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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good afternoon and welcome to the Edison International First Quarter 2021 Financial Teleconference. My name is Michelle and I will be your operator today. [Operator Instructions] Today's call is being recorded.
I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.
Thank you, Michelle and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro; and the Executive Vice President and Chief Financial Officer, Maria Rigatti. Also on the call are other members of the management team.
I would like to mention that we are doing this call with our executives in different locations so please bear with us if you experience any technical difficulties.
Materials supporting today's call are available at www.edisoninvestor.com. These include our Form 10-Quarter, prepared remarks from Pedro and Maria and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation.
During this call, we'll make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure. [Operator Instructions]
I will now turn the call over to Pedro.
Well, thank you, Sam and good afternoon, everybody. Today, Edison International reported core earnings per share of $0.79 compared to $0.63 a year ago. However, this year-over-year comparison is not particularly meaningful because SCE has not received a decision in its 2021 General Rate Case.
SCE recognized revenue from CPUC activities for both the first quarter 2020 and 2021 largely based on 2020 authorized base revenue requirements. Maria will discuss our financial performance in her remarks.
Investors have been asking us about how we view Edison's risk profile given all the news reports that California is headed into another peak wildfire season with above-average risk. As I have shared before, 2019 and 2020 were also above-average-risk years, with 2020 setting records for acres burned. However, and this is a really important, however, the state has successfully avoided the scale of catastrophic damage seen in 2017 and 2018.
I would like to highlight three key factors that have significantly improved our risk profile: state investments to improve firefighting, CPUC progress on AB 1054 implementation and SCE's own wildfire mitigation work.
So first, the state has increased investments in firefighting capabilities over the last several years. Incorporating the Governor's 2021 to 2022 proposed budget, which continues this trend; this would represent a 45% increase in CAL FIRE's budget since 2016, a 30% increase in firefighters at the peak of the season since 2019, and significant increases in equipment and modeling to enhance the state's wildfire suppression capabilities.
For example, the state is expected to have seven large air tankers operating this fire season and another five in 2022. These enhanced suppression resources will help the state move more quickly to combat wildfires before they become catastrophic.
The proposed budget also adds a focus on wildfire prevention and the Governor and the Legislature have already taken early action. Earlier this month, they approved $536 million to accelerate land and forest management projects laid out in the Wildfire and Forest Resilience Action Plan, and an additional $80 million for roughly 1400 new CAL FIRE firefighters for the 2021 fire season. We have also seen significant staff and resource additions in our local fire departments to aid response times and firefighting capacity.
The second risk improvement factor is that the CPUC has made steady and timely progress over the past nearly two years enacting AB 1054’s provisions as designed. For instance, shortly after the Legislature passed AB 1054, the CPUC opened a proceeding on an emergency basis to establish the non-bypassable charge that funds about half of the Wildfire Insurance Fund.
Another indicator is that the Commission has approved each of SCE’s annual safety certifications in a timely manner. This certification is a key step in implementing the prudency standard that AB 1054 codified, where a utility’s conduct is deemed reasonable if it has a valid safety certification, unless serious doubt is created. Importantly, this standard will go beyond the life of the Wildfire Insurance Fund. The Commission established its Wildfire Safety Division, providing additional wildfire safety oversight and direction.
Lastly, the CPUC has completed numerous wildfire-related decisions on a timely pace despite the COVID-19 pandemic. The Commission has also been proactive in engaging with the IOUs on Public Safety Power Shutoff, or PSPS execution, at the same time acknowledging that it is within the utilities’ discretion to use this crucial tool to protect the public’s safety. Taken together, these are all signs that AB 1054’s intent is being implemented steadily as designed.
The third risk improvement factor is SCE’s own work to reduce wildfire risk. Fire mitigation has been an integral part of SCE’s operational practices for years and the utility has had several programs in place to manage and reduce wildfire risk. As climate change intensified wildfire risk, the utility stepped up its comprehensive wildfire mitigation strategy and has made substantial progress, particularly through its WMP.
In 2021, SCE continues to invest in its infrastructure and new technologies to mitigate the risk of fires from electric infrastructure, increase accuracy in fire weather forecasting, enhance its operational practices, and improve its PSPS program. SCE has assembled a dedicated PSPS Readiness team to address the feedback from customers, public safety partners, elected officials, and regulatory agencies. The utility is accelerating the pace of covered conductor deployment and expects to install at least 1,000 additional circuit miles by year-end.
At this pace, SCE will have hardened over 2,500 miles, or over 25% of all its overhead distribution infrastructure in high fire risk areas, substantially reducing the risk of wildfires associated with utility equipment.
