And gentlemen, thank you for standing by and welcome to the PG and E Corporation Third Quarter 2020 Earnings Release Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Fallon, Senior Director, Investor Relations. Thank you.
Please go ahead.
Thank you, Rob, and thanks to those of you on the phone for attending. Joining us this morning are Bill Smith, our Interim Chief Executive Officer and Chris Foster, Vice President and Interim Chief Financial Officer. Also joining us today are John Simon, Executive Vice President, General Counsel and Chief Ethics and Compliance Officer Michael Lewis, Interim President of Pacific Gas and Electric Company and Robert Kenny, Vice President, Regulatory and External Affairs. I want to remind you that on our discussion today, we'll include forward looking statements about our outlook for future financial results, which are based on assumptions, forecasts, expectations and information currently available to management. Some of the most important factors that could affect the company's actual financial results are described on the second page of today's Q3 earnings call presentation.
The presentation also includes a reconciliation between non GAAP and GAAP measures and can be found online along with other information at investor. Pgecorp.com. We also encourage you to review our quarterly report on Form 10 Q that was filed with the SEC earlier today and the discussion of risk factors that appears there in our Q2 10 Q and in the 2019 annual report on Form 10 ks. With that, I'll turn it
over to Bill. Thanks, Matt, and good morning, everyone. Thank you for joining us today. Before I cover the priorities for the quarter, I want to express our sympathy for all of those impacted by the devastating wildfires we've experienced in California this year. It's been an historic and very challenging wildfire season for our customers.
We've seen over 4,000,000 acres burned in California with nearly 3,000,000 acres burned in our service area. We thank the Governor's office, Cal Fire, California Office of Emergency Services and all the first responders for their tireless efforts in keeping our communities safe. We continue to focus on executing a series of important changes at PG and E. These changes will help us live up to the commitments made as a part of our Chapter 11 emergency plan, including our efforts to improve our operations and safety outcomes, reduce risk and enhance our customer focus. This morning, I'll touch on 3 key areas of focus for PG and E.
First, improvements to our wildfire mitigation plan second, our operational updates and third, our executive leadership recruitment progress. Chris will then cover our financial updates and key regulatory cases. Looking at our wildfire mitigation plan, our highest priorities remain mitigating ignition risk, enhancing our situational awareness and implementing public safety power shutoff or PSPS events. We will initiate these events when absolutely necessary to protect public safety. As you can see on Slide 4, we continue to be on track or ahead of our 2020 targets for system hardening, enhanced vegetation management and installation of weather stations and high definition cameras.
Our efforts over the last quarter have our weather station and camera installations back on track. We will respond to Judge Alsup's request for information in the monitored report of PG and E's enhanced vegetation management inspections next week. We share the court's goals in ensuring we operate in a safe and reliable grid. While we acknowledge there are some areas where our comprehensive wildfire mitigation plan that we stood up in 2019 could improve, we do see some of the results somewhat differently than the letter provided by the monitor. We are unable to comment any further ahead of our response, which will be filed on November 3.
There is one aspect of the wildfire mitigation program that I'll give a detailed update on and that's our public safety power shutoff or PSPS program. We have done a lot since 2019 to increase cooperation with local authorities by hiring additional talent with emergency planning expertise. We also prioritize better communications with our customers as well for our season. The technology improvements that will help us achieve our program goals are highlighted on Slide 5. As we have in prior years, we'll continually evaluate conditions that include wind speed, humidity levels and fuels moisture among other factors.
When conditions warrant, we will implement power shutoffs as a last resort to keep our customers and communities safe. We have taken steps to minimize the impact of these events on our customers and we've executed 5 events so far this year. We have made our events smarter through leveraging technology, smaller by implementing sectionalization devices as well as temporary generation and shorter by increasing our post event inspection capabilities. We have engaged with our communities and our customers to implement changes that incorporate their feedback. While we have improved in 2020 versus 2019 in making these events less disruptive, we continue to learn from each event.
To make our program smarter, we collect fuels moisture data and incorporate it into our fire spread modeling. This data is an important indicator along with wind speeds and assessing fire conditions in real time. We utilize the fuels data along with forecasting work we do in collaboration with the National Weather Service to determine where we need to implement a PSPS event. Our next priority to improve the program is to make the impacted customer footprint smaller. We have pre positioned temporary generation in regions that are prone to shut off events.
We installed 600 sexualization devices, which were in place by the end of August. In addition, we've added an islanding configuration at the Humboldt Bay and Cariboo generating stations, which allow almost 70,000 customers to stay online. Those customers would have been shut off in 2019. This is one example of how we've implemented lessons learned from previous wildfire seasons. These actions allowed us to meet our goal of in customers impacted in our first events.
