, total weighted average CPUC and FERC jurisdictional rate base will increase to $41 billion by 2023. This request level represents a compound annual growth rate of 7.5% over two rate case periods. To give you an update on the 2021 GRC, on April 10th, California Public Advocates, CalPA, filed its intervener testimony in response to the track one request in line with the schedule laid out in the scoping memo.
CalPA proposed a 2021 test year revenue requirement of $6.9 billion, a $651 million reduction from SCE's request of $7.6 billion. They also proposed post-test year revenue requirement increases of 3.5% for 2022 and 2023. Overall, CalPA proposed approving approximately 90% of SCE's capital expenditure request. The primary difference between our request and the interveners' proposal was in the covered conductor program related to wildfire prevention and mitigation and in T&D grid operations. TURN and other interveners are scheduled to provide testimony on May 5th, and our rebuttal is due on June 12th. Additionally, earlier this month, the CPUC issued an amended scoping memo on the schedule and procedure for litigating the third attrition year of the 2021 GRC cycle. The ruling sets forth a track four schedule beginning with SCE's filing for 2024 in May 2022 and concluding with a proposed decision in Q4 2023.
Since the onset of the COVID-19 pandemic, we've been asked about the potential impact to revenue and earnings. We've also had conversations on the actions to strengthen our balance sheet, liquidity enhancements, and the strong funding status of our pension benefits and post-retirement benefits other than pensions, or PBOP, and related regulatory recovery mechanisms. I am going to take a few minutes to address these items which are laid out on slides six and seven. For nearly four decades, California has had a regulatory construct that has been supportive of customers and IOUs, particularly in decoupling utility revenues from sales volume through various cost recovery mechanisms. CPUC rates decouple authorized revenue from volumetric risk related to retail electricity sales so that SCE receives revenue equal to the authorized amount.
We track over or under collections of the CPUC base rates due to variations in load in our Base Revenue Requirement Balancing Account, or BRBBA. Annually, the difference between amounts billed and authorized levels are either collected or refunded, there is no net impact to SCE's revenue and earnings from load changes. These adjustments address all volatility in SCE sales volume, including from COVID-19 related developments. Additionally, as I noted earlier, we will request to use the new CPPMA to record consumer protection costs. We will see cost recovery of these in our annual Energy Resource Recovery Account, GRC, or other proceedings. In addition to the CPPMA, SCE has activated the Catastrophic Events Memorandum Account, or CEMA, to track other COVID-19 costs.
The costs we will be tracking include IT expenses to facilitate teleworking, employee benefits allowing employees to care for themselves and dependents affected by COVID-19, and other costs incurred to support the safety and wellbeing of our workers during this crisis. This account will also record any savings realized as a result of changes in work, which will be used to offset the additional costs recorded. I also want to share with you the impact of COVID-19 on SCE's load and on customer bills to date, particularly given the importance of customer protections. Through April 19th, SCE has experienced a 6% decline in system load during the stay-at-home order versus the prior year. While total load is down, experience has varied across customer classes. On slide six, you can see the load changes within each customer class.
Given the timing of billing cycles versus the start of the stay-at-home order, we are still evaluating the full impact on customer payment behavior. However, we have seen some increases in the number of outstanding accounts receivable for both commercial and residential customers. This is a likely leading indicator for an increase in deferred payments or bad debt expense. Please turn to page seven, which includes some information on our pension benefits and PBOP. At the end of 2019, our qualified pension plans were 96% funded. Also, we are well-positioned with PBOP, which is managed through multiple trusts that in total range from approximately 80% to fully funded as of year-end. These plans have a diversified asset allocation which provided a significant level of resiliency through the volatility we have seen in the early months of 2020.
SCE makes annual contributions to its pension plans and PBOP accounts, these contributions are recoverable through a CPUC-approved balancing account that allows us to true up every year to the actual contribution. Because we record a regulatory asset for the unfunded status of these plans, there is no impact to earnings. Please turn to page eight. We continue to focus on ensuring we have a strong balance sheet and maintaining financial flexibility. As you can see from the bars on the page, as of April 15th, EIX and SCE have a consolidated liquidity profile of $6.4 billion, which is a combination of cash on hand of $1.3 billion and available capacity on credit facility of $5.1 billion. EIX and SCE have no long-term debt maturities for the rest of the year and approximately $1 billion of debt maturities in 2021.
