Good morning, everyone, and thank you for participating in PG&E's third quarter earnings call. Joining us today are Patti Poppe, our Chief Executive Officer, and Chris Foster, Executive Vice President and Chief Financial Officer. I wanna remind you that today's discussion will include forward-looking statements about our outlook for future financial results. These statements are based on assumptions, forecasts, expectations, and information currently available to management. Some of the important factors that could affect the company's actual financial results are described in the second page of today's third quarter earnings call presentation. The presentation also includes a reconciliation between non-GAAP and GAAP measures. The presentation 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 for the quarter ended September 30, 2021.
Before I hand it over to Patti, I'd like to thank all of you who attended Investor Day, either in person or virtually, and we look forward to seeing you again at EEI.
Thanks, Matt. Hello, everybody. Thank you for joining us today. This quarter, we delivered non-GAAP core earnings of $0.24 per share. We're reaffirming our 2021 non-GAAP core earnings per share guidance of $0.95-$1.05, and we no longer expect to issue equity in 2021. We continue to see rate-based growth of 8.5% and longer-term earnings per share growth of 10%. Chris will provide more details on the financials in just a bit. As you saw at Investor Day, our experienced team is driven and focused on delivering clean energy safely every day. We have a very sophisticated and continually improving PSPS algorithm year- over- year.
In fact, when we backcast our current models to the previous utility-caused fires between 2012 and 2020, we would have prevented 96% of the structure damage had the current model been in place. This year, we also implemented Enhanced Powerline Safety Settings to address wildfire risk we face from extreme drought conditions. In fact, since the end of July through mid-October, we saw a 46% decrease in CPUC reportable ignitions in High Fire-Threat Districts and an 80% reduction in ignitions on enabled circuits. These Enhanced Powerline Safety Settings make our system and our customers safer. We're delivering on the 2021 Wildfire Mitigation Plan with our Lean Operating System and deploying it across the entire company to deliver predictable outcomes for customers and investors.
In addition to quarterly operational, financial, and regulatory updates, I'd like to spend some time on the work done and the changes made since 2019 that make our system safer and more resilient. Let's start on slide four with how we've improved our PSPS program since 2019. In 2019, we had seven events that impacted over 2 million customers. Since then, we've installed approximately 1,300 weather stations, 500 high definition cameras, and over 1,100 sectionalizing devices to better pinpoint exactly where we need to initiate PSPS. Our 2021 PSPS algorithms are informed by more granular weather forecasting, and we're using Technosylva software to incorporate machine learning into our fire spread modeling, so we can better predict where the risk is on our system in real time.
Our continuous improvement approach applies to addressing safety risks while minimizing disruption to our customers. As you can see on slide five, our model shows that by backcasting our new 2021 PSPS algorithm onto 2012 through 2020, we would have prevented 96% of the structural damage from fires caused by overhead electrical equipment in our service area. As you know, this year, we experienced extreme drought conditions in our service area. Due to these conditions, we saw fire spread on non-Red Flag Warning days. We assessed these risks and identified where we needed to focus. Guided by former CAL FIRE and local fire authority personnel who now work for PG&E, we implemented additional wildfire mitigation in our high fire threat areas. You can see the results of our safety focus on slide six.
We've compared the data since we implemented our Enhanced Powerline Safety Settings against the most recent three-year averages. What we've seen is a 46% reduction in CPUC reportable ignitions in our High Fire-Threat Districts from the end of July through mid-October. On the specific circuits where we first implemented the Enhanced Powerline Safety Settings, we've seen an 80% decrease in ignitions over the same time period. We're working hard to reduce the customer impact from these new necessary protocols. We've optimized our protective device settings on all circuits that have Enhanced Powerline Safety Settings, and we've adjusted our circuit restoration procedures. These enhancements are making outages smaller and faster to restore while still removing the ignition risk. We're communicating transparently our commitment to preventing fires of consequence to communities where Enhanced Powerline Safety Settings are in place.
Let me make it real with one story. On Monday, October eleventh, we initiated a PSPS event that affected about 20,000 people. The winds came in as forecasted. In 33 instances outside of the PSPS zones and the highest wind areas, our lines automatically de-energized due to the unpredictable disturbances and potential risk was mitigated. We know our protocols are working. We will continue to work around the clock to make these solutions less disruptive to customers and know that we are keeping them safe while we do that. Our experience since implementing these settings in late July will serve as an important guide for our 2022 planning. As we continue to keep people safe each day, I wanna talk a bit about the risk reduction work we've completed since 2019. Let's start on slide seven with our enhanced inspections.