In order to make outages shorter, we've increased our aerial patrol abilities through additional helicopters and fixed wing aircraft. We now have access to more than 60 helicopters to help us meet our goal of a 50% faster restoration time versus 2019. I'd like to touch on a couple of other areas of PSPS implementation where we've increased our focus in 2020. This includes our coordination with county and city emergency managers and our outreach to customers. In December, we started holding town hall listening sessions with city managers, first responders and residents.
At these sessions, PG and E senior leaders listened to the local stakeholders started working on plans to improve coordination for the 2020 PSPS events. Our team then held subsequent discussions where we walked through local plans for these events based on the information we learned in the listening sessions. As an example of change made resulting from these listening sessions, we increased the local presence of PG and E personnel who coordinate with emergency managers. These important employees serve as a single point of contact for individual counties and cities during a power shutoff event. On the customer side, we've also made significant changes in response to lessons learned in 2019.
We conducted webinars focused on our safety initiatives in the counties we serve. We asked questions and received valuable feedback, which we've used to address the concerns and needs of our customers on a county by county basis. We've worked hard on 3 specific areas related to customer engagement during PSPS events. The first is our notification system, the second is our website and the third is customer resources provided by PG and E. With regard to our notification system, we work to notify customers with an initial watch notification message as early as 48 hours prior to event.
The PSPS watch will be upgraded to a warning when forecasted conditions show that a safety shutoff will be necessary. Warning notifications are sent approximately 4 to 12 hours in advance of an event. These messages also include an expected restoration time. Outage and restoration information is updated throughout the event. Messaging in direct response to customer feedback from last year.
2nd, on our website improvements, we have moved pge.com from our data centers to the cloud where we tested the site to levels well beyond the demand we saw during our peak usage in 2019. Our enhanced web capability allows for customers to look up shutoff times and estimated restoration times by address. This information is available as early as 2 days before an event occurs. Also, we increased the number of our community resource centers during PSPS events. In our first event this year, we had 50 community resource centers available for analogy impacting 172,000 customers.
By comparison, in 2019, we had 80 centers for 1,000,000 customers impacted. These centers provide a place impacted. These centers provide a place for customers to go during power shutoffs and
are equipped
with charging stations, bottled water and other necessities. All of these locations comply with COVID safety protocols. We expect to have incremental opportunities to leverage technology to improve our wildfire mitigation plans and our PSPS implementation. We continue to incorporate feedback from our community leaders and our customers to improve these events. With respect to updates on wildfire filings, as we indicated before, we anticipate a decision on our safety certification request at the CPUC by the end of this month.
We believe we provided all the necessary information, and we hope to see that outcome any day now. As a reminder, the prior certification we received last year remains in place. Looking forward, we will take the learnings from our wildfire mitigation plans as well as our PSPS adjustments and will reflect them in our 2021 wildfire mitigation Plan filing. Last week, the Wildfire Safety Division gave all 3 IOUs a February deadline for that submission. One additional note on operations.
We notified we were notified earlier in the month that Cal Fire has taken possession of PG and E equipment as a part of their ongoing investigation into the cause of the Zog Fire, which was west of Redding, California. Given the early stage of the investigation and the fact that we haven't had an opportunity to review the assets retained by Cal Fire, there is limited additional information to provide today. We are fully cooperating with CAL FIRE in its investigation and will provide more information on the the appropriate time. In addition, on Monday, we filed a response to Judge Alsop's request for information on the Zog fire. We will not comment any further as to and we do not want to get ahead of the CAL FIRE investigation.
While our electric operations are certainly an area of focus given our effort to mitigate wildfire risk, I also want to highlight the continued good work done by our gas operations team. One of the major initiatives to make our gas system safer is to enable in line inspections. This method is preferable to traditional hydrostatic testing in a couple of ways. It eliminates the need for a line to be taken out of service for testing and it's safer than hydrostatic testing, which can compromise the strength of the pipe. In terms of day to day operations, our gas odor average response times and our 3rd party dig in rates are at the upper end of industry standards.
These are two areas of focus to ensure we provide safe and reliable gas delivery. I want to mention 2 facilities that we opened in 2017 that have helped us improve our gas operations. These centers were opened in direct response to a comprehensive evaluation of our operations. First, in 2017, we opened the Center For Gas Safety, which has expansive lab space that allows us to test new technologies. 2nd, we opened our Gas Safety Academy.