We have proactively de-risked our financing needs for 2020 by accessing the capital market in January, March, and April. This includes issuing $2.3 billion in long-term debt at SCE and $400 million of notes at EIX. The latter funds the debt portion of the EIX 2020 financing plan. EIX also put in place an $800 million 364-day term loan to provide financing flexibility for our 2020 equity need given the recent market volatility related to COVID-19. Also in the first quarter, SCE put in place a 364-day revolving credit facility and term loan for $1.3 billion. This will be dedicated to capital spending related to wildfire mitigation under AB 1054 that does not earn an equity return but is eligible to be recovered through a securitizable dedicated rate component once authorized by the CPUC.
Our long-term financing framework is to execute our SCE capital growth plans while maintaining investment grade ratings at both SCE and EIX. This framework drives our previously disclosed EIX 2020 financing plan, which includes the $400 million of debt at EIX, which I just discussed, and $800 million in equity, out of which $600 million is in support of the growth capital needs at SCE for 2020. The remaining $200 million is a carryover of the equity plan we disclosed in 2019 that we expect to complete this year. As of March 31st, approximately $90 million of that amount was raised through ATM and internal programs. As I have mentioned, given recent volatility in the capital markets, we put in a term loan at EIX last month to give us flexibility as we work deliberately on executing our remaining equity financing plan for 2020.
Page nine shows our 2020 guidance and the key assumptions for modeling purposes. We are reaffirming our guidance range of $4.32-$4.62 per share. In light of the volatility introduced by COVID-19, let me explain our thoughts for not showing a bridge to the midpoint of this range as we have done in the past. Previously, our 2020 guidance started with rate-based earnings from CPUC and FERC jurisdictional assets. As you can see from the information on this slide, our assumptions for rate-based earnings are unchanged, but COVID-19 will have an effect on how we execute our operational and financing plans for the remainder of this year. As I mentioned earlier, there are strong regulatory constructs in California that will mitigate the impacts of load reductions as well as incremental costs related to COVID-19.
There may be cost savings that are realized because some activities, such as travel, have been reduced as a result of the stay-at-home order. These savings driven by COVID-19 government directives will be used to offset new costs before additional recovery is authorized. It will be a detailed and data-intensive process to determine which costs and savings are specifically COVID-19 related. Therefore, I expect that there will be more variability within and across the various earnings drivers that are typically part of our guidance. It is more relevant to discuss the range rather than the midpoint. I look forward to giving you an update on the next earnings call as we continue to deliver this essential service to our customers and gain a more specific understanding of the impact of COVID-19 in California. That concludes my remarks.
Sue, please open the line for questions. As a reminder, w e 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 telephone. One moment, please, for the first question. That comes from Jonathan Arnold with Vertical Research Partners. You may go ahead.
Oh, good afternoon, guys.
Hi, Jonathan.
Hey, Jonathan.
Thank you for all the detail. Just one thing I saw in the 10-Q, I think, that the wildfire, the WEMA memo accounts are up to something like just under $950 million. Could you just tie those to what you talked about in terms of the Track two filing? Is that a filing covering some of that number, or is it a separate piece? Then maybe an update on the WEMA proceeding itself.
Sure. I think you're looking back in the notes where we show the regulatory accounts, the memo accounts, and the balancing accounts. From year-end to now, that number has moved, I'll say, about $80 million. We recorded about another $80 million in that account. The increment that we recorded this year is actually in the next track that we will be filing with the commission. If you recall, the costs incurred in 2020 are actually part of the track that gets filed in Q1 of 2021.
Okay.
We'll continue to accumulate these costs. That account that you're looking at, or in the note, the line item that you're looking at, is not just the WEMA account, it's the alphabet soup of wildfire-related memo accounts.
Okay.
The WEMA account is. Sorry, Jonathan.
The Track two filing you talked about encompasses some of that balance. Is that correct?
That's right. The Track two that we filed for is seeking recovery for about $500 million of revenue requirements, and we would expect to see that decision in the early part of next year-
Got it. Okay.
The WEMA, which is primarily aimed at or associated with insurance costs.