As you can see, we're on track to complete our enhanced inspections on 500,000 assets in 2021 in our high fire threat areas. These inspections are scheduled to be conducted every year on all assets in Tier 3 and every three years for all assets in Tier 2. At the bottom of this slide, you'll see a couple points on our routine inspection program, which gets a lot of attention internally, but really isn't well-known outside of PG&E. As you can see in the green box, we conduct vegetation management inspections across our entire system annually, and in high fire threat areas, we patrol those conductors twice a year. In 2021, we plan to complete 1,800 mi of enhanced vegetation management work.
Combined with what we completed in 2019 and 2020 adds up to over 6,000 mi by the end of this year. While we're focused on keeping people safe with inspections and vegetation management, we're also focused on the longer-term hardening of our system. In the last 3 months, we've made great progress against our multi-year 10,000-mi undergrounding program. Our engineering team is scoping out the work as you'll begin to see in our 2022 Wildfire Mitigation Plan. Our goal is to engage the entire community around the imperative of undergrounding, and we are succeeding. We're engaging stakeholders through our undergrounding advisory group with representatives from environmental groups, labor, telecom, consumer advocacy groups, counties, tribes, among others. We're gathering ideas on innovations in engineering, equipment and construction from the world's best through our RFI process.
We're continuing to work on system hardening, as you can see here, and we'll provide an update on how we're thinking about that work as we further develop our undergrounding program. As a sneak peek, I'll share one project we completed this year. In September, we completed undergrounding power lines in Santa Rosa, which resulted in 11,000 customers who will no longer be impacted by PSPS. This is one of many projects. This is the right solution for our customers in that area, and that's why we did it. Simple solutions based on customer needs. As I mentioned, more to come on our undergrounding plans as we move into early 2022. At PG&E, effective implementation of our Wildfire Mitigation Plan is enabled by our Lean Operating System, which we're deploying across the entire company.
Every day, we have over 1,200 daily operating reviews, beginning with our crews closest to the work first thing in the morning and cascading to our executive operating review. These brief 15-minute huddles provide daily visibility on the metrics that matter most, help us identify gaps, and quickly develop plans to support our teams closest to our customers, giving us control and predictability of our operations. As you know, this summer, we were challenged by the Dixie Fire and the impact the fire had on all of our customers. I'll repeat what we've said since Investor Day. Our actions around Dixie were those of a reasonable operator, and we're confident in the framework created by AB 1054.
AB 1054 resulted in a wildfire fund to provide liquidity for resolved claims, a maximum liability cap for reimbursement by investor-owned utilities, and enhanced prudency standards when determining that reimbursement amount. We're reflecting that view in our financial statements, which show a gross charge of $1.15 billion. We've booked an offsetting $1.15 billion receivable that reflects our confidence to recover costs. As I highlighted, PG&E is working hard every day to deliver clean energy safely. We're building on the mitigation programs we started in 2019. We're staying nimble to respond to current conditions, and we are improving our performance enterprise-wide. For example, our team just last week responded to an atmospheric river weather event that included among the highest rainfall totals observed in a 48-hour time frame, ranging from 16 inches at Mount Tam to 5 inches in downtown Sacramento.
The strongest wind gust recorded was 92 mph from Mines Tower in Alameda County, with at least a dozen other locations experiencing gusts greater than 69 mph. Even in the face of these difficult conditions, we completed our work without any serious safety incidents while returning service to 632,000 of the 851,000 customers impacted within 12 hours. I am very proud of the safe and rapid response of our team. Now I'll hand it over to Chris to cover financial and regulatory items.
Thank you, Patti. As Patti referenced earlier, our financial plan remains on track and is supported by our regulatory construct. I'll cover the highlights first, then go into more detail. Today, we're announcing that we no longer see a need for equity in 2021. We're reaffirming our non-GAAP core EPS guidance for this year, and we anticipate issuing our 2022 guidance on our Q4 earnings call. Additionally, we're seeing progress on recoveries related to prior wildfire risk reduction investments to help the balance sheet. Let's start with the share count used for Q3 2021 and year-to-date GAAP and non-GAAP core earnings per share. We're in a GAAP loss position for both Q3 2021 as well as year-to-date 2021 due to our grantor trust election this quarter.
As a result, we're required to use basic shares outstanding to calculate both GAAP EPS and non-GAAP core EPS for Q3 and year-to-date. Our full year guidance has always assumed a GAAP positive year and our full year non-GAAP core EPS of $0.95-$1.05 per share reflects our fully diluted share count, so there's no impact there. I'll start with our Q3 results. We continue to be on track for the 2021 non-GAAP operating EPS of $0.95-$1.05. This is calculated using our fully diluted share count I just mentioned, consistent with our assumption when we initiated guidance. Slide nine shows our results for the third quarter. Non-GAAP core earnings per share for the quarter came in at $0.24. We recorded a GAAP loss of $0.55, including non-core items.
