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Edison International (NYSE:EIX)
Q3 2020 Earnings Call
Oct 27, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Edison International Third Quarter 2020 Financial Teleconference. My name is Michelle, and I will be your operator today. [Operator Instructions]

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.

Sam Ramraj -- Vice President of Investor Relations

Thank you, Michelle, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro; and Executive Vice President and Chief Financial Officer, Maria Rigatti. Also on the call are other members of the management team.

I would like to mention that we are doing this call with our executives in different locations, 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-Q, prepared remarks from Pedro and Maria and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation.

During this call, we will 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.

Pedro J. Pizarro -- President and Chief Executive Officer

Well, thank you, Sam, and good afternoon, everyone. Today, Edison International reported core earnings per share of $1.67 for the third quarter 2020, that was up $0.17 compared to the same period last year. This increase was primarily due to higher CPUC-related revenue from the 2018 GRC escalation mechanism, and lower expenses from regulatory deferrals related to wildfire mitigation activities, partially offset by equity share dilution. Reflecting our strong year-to-date performance and our confidence in the outlook for the year, we are narrowing our 2020 guidance range to $4.47 to $4.62 by raising the low end $0.10. Maria will discuss our financial performance in detail in her report.

We continue to address the numerous impacts of COVID-19 on our operations, customers, and communities. At the same time, we recognize that climate change is driving unprecedented weather conditions and catastrophic wildfires in California, and the State is in the midst of another active wildfire season. Our thoughts are with the communities and families impacted, and we are thankful for the first responders who have worked tirelessly to contain the fires and protect the lives and property of Californians. At Edison, safety remains our first and highest priority. SCE continues implementing measures to reduce wildfire risk, working closely with local first responders and emergency managers, and communicating regularly with customers to improve awareness and promote preparedness.

On the California legislative front, this year's session was shortened due to COVID-19. The legislature prioritized the state's COVID-19 response and wildfire risk reduction. The governor signed several pieces of legislation that build on the state's investments in firefighting personnel, and technology and fuels management projects. I am also pleased that two issues advocated by SCE; clarifying the AB 1054 insurance policy year and obtaining the opportunity to securitize revenue undercollections and bad debt expense due to COVID-19 in 2020 were both addressed by the legislature through the unanimous passage of Assembly Bill 913.

During this wildfire season, we have seen near-record deployments of firefighters to contain major wildfires throughout the state, with over 19,000 first responders at the peak, which was the highest since 2008. Firefighters from CAL FIRE, the U.S. Forest Service, and numerous cities and counties have done a tremendous job this year despite being stretched due to significant lightning-driven wildfire complexes and having to work with COVID precautions. This reflects the work done over the past couple of years to significantly increase firefighting resources and enhance the ability to model and forecast fire progression to better position ground and aerial assets.

SCE's wildfire mitigation efforts augment those of state and local agencies. For example, SCE has improved its situational awareness and that of local fire authorities by installing 161 cameras. In late September, SCE contributed $2.2 million to the Orange County Fire Authority to secure the largest heavy lift helitanker in the world for this fire season, capable of night-time flying and making water drops of 3,000 gallons.

This helicopter was working all through last night and today on the Silverado fire in Orange County. As of this morning, the Orange County Fire Authority reported that this fire has burned over 11,000 acres and is 5% contained with no structure losses. Tragically, two firefighters have been seriously injured battling the blaze. SCE filed an electric safety incident report, or ESIR, yesterday on the Silverado fire.

As noted in the ESIR, there was no activity on a nearby SCE power line nor evidence of any downed power lines prior to the reported start of the fire. While SCE's investigation is at an early stage, I would like to note that preliminary investigation suggests that a lashing wire attached to a third-party owned telecommunication line that sits beneath SCE's power line may have contacted SCE's power line above it, possibly igniting the fire. However, it is early to draw any definitive conclusions at this point.