That proceeding is a little bit ahead of the Track two proceeding. The CPUC is in the process of determining whether evidentiary hearings are required, and so we will understand whether or not those are required, and potentially, those could take place in June. A decision would be forthcoming following that. Right now, the parties have been asked to meet and confer to see if they actually need evidentiary hearings.
Maybe just as my follow-up, what are the prospects of starting to work down some of these balances yet in 2020? How has your view on that evolved since last quarter?
I think the timing is reasonably the same in terms of where we think the proceedings will play out. The one thing I would say is there's always the issue of trying to get a decision, and then you have to get on a calendar 30 days later to get the proposed decision, then we have to roll it into rates. There could be some variability as a result of that. Things are still reasonably in the same place as they were last quarter.
Okay. Thank you very much, Maria.
Thanks, Jonathan.
Thank you. The next question is from Steve Fleishman with Wolfe Research. You may go ahead.
Hi, Steve.
Hey, Pedro, Maria, good afternoon. I wanted to make a clarification. You did reaffirm your 2020 guidance, including your current view of the impact of COVID-19. Is that correct? Is your commentary related to all the moving pieces in the bridge, so to speak, more about kind of dealing with the exact way you get there, but you do think you'll be within this range? Is that right?
Yes, and a lot of moving pieces, but Maria.
Yeah. I agree with Pedro. I think that we've reaffirmed the range. I think there are a lot of moving pieces. We do want to build that bridge because I'll tell you, I think if we try to keep putting things in very precise buckets, it would convey a level of precision that I think you would question. I think we're just trying to be straightforward with the guidance range and that things are still moving, and we'll be able to provide maybe more specificity as we move on through the year, obviously. Right now, that's where we are.
Got it. Just so I get it, because I think, if you get into every detail of how California mechanisms work, it's kind of getting too much into the trees and not the forest. Just if I'm going back up to the forest, the overall view, despite the timing of when you record things and all the different components of this, is that you do have tracking mechanisms that recover a lot of the volatility of revenue and cost such that a lot of the issue is just the timing inter-quarter and the way you account for things. It's not the overall picture of the forest. Most of these issues are recovered.
Yeah. I think especially memo accounts definitely create that inter-quarter and year-over-year kind of variability just because of the way the mechanics work, the methodology. I completely agree that there's a lot of mechanisms in California, some of them 40 years old at this point, that allow us to recover a variety of costs or under-recoveries or under-collections of sales.
Let me just add one piece here, just maybe not even at the forest level. It might be up at the clouds level. The reality is that, when you think about all those moving pieces, if you bring it down to the actual things that we're doing, there are so many decisions we've had to make and steps along the way in terms of how we're changing how our workforce is working, what things we need to be providing our teleworking employees to do their work efficiently from home. Our folks in the field, what things they need to be doing, different practices to be able to keep them safe out there and help do our part to slow down the spread of COVID-19. It's great we have all these tracking accounts.
There will come a time, obviously, when we'll need to not only have the amounts tracked, but we'll need to demonstrate that those were prudent decisions that we made. That's why we have so much process around this, right, in terms of the IMT I described and the Crisis Management Council and Senior Oversight over that myriad decisions.
The other piece around this is we are having discussions informally with the CPUC, with the Governor's office, with others involved, because this is not just about how we're thinking about things, but it's about how the state overall is looking at managing through the crisis, through the pandemic, and then looking at the building blocks that will allow the state, the economy, and our company to go back to whatever the new normal is after this. We're also trying to do what we're doing not in a vacuum, but consulting policymakers, consulting peer utilities in the state, outside the state. I think that all helps bolster the case for how we're trying to do all this prudently and should ultimately have a good shot at recovery.
Okay. Thank you very much. I'll let others ask. Thank you.
Thanks, Steve.
Thank you. The next question is from Michael Lapides with Goldman Sachs. You may go ahead.
Hey, guys. Thank you for taking my question. One easy one, which is on the BRBA, how much lag is there? Meaning, how quickly does the BRBA true up? If demand is down, call it 10% in a quarter or in two quarters, and for earnings purposes, there's no impact, but from a cash flow purpose, there's an impact. How does the mechanism work from a timing perspective?
Hi, Michael, it's Maria. BRBA gets put into rates at the beginning of every year. It's an annual true-up.