So this combination of investment and actions by the State of California, the CPUC, and SCE gives us increasing confidence in Edison International’s improved risk profile with respect to wildfires. Slides 2 and 3 in our deck provide additional information on SCE’s year-to-date wildfire mitigation activities and the State’s actions over the last few years. This work is also a building block for longer-term reliability and resiliency, which will be essential as electrification increases dramatically across the economy for decarbonization.
Now speaking of decarbonization, we agree with the goals of President Biden's $2.25 trillion infrastructure proposal to address climate change; create well-paying jobs; improve air quality, particularly in our most vulnerable communities; and increase our global competitiveness. That future requires substantial deployment of EVs, electrification of buildings, and new investments in electric infrastructure to ensure clean, reliable, and resilient electric service for this greater demand.
We look forward to working with the Administration and leaders in Congress to develop and implement the complementary policies that will effectively meet the Nationally Determined Contribution, or NDC, target of 50% to 52% greenhouse gas reductions across the economy relative to 2005
This is in close alignment with what SCE outlined in its Pathway 2045 white paper, and Edison had already stated its support for this economy-wide target prior to the NDC’s release. As highlighted in Pathway 2045, the least expensive way to achieve economy-wide decarbonization is through an equitable clean energy future with increasing amounts of carbon-free generation powering the further electrification of the economy. The average customer will also benefit from a decline in total energy costs of one-third thanks to the greater efficiency of electric technologies.
Slides 4, 5, and 6 in our earnings deck provide you with additional information on our views in these areas. SCE has a long track record in maintaining affordability, but in the near-term customers will see increases in their bills as SCE invests in grid hardening and makes the investments needed to support clean energy goals and the long-term affordability they will yield.
For over a decade, SCE has proactively pursued cost reduction efforts, as well as improvements in areas like reliability, through its operational excellence efforts. We expect to do more. Embedding more digital tools deep in our operations areas like inspections and vegetation management, will enable efficiencies in how we work and better harness data to improve asset management and performance, and reduce risk.
Building a more robust capability in lean process management will help us drive these efficiencies and create a stronger basis to use automation and other technology to streamline our operations. Fundamentally, delivering value to our customers starts with being an excellent and safe operator, through the safe delivery of reliable and affordable electricity.
Let me close my comments by acknowledging yesterday’s news that our colleague and friend Carla Peterman, SCE’s SVP of Strategy & Regulatory Affairs, will be leaving us on May 7 for a new role as PG&E’s Executive VP of Corporate Affairs. We are very sad to lose Carla after a great, really great year-and-a-half together, but wish her well as she takes on the important and very challenging task of helping Patti Poppe and her new leadership team turn around PG&E’s operations and relationships with their stakeholders and communities. California needs all of its utilities to be healthy and strong, so I am really glad our state will continue to benefit from Carla’s talent.
With that, Maria will provide her financial report.
Thanks, Pedro, and good afternoon, everyone. My comments today will cover first quarter 2021 results, our capital expenditure and rate base forecasts, key regulatory filings, and updates on other financial topics.
Edison International reported core earnings of $0.79 per share for the first quarter 2021, an increase of $0.16 per share from the same period last year. As Pedro noted earlier, this year-over-year comparison is not particularly meaningful because SCE has not received a decision in its 2021 General Rate Case.
On page 7, you can see SCE’s key first quarter EPS drivers on the right-hand side. I would like to highlight a handful of items that accounted for much of the variance. To begin, revenue was higher by $0.05 per share. FERC-related revenue contributed $0.03 to this variance, primarily due to higher rate base. CPUC-related revenue contributed $0.02 to this variance. However, this was offset by balancing account expenses with no effect on earnings.
O&M had a positive variance of $0.20, largely due to lower wildfire mitigation-related O&M and lower employee benefits expenses. Wildfire mitigation expenses were lower in the first quarter, primarily because fewer remediations were identified through the inspection process. There was also a negative variance of $0.08 from an increase in depreciation due to a higher asset base.
Lower net financing costs had a positive variance of $0.08 due to several items, including lower interest rates on balancing accounts and lower preferred dividends due to the redemption of preferred stock at SCE last year. Finally, SCE’s EPS in the quarter was $0.04 lower because of dilution from the increase in shares outstanding, primarily associated with the equity offering in May 2020.
I would now like to comment on SCE’s capital expenditure and rate base growth forecasts, which are shown on page 8. Our capital and rate base forecasts are unchanged from the last quarter pending a final decision in SCE’s 2021 GRC track 1. SCE is executing against a capital plan that targets key programs, while maintaining flexibility in later years to adapt to what is ultimately authorized in the GRC decision.