I've mentioned before that covered conductor is the most effective and expeditious way for SCE to buy down public safety risk by preventing ignitions that can lead to catastrophic wildfires. SCE is on track to meet or exceed the target of 700 miles of installed covered conductor set in the 2020 Wildfire Mitigation Plan. Our utility made substantial enhancements over the past year to its Public Safety Power Shutoff, or PSPS, program. SCE has enhanced communication and coordination with government and communities and improved its capabilities to sectionalize circuits to reduce the number of customers impacted when a preventive de-energization is initiated.

In addition to our efforts to help reduce the risk of wildfires, the company continues to work to resolve wildfire-related litigation. As we noted on September 23rd, SCE resolved all insurance subrogation claims for the Thomas and Koenigstein fires and Montecito Mudslides. With this and other information in hand, we were able to move our accounting reserves from the low end of the estimable range to a best estimate, providing investors greater clarity on this and our related equity need.

Moving to regulatory actions at the CPUC, we are very pleased to see continued timely decisions and progress on our key filings as originally scheduled. This is a significant improvement in action and progress under the leadership of President Batjer. We commend the Commission and its staff for their continuing efforts in ensuring that proceedings are staying on schedule, despite challenges from the new remote working environment during the pandemic.

During this quarter, the CPUC issued decisions in several of SCE's key filings. These include the 2020 Safety Certification, the Charge Ready 2 program, and the WEMA application, authorizing $505 million of wildfire insurance cost recovery and supporting continued treatment of insurance as a reasonable cost of service. We also received a proposed decision on our initial AB 1054 capex securitization application and see timely progress on Track 1 of the 2021 GRC proceeding. Furthermore, SCE has reached a settlement-in-principle to resolve all issues pending in Track 2 of the GRC.

SCE and numerous other parties filed their 2020 integrated resource plans. One of the principal objectives of this IRP is to help California meet its 2030 and 2045 GHG reduction targets. In SCE's plan, we urged the Commission to adopt a 38 million metric ton target for 2030 to put California on a viable trajectory toward meeting its decarbonization goals. SCE also reiterated and highlighted a substantial CAISO system capacity need of 5,400 megawatts in the 2024 through 2026 time frame due to planned power plant retirements. To address this, SCE has recommended that the Commission update its reliability planning methodology, including increasing the planning reserve margin, to better reflect the state's evolving electricity market and ensure system reliability. These recommendations are consistent with the conclusions found by the CAISO, the CPUC, and the California Energy Commission in their recent preliminary root cause analysis of the August rotating outages.

Last month, the Governor issued an executive order that moves up the time frame to have all new vehicles sold in California be emission-free to 2035. The order aligns with our Pathway 2045 work, in which electric vehicles are an important element to achieve carbon neutrality. I am really proud that Edison has been recognized as a thought leader on this front.

I want to underscore the importance of making necessary investments today to ensure we have a strong, safe, reliable, and resilient grid to accommodate the increasing electrification of the economy. This drives substantial investment opportunities to meet increased electricity usage and increased system complexity including more distributed energy resources, higher levels of renewable resources, and energy storage. Importantly, our analysis shows that this transition will also be affordable, since the greater efficiency of electric motors and appliances will reduce customers' total costs across all energy commodities by one third by 2045.

With that, turn it over to Maria to provide her financial report.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Edison International reported core earnings of $1.67 per share for the third quarter 2020, an increase of $0.17 per share from the same period last year. This increase was primarily due to higher CPUC-related revenue due to the 2018 GRC escalation mechanism and lower expenses from regulatory deferrals related to wildfire mitigation activities. These were partially offset by equity share dilution. Reflecting our solid results for the first nine months of the year, we are once again narrowing our guidance range by raising the low end of our 2020 EPS estimate. I will discuss this in more detail later in my remarks.

On page 2, you can see SCE's key EPS drivers on the right-hand side. I would like to highlight four items that accounted for much of the variance. First, EPS increased by $0.43 related to higher revenue. CPUC-related revenue contributed $0.25 of this increase due to the escalation mechanism from the 2018 GRC decision. FERC and other operating revenue had a negative variance of $0.05, largely because of the true-up for the 2018 Formula Rate case we recorded last year. There was also a positive variance of $0.23 primarily related to the balancing account for the GSRP settlement that was approved in April. However, there were offsets in expenses related to this variance.