This quarter, we recorded a $1.3 billion charge we've previously guided to as a result of our grantor trust election. Moving to slide 10. $1.15 billion charge this quarter for the Dixie Fire. We also recorded a $1.15 billion of offsetting receivables on the facts and information available to us today. As a reminder, we recognize a receivable if we believe recovery is probable under the applicable accounting standard. Due to the facts currently available, recovery is not probable for amounts exceeding insurance for the 2019 Kincade and 2020 Zogg fires. Therefore, we haven't recorded offsetting receivables. We show the quarter-over-quarter comparison for non-GAAP core earnings of $0.24 per share for Q3 2021 versus $0.22 per share for Q3 2020.
Account as a result of the GAAP loss I mentioned earlier, and $0.01 from lower wildfire mitigation costs, partially offset by a $0.01 decrease due to timing of taxes that will net to zero over the year. We expect a stronger fourth quarter due to timing on some regulatory revenue and efficient work execution. Moving to slide 12. We're reaffirming our non-GAAP core EPS of $0.95-$1.05. On the debt side, we expect to complete an initial AB 1054 securitization transaction this month for $860 million. Our separate rate neutral securitization has also been approved by the CPUC, and once we resolve the final legal steps, we anticipate we'll start issuing bonds early next year. Now some updates on regulatory matters.
I'll specifically highlight important filings reflecting both our focus on timely cost recovery for historical spend and our focus on the planet, supporting California's clean energy future. Turning to slide 13. At the end of the third quarter, we've requested cost recovery for approximately 80% of the unrecovered wildfire-related costs on our balance sheet, and we already have final decisions, settlement agreements, or interim rates for roughly 60%. In September, we filed a settlement agreement for our 2020 wildfire mitigation and catastrophic event application. Our request was $1.2 billion. Given some of these costs predate the wildfire mitigation plan construct, we feel the settlement of $1.04 billion. Most recently on this front in September, we filed for recovery of $1.4 billion of additional wildfire mitigation and catastrophic events.
The costs were incurred last year and will be recovered in 2023 and 2024. You should expect to see similar filings in the coming years as we invest in these areas. Next, I'll cover a brief update on our cost of capital application for rates starting in January 2022. The request is between lower interest rates and the increase in cost of capital for California utilities, as seen from higher interest costs and equity issuance costs. At this stage, we'll follow the recent direction by the Administrative Law Judge and file materials that would have been included in the Cost of Capital Adjustment Mechanism advice letter by next Monday. The filing will include calculations of the ROE, cost of debt, and the resulting overall return on rate base from the operation of the adjustment mechanism.
ALJ's order asks us to submit the relevant information into the cost of capital proceeding rather than requesting us to file an advice letter. Our focus on the triple bottom line of people, planet, and prosperity is also not slowing down. Just last week, we filed for key transportation electrification investments that will accelerate technology adoption for underserved communities and of course, support California's greenhouse gas reduction goals. An ongoing EV fast charge program we're requesting a total revenue requirement of roughly $225 million from 2023 through 2030, 15,000 new charging ports, which is just scratching the surface to meet the demands of our customers, who today are driving nearly 20% of the electric vehicles in the country.
We are proud to serve the largest base of customers owning and purchasing EVs in the U.S. I'll close by reiterating that we're delivering against the financial plan for 2021. Our focus continues to be on addressing the critical need to reduce wildfire risk in the near term while running the business effectively for the long term. We're investing in needed wildfire mitigation, and we've eliminated our 2021 equity need. We'll continue to focus on improving our balance sheet while making the right investments to deliver clean energy safely to our customers. With that, I'll hand it back to Patti.
Thanks, Chris. Every day we are more and more excited about the future we're creating here at PG&E. We can see the difference that's being made and the value to be unlocked. We continue to reduce wildfire risk, and we're encouraged by the protections we have in place for our investors and the hometowns where we live and operate. Our 2021 PSPS protocols are the right solution on high wind days, and our Enhanced Powerline Safety Settings are necessary and effective in reducing ignitions and the resulting damage given our current drought conditions. We're focusing our work to make our system safer every day. We're adapting based on what we learn so we can best serve our customers and you, our investors. We'll deliver world-class utility. Jenny, please open the line for Q&A.
Your first question is from Jonathan Arnold with Vertical Research.
