Ladies and gentlemen, thank you for standing by and welcome to the PG&E Corporation Second 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 session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Foster, Vice President, Treasury and Investor Relations, PG&E Corporation. Thank you. Please go ahead.

Thank you, Stephanie. And thanks to those of you on the phone for joining us. Before I turn it over to Bill Smith, I want to remind you that our discussion today will include forward-looking statements about our outlook for future financial results, which are based on assumptions, forecasts, expectations, and information currently available to management. Also joining us this morning are John Simon, Executive Vice President Law Strategy and Policy and Jason Wells, Executive Vice President and CFO. Some of the important factors that could affect the Company's actual financial results are described in the second page of today's second quarter earnings call presentation. The presentation also includes the reconciliation between non-GAAP and GAAP measures and could 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 and in the 2019 Annual Report on Form 10-Q. With that, I'll hand it over to Bill.

Thanks, Chris, and good morning everyone. We are excited to return to our traditional format. Today's call marks a milestone for us and we're excited to share our post-emergence vision for the coming years. We've emerged from bankruptcy as a stronger company; the complex legal matters are now resolved with major regulatory cases establishing our revenues that are either approved or settled. We also have a good line of sight on a regulatory framework for the next three years; our financial plan displays strong growth and enables a path for the company to get back to investment grade. Our remarks today will focus on changes we made regarding governance, progress on our wildfire plan, and preparations ahead of the 2020 wildfire season. I will conclude with an update on key regulatory matters. Jason will then cover the financials, including updated guidance, and walk us through the quarterly financial results. Our focus now turns to building on the many changes we've put in place in bankruptcy. We've set the foundation for an improved Company. At the same time, we will never forget the impacts to the communities we serve and those who lost their lives as a result of catastrophic wildfires in recent years. Our mandate is to rebuild the trust of our customers while delivering operational excellence. We'll do that by focusing on responsive customer service and system investments and focusing on risk reduction, safety, and reliability. Organizational changes to help deliver on this mandate are already well underway. First, at the Board level, 11 new directors were seated at the start of this month. These directors were carefully chosen based on their individual skills and backgrounds and are well suited to guide our Company for years to come. One of our initial priorities as a Board is to hire the next permanent CEO, and that process is ongoing. We've announced recent changes among our leadership ranks and I want to thank each of them for all their contributions to PG&E. With our emergence from Chapter 11, this is a natural inflection point for leaders to evaluate their future and the roles at the Company. We will continue to build our team through both internal development programs and external hires. A couple of recent additions to the team include Francisco Benavides, as our Chief Safety Officer, and Sumeet Singh as our Chief Risk Officer. I’m delighted to say we'll be announcing a CIO soon. We have a seasoned team in place that is well suited to execute on our operational improvement plans developed during the bankruptcy process. For example, the core electronic operations team members that manage our wildfire mitigation efforts and successfully achieved our goals during the last wildfire season remain in place. This group has consistently improved our tools and evolved our capabilities each year. I have confidence that this team and others will deepen the bench and lean on their extensive experience to manage the evolving wildfire threat. We will take the necessary steps to keep our customers safe. If you go to Slide 3 of our presentation, you can see we're progressing well on our four key wildfire mitigation plan targets. I'll cover a few areas on the wildfire preparedness front. First, I'll touch on our operational work plan status. I will also showcase some of the technology we continue to deploy to better understand our assets and reduce risk. Then I'll touch on our public safety power shut-off or PSPS program evolution. Knowing a number of the program goals are longer-term in nature, we continue to stand ready to shut off power when extreme weather conditions present themselves. So, let's start with this year's mitigation work; our annual work plan is on track to meet all of our 2020 targets. We had some supply chain issues early on due to COVID-19 which slowed our progress on the installation of weather stations and HD cameras. We resolved those issues and fully expect to meet the program goals. Turning to Slide 4, you'll see a snapshot of how we're making foundational investments in technology that we're excited about. On our enhanced inspection work, we're evaluating new programmable flight options to ensure greater consistency and efficiency of the drone inspections we do. We've also started a partnership with one of the country's most advanced data analytics companies. We're working to migrate to predictive maintenance utilizing the enormous dataset we've collected from advanced visualization inspection tools. This year, we will likely add another 2.5 million images of our assets. We are utilizing machine learning tools