Second, O&M had a positive variance of $0.08, primarily due to recognizing lower wildfire mitigation expenses as a result of deferrals to regulatory assets. Third, income taxes had a negative impact of $0.13, primarily reflecting lower tax benefits captured through our tax balancing account. Lastly, SCE's EPS in the quarter was lower by $0.16 because of dilution from the increase in shares outstanding.

On page 3, you will see SCE's capital expenditure and rate base forecast. c

Capex is consistent with last quarter's forecast for 2021 through 2023, with a slight increase to 2020. Additionally, we updated the rate base forecast primarily for Charge Ready 2 and GRC rebuttal testimony. We continue to see significant opportunities to grow rate base over time, driven by investments in electric infrastructure, and this is reflected in our robust capital program of $20 billion to $21 billion over this period. This request level represents a compound annual growth rate of 7.6% in rate base over two rate case periods. After applying a 10% reduction to the total capital forecast to reflect our experience of previously authorized amounts and other operational considerations, the low end of the range still reflects strong rate base growth of 6.6%.

Please turn to page 4, Track 1 of the 2021 GRC proceeding has been on schedule and during the quarter all related briefs were completed. We are now waiting for a decision and continue to expect that in first quarter 2021. To emphasize our previous statements, SCE's core business will require minimal equity to fund our ongoing capital expenditures program beyond 2020. We will be able to quantify these levels after we receive the final approval of the GRC.

Page 5 summarizes our progress on SCE's cost recovery filings for incremental 2018 and 2019 wildfire mitigation costs. In April, SCE received CPUC approval for the GSRP settlement, which authorized recovery of $476 million of capital and $123 million of O&M. The decision approved a revenue requirement of $159 million, which went into rates on October 1. The balance of the capital costs that were approved will be recovered as we securitize amounts related to wildfire mitigation, as authorized in AB 1054. In September, the WEMA application to recover $505 million of costs for wildfire insurance was approved. This is now included in rates and will be recovered over the next 24 months.

Importantly, the CPUC noted in its decision that SCE had acted reasonably and prudently in its procurement of insurance policies. The Commission also recognized that wildfire liability insurance serves as an important protection for customers against third-party legal claims invoking the inverse condemnation doctrine and allegations of negligence. These decisions enable SCE to recover approximately $665 million of cash over the next two years and further strengthen its balance sheet and credit metrics. In addition, the CPUC recently issued a proposed decision on SCE's application to securitize the GSRP capital noted above. When the financing is completed, it will add approximately $335 million to the cash position.

SCE and all intervenors reached a confidential settlement-in-principle regarding all issues in Track 2 of the 2021 GRC. Once a definitive settlement is executed, a motion will be filed with the CPUC seeking approval. SCE expects a proposed decision on the Track 2 settlement in Q1 2021. We will record the impact of the settlement once the Commission acts and do not expect a negative earnings impact.

I will highlight a number of other pending filings and future applications related to wildfire mitigation costs. First, we are due to receive a decision on our CEMA filing for certain drought and restoration costs in first quarter 2021. In the next few months, we also anticipate filing a WEMA application for excess insurance premium costs for July through December 2020. Finally, we will make our GRC Track 3 filing in first quarter 2021, with a proposed decision expected a year later.

As for other regulatory actions during the quarter, the CPUC approved SCE's Charge Ready 2 program, which supports approximately 38,000 light-duty EV charging ports. This is the largest light-duty EV charging program by an investor-owned utility in the U.S., and will add approximately $400 million to SCE's rate base by 2026.

Turning to guidance, pages 6 and 7 show our updated 2020 guidance and the key assumptions for modeling purposes. Let me highlight that we are once again narrowing our full year 2020 EPS guidance range to $4.47 to $4.62 per share by raising the low end of the range. This also increases the midpoint of the EPS range by $0.05 to $4.55. While most of the earnings assumptions are essentially unchanged from last quarter, there are a couple of factors driving the majority of this upward revision. First, we now expect SCE earnings to be $0.04 higher than our previous assumption. This is driven by improvements of $0.01 in rate base earnings and $0.03 from SCE variances related to the timing of financing activities as well as operational items. Second, the EIX Parent and Other forecast has improved by $0.01 versus our previous estimate. These factors and our strong performance so far this year make us increasingly confident in our narrowed 2020 EPS guidance range.