The rate base forecast does not include certain projects and programs that are not yet approved. This includes the Customer Service Re-Platform project, or CSRP, which went operational earlier this month. SCE expects to file an application for cost recovery for CSRP later this year and, if approved, this could add approximately $500 million to rate base by 2023. It also does not reflect capital spending on fire restoration related to wildfires affecting SCE’s facilities and equipment in late 2020. SCE is evaluating the costs to determine how much may be incremental to the current rate base forecast.
Please turn to page 9. On the regulatory front, we remain hopeful that SCE will receive a proposed decision on track 1 of its 2021 GRC this quarter. As a reminder, the CPUC can vote out a final decision no sooner than 30 days after it issues a proposed decision. Consistent with our prior practice, we will issue earnings guidance after we receive a final decision on the GRC.
Additionally, SCE filed its testimony in track 3 of the 2021 GRC in the first quarter. In track 3, SCE is requesting recovery of $497 million in revenue requirement, and that the CPUC find reasonable $679 million of incremental wildfire mitigation capital expenditures. This filing is another step towards recovery of wildfire mitigation costs we have already incurred.
Page 10 provides a summary of the approved and pending cost recovery applications for incremental wildfire-related costs, including track 3, which I just mentioned. As you can see on page 11, in the coming months, SCE will request a financing order that would allow it to securitize the costs authorized in GRC track 2, residential uncollectibles for 2020, and additional AB 1054 capital authorized in GRC track 1.
We expect SCE’s total request to be approximately $1 billion, composed of $500 million of AB 1054-related capital, $400 million of wildfire mitigation-related O&M, and $100 million of incremental residential uncollectible expenses associated with the economic effects of the COVID-19 pandemic.
Related to the 2017 and 2018 Wildfire and Mudslide events, SCE continues to make solid progress settling the remaining individual plaintiff claims. As shown on page 12, during the first quarter, SCE resolved approximately $200 million of individual plaintiff claims. In total, that brings resolved claims to approximately $4.2 billion, representing more than two-thirds of the best estimate of total losses, which remains unchanged.
I would now like to provide an update on the EIX financing plan and the issuance of securities with up to $1 billion of equity content that we discussed on our last earnings call. To reiterate our previous statements, this equity content supports maintaining investment grade ratings at EIX and the utility.
During the first quarter, Edison International issued $1.25 billion of preferred stock, with equity content of approximately $625 million. We will continue to monitor market conditions and consider additional preferred equity, internal programs, and, if needed, the existing at-the-market program to satisfy the balance of the equity content need this year. Beyond 2021, we continue to expect to have minimal equity needs associated with SCE’s ongoing capital program and we will quantify these after receiving a final decision in the 2021 GRC.
That concludes my remarks.
Michelle, please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow-up, so everyone in line has the opportunity to ask questions.
Operator
Thank you. [Operator Instructions] Jeremy Tonet from JPMorgan. You may go ahead.
Hi. Good afternoon.
Hi, there.
Good afternoon, Jeremy.
Just want to start off on the Biden point, if I could. And granted, it's very kind of early innings here, and it could still change its form. But just wondering, as you see it right now, what impact do you think the plan would have on EIX, particularly as it relates to transmission and EVs? If you could share any thoughts for us there.
Yes. To give you a few high-level thoughts, Jeremy, and as you said, it's early here. And as you know, we’ve seen the administration provides last week the start to their plan through the NDC, but lots of details to be filled in, not only by the administration, but then also ultimately by Congress, right? And so with divided Congress, I expect that Anything happens in Washington, at least on the conventional side, will have to be bipartisan, and therefore, something that both parties can work with.
I think at the highest level, we -- as I mentioned in my prepared remarks, we absolutely support the overall economy-wide direction and the 50% to 52% reduction in greenhouse gas emissions by 2030.
As you've seen the initial elements of the Biden plan, clean energy, electrification and transmission are all big parts of the plan. And they line up really nicely with what we've been saying is the most feasible and cheapest way for California to get there through our Pathway 2045 work.
So that's really good alignment in terms of strategy, and I think it just provides long-term support for what we've been talking about for the last several years from an SCE perspective, making the investments needed to prepare the grid, to be able to manage their transition and to support customers, see electrifying building, space and water heating, electrifying transportation.
And then, I think in terms of the core utility investment what that means is, I think most importantly support for the core program that we've outlined. I know that we don't provide guidance beyond the rate case cycle to date. But we have said that we expect to see this very robust spending need -- investment need for the next several years, certainly well past the rate case.