Got it. In other words, if you've got a kind of a, I'll use the term lost revenue number, pick a number, whatever it is, that lost revenue number gets put into rates at the beginning of next year, along with any other rate adjustments.
That is how it's been working. Yes. Mm-hmm.
It's been working that way for many years.
It's an automatic process, or do you have to actually file for the BRBA, go through a docket, get regulatory approval to get updated?
BRBA works a little bit differently than ERA. You were thinking probably of our purchase power accounts. Recovery accounts that they actually file and we go through and kind of talk to people about, and then we get a decision, then we roll that into rates. With BRBA, what happens is it just really goes into rates automatically at the beginning of the year.
Got it. One rate base growth or CapEx question. On your CapEx slide, you've got a list of things that are not included in that, I think the last one on the list was transmission infrastructure. Can you just remind us what you're referring to or what that implies?
I think you're looking at something that says what the long-term growth drivers are, and one of them is transmission infrastructure.
Yeah.
We do have some of our FERC transmission projects are certainly in the rate base calculations that we've provided here. I think this references to, in California, as we move to electrifying more of the economy, will more transmission be needed? When will that be needed? It would be a growth opportunity as that plays out over time. The CAISO has not yet put out their plans for the longer-term transmission need however, at this point.
Just to piggyback on that, remember, Michael, that the Cal ISO ends up developing the overall plan. They develop that based on input that they get from transmission owners and other market participants. To the extent they identify brand-new projects and under Order No. 1000, those are open to competition. To the extent that they identify projects that are upgrades or extensions of existing projects, then the utility, as transmission owner, has the right of first refusal. We don't know what that plan will be in the future for 2030 or for 2045 or what have you. I think it's probably reasonable to expect there might be some combination of projects that are extensions, upgrades of existing lines that SCE would have a right of first refusal on. Some other projects might be new competed projects.
Got it. Okay. Thank you, Pedro and Maria. Much appreciated, and y'all be safe.
Thank you.
You take care.
Thank you. The next question is from Julien Dumoulin-Smith with Bank of America. You may go ahead.
Hello, Julien.
Hey, good afternoon, everyone. Hey, thanks for the time guys. Hope you all are well. I wanted to follow up on where Steve was a second ago here and just make sure we're crystal clear about this. Maria, when you're talking about missing the forest through the trees here and the whole conversation, I mean, ultimately, the variability is pretty strictly intra-quarter. Ultimately, when you think about this netting, this netting dynamic simply reduces the ultimate amount that you're seeking from the CPUC in this new COVID account.
To the extent to which that you're seeking some net number from them, and you're not able to offset everything, that number is still going to be deferred, and that's not necessarily going to show up on your income statement as an expense. You tell me how you're going to account for it, just to make sure I'm not missing the conceptual point that you're raising about added volatility this year.
The variability obviously covers not just COVID-19 things, but probably earlier in my prepared remarks, I talked about just memo accounts and how that's working around wildfire mitigation as well. There's a little bit of activity going on in both of those areas. There's some variability around more than just COVID-19. In the COVID-19 space, correct, we are going to be tracking all of our costs. We have to always be looking at whether or not those are costs that were just amplifications of things that were already authorized in the GRC. We would be first recording all of the GRC authorized amounts, and then only would we be able to defer expenses. We'd also go through our standard process of probability of recovery, because that's part of our quarterly process as well.
We'd also have to be tracking savings that relate to these categories in terms of things that are being driven by COVID-19 government directives. I gave an example of travel. That's a really easy one, right? Frankly, none of us is traveling right now. We'll have to go through that process, and I think it could create some variability across the year. I think we're also going to always be looking at some of those other categories as well, and we want to make sure that we manage across all of them. That's why, while we're reaffirming the guidance range, we didn't want to provide that level of specificity with every piece part and every component with what we know today.
Got it. If I can follow up here. Obviously there's a lot of earnings gyrations, but cash flow gyrations and working capital gyrations. I presume, given your commentary is unchanged with respect to equity cumulatively for the year, that the quantum of working capital involved with respect to decoupling or with respect to COVID-19 or the litany of other accounts that you just alluded to, that fundamentally does not drive any changes in how you're thinking about balance sheet considerations, FFO metrics, etc. Perhaps even within that, doesn't necessarily change this notion of latitude on timing as well, I presume.