Last month, we issued a news release about the September 2020 subrogation settlement and noted that we anticipate issuing approximately $1 billion of equity to invest in SCE, enabling the utility to debt finance wildfire claims payments. Since then, many of you have asked questions about the timing of the equity issuance. As we shared with you, we will provide an update on the fourth quarter 2020 earnings call. The timing of the equity issuance will be dependent upon the timing of future claims resolutions and payments that exceed insurance.

And that concludes our remarks.

Sam Ramraj -- Vice President of Investor Relations

Michelle, please open the call for questions. [Operator Instructions]

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Jonathan Arnold with Vertical Research Partners. You may go ahead, sir.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Good afternoon, guys. Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, Jonathan.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hi, Jonathan.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Could I just ask a quick question on the September announcement and the -- which obviously you just mentioned now, and particularly, of the $6.2 billion that is now your accrual, can you give us any sense, Pedro, sort of how -- what proportion of that is effectively settled or agreed and how much is still subject to estimate or extrapolation, just sort of some directional sense of how you arrive at that being that the estimate as opposed to the low end these days?

Pedro J. Pizarro -- President and Chief Executive Officer

Thanks, Jonathan. Maria can fill in the numbers here, but in terms of the categories, you've seen the major announcement so far, the various settlements that we have announced, one last fall with the public entities and now the subrogation parties in this latest settlement. In addition, there has been a -- I think, we shared that there has been settlements with a number of private party, private plaintiffs, but those are small relative to the thousands of plaintiffs in the individual cases.

So, that's -- based on that, and Maria can probably give you the precise number that we disclosed that's included in the settlements. But ariving at the best estimate what we did was have the benefit of now having those major settlements under our wins, all right, and behind us. And then in addition to that, going through the discovery process on the rest of the claims, we're deeper into the discovery process, we think we have a better understanding of the facts at hand, and what our arguments would be. We have an understanding of some of the counter arguments that various classes of plaintiffs might have and that just gives us a better ability to now move from the low end to the best estimate.

Just still assumptions in there and we, I think, disclosed that the final result to be higher or lower, and we are not able to disclose an uncertainty been around there, Jonathan. But our hope and expectation is that by now moving from the low end to a best estimate that we're no longer talking about being on one end of the roadway, we're now right down the middle of the roadway and I know that investors will be probably making assumptions or having their own expectations about what that uncertainty been [Phonetic] might be. Again, we're not in a place to be able to communicate that but what we've given you is our best estimate, our best sense of what the final outcome would look like on the benefit of not only things that we've locked down, but facts that we now better understand through the litigation process. Maria, I don't know if you want to give Jonathan -- do you have a handy kind of percentage?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah. I think, just the only thing Jonathan maybe with the last part of your question is, you're, I think, asking about which portion of that amount is the subject, I think, the way I interpret is the subject, the subrogation claims settlement that we reached and that's about $1.2 billion.

Jonathan Arnold -- Vertical Research Partners -- Analyst

I know that, Maria. I was looking for just overall, how much of it is known versus estimated?

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah. And Maria, I guess, the answer to Jonathan's question would be that you take the $6-billion-plus gross amount and then point into the settlement that we just entered for $1.2 billion, the settlement that we had last fall, which was on the order of $1 billion, the claims -- or $1 billion of the settlement was, call it, a third or so of that. So, round numbers would be, Maria, you probably have a more precise number $1.5 billion or so $1.6 billion.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah, I guess, I would probably just go back to what we have recorded on the books right now as the total recorded liability, Jonathan. The portion of that the $1.2 billion approximately is associated with the subrogation claims payment. What I would say about your question, what's known, what's unknown. We took all of that into consideration in order to reach the best estimate. I don't think Pedro's comments earlier about kind of the process we went through, etc. We're not trying to break down between all of the different types of claims payments at this point [Indecipherable].