Morning, guys. Thank you for the op. Just picking up on your comment on cost of capital, does the fact that the ALJ didn't require the actual advice letters suggest that, you know, rates might stay where they are pending resolution of the on that?
Sure. Morning, Jonathan. And again, just as a reminder for everyone, the trigger mechanism itself would have implied a 60 basis point ROE reduction, which for us is roughly six cents of EPS. In terms of the current state of affairs, we'll be filing this next set of information next Monday. It is true, Jonathan, that our position is that the rates are not adjusted January 1st, 2022 by the ALJ's ruling. That's definitely our position at this point. Tough to know until, to your point, we see a little bit more in terms of the scoping memo, but we do think that was a good development in terms of how the judge was treating that next step.
Okay, great. Thank you. Just, I guess sort of stepping back a little bit and considering taking the equity out of this year, and then the securitization you're about to do. At what point in time will you arrive at a point where it can start paying a dividend to the parent, and then we can sort of start to think about some delevering?
Absolutely. We're looking forward to that, Jonathan. Again, our commitment is really twofold, right? First is ensuring that our takeout is still on track there. Second, our focus is certainly on $1 million. That would put us at roughly mid-year in 2023, when we'd be in a position to reinstate the dividend. Certainly would be partnering Patti, myself, partnering with our board to really evaluate what makes sense in terms of reinstatement level.
Can the utility start dividend to the parent, you know, before that? Or is it also...
At this stage, you may have seen that we had disclosed this quarter actually an intercompany loan. I think at this point, we've got the path to make sure that we're feeding the holding company for any needs it has, Jonathan, and would still be of the view that the HoldCo reinstate would be mid-year 2023.
Okay, thank you.
Sure thing.
Your next question is from Steve Fleishman with Wolfe Research.
Yeah. Hi, good morning. Can you hear me?
Morning, Steve. Yep, we can hear you, Steve. Good morning.
Great. Thanks. From the Democrats in their infrastructure bill or whatever you want to call it. One of the proposals is this minimum effective tax rate. I know it's early on. I know it's not passed, but is there any risk that that could kind of impact the ability to get all your NOL and also, you know, the securitization tied to the NOL?
Sure. Steve, good morning. Thanks for the question. I think at its highest level, it's definitely a little bit early. In terms of our initial read of this, just given the draft was provided, I believe, last Thursday, there's really a couple of things going on. First is that the tax NOLs are derived separately, are not impacted by book minimum tax, and the proposal really is focused on book NOLs. Second, as you can imagine, just kind of going forward, very traditionally, these costs are considered costs that are part of cost of service and are passed through to customers. It's a bit early to know exactly how this will play out.
Certainly the draft, again, in D.C. could change again, but at this stage, I don't see an immediate impact coming through from the alternative minimum tax.
Okay, great. Question just on the zero equity this year. It does also look like the billion-dollar contribution for the securitization was moved to next year. Is that not clear?
Not necessarily, Steve. We've consistently articulated that our focus has been on resolving really prior legacy legal issues, and that has driven some of the equity needs. As we disclosed today, we made some progress, in particular, on the Zogg Fire. What I would say is, it is true, and we've been signaled pretty clearly here that any additional impact there as it relates specific would be only occurring after we have completed the securitization itself. Don't see a risk there.
Okay, that's great. Just lastly on the Dixie Fire cost, I know that was obviously a large fire in terms of the acreage, but the impact in terms of structures seem to be relatively small. I'm a little surprised at the size of cost relative to just structures. Could you just maybe give us a better sense of what might explain that?
Sure. Traditionally what we'll do, Steve, every quarter is we'll consistently update this. At this stage, when you look at the totality of structures impacted, what's going on there is you have a mix of a few things. First, it's the roughly four a commercial area or a downtown area that was impacted. There's some focus on business interruption for private timber operations, which would have a, you know, a potential impact there as well. When you stack those all on top of each other, you get to the point where we get in terms of those private claims recoveries and the charge we disclosed today of $1.15 billion.
Okay. Your ability, the AB 1054 is what allows you to be able to offer some conviction on being prudent.
The reasonable operator. You know, one of the interesting things as we look at the fact pattern, we've disclosed much of the information through Judge Alsup's questions. The fact pattern is very much supportive of the AB 1054 new prudency standard that is presumed, that does, we feel, give us confidence in the accounting treatment.
Those answers. Thank you.
Yep. Thanks.
We did in terms of the materials this morning for everyone is if you go to slide 10, we give a pretty defined breakout of the different components of potential recovery mechanisms there. Certainly AB 1054 and its key protections are there, but there are a few other recovery components there that we broke out for everyone this morning. Thanks for that question, Steve.