And really as you look on a California-wide basis, we have estimated in Pathway 2045 that the investment need will be something like $250 billion or so across the need for clean energy resources, renewables, storage and transmission investment. The transmission part of that alone -- transmission and distribution part is around $75 billion. And I think one of the charts in the deck provided a little detail on that.
So, I think its page 6 that show the $75 billion breakout for the state. So, a long way of saying we think that that's all supportive of the core investment opportunity as well as some upside opportunities to the extent of the utility and so needing to play a role in California to be on core grid investments, or for example, for added storage or for programs like our Charge Ready 2 and Charge Ready transports that we have underway right now.
One final thing I'll say is that there was more press this morning on the campaign trail, President Biden has talked about getting the power sector itself on a standalone basis to zero GHG by 2035, and there's now discussion about potentially setting a target of 80% reductions from 2005 levels for the power sector by 2030.
Speaking here both from an Edison perspective and from a broader industry perspective, we're all lined up to do as much as we can as fast as we can at a national level. 80% may really be stretching I think, the feasibility for the nationwide transition, just given the fact that it's nine years until ban.
There's still R&D and technology that's needed to help fill the gaps and significant technology deployment that would be needed, particularly on the transmission side. It's not just the capital investment but the permitting process that can take quite a while. So, our Pathway 2045 analysis actually concluded that California would see something like a 72% decrease in greenhouse gas emissions from 2005 levels by 2030.
I've seen some national analysis from EPRI and others that suggest that the national number on an aggressive pathway might still be below 70% maybe mid-60s or so. So, I think there will be a number of discussions among the industry, the administration and Congress will be on what defines what -- as much as we can do, especially if we can do. What defines the art of that? And how do we make sure that the transition is reliable, affordable and equitable for all customers across the country.
Got it. That's very helpful. Thank you.
So, maybe more than you wanted. Yes, we've been spending...
No. No, no. That was great. Thank you. Maybe just kind of pivoting a bit here and thinking kind of high level, when it comes to inverse condemnation. I think there had been legal challenges in the past. And just wondering what your thoughts are on this front. Do you see any changes on this outlook? Or do you see any challenges going forward here? Or any thoughts you could share would be helpful. Thanks.
Yes. This one maybe more brief. Very near term. we are pleased that we have AB 1054. And AB 1054 did not resolve inverse condemnation, but it created a fair framework. And so, I think that they went a long ways, and in our view significantly reduced the risk exposure for utilities across the state.
In terms of changing the state's current approach on inverse itself, I think it's unlikely you'd see legislative action anytime soon because quite frankly, there's been a lot of workabilities and literature on wildfire issues already for AB 1054. They have a full agenda in helping the economy recover from the pandemic. So, I wouldn't expect that there'd be a whole lot of bandwidth for taking that up in the near-term.
There is always a possibility that there could be court cases where inverse could be tested again and challenged again. Probably premature to go into details of specific court cases, but I'm aware that not only might there be some that pop up for us as we go through our case load, but other utilities also may have opportunities to challenge inverse. So, that's always a possibility out there through the court system.
Got it, that’s helpful. That’s it for me. Thanks.
Thanks Jeremy.
Thank you. Our next question comes from Julien Dumoulin-Smith from Bank of America. You may go ahead.
Hey there Julian.
Hey good afternoon team. Thanks for the time. Perhaps here at the outset, Pedro I appreciate your comments on just all the mitigation actions you guys have taken about wildfires. Can you comment a little bit on just the wildfire probabilities? And just as you see weather events materializing thus far, et cetera what the risk profile is going into the fall especially relative -- versus the mitigation efforts that you guys have already pursued here? How would you frame that risk profile? Seems to be getting some attention here. So, I'll put it back to you.
Yes. Thanks Julien and that's why I dedicated the first part of my comments to framing that. I guess I would recap one part and maybe add a little bit. The recap part is that we do see and I think all the external forecasts that we see are calling for a likely above-average fire risk peak period here.
I think in terms of the mitigation I went through them in a fair amount of detail. Maybe what I would add is that to remind you that the approach we have taken over the last several years has been a risk-informed approach. So, when we went out to replace the first mile of bare wire with cover conductor it was the mile that was in one of the highest-risk areas possible, right? So, we've been going down the stack if you will by trying to address the highest-risk areas first where the mitigations would have the highest impact on risk reduction. So, every piece of work we do is reducing the risk and we've gone after the big bites early on.
That I think is really helpful and constructive in terms of framing that risk profile. That risk profile continues to narrow. And that's the stuff we've been doing. As I mentioned in my prepared remarks we've also seen the states dedicate just outstanding effort to improving firefighting modeling and just firefighting capabilities fire-suppression capabilities. And so that ability now that the state has that frankly it didn't have in 2017 or 2018 to fight multiple large fire simultaneously.