Jonathan Arnold -- Vertical Research Partners -- Analyst

Okay. Understood. And may I just sort of on a related topic for my follow up, the equity that you say you're going to talk to us on the fourth quarter, any -- can you -- would you comment at all on your sort of interest in using the current ATM that you have between now and then? And then sort of also, why -- what's the thought process behind sort of waiting till you need to actually pay claims, why not just sort of put this dilution behind you? For a better -- want of a better reason 2021 will be a sort of the base that won't be further diluted.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

So, in regards to both of those questions, I think, first question about thoughts about what I'll say approaches or tactics or tools, I think, we have a lot of flexibility around the tools and all options I think are available to us running the gamut to ways we've done it before, ATM etc. So, I think, we have a lot of options when it comes to the tools. And we'll work that out as we progress closer to the point in time at which we will be issuing an equity.

And I think your second question around kind of why wait. I think, we've described before that the way these processes work we have changed our best estimate, but that doesn't mean that cash is going out the door, right now. In fact, the segregation settlement that we announced last month really most of that was covered by insurance. So, we're really going to follow that pattern of where wind cash is actually required and that will play into our decision about the timing of the equity issuance.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Okay. Fair enough. Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Let me just put a fine -- let me put a fine point on it, Jonathan, because perhaps reading too much between the lines of your question, there could be an implication there that perhaps the events might be happening within a certain time frame. And the reality is we just don't know what the time frame will be for resolution of the remaining claims. I think, as we settle along often these claims get resolved through settlement, but they need not resolved through settlement. If it goes through settlement some have happened more quickly like you saw the public entities settlement and the subrogation claims. But there is no guarantee that remaining claims outstanding will be settled on a similar sort of time frame. And it could like to take much longer for those to be resolved.

And if we ultimately ended up going all the way through litigation that we would expect would be a multi-year process sale. I think, I was hearing into your question, the idea, well, if you need it by x time, why not go ahead and do it, issue the equity a little bit earlier. But we don't know whether that will be a little bit or a lot earlier, because we don't really know the time frame, Jonathan.

Jonathan Arnold -- Vertical Research Partners -- Analyst

Okay. Fair enough. That makes sense. Thanks very much for all the help.

Pedro J. Pizarro -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Julien Dumoulin-Smith from Bank of America. You may go ahead.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, Julien.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon, team. Thank you very much for the time. So, if I can pivot to the Silverado fire, if you don't mind. I appreciate the remarks at the outset here, but can you help frame as best you understand the liability statutes pertaining to third parties such as those potentially involved with the telecom lines in the case. And also further, I appreciate all this is preliminary, but how should one think about your direct exposure, should the fact that you guys just alluded to about a third party causing the fire be affirmed and most critically that inverse condemnation would not apply to the utility, seeing that, at least as best I physically understand what you're describing that this wire basically flew up from below and actually touched your -- or presumably sparked your own wires. Sorry for long winded question, but I just to be very clear to make sure we understand the statute here.

Pedro J. Pizarro -- President and Chief Executive Officer

Sure. And I'm going to give you a sadly unsatisfying answer because this fire still raging, we know very little at this point. And so even what -- I won't say statute, what legal treatment would apply ultimately is still unclear. I know probably focusing, for example, on could inverse condemnation applies, for example. And even with that whether it applies to depend upon the facts of a particular case ultimately will be determined by a court. So, we've been speculating if we would try to opine on whether something like inverse would apply here.

Likewise in terms of liability potentially by other parties, I think, you're understanding the picture as well as we do right now, right. As we shared we were aware of this possibility of the lashing potentially haven't gone up and flown up into the power lines. So, we're above that on that particular segment. And so that could imply then some potential liability by the third-party telecommunications carrier. As the utility could show that there were clauses like that then utility would be able to pursue a contribution from other responsible parties. And so that certainly is a possibility here but it's just way too early to draw any conclusions at all, Julien. And so probably we have to leave it at that.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

All right. Fair enough. I'll ask you a little bit of an easier one here, if you don't mind.