Your next question is from Julien Dumoulin-Smith with Bank of America.
Hey, good morning, Julien.
Yeah, good morning. So maybe to follow up on Steve's question there briefly, can you talk through a little bit more of the AB 1054 process, at least for the initial $150 million, but also speak to the process on effectively truing it up with the suppression costs or what have you but that the process under the AB 1054 Wildfire Fund, quote-unquote, works, if you will. I know it is at times protracted here, but how do you practically see it from here, given now that you've established a receivable?
Sure. Actually earlier this year. Ultimately what would be happening here is work our way through the claims themselves. It's very early in terms of any kind of claims process we're having at this stage. You traditionally have a time period that passes in terms of the first couple of years. At that stage, once we resolve the claims, the Wildfire Fund administrator would only then really seek potential recoveries. If history is any guide, Julien, this could be a few years of interaction. In terms of any implications related to fire suppression costs, other additional acreage that we provided in the disclosure certainly today and we'll continue to take a look at. That's just to review all these different elements.
At this stage where we are today, the recovery sources would be pretty limited here, as you can imagine. Right. It's just that amount over $1 billion. Roughly $150 million.
If I can move it to a slightly different subject here, if you don't mind. On the Resource Adequacy. Summer relatively unscathed. I wonder where you stand, where the state stands on whether process oriented towards improving its reserve margins and or just execution. Right. I imagine that supply chains and just ability to project to the state's progress. Curious on your state of affairs after the summer.
Yeah, great question. It's definitely top of mind. You know, we did see some delays in supply chain procurement, particularly of battery storage. However, we expect to have over 900 MW added to the system by the end of this year, and so that's all valuable for next year. In total, our plan of 2023. We're working hard to get those procurement plans in place so that we can make up for the delays that continue to plague the supply chain. I'll also just say that, looking statewide at who's responsible, we've developed a strong working relationship with California ISO. California ISO has some new leadership there, and we're working together to make sure that we have the kind of transparency and visibility into what is required by when.
Lots of, I would say, positive momentum and working together as a state to make sure we have adequate. It's very important, and we see the potential of distributed resources and clean energy resources in this unique time, you know, this kind of unique moment in time, a generational opportunity to clean the energy resources, as we transition and provide more Resource Adequacy for the state. I would say very positive signals moving forward.
Excellent. Just quick further elaboration here. What types of documents are requested by the October seventh subpoena from the federal investigators? If you can just quickly throw that in there.
Hi, Julien, it's Chris. There's not much more detail we can provide there. They do relate, broadly speaking, to the Dixie Fire. What I would offer as well is that you can imagine we have an enormous amount of information in the public domain at this stage through primarily due to the requests that have come through from Judge Alsup and the federal monitor. Quite a bit of information already out. We've shared certainly what we've seen at this stage, and at this point would certainly be complying with any requests from the U.S. Attorney.
You know, at the end of the day, we continue to say that the fact pattern reinforces that we are a reasonable operator and, you know, we'll continue to cooperate.
Thank you for the responses, guys. Best of luck.
Thanks, Julien.
The next question is from Michael Lapides with Goldman Sachs.
Hey, guys. Thank you for taking my question. Just a high-level one. Commodity prices have moved a lot. That's just, you know, everybody can look every day of the week, and yet they've come down in the last couple of days a little bit. How are you thinking about the bill? Because you've got a pretty sizable general rate case request out there. You've got all the various cost recovery related to wildfire spend that are starting to flow through the bill, maybe not on the income statement, but on the cash flow statement and on the customer's bill. Then you've got the move in gas and purchase power costs, which have been pretty material lately. How do you think about things that can help offset that to mitigate significant bill creep for your customer base?
Michael, great question. This is obviously top of mind. Affordability is always very important to us, and there's lots of things that we can do at PG&E to protect customers from bill increases. But just a couple facts for you. You know, our average monthly gas bill is at around $50. So a 10% increase in gas prices would increase the bill about 2%. The commodity portion of the bill is about 25% of the bill. So, you know, the impact is muted. But more importantly, I would say that because we have pipeline access to many gas production basins, and we're able to...
That allows us to get the lowest cost gas as it's available, and then we use our gas storage to then be able to protect customers from these unusual upticks in price and protect our customers in that way. That's an important thing. I would also say that, you know, as gas fuels electric prices, a 50% increase in electric power prices would have less than a 10% increase on our customers' overall bills. Again, because we have limited exposure to natural gas for our customers' electric usage. I would say of many jurisdictions, our customers are well positioned given the commodity prices.