You might recall I mentioned there are some really interesting L.A. Times articles around 2018 and the challenge that the state had in fighting the Camp Fire and the Woolsey Fire and the Hill Fire all simultaneously. Well, the other states added a lot of qualified bodies with a lot more planes and trucks and equipment to be able to deploy across multiple fronts simultaneously. And that is a significant piece of risk reduction for all of us.
So, I'm not sure I can give you a disclosure-quality quantified answer. So, therefore it's x.y% lower. But I think it's a significant percent difference in terms of the overall risk profile that the state faces and that therefore we face right now.
Got it. Excellent. I know it's a tough question. If I can clarify this stuff Maria, you commented about the $200 million in individual claims here. But just as you look prospectively through 2021 here, any specific milestones that could drive perhaps chunkier resolution here and remaining claims of the third? Anything you can say at all on that front?
No. I think Julien, we're going to continue to disclose every quarter, the progress that we've made. It's -- as we've mentioned before, the individual plaintiffs are not sort of like the homogeneous group that we saw in the subro claims because those are all property damage claims. So we're just going to continue to move through. We have some processes to try and make the discussions with the individual plaintiffs as streamlined as efficient as possible. So we'll do that and we'll come back to you every quarter and let you know what the progress has been.
Okay. Thank you guys. Best of luck.
Thanks, Julien.
Thank you. Our next question comes from Jonathan Arnold with Vertical Research Partners. You may go ahead, sir.
Hi. Good afternoon guys.
Hi, Jonathan.
Hey, Jonathan.
Hi. Just wondering if you could talk a little bit about your approach to PSPS and what you're specifically doing to avoid some of the issues you've kind of come on -- taken some flag for in the past. And then also obviously PG&E has sort of been putting these new criteria in front of the CPUC. I'm just curious if you're working on anything similar or just an update on that whole situation?
I'll start and Maria you may have more to add. I would separate the PSPS space into two broad categories. One is the actual -- the physical execution of it, the planning for it, the engineering behind it and then the execution. The second would be the broad communications element. I think that SCE has done frankly pretty well in terms of the core execution for the last several years, right?
We -- utility had significant prior investment in sectionalizing the grid. I remember reporting to you all in earnings call probably going one year 1.5 years back about how at that point something like -- if you look at our circuits in high-fire-risk areas, on average it could be cordoned off into four separate sections right, which allowed us to better target a PSPS event.
Well we continue to add segmentation sectionalization devices to circuits in high-fire-risk areas. So that continues to hone down the scope of PSPS events. Through that and through better planning from 2019 to 2020 now to 2021 we've seen significant improvements in terms of the number of customers who have been impacted in given events.
Now I have to add though that this is all very much weather-driven. And so a lot of what happened in 2020 was that we had some tough weather events to necessitate it using this tool of last resort SOS resort, right? And so that grows some of the numbers. But even if you look now at the various filings that the utilities have made through the WMP process, if you take a look at the numbers I think Edison has actually had -- on a percentage of total customers basis has the lowest percent of customers who are impacted by PSPS in the 2020 season.
Importantly, the continued work from 2020 to 2021 has -- we believe will allow Edison to significantly reduce the impact further for customers who were impacted last year, if we have the same weather as we did last year. Of course, we won't have the very same weather.
But from an assumption basis, we would see I think pretty significant reduction in the impact. I think the number is over 28% or close to 30% reduction in impact to customers who were impacted last year. So lots of good things in terms of the modern capabilities, being able to triage it down and restrict the impact of any one event.
On the communication side, I think, is where we had more opportunity, and frankly, got some pretty pointed feedback deservedly from customers and communities and local governments. And so if you look at the action plan that SCE filed in February, there's a lot there on continuing to do better at the things that we were doing okay at and also doing much better than things that we didn't do so okay at.
And so that's where you see a lot of focus on how do we have more timely communications with customers, with communities, with local governments, with emergency operation centers, improving the quality of those communications and the vehicles for them. And so that's an area where I hope our customer -- expect our customers will say a good improvement going into this next peak season.
Maria, what have I missed in there?
Yeah. I guess I would just add two things. One is that along the lines of how we communicate with our customers as well, really a focus on additional programs that could benefit them when they are deenergized, because I think that's obviously a big component of this. I think it's clear that this tool is necessary and important what can we do to help customers when we do deenergize them.
And then I think the other aspect that I would just add is now that we filed our action plan, we do have the opportunity now to communicate with the commission. So I think our cadence is about every two weeks now. So it really does provide an opportunity for us to have an ongoing dialogue around what it is that SCE is doing. So I think those are all important aspects of PSPS for this year.