Here, we offer gas operations team a training space that simulates various gas emergencies we encounter in our territory. These two centers were open to ensure that we have given our operations team the necessary technology and training facilities to drive continuous improvement. We will look to the practices we have implemented in our gas business and our wildfire mitigation efforts to continue to inform our path forward. While we have accomplished a lot in increasing safety and reducing risk, we continue to work hard to improve. The last item I'd like to cover is the progress we're making on open executive leadership roles.
We remain on track to name a new CEO as well as a President of the Utility by the end of the year. We have also kicked off a national search for a CFO. All three of these key senior leadership searches are being supported by the same firm that will help with the alignment of abilities and backgrounds. We are fortunate to have Chris Foster taking the lead as Interim CFO. Chris is leading a very strong finance department while we conduct our search for a permanent CFO.
These leaders will build off a few recent hires that are very exciting. Those include Francisco Benavides, our Chief Safety Officer Sameet Singh, our Chief Risk Officer and Ajay Wadhre as our Chief Information Officer. These three recent additions to the PG and E team reflect our commitment to change. We will continue to operate with a focus on safety and risk while continuously looking for new ways to implement technology to increase efficiency. To build on that a bit, I'd like to share a recent initiative that we kicked off.
We are taking a focused look at our operations. We will look to operate more efficiently and improve our relationship with our customers by creating an enterprise approach to asset management, adopting consistent work management practices and implementing tools to measure, track and monitor our customer experience. We'll have more to share on this initiative as we move into 2021. In closing, I want to express my appreciation for all PG and E frontline employees. Our employees are navigating a difficult operating environment and they continue to execute on safety, risk reduction and reliability programs across electric and gas systems.
With that, I'll turn it over to Chris to cover our financials and some key regulatory cases. Chris?
Thank you, Bill, and good morning, everyone. I plan on covering 4 items, which are highlighted as the key takeaways on Slide 3. First, we are on track in reaffirming the 5 year earnings guidance we set last quarter. This is reflective of the consistent growth we anticipate over the coming years. 2nd, I'll provide an update on our insurance coverage, the impact of COVID and our financing needs.
3rd, I'll highlight meaningful progress our regulatory cases that provide additional revenue clarity. Lastly, I'll briefly cover the Q3 results. Starting with our earnings guidance elements, they are highlighted on Slide 10. We have updated our GAAP earnings guidance range slightly for 2020 to reflect a loss between $1 $1.06 per share. We are reaffirming non GAAP core earnings per share guidance as well as our earnings factors for both 2020 2021.
Specifically, in 2020, we are guiding to non GAAP core earnings of $2,000,000,000 for the year or approximately $1.62 to $1.63 per share. This is based on weighted average shares of roughly $1,250,000,000 in 2020. The drivers of variance from earning our authorized return remain unchanged. Also noted here are the key assumptions underlying 2020 guidance. This includes receiving a final decision in the 2020 general rate case in the Q4.
Our guidance is also consistent with the TO-twenty formula rate settlement and assumes FERC's approval of our separate AFUDC waiver requests reflected in this settlement in the Q4. I'll come back to these regulatory items to provide more color. Moving to non core earnings guidance, which is broken out on the same slide. We've made a couple of adjustments to these items. Our range for bankruptcy and legal costs increased $30,000,000 to the range of $2,660,000,000 to $2,700,000,000 The increase to the range reflects the final adjustment required to the fair value of the equity backstop fee based on the share price at the beginning of July.
Additionally, for investigation remedies and cost recovery, we have lowered the forecasted spend from $300,000,000 to $230,000,000 for the year. Roughly $30,000,000 of this decrease is permanent and we will apply it towards the wildfire OII spend requirement. The remaining difference is a timing item that will impact 2021 non core spend. We have increased the guidance for 2019 Kinkade fire related costs by 20,000,000 dollars to approximately $170,000,000 for the year. During the Q3, we received information from potential claimants, including insurance subrogation claims that led to an increase in our accrual from $600,000,000 to $625,000,000 pretax.
As it relates to the Kincade Fire, we continue to not have access to Cal Fire's investigative report or the evidence they have collected. We've also included a pickup of $50,000,000 for the category prior period net regulatory recoveries. This category includes 3 items. First, we've included revenues related to the 2011 GT and S capital audit, consistent with previous guidance. This quarter, we've also added a pickup for the 2019 impact of our modified AFUDC filing.
Partially offsetting the first two items are prior year revenue reductions that are associated with FERC's recent order on TO-eighteen and the TO-twenty settlement now pending with FERC. Our full year guidance for the amortization of the Wildfire Fund contribution remains the same. Moving to 2021 guidance on Slide We continue to see non GAAP core earnings of $2,100,000,000 to $2,300,000,000 for the year or approximately $0.95 to $1.05 per share. This non GAAP core earnings target is $275,000,000 to $425,000,000 below our authorized levels. This range is mostly comprised of interest expense of $275,000,000 to $325,000,000 Additionally, net below the line and spend above authorized will taper off as we carry out additional efficiency measures.