More importantly, I would suggest that we, PG&E, will develop a much stronger muscle with our Lean Operating System in place to make investments in infrastructure that they need, trading operating expense band-aid replacements for permanent long-term, higher value capital replacements that serve customers very well and better than deliver for investors. That's definitely our game plan and our path forward.
Do you believe there's material mitigation cost decrease potential in the company in the next couple of years, or do you think it's more beyond that?
Well, I think, we're seeing cost improvements today by already. The visibility that we have with our daily operating review cadence, our experienced executives who are accustomed to finding cost savings, on a routine annual basis, I suggest those cost savings will materialize, and they are materializing now, and they will materialize for years and years and years to come. I will just share with you every moment that I spend observing our operations, which is a lot of moments. I see great opportunities for waste elimination and cost savings for our customers.
Got it. Thank you, Patti. Much appreciated.
You're welcome, Michael.
Your next question is from Stephen Byrd with Morgan Stanley.
Hey, good morning. Thanks for taking my questions.
Morning, Stephen.
Morning. I wanted to step back on federal draft legislation, again, building on Steve's question, just thinking about other provisions that you all are thinking about that could be relevant. I was assuming that change impacts what that might be able to do from both a PG&E specific factor as well as just more broadly reducing fire risk. Then maybe just the second part of the question is just very broad, which is just other impacts from federal legislation that you're thinking about beyond sort of what I've been thinking about on the sort of climate side of things.
Great question, Stephen. We have been actively engaged very early on in the grid resilience, the climate adaptation components of much of the infrastructure package. We wanted to make sure that there were a couple things that were recognized in that federal package. One is making sure that we could have support for our customers on vegetation management, which is a high expense item for us, as well as other grid hardening solutions, microgrids, or even undergrounding. We see those elements in the package today. Now, your guess is as good as mine of what's actually gonna get passed, but they continue to be in the revisions that we see coming forward. We think that's a good sign. We also are very supportive of additional funding for the federal Forest Service.
You know, the U.S. Forest Service has a very important role to play here in California, and we're working in partnership with them on fire prevention and fire mitigation efforts and making sure they have appropriate staffing so that in the event of fires, they are able to adequately respond. We're very supportive of additional funding for the U.S. Forest Service. Ultimately, obviously, this clean energy transition, we've been leaders in that. PG&E, you know, today we have an 85% greenhouse gas-free generation mix, and we're proud of that, and we're proud of the leadership position we've shown nationally on that front. We wanna make sure that the infrastructure package continues to reflect early movers, if you will, people who have advanced in clean energy.
We wanna make sure that the package definitely recognizes that. We've been working closely with our D.C. office and EEI and others to make sure that the clean energy components of any of the legislation is favorable.
That's really helpful. Patti, maybe just building on the point about fire risk, cost mitigation. I guess I'm thinking a lot about that magical 8-to-1 ratio of CapEx to O&M, and to the extent that O&M costs can be defrayed by federal support. Could that potentially allow you to sort of accelerate the undergrounding effort in a way that does not harm customer bills because of that federal support, or is it kind of unclear at this point?
Well, I would say there's lots of reasons why our customers will not be harmed economically by our undergrounding program. First and foremost, even without federal assistance, your point about the trade-off between OpEx to CapEx is a key enabler to funding that undergrounding program. We know that the ongoing enhanced vegetation management and even our routine vegetation management program has a large expense to customers. We spend $1.4 billion a year on vegetation management. Being able to trade off some of that for capital investments in hardening the system or even so for undergrounding for sure, but also for microgrids and other hardening solutions, depending on the circumstances, that trade-off is very good for customers. We think there's a very.
We'll start to demonstrate some of that in our longer term financial plans and our Wildfire Mitigation Plan that you'll see at the early part of 2022. We don't think that there's an economic trade-off for customers to safety. We think we can both have affordable energy and safe, resilient energy, and that's our path forward.
Understood. I was thinking as well that that could get accelerated even further if you could get federal support that could lower your cost structure. I guess we'll stay tuned to see how the specifics shape up for that.
Yeah. No, your intuition's right on that, Stephen. Of course it is. There's certainly any support from this package will be good for customers. We've got ample capital to deploy that if we can, you know, defray some of the costs through federal support. We're all for it. There's definitely lots to be done out here in California.
Very good. Thank you so much.
Thanks, Stephen.
The next question is from Shar Pourreza with Guggenheim Partners.
Good morning, guys.
Morning, Shar.
Morning, Shar.