to deploy computer vision models to compile asset inspection photos. This improves the quality and consistency of the analysis. All of this serves to improve our understanding of our assets and consistently improve our records and data. Stepping back with these early-stage examples, we’re evaluating a range of different technologies, much like we did with the methane leakage technology adopted by our gas business years ago. We are fortunate to be working with California-based companies on these emerging technologies that will reduce wildfire risk in our state. We've taken this partnership approach for years on the Clean Energy front. Our announcement yesterday that we're breaking ground on one of the world's largest battery energy storage systems with Tesla is just another example of that. There is one other aspect of the wildfire mitigation program that I'll give an update on, and that's our PSPS program. It's covered here on Slide 5. As we have in prior years, we will continually evaluate conditions that include wind speed, humidity levels, fuel moisture and other factors. When conditions warrant, we will implement power shutoffs for public safety purposes. We've taken steps to minimize the impact of these events on our customers; we're working hard to make the PSPS program smaller, shorter, and smarter. To make our PSPS program smarter, our team will be using new weather modeling that doubles the granularity of the data feeding our models. Our team will now use the improved insights to inform which circuits are considered for shutoff. The improved accuracy of the forecast should ultimately result in fewer customers being impacted. Our next priority to improve the PSPS program is to make the customer footprint smaller. To address this, we are pre-positioning about 460 megawatts of temporary generation in order to meet critical community needs in areas that have a high probability of an outage. These will be strategically placed at over 60 substations, midfield locations, and secondary health facilities. We've also installed nearly 400 sectionalizing devices and plan to achieve our 2020 goal of 600 devices by the end of August. Both solutions allow us to keep power on in more places where it's safe to do so. In combination, these elements are expected to allow us to reduce the number of customers impacted by one-third. In order to make the outages experienced by our customers shorter, we've increased our aerial patrol capabilities through additional helicopters and fixed-wing aircraft. By using infrared cameras, we will be able to conduct controls into the evening, unlike last year where our post-outage inspections were limited to daylight hours. This greatly advances our ability to meet our goal of 50% faster restoration time this season. As I mentioned earlier, part of the improved financial foundation for the company has improved clarity on our key regulatory cases. I'll touch on a few of those. First, I'll cover some updates at the CPUC. Looking back to our previous gas transmission and storage rate case, we overspent on capital and sought recovery, roughly $600 million of that spend is subject to audit, which was completed in May with no disallowance recommended. We are now authorized to seek recovery of that spend, and we anticipate a decision on that filing in Q2 of 2021. As a reminder, we've reached an all-party settlement in our 2020 general rate case. The Commission recently updated the procedural schedule, and we expect a final decision by the middle of December. In our securitization filing this week, a scoping memo was released by the Commission pointing to hearings at the end of November. Given this update, we would anticipate resolution around the start of Q2 next year. We are required to have our safety certificate renewed each year in order to access the AB 1054 wildfire fund. Our 2020 safety certification request is currently with the Commission for review, and our certificate from last year is valid while the review is underway. Moving to FERC in our transmission owner 20 case, we are currently in settlement discussions, but we do not know the timing of potential resolution. I'll close by touching on COVID-19 and workforce impacts. I'd be remiss not to mention other challenges our employees and customers face given the broader backdrop of the issues that are part of our larger national discussions. While we continue to make headway in the second quarter, even with the challenges created by COVID-19, the recent uptick in COVID cases in California has resulted in the state reinstituting measures to protect against further spread, compared to what we reported in May. During the period from mid-May to July, we've seen a 3% reduction in electric load and a 4% reduction in core gas load on a weather-adjusted basis versus 2019. We also experienced high costs in Q2. These impacts have often been offset by a regulatory asset that was recorded to a Memorandum Account created to track COVID-related costs. Given the challenge of our current operating environment, I want to take a second to express my appreciation for all PG&E frontline employees who continue to execute our risk reduction, safety, and reliability programs across our gas and electric systems. Our workforce is also engaged in the broader discussion around diversity and inclusion. We are fortunate to serve a customer base with extreme diversity. As a company that has weathered bankruptcy and still maintains a very low overall attrition rate, we're focused on this conversation with our employees and our management. Over 50% of our hires in 2020 have been people of color, and we will maintain our history of investing in diversity, including eight consecutive years of increased supplier spend. With that, I'll turn it over to Jason to cover the financials.