Great. I'm glad you added that because for example the battery programs and deployment of batteries is something we've really increased the emphasis on appropriately.
It does not show Pedro trying to do it less often if you can and make it more bearable for people when you have to.
Absolutely. But we will do it when we have to do it, right? Because it's an important protective tool to protect the health and safety of our communities.
Okay. And then if I may just on the GRC, do you have any sense of what seems to be extending the timing a bit here? And commission has been moving pretty fast on a whole host of other things. Maybe this case doesn't have a statutory deadline or just any thoughts you have why we're still waiting here.
Yeah. Jonathan, I would not read anything into it. It's a complicated case. It's a request that has a lot of different components like most GRCs. So I think that they're just working through the different aspects of it and putting pen to paper to get that proposed decision out.
All right. Thank you.
Okay. Thanks, Jonathan.
And our next question comes from Shar Pourreza; you may go ahead, from Guggenheim Partners.
Hi there, Shar.
Hey, good afternoon. It's actually Constantine here filling in. I just had a couple of quick ones just to follow-up and a lot of the questions that I had have been answered. Kind of, as Jonathan mentioned it's been quiet with the ex partes in the filing and the CPUC has closed out a few of the more controversial proceedings. And just curious to get your sense on the CPUC process this GRC cycle if you see some prospective improvements in the timeliness of the decisions? And is this indicative of the staff getting close to the PD since everything else is now moving forward?
Yeah. And if I'm hearing your question right, you're asking about broadly the PUC not just with the GRC right?
Yes.
Right. So I think we mentioned this in our prepared comments a bit. But, the CPUC has been moving expeditiously through a whole lot of stuff. And you throw in a pandemic into the mix.
And frankly, I think they performed pretty admirably given the amount of -- the number of balls they juggle under blue skies. And then you make the skies a lot tougher with COVID-19 and the impacts on their own operations of that as well as the extra volume of work that COVID created, right?
So frankly, I think they've been doing all right that we all have. The GRC is a complex case. And obviously we had hoped that we would have had a PD by now. But we're still hopeful that we'll have a PD by the end of this quarter, as Maria mentioned in her comments.
And I'm not -- I don't think we're seeing anything systemic there that says, there's a problem the process is broken on the contrary. We provided a number of examples in the prepared remarks around things like safety certifications for Edison the disposition of a number of the cost recovery accounts.
So I just think they have a lot going on under difficult times. And obviously, we'd like to see a PD for the GRC soon. And we'll do our part for that. But we're not sensing that there's something grinding the gears down more systemically. Maria, anything you say differently then?
No. I agree.
Okay. Thanks for that color. That's really helpful. And just one kind of last follow-up, you mentioned that kind of some of the drivers were kind of lower expenses related to fewer mitigation activities on kind of wildfire risk.
And just a little bit more broadly, I guess, there's been, some studies on kind of the extremely low moisture content in California forest this year and this fire season. So that kind of I guess, puts us in another kind of high-wildfire-risk year.
Can you kind of qualify a little bit if you have enough kind of recoverable capacity for another year of wildfire risk conditions? And I guess more broadly kind of how are you thinking about rate inflation even in the near-term?
And I know you kind of mentioned the longer term that some of these issues bounce out but in the near term kind of what are the -- some mitigating factors? And understanding that there will be rate inflation?
Yeah. Maybe, I'll take this -- or Maria, I was...
No. Go ahead. Go ahead.
Yeah. Now just on the first part of that, we're certainly seeing the risk around the moisture content. And basically all the signs that point to an above-average risk year. When you talk about capacity, again, I'm taking that multiple ways.
And first and foremost, focused on the fact that, we believe, we're doing the things we need to do in our wildfire-mitigation plan to help mitigate our side of the risk. And we believe the state's doing the things they need to do, to have the fire-suppression resources ready to help control a fire, if it ignites.
But I think that your question then also went more to on the rate pressure side. Maria, I know you commented some of that already, but maybe you can follow up some more.
Sure. I think, as you mentioned we did see some lower expenses related to wildfire mitigation. That's inspections that we do. We found fewer areas that we had to remediate. But I think more broadly, there are still costs associated with mitigating this risk.
We've talked before, and in fact the commission convened an on bond not too long ago to talk about affordability. And so as we do that, we continue to focus people on the necessity for the wildfire-mitigation expenditures that we and other IOUs are doing that that goes squarely to maintaining the safety of our communities.
And then over the longer term, looking at what it really means to our electric grades, as we further electrify the economy, what that means for rates but then also what it means for the energy bill itself. And so I think as we think about affordability, we and the commission and other stakeholders are looking at it from different perspectives, total share of wallet that energy represents so not just the electric bill.