Pedro J. Pizarro -- President and Chief Executive Officer

Sure.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Where do you stand on the ability to procure insurance as you look forward here. And I'm asking this in light of continued elevated wildfire activity in the state even if it's admittedly not been directly tied to utility matters, but rather broader environmental factors here.

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah, I'll start this and Maria will probably have even better detail. But I think certainly saying you saw that we procured ensuring successfully for this calendar year. It is a tighter market than it's been in the past the disclosures you've seeing of premiums and amounts we've saw the recovery of indicated that the pricing for that product is a lot higher than it was three or four years ago. I wouldn't want to speculate on what the market will look like when we're back out in the market. I think, we would expect that there would be product available, but that's discovery you go through every time that you go through the insurance cycle. Maria, what would you add there?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Sure. So, Julien, I think it was a tough market. It's been tough market for couple of years. We have had the ability to get the amount of capacity that we wanted, albeit at a higher and higher price. So that is, of course, an issue for our customers. You may be aware that in our 2021 GRC we've actually started to try and explore other alternatives that wouldn't help to lower the costs, self-funded health insurance and things like that balancing accounts. So that if the market changes to the good or to the bad in terms of pricing that we're not cut short nor would our customers bear an undue burden if it actually turns out to be better than we were forecasting. So, I think, it's just something that we continue to monitor and you continue to work hard to get it into our program at the most affordable price for our customers.

Pedro J. Pizarro -- President and Chief Executive Officer

Maybe one more thing I would add, Julien, that might be helpful is, and again this is a little bit of speculation here. But at the same time, I think it's important to reflect on the fire season that we've seen so far, which was been once again historic. We thought 2017 and 2018 were historic, but in terms of acreage burn, we've seen over 4 million acres burned across the state with over half of that having been due to lightning strikes. The point I'd make here is one that I think I made already in my prepared remarks, the fire suppression effort has been really strong. And I'm going to speculate a little bit here. But -- and I can't prove the negative here, but I would hazard a pretty good guess that if we had had this fire season three years ago before the state has significantly increased its firefighting resources and capabilities, we might be seeing a much different level of damage across the state regardless of the cause of the fire. We might have seen much more damage for the lightning induced fires and if there were utility cost fires, we might see more damage stemming from those as well.

So, I would hope that as insurance carriers look at their risk profile for California, they I'm sure will be taken into account some of the climate change related weather conditions, winds etc., that have contributed to the large fires this year. But I would also hope that they would be looking at the flip side, the fire suppression efforts that helps bring the risk envelope down for everyone. And at the same time, I would hope they would be looking at the efforts of all the utilities, certainly, our utility in executing the wildfire mitigation plan, the risk isn't zero, the risk will never be zero, but I think the risk is very different today than it was three years ago as we -- and we will continue to change as we continue to harden the system as we continue to use PSPS responsibly and the like.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Thank you, guys. I'll follow-up offline here.

Pedro J. Pizarro -- President and Chief Executive Officer

You bet. Hey, thanks, Julien.

Operator

Thank you. Our next question comes from Michael Lapides with Goldman Sachs. You may go ahead, sir.

Michael Lapides -- Goldman Sachs -- Analyst

Hey, guys. Thank you for taking my question.

Pedro J. Pizarro -- President and Chief Executive Officer

Hey.

Michael Lapides -- Goldman Sachs -- Analyst

I want to -- I have two things, one is, just a payment level question for the 2017 and 2018 wildfires, if I just do back of the envelope, and I'm sure the queue has more and I'll hop in offline, but the $6.2 billion accrual you've paid out about $1.6 billion, you have somewhere between $1.5 billion and $2 billion of insurance lapsed and you're getting around $2.25 billion [Phonetic] on FERC recovery. So, that's -- it's kind of rough the cash out of pocket is somewhere in the $2.5 billion to $3 billion range from the 2017 and 2018 wildfires, am I kind of in the ballpark, Maria?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah.

Pedro J. Pizarro -- President and Chief Executive Officer

And that's for forward tax...