Thank you, Bill and good morning everyone. I plan on covering three items, some of which are highlighted here on the financial summary on Slide 6. First, given the clarity resulting from the emergence from Chapter 11 and the resolution of key regulatory proceedings, we will benefit from the wildfire fund as well as from our other financing initiatives. Lastly, I'll briefly cover our results for the quarter. Stepping back to a more traditional earnings format post-Chapter 11 emergence, we plan to provide a slightly longer view of our earnings potential and a greater level of detail than in the past. We've provided some of the basic assumptions impacting GAAP and non-GAAP core earnings for you on Slide 7. We've also provided a traditional look at CapEx and rate base growth, the latter of which is growing at roughly 8%. Our assumption for rate order due to our anticipated timeline for cost recovery of the rate case audit results is included as well. We now have that amount included in rate base and earning a return on equity in 2021; there was no impact to our capital forecast for the year. One item to note is that CapEx reflects the $3.2 billion in wildfire mitigation spend but does not earn equity under AB 1054. However, this amount is not included in these rate base projections. Moving to our earnings guidance elements, we are updating earnings core earnings per share guidance for 2020. Non-GAAP core earnings per share guidance is also being updated along with our potential equity needs for 2021. If we now go to Slide 10 starting with 2020 earnings guidance, we have updated our earnings factors to reflect the anticipated non-GAAP core earnings of roughly $2 billion for the full year. That translates into approximately a $1.60 to $1.63 per share based on an anticipated average share count of 1.25 billion shares outstanding for the full year. This non-GAAP core earnings level reflects a tightening of previously provided guidance of $350 million. We are also narrowing the range on both components of our earnings net below the line and spend above authorized; we are adjusting the expense range to $225 million, which primarily reflects additional wildfire spending above what was authorized. Second, unrecoverable interest expense will be consistent with the midpoint of our prior forecast range and results in a $125 million impact to earnings for the remaining six months of the year. Keep in mind that for 2020 some factors such as increased shares outstanding and interest expense from our exit financing are impacting the last six months of the year. The guidance assumes a final decision in the 2020 GRC this year, consistent with our all-party settlement. Moving to non-core earnings guidance, there are a number of elements that I'd like to update here. First, we have an updated range for estimates to $2.63 billion to $2.67 billion, which reflects the total of equity-backed fees of $1.5 billion, a charge of $620 million for the reduction of the deferred share value for the equity contributed to the Fire Victims Trust, and total legal and professional service costs for the Chapter 11 proceeding. Second, the $300 million of investigation remedies and cost recovery has been updated to reflect the uncertainty in the tax deductibility for a small portion of the amount due to the wildfire and Locate and Mark OII. Third, amortization of the wildfire fund contribution has decreased to roughly $300 million for 2020, reflecting an increase in the assumed life of the trust. That I'll discuss further in my prepared remarks. Fourth, due to the media notice provided by Cal Fire recently identifying PG&E's transmission line as the cause for the Kincade fire, we've also recorded an accounting charge that reflects the lower end of the range we provided last quarter, a write-off of associated restoration costs and any receivable for the associated insurance recovery. Finally, we've updated the pickup associated with the successful audit of GT&S Capital. The $80 million reflects a recognition of the regulatory asset for recovery of the historical depreciation expense and cost of debt. The final decision approving cost recovery is now anticipated in 2021, and accounting rules limit the ability to recognize a regulatory asset for the historical equity return until that final decision is received. Moving to 2021 earnings factors on Slide 11, we’ve made progress addressing the factors contributing to under-earning our allowed return on equity, resulting in an increase in our forecasted non-GAAP core earnings relative to the forecast included in our March disclosure. We are initiating non-GAAP core earnings for 2021 in a range of $2.1 billion to $2.3 billion. This is roughly $50 million to $250 million more than our previous estimate in the March disclosure statement. Comparing this range to our authorized earnings, this guidance results in between $275 million and $425 million below authorized levels, reflecting an update to net below the line spend above authorized levels of up to $100 million to $325 million in unrecoverable interest expense. We have line of sight to initial improvements relative to our disclosure statement in a few areas including lower unrecoverable interest costs and renegotiated third-party contracts that will result in more efficient execution of some of our inspection repairs on our electric system next year. 2021 is the first year we'll experience the full dilution from the exit financing, translating into a range of non-GAAP core earnings per share