Affordability has been defined a few different ways by the commission, things like, how many hours do you have to work at minimum wage in order to pay your electric bill. I think it's going to be an ongoing discussion. But we do know that wildfire mitigation is very important to the safety of our communities and we know that a broader electrification is important for the greenhouse gas and environmental objectives that the state has.
And that's important because as we do that and we think about affordability, it's also about being equitable and having all of our communities also participate in that improvement in the environment. So I think it's going to be an ongoing discussion. The commission is rightfully focused on it and we have been focused on it as well, as Pedro mentioned, over a many year cycle trying to manage our costs. And then as we further electrify the economy allowing that to help increase affordability as well.
Thanks, Maria. Thanks very helpful commentary and thank you for taking the questions.
Thank you. [Operator Instructions] Our next question comes from Michael Lapides with Goldman Sachs. You may go ahead sir.
Hi, thank you for taking my question. My may be a Maria question. I'm just trying to think about the puts and takes for cash flow. So if I look at slide -- what is it Slide 10 and Slide 11 and even the liabilities you still have to pay out. I mean, if I think about it, the liabilities you still need to pay out around $2 billion based on your estimate.
I want to make sure I'm not double counting here, because if I think about it, you've still got a good chunk of cash coming in the door as outlined on the items in Slide 10 and then almost $2 billion -- a little over $2 billion of securitization on Slide 11. Should I think about those two sources as more-than-ample-enough cash to fund the cash outflow that you're going to require when you finalize settlements or when the litigation gets finalized from the 2017 and 2018 wildfires?
So a couple of things in there. I think as you look at Page 10 and look at Page 11, some of those things are not unique. So some of the things that we talk about on Page 10, end up being securitized on Page 11. So it's probably easier, if we kind of maybe can separately go through and I'll take and tie the numbers for you.
The more general response to your question is, we do have cash that we have already spent on wildfire mitigation. This will -- these securitizations and/or recoveries through rates as we continue to file the application will allow us to sort of get that cash back in the door. So some of the pressure that you've seen, often expressed through the issuance of short-term debt in the past or funded through short-term debt in the past will be alleviated.
I think from a claims perspective, what we've said before is that EIX has issued equity or preferred equity in the past in order to sustain the credit metrics and the investment-grade ratings both at the utility and the holding company. And that equity issuance allows SCE to continue to debt finance the claims payments as they come due now that we're -- shortly we'll be past the insurance recovery. And so they'll be able to do that. And subject to the waiver that they have they can keep that debt outside of the capital structure.
Over time -- cash is all fungible as we're putting dollars down there. That may impact the exact timing of when they do their debt financings. But over time, they'll be funding their business in accordance with their authorized capital structure.
So I think that's the general framework. I think the numbers on slides 10 and 11, there's a little bit as I said of overlap between applications. And then we translate that into securitizations on page 11 and we can go over that in more detail if you like later on.
That'd be great. And finally, Pedro, can you circle back -- you highlighted some areas where there could be upside to CapEx. Can you revisit those a little bit for us? You kind of went through that a little bit quickly. And are these items that impact you in kind of 2022, 2023? Or are they beyond that meaning 2024 and beyond?
Sure. I think, there's probably some of midterm and some of long-term. And you've already seen over the last few years things that were near-term that materialized, right? So we're going to have our Charge Ready programs and forecast for quite a while until we got approval of those applications. But now we have over $800 million of program and of that it's probably what three plus two some -- certainly over $0.5 billion worth of CapEx coming from those Make Ready programs for light-duty and heavy-duty vehicles.
So that's an example of one where we were talking about it for a few years, went through the process, developed and designed a program and got PUC support for this. I think as you look at the near-term -- near midterm in next decade or half a decade, storage is an opportunity that could present some potential upside because for storage I think a lot of that will be done by third parties and whether it's large-scale or the BPAs or whether it's customers down the customer premise. But there may be opportunities for utility-level grid-side storage. You've seen us do already some of that. The rate case included some assumptions about a modest level.
But particularly as we see the acceleration of things like vehicle electrification that might lend itself to places where it might make sense to reinforce a substation with more storage as we did with Mira Loma where we put in 20 megawatts of batteries a few years ago. So that's kind of a near-term or call it midterm one. I think longer-term the upside is in transmission. And of course, we have per quarter 1000 with competition for transmission. We want to make sure that the utility is able to compete.
However, I'll remind you that for projects that are upgrades of existing utility on projects, the utility has the right of first refusal. And just given the scale of wires investment that we think is needed that's -- I would hypothesize handily that there will be probably some projects that are upgrades of existing lines where maybe we haven't conceived that yet.