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah, that's about right. And then I have to go to the math a little bit. You went through it pretty quickly. But we had about $6 billion, $2 billion and $4 billion [Phonetic], I would say, $2.5 billion [Phonetic] seemed a little low to me, if I go through the numbers. If you're going all the way from the beginning, not -- am not, if you take all of the charges, including the ones that have already been paid for the evidence of the settlements back here.

Michael Lapides -- Goldman Sachs -- Analyst

I'm just trying to think about cash going out from today onwards.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Got it.

Michael Lapides -- Goldman Sachs -- Analyst

So, $6.2 billion [Phonetic], but you've already paid $1.6 billion, roughly $1.6 billion. And you have some insurance still to collect. So, and I don't remember what that number is, the math is $2 billion. But I think you've already collected some. And you're going to still...

Maria Rigatti -- Executive Vice President and Chief Financial Officer

So, if you're only thinking about the -- if you're thinking about the go forward that's probably about right, about $3 billion.

Michael Lapides -- Goldman Sachs -- Analyst

Okay. Thank you.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

In the best estimate. Embedded in the best estimate.

Michael Lapides -- Goldman Sachs -- Analyst

Understood. Pedro, I have a question just about the tone in California toward utilities, which is one of the major publications in Northern California today put out what seen -- or maybe it was last night, put out what seemed like a very harsh piece on one of your peers. And it seems to have been relatively quiet coming out of Sacramento and other public officials about kind of the low utilities play in wildfires and wildfire mitigation and maybe that's because we're going through our first season. But could you just talk about how the -- how you manage the court of public opinion from here and the sentiment? And how that impacts and kind of flows to policy makers and the coordination with policy makers?

Pedro J. Pizarro -- President and Chief Executive Officer

That's a good question. And I'll try not to take up the whole rest of the earnings call on, because it -- probably I could spend a whole afternoon on it. By the way in your prior question, I'm glad you asked, but I think that your question was, probably in the same zone as Jonathan's and looking for the sizing of the numbers. So, hopefully that helps everybody. I think, in terms of tone, and look, I won't comment on the publication you just mentioned or other utilities out there, but I think I'll make two comments. I'll make a general comment and then a more specific comment about Edison.

The general comment is that particularly with the 2020 wildfire season so far, the fact that over half of the acreage burned have stemmed from lightning induced fires. The issues that everybody in the population have seen around firefighting and frankly the great efforts by firefighters etc., I think, at some level, there is a deeper understanding that this is not just about the source of the fire, but it's about this convergence of factors including climate change, including weather conditions, including fuel on the ground, including all of it, including where homes have built that adds up to this risk that the state bears and trying to do something about.

So, that I think brings in maybe a little different tone overall. I'll make the second comment about our utility. One of the things we've tried to do throughout all this is -- name a few things we've done. We try to be really transparent, Michael. And so, as we have seen issues in the system as we've gone through the 2017 and 2018 wildfire experience, you saw us be very transparent. When we saw that there might have been issues related to our equipment that might have contributed to fires because of all, I want to make sure that the public can have confidence and trust in the Edison company being forthright. And not only working hard to improve things and reduce wildfire risk for our communities, but also -- and being transparent about when things might happen.

And the reality is we operate under a prudency standard not a perfection standard, because we operate a system with a 1.5 million poles across 50,000 square miles, with 27% of those 50,000 square miles being high fire risk territory. And the other thing we've tried to do is make two more things we do. Second thing has been to work really hard, really hard and continuing to learn, develop our wildfire mitigation plans, improve on that. Actually even before there was the concept of the WMP, frankly, even before we've seen the Thomas Fire in 2017.

We started to work on the Grid Safety and Resiliency Program because we saw with the combination of the wine country fires in the fall of 2017 and the instability we've been in the regulatory framework of the -- after the CPUC San Diego Gas & Electric decision. We saw that the risk profile was very different both physically and in regulatory space and that began our first iteration of a radical rethinking of how we thought about wildfire risk on our system that led to the GSRP filing and we haven't stopped since then. And we try to communicate with the communities everything that we're doing around that.