This includes revisiting contracted work such as contracts for wildfire mitigation and brings us to our range of $0 to $100,000,000 there. Next, I'll cover updates on our non core asset sales, insurance coverage and the impact of COVID-nineteen and the effect of these items on our financing needs. As we mentioned in our Q2 call, we are considering selling a set of small non core assets. We remain early in the process there, but we have made some progress on that front. If successful in 2021, the impacts from such a transaction could reduce the high end of our $450,000,000 to $750,000,000 forecasted equity range for the year.
We've also filed an application with the CPUC for approval to sell our San Francisco office complex, fulfilling the commitment we set out in our plan of reorganization. Based on an illustrative sale price of $1,000,000,000 shown in our application, a benefit of $600,000,000 would flow back to customers. We are looking at 2021 for the likely timing of the sale. Moving to our wildfire insurance. We've made progress in accessing over $100,000,000 of additional coverage since the Q2.
That puts the wildfire liability insurance component of our overall insurance portfolio at up to $868,000,000 in coverage for the period. With regard to the impact of COVID-nineteen, continue to experience higher uncollectible costs during the year as well as incremental operating costs. Roughly $90,000,000 has been recorded in memorandum accounts created to track COVID related costs for collection in future periods. When combining the impact of higher insurance costs, the timing of the general building office sale and the timing of recovery for COVID-nineteen costs, we foresee a short term cash need in the 4th quarter that we anticipate will be met with short term debt. We do not see these items changing our equity needs.
I will now shift to covering a few significant updates on the regulatory front. We've made progress in a few areas that keep us on the path to achieving the guidance ranges we set out last quarter. I'll start with FERC. 2 weeks ago, we filed a settlement in the transmission owner 2020 rate case that is subject to approval by FERC. We are pleased with the outcome and the support of the broad set of settling parties.
There are a few elements to the settlement that I'll highlight. First, we established an all in return on equity of 10.45% and a capital structure that is 49.75 percent equity. These factors remain in place through 2023. This settlement establishes our 1st formula rate case that brings clarity with the annual expense true up process. And additionally, the settlement outlines a modified AFUDC waiver filing with FERC that if approved will allow us to apply a higher equity ratio on AFUDC back to May of 2019.
That is being reviewed by FERC staff on a separate track and we assume completion of that review by the end of Q4. I'll now shift to the cases at the CPUC. Last week, we received a proposed decision on our 2020 general rate case. The outcome is largely similar to the multiparty settlement we reached last December and does not impact our 2020 or 2021 earnings guidance. The total $9,100,000,000 revenue requirement was unchanged.
The proposed decision does include changes to the cost recovery process for liability insurance, vegetation management and wildfire mitigation capital and expense. Specifically, the proposed decision would require us to file separate applications for the recovery of costs above 130% of the authorized amount. It also proposed reductions to the authorized wildfire mitigation capital costs. These are considered AB1054 related capital spend and are at the magnitude of roughly $900,000,000 over 2 years. These amounts were already excluded from our rate base forecast, so we do not anticipate a change in our rate base projection.
The timing of this proposed decision should keep us on track for a final decision by the end of the year, which aligns well with the previous statutory deadline of December 13 set forth by the CPC in June. We have also sought recovery for roughly $1,300,000,000 of 2017 through 2019 costs through our recent wildfire mitigation and catastrophic events or WMSI filing at the CPUC. Related to these costs, we received a decision in our CEMA case last week that allows us to recover roughly $450,000,000 beginning in December. Now the wildfire mitigation catastrophic events or WMSI filing becomes the path to recover the remaining costs. On our securitization filing, hearings begin in December at the CPC.
And based on the procedural schedule, we anticipate the case could wrap up in the Q2 of 2021 with the securitized debt offering closely following. We will also be separately preparing our AB1054 related securitization filing after we receive the final decision in the 2020 General 8 case. Looking forward, a last area I'd like to touch on due to the broad public policy focus in California is vehicle electrification. The transportation sector remains the largest emitter of greenhouse gases, accounting for roughly 40% of the total for the state. So the need for emission reductions in this sector is as part of meeting our statewide carbon reduction goals is clear.