of $0.95 to $1.05. Our 2021 guidance incorporates the same inception assumptions as 2020 with the addition of an approved securitization application in the first quarter. Non-core earnings guidance for 2021 includes a one-time upfront charge for securitization of $1.36 billion, amortization of the wildfire fund contribution of $330 million, bankruptcy and legal costs of around $40 million to $80 million, $80 million of investigation remedies, and cost recovery, and pickup, about $140 million related to the deferred equity return on the successful audit of GT&S Capital, given the final decision we expect next year. We are also providing an update to our potential equity needs in 2021 which are contingent on the approval next year of our securitization application at the CPUC that Bill mentioned earlier. While we remain committed to achieving investment-grade ratings across the enterprise and paying down roughly $1.7 billion in holding company debt in 2021, we are lowering our projected equity need in 2021 to between $450 million and $750 million. This range includes the net impact from the Kincade fire accrual this quarter. I would also like to reaffirm that we do not have any anticipated equity needs beyond 2021 for our five-year plan. There are a few factors that contribute to this overall reduction, including the improved earnings range I referenced earlier and a slight reduction in CapEx we are projecting. Additionally, we continue to pursue the vesting of certain non-core assets that could generate additional proceeds more cost-effectively than issuing equity; it would enable us to trend towards the lower end of this revised equity range. Turning to Slide 12, we have confidence that 2022 and subsequent years will continue to reflect a roughly 8% rate base growth, as I mentioned earlier, and that rate base growth will be outpaced by earnings growth as we continue to pay down unrecoverable interest costs. As Bill covered, the operational efforts we are making to mitigate fires, along with good execution thus far on our operational work plans, have reduced our financial risk as we head into the traditional start of fire season. We are now fully participating in the AB 1054 wildfire fund, having made our roughly $5 billion contribution. As a reminder, as participants in the fund, a disallowance liability cap is in place, and the new prudent manager regulatory framework applies. In terms of how this contribution has been reflected in our second quarter financial statements, we've recorded a regulatory liability of $6.7 billion, reflecting the discounted value of the total payments to be made to the wildfire fund. In addition, we recorded wildfire contribution assets of $6.5 billion, with the difference reflecting amortization expense for the period of time we had partial coverage under the fund prior to our emergence from Chapter 11. The total expenses amortized are based on an expected life of 15 years, which is longer than the previous estimated life of 10 years. This change was made to model to better reflect relevant historical data in the effectiveness of the state's collective wildfire mitigation programs. We also established our new liability insurance coverage, which runs from August 2020 through July 2021, totaling slightly more than $1.4 billion. The wildfire liability insurance component provides up to $757 million in coverage for the period, while the non-wildfire liability insurance provides up to $700 million for wildfire events. The total cost of this overall coverage is roughly $750 million. We will continue to pursue additional insurance coverage for the same policy period in the weeks to come. We will seek recovery for all premiums associated with this coverage, either through the proposed two-way balancing account included in our pending 2020 general rate case settlement or through the existing Wildfire Expense Memorandum Account tracking mechanism. Now, I'd like to transition to our second quarter financial results. Slide 13 shows our results for the second quarter. Non-GAAP core earnings came in at $1.3 per share and is largely consistent with the disclosure statement forecast. GAAP earnings, including non-core items, are also shown here. The non-core items are consistent with the discussion of the full-year 2020 guidance I mentioned. Moving on, Slide 14 shows the quarter-over-quarter comparison of non-GAAP core earnings per share of $1.10 in the second quarter of last year and $1.03 this year. The primary drivers relate to the decisions from the 2020 GRC decision, as well as an increase in interest on prepetition payables and short-term debt with no corresponding cost last year, and wildfire mitigation costs that exceeded our authorized levels. These costs were partially offset by growth in rate base earnings and timing of taxes. To close this out, I just want to echo Bill's comments at the start of our call today. The clarity we have on a number of fronts positions us very well from a governance, operations, and financial standpoint. We are focused on earning our authorized rate of return on equity and managing unrecoverable interest expense in 2022. You can see that our five-year financial plan grows at roughly 10% earnings growth, which exceeds the 8% rate base growth we provided. When combined, we see a competitive total return. Even with our temporary suspension of the dividend, having a Chapter 11 case behind us, our operational plans open up new opportunities for growth. I will now open the line for questions.