We really are going to be dependent on the California independent system operator to run through its transmission planning process and determine the transmission that's needed for renewables by 2030 and later on by 2045. So I think transmission presents another offset opportunity.
Finally, coming way back down to the Bermudan very near-term, I know Maria mentioned this, but just to remind you that we have our Customer Service Replatform Project and that could be $500 million of rate base additions if approved by the commission. We just went live with that in early April. And then there could also be some additional rate base additions from the wildfire restoration work that we did in 2020 out of the Creek Fire. We haven't quantified that yet externally, but we're finalizing that analysis now. So those are much more kind of blocking-and-tackling near-term opportunities.
Got it. Thank you. Much appreciated.
Thanks Mike.
Thank you. Our next question comes from Ryan Levine from Citi. You may go ahead.
Hi, good afternoon. How has the cadence of settlement discussions continued in recent weeks for the remaining 32% of the OE and potential claims, recognizing that they're smaller in nature as the pace has been changing?
Yes. We probably won't be able to help you very much there, unfortunately, because those are confidential negotiations. I think we did share that, there's good news in that we now have a process both for the Thomas, Koenigstein mudslide plaintiffs as well as for the Wolfspeed plaintiffs -- individual plaintiffs. So there's an established process approved by the court that allows us to have smoother approach to working our way through several thousand cases that remain.
I would also say -- you mentioned there are smaller ones remaining. When you think -- they're smaller relative to say the subrogation settlements that we did earlier. But I want to make sure, you're not generalizing too much by looking at say, the dollar amount of settlements we've done with individual plaintiffs so far relative to the number of individual plaintiff cases that we settle and making any assumptions or extrapolating from that about the remaining cases.
All of these are solved case-by-case, very individualized. So it's really hard to extrapolate and say, because we did X dollars for these Y plaintiffs, you can use that ratio for the remaining ones. It's really case-by-case. I think the one thing we can anchor you on is that, we review the reserves, the best estimate every quarter. We did that once again, and you saw that we did not make any changes to that estimate. Maria, what may I have missed in that?
No. I think you covered it. There's not really anything, Ryan, that we can stay in terms of cadence or patterns or anything like that. I think the most -- the signposts that you should look for is that we'll be updating every quarter for the amount of settlements that we have reached with some -- with these individual plaintiffs. So that's really going to be the milestone.
Great. And if I could just squeeze in one more in terms of follow-up around the transmission growth opportunity that you had outlined in your Pathway 2045. Was it $75 billion? In light of the presidential and congressional bills before Congress is there any key permits that underpin that longer-term growth outlook? And any politics that may be in flux that could get accelerated in light of some of the federal and state holds?
Yes. Maybe we'll take a shot at that. Probably the most honest answer I can give you is that, it's really early, right? And you're going to see significant discussions between the administration and Congress over the next weeks and -- maybe even months. I think that there's -- in terms of streaming the timing a bit, I would expect that the administration will want to have a plan firmly in place and time for the Glasgow conference of the parties -- the United Nations conference of the parties in November. And so -- and if not, hopefully sooner.
But the pace, the scale -- I mean you even see it in the discussions we're now on the infrastructure package that's been proposed by the President. And you're hearing $2-plus billion numbers coming from his proposal. You're hearing Republican members talking about packages that are more on the $600 million mark. So that will influence us.
The relative degree of emphasis on different levers in the packages and so in the case of transmission, I think, it's generally accepted by both sides that transmission will be a key element of the equation. But how that translates into? Are the federal incentives?
Frankly, from our perspective, the things that we would really like to see the federal government do more than just money is focus on the permitting process and helping on the federal side to streamline access to federal lands where we might need to have access for rights of way for new transmission lines. That alone is probably one of the biggest levers they have to accelerate this because that -- it's that piece the permitting process that adds years and years of transmission projects. It can take you a decade to build a transmission project.
So -- but in any case Ryan, I'll go back to my first point that it's early in the game lots of discussions ahead. And those discussions will then guide the level of emphasis frankly not in transmission, but how deeply to go in the power sector by what time frame? How does that compare with -- how you're going deeper in other sectors? To what extent are you using market mechanisms to do that versus more sector-by-sector allocations? All of that is to be determined.
Appreciate it. Thank you.
You bet.
And that was our last question. I will now turn the call back over to Mr. Sam Ramraj.
Yes. Thank you for joining us today. This concludes the conference call. Have a good rest of the day everyone and stay safe. You may now disconnect.
And thank you. This concludes today's conference call. You may go ahead and disconnect at this time.