Our customers' excitement for electric vehicles continues to be reflected in consistent adoption levels. More than 300,000 electric vehicles plug into TGE's grid, representing 1 out of every 5 electric vehicles nationwide, and we see additional growth due to the increasingly competitive space among OEMs. Our current CPUC approved EV charging infrastructure portfolio is one of the largest of any utility in the United States. At this time, we have installed roughly 3,500 ports as part of our Phase 1 for electric vehicle charge network filing at the CPUC. And as an indicator of our customers' interest, this program is more than 3 times oversubscribed.
The governor recently issued an executive order for 0 emission passenger vehicles by 2,035 and medium heavy duty vehicles by 2,045. And in support of the state's clean energy goals, we anticipate submitting a 10 year transportation electrification plan by early 2022. Now I'd like to transition to our Q3 financial results. Slide 13 shows our results for the Q3. Non GAAP core earnings per share for the year came in at $1,600,000,000 and is consistent with our full year guidance.
GAAP earnings including non core items are also shown here. The non core items are consistent with the full year 2020 guidance I mentioned. Moving on, Slide 14 shows the quarter over quarter comparison for non GAAP core earnings of $590,000,000 or $1.11 in the Q3 of last year and $461,000,000 or $0.22 this year. The primary drivers were an increase in shares outstanding from our July 1 equity raise, interest expense as well as 2 timing items that are each expected to reverse. The first is the 2020 generate case cost recovery and second is the timing of taxes.
With the full quarter behind us after the bankruptcy, we're now very focused on executing well on the operational and financial plan we set out. We have a strong earnings projection ahead of us that is supported by regulatory outcomes that I discussed. And we are excited for the long term opportunities provided from our state's focus on clean energy technology. With that, operator, could you please open the lines
Your next question comes from the line of Stephen Byrd from Morgan Stanley. Your line is open. Studenberger, your line is open. Your next question comes from the line of Julien Dumoulin Smith from Bank of America. Your line is open.
Hey, good morning. Can you hear me now?
Hi, we can hear you Julien. Good morning.
Hey, good morning. Thank you. So perhaps if I can go back here, thank you for all the details. Can we talk about the wildfire certification process and just your expectations here? I mean, clearly, both of your peers have it.
Certainly, you had articulated some forthcoming deadlines here on obtaining it. Any specific context that you would provide us in thinking about nuances as to delays or otherwise as to the process itself, just given where we stand today? And I have a follow-up.
Sure, Julie. No problem. Again, I think as Bill laid out, right, we have filed all the information that we think is relevant that the commission was seeking at this stage. We filed that on July 29. So we do still anticipate a decision from the commission by the end of the month.
What I would offer just in terms of context around it because I think there's been a little bit of confusion is maybe a couple of ways to think about it. First, it's important to keep in mind that while the commissions constrain that decision, the prior safety certificate remains in place. If we run into a scenario where the commission were not to approve, you'd have a couple of things occurring. First, we would have the ability to continue to have access to the 80ten-fifty 4 wildfire fund, but we would lose the protections of the shareholder liability cap and the improved prudency construct. So just wanted to provide that.
We don't anticipate that being the outcome, Julien, but I just wanted to provide that as a way for to help you think about what the other scenario could look like.
Got it. All right. Excellent.
Thank you. If I can go back, can
you talk a little bit
about the scenarios here with the Zog Fire? I know it's difficult to speak to it at this point in time. But can you speak a little bit to the context of the Enfission Maker around PSPS? And I know you all provided this context earlier, but can you give a little bit more as to the events as to why you did not engage in PSPS in that specific context there? And again, how that fits into the certification framework as well?
Sure, Julien. This is Chris. I think the safety certificate we would consider largely separate and apart. There was a fairly straightforward set of criteria that the commission was evaluating as it related to the certificate itself. If you look at the situation in terms of the data points around the Zog Fire, there were 3 different weather stations that were in the general vicinity, which is what we shared with Judge Alsip in our filing this week.
And there, I think what you saw is, generally speaking, the sustained winds were roughly 15 miles per hour in that area with gusts at certain publicly owned weather stations at up to around, I think, 32 miles an hour. That deviates from what we have in terms of our own planning. As you know, our public safety power shutoff approach consists of a number of different considerations from relative humidity to the moisture in the fuels in the ground to wind speeds as well. The wind speeds in those areas did not meet the general requirements that we have in place. You could consider those as roughly 25 miles per hour in terms of sustained winds And generally speaking, an exceedance of 45 miles per hour in terms of purposes when we would typically consider shutting off an area that customers are being served by.
Got it. Thank you for that clarification. Lastly, sorry to prove another one, but if I could squeeze it in, just on insurance, obviously, the market is dynamic, you've obtained more here. Going forward into next year, what are your options around different avenues here, if you can just elaborate very quickly as to the extent to which that it may not necessarily perpetuate as it has this year?