Your first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Yes, thanks. Hi, good morning and nice to have you all back. A couple of operational questions just on the wildfire preparation. Based on looking at the full year, could you just provide an update on how you're progressing with those categories?

Steve, this is Bill. I'd be glad to do that. We are really on track with all of the measures. As I mentioned a couple that we had a little bit of a delay with, related to weather stations and the HD cameras. Those were impacted by some assembly issues at factories that were closed down temporarily, but we are on plan to get everything completed, and in some of these cases, we're ahead of target. For example, in vegetation management, we're actually running ahead of target, and in terms of temporary generation, we're going to overshoot that target by about 50%. So we're doing very well overall. The two items that were a little bit delayed early on, we have a recovery plan in place. Thus, we feel very solid about getting all of this program executed as scheduled.

Okay. And then just any comment on the departure of the Utility CEO?

No, I think during an emergence like this, it's a lot of times people reevaluate their situation, so this is not an unexpected development. We're situated with the leadership team we have in place and we're actively bringing in the next generation of leaders for the new PG&E. So, we're all set.

Okay, great. And then just on the thinking about 2021 in the securitization assumptions, do things change dramatically if for some reason the securitization doesn't go through, or do you have other alternatives?

Sure, happy to do so, Steve. This is Jason. While we have confidence in the securitization application being approved, we have put a fallback measure as part of our reorganization plan. We asked the CPUC to approve an extension of that temporary debt. We also asked for a waiver to the capital structure in the event that the securitization application is not approved. If it isn't approved, the one major impact would be that there would be incremental unrecoverable debt on the $6 billion temporary debt in 2021 and beyond.

Okay. I have one last question regarding the grantor trust discussion that you mentioned in the release concerning the Fire Victim Trust. Could you elaborate on how to interpret that and what that discussion means?

Sure. As I mentioned in my prepared remarks, we took a $620 million charge this quarter to reduce the deferred tax asset associated with the stock that we issued to the Fire Victims Trust. We had originally recorded it as an asset based on the settlement value of $6.75 billion. As a result of that, we recorded a reduction in the deferred tax asset assuming we maintain the tax reduction based on a qualified settlement fund, which recognizes the tax deduction at the time the stock is issued to the Fire Victim Trust. However, we are pursuing a different election for the deduction, which would allow us to deduct the value of the stock when it is sold. As the stock value increases over time, it would enable us to recognize a larger tax deduction. We expect clarity on this likely around the end of the calendar year.

Thank you very much. Appreciate all the questions.

Your next question comes from Stephen Byrd with Morgan Stanley. Please go ahead.

Hi, good morning.

Good Morning, Stephen.

Thanks for that thorough update on a lot of topics. Just a couple of items here. I guess from my end, just in terms of the cost of wildfire insurance you laid out, would you provide general commentary regarding the availability and costs?

No, we are certainly seeing tightening in the liability insurance market. While AB 1054 provides significant financial stability to the utility, the fact that the inverse still applies, which means that the first dollar of loss falls on liability insurers, has resulted in tightening capacity in that market and a significant increase in costs. The total cost of liability insurance at $757 million relates to wildfire claims. As I mentioned, the total cost of that program is roughly $750 million, which reflects a significant increase over what we were paying several years ago. I think this is indicative of an ongoing trend of higher liability insurance costs going forward.

Understood. That's helpful. And then I guess, looking at the overall business, are there opportunities for cost optimization across the entire PG&E footprint?