Just real quick on the equity. Obviously, you guys removed it for this year, but I'd love to get a little bit of a sense on, you know, sort of the moving pieces as you're thinking about financing what seems to be a relatively ambitious CapEx plan, right? As you're thinking about undergrounding distributed generation microgrids, would sort of any of those programs push you to issue equity? I guess the broader question is what would push you from zero? Or do you think sort of, Patti, with the amount of levers that you have at your disposal, like on the O&M side, that you can leverage that opportunity versus having to actually raise future equity?
Hey, Shar, it's Chris. I'll go ahead and take this. I think. Morning. I think there's a couple factors. First, we'll be growing into our undergrounding plan a bit. That's the way I would think about it. As we start to reduce operating expense and work into that undergrounding plan, it will occur over time. We'll really start to disclose more details there as part of our 2022 Wildfire Mitigation Plan in February. We haven't guided toward 2022 equity needs at this stage specifically, but we would intend to do so again at Q4 and provide more color at that stage. I wouldn't necessarily just offhand consider, though, what I'm getting at here, undergrounding or for that matter, kind of DER-related investments driving an immediate equity need. This is gonna be something where we're really growing into this plan over time.
Then, just on undergrounding, I'm curious, right, you know, and I know you kind of mentioned it, but I'd love to get a little bit more of an early indication on sort of the cost and scaling up that 10,000-mi program, right? I mean, obviously the slides reiterate the plan through 2026, with undergrounding remaining, you know, quote-unquote, a potential opportunities bucket. Are there? I guess, Patti, are there any changes to the scope or timing that you're contemplating for such an undertaking from your prior messaging as the CPUC is starting to more actively inquire about your plan? Net-net, I guess, can you do more cheaper and faster?
You know, I would say we're very bullish on that, Shar. You know, we did a global RFI for construction and engineering firms, and we received about 25 responses. They were very elaborate. We're doing face-to-face discussions with seven of the firms, and they're very affirming. It's very exciting. We can't wait to share more details, and we will. I'll just tell you that we feel more convicted than ever that this is an important part of the solution. I will reiterate that our capital program is very expansive and undergrounding is a portion of it. We do think that it's an important portion of it.
I can tell you, I heard about just one example of a job last week where we're undergrounding as we speak, and as we observe the work, we see tremendous opportunity to reduce the cost of doing that work and when we're at scale. In fact, that project was in about the $2.5-$2.7 million a mile range. That's a current active project that is not what I would describe at scale.
Mm.
We will be at scale, and when we are, the costs are inherently lower. We are very, very bullish. You know, all of the feedback we're getting from people is they do want more information. You know, we have to respect the CPUC's role to affirm that that's the right plan. Knowing what we know and what we can see moving forward, we're very confident that as people see the numbers and the plan, they'll feel very excited just like we do.
No, that's helpful. I think investors would like to see that 10,000-mi target tripled. Thank you for that. Just last thing, I apologize. I have to hop on and off the call. Can you just maybe comment on the recent Wildfire Safety Division resolution, you know, ratifying actions from the 2021 WMP update, especially as the resolution would require the 2022 WMP update to be included in the GRC proceeding, including sort of an explanation of the undergrounding plans. Does it kind of complicate the proceeding, or is it in line with sort of your GRC strategy? Thank you.
Well, just a couple things, just to touch on. The good news is, as you all remember, the Wildfire Mitigation Plan was approved by OEIS. The CPUC ratified that safety certificate or ratified our plan on April 21st, 2021, and then we'll shortly file for our safety certificate. We do have a required safety meeting on Wednesday, November 10th, with the CPUC and OEIS. We look forward to that opportunity to continue to talk about our plans. Shortly thereafter, we'll file our 2022 wildfire safety certificate for OEIS. Now, currently, that wildfire safety certificate that we currently have is in place until the following proceeding happens. The process is happening as discussed.
We think it's a great opportunity to talk more about our undergrounding plans in our 2022 Wildfire Mitigation Plan, but we'll file that in February of next year. No red flags as far as we're concerned. We feel good about how it's progressing.
Fantastic. Thank you, guys. See you in a few days. Appreciate it.
Thanks, Shar.
Once again, if you have a question, press star one on your telephone keypad. Your next question is from Jeremy Tonet with JP Morgan.
Hi. Good morning.
Morning, Jeremy.
I think, outside of Dixie, I think it's pretty clear that wildfire season's been much less active versus recent years. Much of this might be a factor of weather conditions and how much might be evidence of
Any mitigation and investments you've been doing so far are really starting to, you know, turn the corner.