Sure. I guess I would start with I have to acknowledge it's been a pretty dramatic year, as Bill talked about, in terms of statewide impacts from the August heat storm fires and other elements. So it's obviously, Julien, the market is going to continue to evolve. I think from a cost recovery standpoint, we do think that we have achieved what is reasonable in terms of insurance coverage for this year. In terms of next year, I think there are probably a few things at play.
Our understanding as we read the statute is that AB1054 does contemplate the wildfire safety administrator, the entity that oversees the wildfire fund, to contemplate a level of coverage for the investor and utilities in the state. Absent any kind of explicit guidance there, we'd be looking into next year to determine what would be the Everything from Everything from multi year plan components, some different structures to the insurance itself as well as certainly trying to compete as best we can for the best price possible for customers. So at this stage for this year, we do have a total of $1,500,000,000 in comprehensive coverage, $868,000,000 of that is for wildfire coverage at a total cost of the $1,500,000,000 which comes to roughly $860,000,000
Your next question comes from the line of Steve Fleishman from Wolfe Research. Your line is open.
Hi. Excuse me. Good morning. Just I guess a question on the Fire Victim Fund. Have you done any indication from them on their intentions in terms of the shares they own and any plans for basically what the plans are for those shares going forward?
Hi, good morning, Steve. We have them at this point. What you'll see in our Q is that we did point out that as October 20, the information the company has is that the trust has not sold any shares. So that really is the update on that front. I think at this stage, obviously, given the Fire Victims Trust is a substantial shareholder of the company, we do our best to communicate openly with them as well to help make sure that they're aware of events around the company.
But at this stage, can't really speculate on how they're thinking about share issuances in the future.
Okay. Can you clarify whether they were blacked out at all or anything or just not?
Sure, Steve. I think it's a fair question. The dynamics that you should think about going forward are that the registration rights agreement that we do have with the trust provides for blackout periods, some demand rights provisions and other things. But largely those attributes would not be really in the public domain. Those would be exchanges of information between the company and the Fire Victims Trust.
Certainly, at this stage, our interests are very aligned. And so we would want to collaborate with the trust as appropriate should they undertake an underwritten offering. Okay.
Second question just and this is I don't know how well you can answer this, but we've had a lot of events this season and we've done several PSPS and obviously most of them have worked very well. We do have the ZOG event but then a lot of successful events in terms of avoiding issues. So could you is there any color you can give on just kind of political regulatory feedback that you're getting on your activity so far?
Steve, this is Bill Smith. Thanks for the question. I think that generally speaking, people understand the nature of the challenge that we are facing and the feedback has been relatively good from our key stakeholders. No one likes to see us have to do this, but I've seen in fact some articles that kind of recognize that this is about public safety. And I think as unfortunate as this season has been, if you look at the early part of the season and the number of wildfires we had that had nothing to do with utilities of any kind, I think it showed the public in general that this is a much broader issue PG and E.
And yes, I think the State of California has had something approaching 9,000 fires so far this year. So I think there's a better acceptance this year of the nature of the challenge. We've been getting some pretty good feedback from all the key stakeholders that we're executing well. And I would like to say that in the events that we've had this year, while we're still doing some of the final tallies from this latest event, but there have been well over 100 cases where we found debris and other things into our lines that had we not taken the proactive steps to implement a PSPS could have or would have likely started a fire. So I think that, obviously, you point out the Zog issue.
We've got to learn more about that. But I would say generally speaking what we're doing is working. I think people appreciate that it's for their safety and the safety of the communities.
Great. Just one last quick one just on the management hires that you're working on. I know can't probably give specifics, but just given that these are obviously 3 very important roles, could you give us some color on the types of people you're looking at for these different roles? Or are we going to know these people? Any color there would be helpful.
Yes. Well, without getting any detailed specifics, I think what I would say is we're looking for people with experience and a strong commitment to safety and operational effectiveness and basically operational excellence. So I'm really pleased at how that whole process is coming along. So just stay tuned, but it's come along quite well and very much according to our plan.
Your
next question comes from the line of Jonathan Arnold from Vertical Research.
Hi, good morning, guys. Quick question on the TO 2020 and just sort of how to think about this going forward. I see it looks from the slides as though you're sticking with the rule of thumb sort of guidance modeling to assume the CPUC cap structure and the return across the enterprise. But one feature of the settlement is that you're getting to earn on high cycle cap structure. So Chris, I'm sort of curious whether there is some sort of help embedded within that versus how you were suggesting we approach this before or whether it sort of fits just within the general tolerance?