Yes, Stephen. Thanks for the question. I think there are pretty extensive opportunities available for the company. We are aware of the need to maintain service affordability as we continue to invest significantly in our gas and electric systems. You've touched on a couple of the programs that are at the forefront of our work on cost optimization, which is selling underutilized assets, including real estate as well as excess renewable energy credits. I also think there's an opportunity for significant improvement with respect to our third-party spend; we spend about $10 billion annually with third-party suppliers. Many contracts were entered into over the past couple of years to accelerate work on our wildfire system. However, we are now bundling that work and making commitments to long-term plans to bring down the cost structure over time. We’re focusing on our vegetation management inspection programs and look forward to continuing work with our third-party suppliers. There is an opportunity for the company to redesign some of our work management capabilities, but right now our focus is on the upcoming fire season. We will grow into that process redesign in the coming couple of years.

Your next question comes from Jonathan Arnold with Vertical Research. Please go ahead.

Good morning, everyone.

Good morning, Jonathan.

Could you ask about the timing of the CEO search process? You mentioned you were going to announce a new CIO soon, but what is the likely timeframe for the leadership announcement? Also, do you anticipate still having a separate Utility CEO?

Sure. Thanks for the question. The search for the CEO is being launched as we speak, so that process is underway. The target deadline is to have someone in the role permanently by the end of the year. Fortunately, there is no rigidity on the time frame; I can remain in the role as long as needed. But, we are seeking to get the next generation of the leadership team fully in place. Selecting the right individual is our priority, so there's nothing artificially imposing a deadline. Regarding the Utility head, separation is required between the corporation and the Utility. I don't think it will be a CEO per se; likely it will return to the way it was for a number of years, with the President of the Utility serving more as a President and Chief Operating Officer. This structure seems to be more sensible, as the dual CEO title has caused some confusion among constituents. We will continue to honor the necessary separation between the Utility and the Corporation.

Great, thank you, Bill. Just one last question on equity for 2021. In the disclosure statement, you discussed that being one possibility, but you might also pay down debt a little slower. Should we take your current comments as a definitive plan to use equity?

Jonathan, thanks for the question. I do think we retain flexibility regarding equity needs. The revised equity range is contingent on the securitization application. We've also had opportunities due to improved earnings forecasts and timing of cash flows, allowing for a reduction in contingent equity needs. As I mentioned, we're exploring certain divestitures of non-core assets that could bring proceeds more effectively than issuing equity, which would enable us to trend toward the lower end of the range mentioned. There is flexibility around the timing of holding company debt pay down. However, we are also committed to improving our balance sheet health and achieving investment-grade credit ratings, so I would anticipate the securitization would issue equity in the range discussed next year.

Your next question comes from an unidentified analyst with Citi. Please go ahead.

Good morning.

Good morning.

Regarding the $757 million insurance, you mentioned in your prepared remarks, what is the status and potential expansion as we get closer to wildfire season?

Yes, we are currently still in the market with several different risk transfer policies. We think there is still some additional capacity that we are pursuing. Our goal would be to achieve the full level of what is prescribed under AB 1054; however, I think our goal is for capacity and coverage needs at that level but we are tracking well. For the record, the AB 1054 requirements state that we need to secure risk transfer for claims costs that exceed $1 billion, given the current context in California.

In terms of the issuance assumption for '21 beyond asset sales, are there key drivers affecting where you may be within the range as the securitization progresses?

No, the reduction in the equity range really resulted from improved earnings forecasts and cash flow benefits. Additionally, our disposition of some non-core assets will contribute to reaching the lower end of the range mentioned.

Next question comes from Michael Lapides with Goldman Sachs. Please go ahead.

Hey guys, thank you for taking my question. With all the issues you've faced over the last two years, could you walk us through the current status of holding and temporary short-term debt, and what you envision those balances being in the next couple of years?

Thanks, Michael. Great to be back on a formal earnings call again. Regarding the holding company debt as part of our reorganization plan, we committed to the State of California that we would not reinstate our common stock dividend until we've achieved $6.2 billion of non-GAAP core earnings, which is approximately three years post-emergence. Those retained cash flows provide significant capacity to pay down that holding company debt. We anticipate paying down roughly a little more than $3 billion of that debt over the next five years, primarily using the suspended dividend's retained cash flows. With respect to the $6 billion in temporary debt, there are two primary paths to pay that down. The first path is the securitization application currently in front of the commission. If approved, $7.5 billion in proceeds from that securitization will be used to pay down the $6 billion temporary debt. If that application is not approved, which we think is unlikely, we have asked the Commission for a permanent capital structure waiver on that temporary debt. We have committed to using the shareholder-funded net operating losses as we realize them to pay down that temporary debt over time.