There's a lot in there. Obviously we're very focused on cash flows and customer payment behaviors, et c. We did put in an additional credit facility, that I mentioned earlier, that was really focused on a certain sliver of our capital spending. The AB 1054 capital spending amounts that'll ultimately be securitized. We put that into place so that would also free up our, I'll say, normal course credit facility. We have the $3 billion credit facility down at SCE, which would be the one that was aimed at customer payment issues, etc. Yeah, we have been managing and putting into place various facilities that we think really help us manage the cash flow and liquidity impacts. In terms of your question on the equity plan for the year, I think we announced that back in Q4. We still have the same plan.
The term loan that we put in place at EIX obviously gives us flexibility around timing there. We have the same, I'll say, financing philosophy, which is to create opportunities to invest in SCE's growth opportunities as well as to maintain investment-grade ratings at both SCE and EIX. We will be continuing with our plan. I think the rating agencies are very, I think, find the California regulatory constructs around some of the issues we're facing with COVID-19 to be very helpful. We're still going to be pursuing our financing plan.
Excellent. Thank you for the detail and the time. Be well.
Yeah, take care, Julien.
Thank you. Our next question is from Jeremy Tonet with JPMorgan. You may go ahead.
Good afternoon.
Hi, Jeremy.
Good morning.
Just wanted to clarify here when it comes to the earnings, in not putting the bridge here that you've done in the past, just wanted to clarify that you're not necessarily indicating the lower end of the range here, just that there's too much uncertainty right now for you to kind of provide this type of dynamic. Is that the right way to think about this?
Yeah, I think Maria captured well earlier, we're reaffirming the whole guidance range. We're not providing a bridge to a midpoint. We're just pointing out that there are a lot of moving parts and pieces right now. We reaffirm the range.
Got it. That's helpful there. Just wanted to turn to equity funding real quick for a second. Given really the unprecedented volatility we're seeing in the capital markets here, just wondering if in any way this has altered your strategy for raising equity, be it looking at blocks or ATM or timing of either. Given that a portion of 2019 equity was carried into 2020, would you consider delaying equity further at this point if volatility in the marketplace continues?
Jeremy, I think kind of tying back to one of the earlier questions, the 2020 financing plan that we announced in Q4 is still our financing plan. What we've done to help in terms of flexibility is put the term loan in up at EIX, which, if you look at the quantum, is about the same. Our plan for 2020 continues to be our plan.
Got it. That's helpful. Thank you.
Thanks, Jeremy.
Thank you. The next question is from Stephen Byrd with Morgan Stanley. You may go ahead.
Hi, good afternoon. Hope you all are doing well.
Likewise.
I wanted to just touch first on the PSPS commentary, Pedro, that you gave. Sounds like there's been a lot of work that's been done thinking about shutoff approaches. Would you mind just talking a little bit more about how that might look different this year in terms of whether it be scope, duration, or just approach? Any further color around sort of how that might look this year compared to last year?
Sure. Yeah, happy to do that. Like I said in the comments, there's been a lot of work going on really all through since last year. Just to remind you of last year's performance, I think it was generally similar to that of San Diego Gas & Electric. When you look at the percent of customers who were out throughout that, I'd call it around 2% or so of the population was impacted at some point or other. That, I think, was the product of a lot of years of investment in areas like sectionalizing our distribution circuits. That on average, in a high fire risk area, we can subdivide a circuit into four.
If there's a high fire risk portion of that circuit, but there's two, three portions that are not high fire risk, you can take out one part and not the three parts, and that limits the scope. That was one major item, and then the other major item last year was the fact that we, particularly comparing to our colleagues at PG&E, what they have been working towards is now, we have the ability to de-energize based on actual conditions as opposed to on a 48-hour ahead forecast. Those two were really helpful last year. I gave a follow what has happened since last year. I thought it's good to anchor you in the starting point. We've been working on further refining. Let me start with the forecasting piece.
There's been a lot of work that's been done to further refine our modeling capabilities, make that more granular, tighter grid, if you will, that should allow us to have a higher fidelity mapping and modeling forecasting capability that should, we believe, allow us to just be a bit more targeted around it. Another advancement since last year that I think I mentioned was these playbooks, right?