It's
consistent, Jonathan. Thanks for the question. I know that the T-twenty case has some unique elements to it. But at this stage, the way the thing that I would focus on is the assumption that we've called out. If you specifically look at our 2020 factors, I think you'd want to focus on the AFUDC waiver because that's the piece at this stage.
The other elements are fairly straightforward. They're not changing relative to where we were before. You'd want the AFUDC waiver piece to be handled by the FERC accounting staff reasonably. And a general way to think about that, if it's helpful, Jonathan, is you'd probably be looking at a $0.03 swing roughly, depending on that how that turns out. But our assumption, as we call out here, implies that we think that we'll have that FERC accounting staff final view by the end of the year.
And actually, I did want to follow-up on that to understand that better. Does that have an ongoing earnings variance impact? Or it sounded like it might be more retroactive applying looking back, but I'm not sure.
It'd be looking back, Jonathan.
Okay. So that $0.03 you're talking about is just a swing factor in terms of what you would book as core earnings for 2021, but ultimately doesn't really change the trajectory. Is that right?
So just to be clear, Jonathan, we called it out as an assumption in 2020 specifically. So that's where we would anticipate the impact if it were to go in a different direction.
Okay. But that's going in a different direction. Would that change the go forward earnings power or just impact with 2020?
It would be an impact confined to 2020.
Okay. So that was it. And I think just one thing on insurance. I know you just gave us the total cost. Is there a data point on what you ended up paying for this incremental 100,000,000
dollars No, there's not specifically, Jonathan. I do appreciate the question because there's been quite a bit of focus on the wildfire component of the coverage itself. We haven't provided any additional color at this stage. I certainly imagine we'll continue that discussion with the CPUC as we examine cost recovery there at this stage. Again, this overlaps with the 2020 generate case proposed decision that we have.
And we do hope the commission ultimately in their final decision could land at the place where in the language that's reflected in our settlement agreement.
Okay. Thank you very much, Jacob.
Your next question comes from the line of Michael Lapides from Goldman Sachs. Your line is open.
Hi, guys. Thank you for taking my question. Chris, this one is probably for you. Just curious, there are lots of items that won't necessarily have a direct income statement impact, but could lead to significant sources of cash inflow in the FEMA and WW, in CDA. Can you just walk us through those a little bit?
Because some of these are starting to get pretty material. And I'm just trying to think about things that would be kind of cash inflows for 2021, 2022 that may be more cash flow income statement drivers?
Sure, Michael. Good morning. I think if you look at it, we call them out as well in our disclosures in the Q. But the way I think about it is you have multiple different memorandum accounts that have been stacking up. I want to say it's I could be off on this number, so I'm going to be generic.
But I think it was roughly in the neighborhood of $2,500,000,000 to $3,000,000,000 in the building up. So I think that's where your focus is. Ultimately, if you step back though, these cost recovery mechanisms and the memorandum accounts are something we've been planning around for a few quarters. So I wouldn't think about it as implying there's any kind of change to the financing plan that sits behind it to support it. Because I think ultimately, if you really start with CEMA, for example, it's been a fairly straightforward cost recovery mechanism for the company for years.
We were pleased to see that the interim rate relief request came through that accelerated some of those recoveries, Michael. But otherwise, as you see those broken out, we would contemplate that traditional regulatory lag that exists for California, and so it wouldn't necessarily be impacting any kind of future financing.
Got it. And then last item, you guys think about the bill, meaning what's going to happen with the customer bill over the next couple of years. Can you talk just directionally what you think the level of bill inflation or deflation you anticipate over the next 3 to 4 years, 3 to 5 years when you look at it to your plan?
Sure. So stepping back a bit, Michael, I think it's a good question, right? We have substantial investments needed to mitigate wildfire risk. But in terms of the company's plan, it's actually pretty straightforward. We have the combination of the GT and S case, our cost of capital proceeding, the General Rate case and now the TO 2020 case, which really gives us pretty good line sight to what that's going to look like at least for the next 3 years in most of those examples.
As you start to look at that kind of 3 to 5 year range, we're generally speaking looking at a roughly 4% to just north of 4% average electric system bundled average rate impacts for our customers. That puts us, generally speaking, in line with growth projections in our state. We are very fortunate to serve the area that we do and the economic diversity that exists here. And I think there's another way we look at it as you can imagine as well. We also contemplate these growth rates as it relates to a percent of share of wallet for customers, right?
We acknowledge that our customer base is very different from customers who may live in the Central Valley of California to Northern California and those in the more moderate temperate areas in the coastal communities. And so that's the range that we're generally speaking looking at for the next few years.