Got it. If I think about your guidance for 2021, how much of the unrecoverable interest expense relates directly to the holding and temporary debt versus other components?

The unrecoverable interest expense has three sources: first, we raised about $2.5 billion of incremental debt to fund half of the wildfire fund contribution upon emergence. This spend has no equity ratio impact because it's offset with an equal amount of equity, but it is $2.5 billion of debt above authorized levels contributing to under-recovery. As a result of the securitization application and its impact on the equity ratio, we do have a modest amount of additional utility debt in 2021 contributing to unrecoverable interest expense. These are the three main sources beyond the holding company and temporary debt discussed.

Your next question comes from Richard Sutherland with JPMorgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. Regarding the insurance premium issue, could you speak to the AB 1054 requirements and any potential changes if we find ourselves in a situation where we are not recovering those premiums?

Thanks, Richard, for the question. I wouldn't anticipate any change to that fundamental structure in AB 1054. That piece effectively sets out the eligibility for the state wildfire fund, encouraging risk transfer for damages that exceed $1 billion. Given all the issues California is currently facing, I don't foresee amendments to AB 1054 modifying that expected level of risk transfer liability insurance.

Got it. Thank you. Clarifying on Kincade. What hurdles do you foresee from the CPUC or other parties in tying things up financially?

Hi, Richard. It's John. Regarding Kincade, it's early in the process, so I won't speculate on timing. However, some challenges arise due to not having evidence regarding the fire yet, particularly the report laying out their determination. We certainly would like to see it, as we work expeditiously through this process to address any outstanding questions.

Your next question comes from Paul Fremont with Mizuho. Please go ahead.

Thank you very much and congratulations on being back. Can you confirm the dollar amounts for the pipeline and convertible, including any outstanding over-allotment?

Yes, the green shoe structures were put in place to ensure we raised a total of $9 billion across the pipeline, the mandatory convertible equity, as well as the common equity. As a result, we have issued the total of $9 billion, following the expiration of that over-allotment feature at this time.

Great. Can I get the convertible dollar amount as well? That's going to impact future share counts.

Paul, it's Chris. I'll make sure we follow up with you separately on that.

Great. And is there an expectation regarding the timing of the securitization? Have you received regulatory approvals?

Generally speaking, there is a 90-day timeframe for applications. I don't think that there's anything in terms of Bill’s prepared remarks that alters the timeline discussed, but we expect it will be somewhere around early in the second quarter.

Your next question comes from Travis Miller with Morningstar. Please go ahead.

Good morning. I appreciate you guys taking my questions. Concerning the CEO search, how involved are the governors or other non-utility entities in that process?

This is Bill. Thanks for the question. There is no formal requirement for input, but we will consider candidates that fit well within the California context and who stakeholders would feel comfortable with. There is no requirement for approval, but this is similar to the process we executed when selecting the new Board, which is an extremely talented group. Therefore, I'm optimistic about the prospects of finding a high-caliber leader who will lead PG&E forward effectively. While the organization has faced significant challenges over the last couple of years, we still have a solid path ahead, and I believe we can perform at a high level.

Great, thanks for that. Additionally, regarding Kincade, what is the timeline for accessing the AB 1054 fund, and how will that impact your reported insurance recovery?

Thanks, Travis. My first part of the question is that AB 1054 is accessible for claims costs that exceed $1 billion, as mentioned. It's too early for us to discuss this in detail because no claims have been paid yet. As for tapping into that fund, we won’t speculate until we receive more evidence regarding the case. Jason, can you elaborate on the second part regarding insurance recovery?

Yes, right now, the accrual estimate is below the $1 billion threshold. We have recorded no recognition of cost recovery from the state wildfire fund yet; we would only begin to record a receivable once our costs exceed that threshold. In the event that substantive violations are identified, we might have the opportunity to recover around 10% of net costs through transmission rate cases.

Thank you, Travis, for that question. Stephanie, thanks for organizing today's call. I appreciate everyone's participation. Have a safe day, and feel free to reach out if you have further questions. Thank you very much.

Thank you, this concludes today's conference call. You may now disconnect.