Well, Jeremy, I appreciate you asking the question because it's a good opportunity for us to reiterate that we believe that our safety measures that we've put in place, the investments that we've made, the vegetation management, the inspections, and the Enhanced Powerline Safety Settings combined with PSPS has made our system safer and our customers are safer and therefore our investors are as well as a result. Certainly, we were not disappointed to have a little early rain, and rain is forecast today and later this week, and that all makes us feel good. As we look at our ignition rates, that is the most compelling statistic in my opinion, and I encourage everyone to look closely at it. In the areas where we implemented our EPSS, we've had an 80% reduction in ignitions. I attribute that to that measure.
I'll also say that given the drought conditions that we experienced this year, historic extreme drought, we have fared extraordinarily well. Again, I attribute that to the safety measures that we've put in place and the amount of investment that we have made in hardening our system and managing the vegetation and doing those inspections.
Got it. That makes sense. Maybe just kind of picking up on your point there, given the success of these enhanced safety settings, what percentage of the high-risk circuits can you expand these to, and how long might that take?
Well, again, we can be very targeted about this. We know where we have drought conditions, and it's a very dynamic tool that we can use. This year, we did around 50%. Next year, we could do 100% but it doesn't have to be like an on/off. We turn it on, and we leave it on for the season. We can turn it on when we can see the conditions warrant. We can be very, very targeted. You know, we've done some work to really optimize the device settings to shrink the impact. The time to restore now is much closer to what the time to restore was before we put in the settings because we've shrunk the impact of each of the disturbances, and our patrols have become more effective and more targeted.
I would just suggest that the degree of improvement for our team's response this year has been extraordinary, particularly given the conditions, and we know it's an important tool to have in our toolkit. Long term, we know the ultimate solution is a hardened system that is designed and built to be resilient to wildfire, and that's why our undergrounding and all of our other mitigations are a very important path forward. In the meantime, today, every day, customers on our system are safer because of the measures that we have taken.
Got it. That's helpful. Just one last one if I could here. Understanding that undergrounding announcements is most topical in some of the stuff we just discussed here. Do you have anything other that's top priorities into the Wildfire Mitigation Plan filing?
Yeah. I think it's really continuing to streamline our vegetation management and our hardening plans. I do think that you'll see more of these remote grid applications. You know, there's a lot of circumstances where we have a long radial running through a forest that we could just eliminate. Don't even underground it. Just equip those people at the end of that line with a distributed energy resource that is both clean and resilient to wildfire and lower cost. We do think there's a variety of solutions that you'll see more of in our Wildfire Mitigation Plan for 2022 and beyond.
Great. That's very helpful.
The next question is from Ryan Levine with Citi.
Good morning. Thanks for taking my questions. Do you have the gas ops of the gas utility as a hedge?
Hey, Ryan. It's Chris. You can imagine we don't disclose at that level, especially commercial decision-making for us, but I would just offer again to reiterate what Patti had mentioned is when you combine the gas storage we've got, when you combine the availability from the basins that we have, you combine the hedging to limit volatility and the fact that we have costs trued up annually, it really is combined a really good solution for customers and clarity for investors.
Okay. Just to be clear, the 10% increase in gas and 2% impact on customer bill is on a hedge basis. Just to confirm that, and then does that assume about three-
I wouldn't think about that, Ryan, as netting a hedging impact. I would think about that just as a basic rule of thumb.
Okay. There are several mentions around undergrounding. To date or year to date, how much undergrounding has been completed?
To share at the beginning of next year, you know, we'll start to show what the path is 100 mi, and we're so excited about. That's why when I talk about our cost per mile, we're at a very project-by-project basis now, and so we can't wait to be able to share with everyone what the ramp-up plan looks like and how we can then get the economies of scale with that ramp.
Appreciate that. There's mention of seven parties in the more face-to-face conversation. Is the intention for one party to emerge or more than one to the extent you're able to comment?
Oh, yeah. You know, we're looking at it could be multiple, it could be one. We're not sure. That's the benefit of having these conversations with these folks. We'll see if that's why it was a request for information, not a request for proposal. We're really working together to learn what is the best path forward.
Scale. It's natural to have a couple of large providers, so you can create good competitive tension in there to get the best outcome possible for customers. We're definitely excited about what we're seeing so far. Couple dozen initial entrants, and now we're winnowing that list down to some really good potential partners.
Appreciate the color. Thank you.
Thanks, Ryan.
At this time, there are no questions. Do you have any closing remarks?
Yeah. Thanks, Jenny. You know everyone, thank you for joining us today. Our system is safer every day, and we want you to know that. It's both safer for our customers and for you, our investors. We look forward to sharing more details with you and having more conversation with you at EEI next week. It's right around the corner. Be safe, everybody.
Thank you for attending today's call. You may now disconnect.