And finally, are there any major cost savings areas where you think you could offset some of that bill inflation?
Yes. This is Bill. I think there are a lot of areas. I wouldn't say there is a given major place, but there are a lot of opportunities that we think that we can do from taking approach to some of our contracting efforts. When we started after the events of 2017 2018, there was a very aggressive attempt to get as many resources on the ground as we could.
I think there are ways for us to come back and look at that more effectively. I think one of the things I'm excited about is the point that I made about the initiative that we're kicking off around some of our operational process improvements. I think there are ways that we can get much more effective at what we do, reduce lost time, take cycle time out, which reduces inventory needs, a lot of things. So I think it's a broad range of areas that can help us get costs out of the business, not any 1 or 2 individual items.
Your next question comes from the line of Jeremy Tonet from JPMorgan Securities. Your line is open.
Hi, good morning. This is Rich on for Jeremy. Thanks for taking my questions.
Just want to start off
with circling back on the prior question. Could you provide a little bit more color around these enterprise wide initiatives that alluded to earlier, maybe the magnitude of the impact over the next few years and how this fits with sort of driving earnings versus setting customer rates? Sure, Jeremy. So there's a few different ways to look at it. I think stepping back, what I think you're interested in is and I want to be sure I'm responsive are kind of categories as a way to contemplate this.
Some categories would be earnings impacting, others would be more specific to benefits to customers. As we look forward to the next few years, some of those categories we've talked about include things like renewable energy credits, right? Anytime you look at kind of the energy side of the business in that way, we're always searching for savings to make sure that we're cost competitive on behalf of customers, right? So I think benefits that you would see there would accrue to customers. We also continue to evaluate additional surplus property assets.
Similar largely similar treatment there in a number of those cases where there's a developed area there, many of those benefits would also accrue back to customers. You can imagine that conversation is really evolving in real time as we look at the COVID-nineteen impacts and how to think about the future state of kind of the footprint of the company. Obviously, that's the case with our future move as well to Oakland and moving our primary headquarters there as well. As we think about some of these other elements of work process improvement that Bill alluded to, think you could see a split there. But ultimately, we see that as being a driver for us going forward in terms of achieving cost savings that will allow us to in the future earn our authorized return as we've guided to in 2022.
And then just given the current focus on the elections right now, can you provide any early thoughts around your financial plan and sensitivities there should corporate tax rates increase? Sure. Rich, sorry. It's limited in short because of the NOLs that the company has. I think if should there be a change in should there be a substantial change in terms of tax policy, I think for at least PG and E, you'll see limited impacts there.
Got it. Thank you very much. Thank you.
Your next question comes from the line of Ryan Levine from Citi. Your line is open.
Good morning. Can you what's the non core assets the company is targeting to sell? And can you remind us the sharing mechanism between ratepayers and shareholders on the potential proceeds? Any more color you could share on it?
Sure, Ryan. I appreciate the question. And I'm really not able to be much more forthcoming than that. I think it's what I emphasize there and where we were really last quarter is we are really doing the internal work right now to evaluate some small non core assets that we're evaluating. If you step back and just think about different what I'll call asset classes, which is you can think about different asset classes in different ways, one of which is the land that the company owns, the physical footprint that we have in different areas, some of which is developed, some of which is not.
Generally speaking, the benefits that accrue from any sale will differ depending on that treatment as one example. As you look across different other different asset classes, there could be opportunities where the gain on sale treatment is slightly different. And so at this stage, we are very focused on this effort. I do think we can continue to make progress, but don't want to be too specific because I don't want to get ahead of our internal work in any kind of outreach we'd otherwise be doing at a later stage.
Thanks. And then changing gears, what assumptions changed that drove the higher Kinkade estimate? And given that you haven't received the Cal Fire report, are there any additional information changes that you're anticipating that we may see further revisions to that current estimate?
Sure, Ryan. So this is really just an element of time passage and us getting better information over time. At this stage, what we had referenced were we're having conversations, as you can imagine, with some of the different entities and, in particular, what we noted were the subrogation claims themselves. We have better data than we had before. As you recall with prior as you may recall with prior wildfires in prior years, the California Office of Insurance had disclosed a greater level of granularity, which provided one means by which to have additional input.
In this situation, we have now improved data as it relates to the subrogation claims in particular, and that allowed us to update our accrual at this stage.
And there are no further questions at this time.
Well, thank you all for your interest in PG and E and thank you for joining us on the call today. If you have any follow-up questions, please don't hesitate to reach out to Investor Relations. Thank you.
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