Rather than having to do a fair amount of work to update the number of variables as we're getting close to a de-energization or planning for one, the team did a great job over the last year of trying to collate the variables that are more static, things that are more repeatable, versus the ones that you really need to update in real time, and using that to have a cookbook or instruction set on a circuit-by-circuit level so that as that time approaches, we can just move a lot more quickly in terms of determining what portions of a circuit may need to be de-energized, what customers get the heads-up that they may be turned off, and would you ultimately do that for real.
Another thing we did was that, the team did, was that they took a look at our, we'll call them the frequent flyers from last year. Circuits that were de-energized multiple times because they're in high-risk areas. They looked at were there ways to further narrow the scope of de-energization on those. In some cases, it might have been doing some rewiring or doing some adding more sectionalization capability to further isolate the trouble spot, if you will, the higher fire risk spot within the circuit. That instead, and I'm going to make up numbers here, but if you have a circuit where you were taking out 500 people, 500 customers last year, several times during the year, if we can narrow that down to 50 people who are in the highest interest area, that actually reduces the overall pain across that community.
Finally, maybe I should have started with this one. Another year means another year's worth of progress in terms of hardening the system. More covered conductor mile deployment out there. That piece in particular will continue to improve year to year over the course of our WMP, so we should see more and more risk reduction from that. When you put all that together, Stephen, if you think about it as we look at the risk-informed decision to de-energize or not, that is the product of weather conditions, of field conditions out there, of the particulars of that neighborhood. It's also dependent on variables like how much bare wire do we have in high-risk areas versus covered conductor, right?
That's why the hardening of the system will continue to decrease the risk profile year on year and will allow us to continue to decrease the number of customers impacted. Bottom line on all that, sorry I was a little long-winded, there's a lot that's gone on. Bottom line is that if we saw the exact same weather conditions that we did last year, we would expect a proportionately smaller amount of de-energization. Of course, we won't see the exact same conditions as last year, it just gives you a sense that there's been some meaningful progress.
That's extremely helpful. Just one separate question on your EV infrastructure program. Would you mind just providing a high-level update on the status of that program in terms of implementation, key milestones from here? Just kind of thinking about the pace of that rollout as you try to meet the increased EV penetration in the state, how do we generally stand on the pace of that program?
Sure. Remember, I'll summarize this as two large programs. One is the medium and heavy-duty Charge Ready Transport program, for which we already have full CPUC approval, and the $340 million range or so. That's a multi-year program. The second large program is our Charge Ready program. There we had a pilot that had been approved to the tune of around $22 million or so. We had an extension of that basically gave us about the same amount to continue in pilot mode or bridge mode while the CPUC considers our larger application for what would be around a $750 million program, all in between capital and O&M. About $550 million of that, I think, is capital. That application is sitting at the CPUC. I believe they extended the deadline for considering it until June 30th of this year.
When they extended that six months ago or four months ago, the six-month extension, I think it's Commissioner Rechtschaffen who's the lead commissioner on this docket, and he said he expected there'd be a PD out early in the year. I don't think we've seen a PD out yet. Certainly understandably, there's a lot going on with the COVID impacts, etc, but we have not heard anything different from the June 30th deadline that they talked about. We look forward to hopefully getting that approved in that timeframe. In the meantime, we made a lot of progress in terms of both deployments on the Charge Ready Transport and the Passenger Vehicle Charge Ready.
I will tell you, through this COVID period, some of that work has slowed down just because it requires working in close proximity. Probably it's less essential than, say, working on a pole to keep the lights on. Customers themselves might not be ready on the customer premise to have somebody come in and work on the installation stuff. There's been some slowdown in that, and that's one of the pieces we're looking at. How does that get ramped back up as we follow the lead of the governor and the state in reopening up parts of the economy? I think just as a long-term need for that continues unabated.
In fact, some of the early discussions of the governor's task force have been all about how, again, as I think I mentioned, this is not just about the near-term reopening, but how do you bolster the economy for the long term, and clean energy and electrification are viewed as a big part of that long-term plan for the state.
That's really helpful. Thank you very much.
Thanks, Stephen. You take good care.
Thank you. That was the last question. I will now turn the call back to Mr. Sam Ramraj.
Thank you, Sue, and thanks, everyone, for joining us today. Please call us if you have any follow-up questions. This concludes the conference call. You may now disconnect.