So, the third and final thing I'll mention is, even as we focus most of our attention on this near-term issue and these risks, we've also kept the eye on the long-term ball here. And that's why you've seen us continue to think hard about things like Pathway 2045 and what California needs to do to address climate change both because we're seeing the climate change impacts manifest themselves in wildfire. So, it's important to take care the wildfire risk, but we also have to help the states take care of the true long-term risk, which is doing something about climate change.

But also because taking care of -- addressing greenhouse gas reduction, it turns out that you really need a strong utility to be a major partner with the state to have a strong grid to help access clean energy and electrify the economy. And that I think that need for a strong utility for the long run to help this state achieve its climate goals is part of the fabric here, all right? It's part of the reason to ensure that the utility can have a compact to keep it healthy. It's part of the reason that you saw state government support AB 1054. And it's part of the reason that you saw unanimous approval for AB 913 this year.

So, a little long-winded here, but we really think a lot about this in terms of what do we do in the near term, but how do we think about the long term and how we help demonstrate to the state and to our public that we want to be a partner and we need to be a strong partner for the long haul here in order to make California the great state that we all enjoy living in.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you, Pedro. Much appreciated.

Pedro J. Pizarro -- President and Chief Executive Officer

You bet. Thanks, Michael.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hey, Michael. Just one thing because I was using my scratchpad while Pedro has gone going through it. I think [Speech Overlap]

Pedro J. Pizarro -- President and Chief Executive Officer

I gave Maria time to work with some numbers.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

I think the number you're looking for is more like $3.5 billion to $3.7 billion and we can go over it how I did my math offline, if you want.

Michael Lapides -- Goldman Sachs -- Analyst

That sounds great. Happy, look forward to following up, Maria. Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Thanks, Michael.

Operator

And our next question comes from Steve Fleishman with Wolfe Research. You may go ahead, sir.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, Steve.

Steve Fleishman -- Wolfe Research -- Analyst

Hey, good afternoon. So, just one technical question on the lashing wire and I guess the telecom wires and electric, are -- does the -- is the telecom company responsible for managing and servicing their own wires near your poles or do you have to do that at all?

Pedro J. Pizarro -- President and Chief Executive Officer

In general, they are responsible for managing their equipment, it gets even more complicated here because you can have multiple telco companies using the assets under joint pole agreements. In some cases they might have space on the pole designated for them, but they can then deem [Phonetic] that or dedicated to other telco providers through transaction sale. It really their responsibility, it is the responsibility to maintain their physical assets.

That said, when we go in and inspect our facilities, we look for any hazards that could interfere with the electrical system. And so while we don't do detail inspection of their telco assets if we see something we certainly keep an eye out for any hazards that they -- telco assets might pose to the electric system and report this to the telco companies.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. And then just one other question on the GRC the -- how -- it sounds like you're feeling pretty good on the timing of the Track 1 by early next year. Do you think there is any chance of settling the GRC Track 1 like you have Track 2 or should we assume that's going to go through the full litigated process?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah, we're pretty far along in the process now. I mean, we -- all we have left is really the ALJ to issue a proposed decision and you could have oral arguments after that. So, I won't say, you can ever do something like that, but we are pretty far along in the process in terms of Track 1. Track 2, on the other hand, obviously we were much earlier in the process and hadn't yet gone through a lot of the different piece parts of the preceding when we reached the settlement in principle.

Steve Fleishman -- Wolfe Research -- Analyst

And you will wait for that to give 2021 guidance, the outcome of the GRC, like you've done in the past?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Yeah, the Track 1. Yes, it will.

Steve Fleishman -- Wolfe Research -- Analyst

Yeah. Okay. Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Steve, we always remain open if parties want to discuss things, but I think Maria guided right this one is pretty far down the path.

Steve Fleishman -- Wolfe Research -- Analyst

Thanks a lot.

Pedro J. Pizarro -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Jeremy Tonet with J.P. Morgan. You may go ahead.

Jeremy Tonet -- J.P. Morgan -- Analyst

Hi. Good afternoon.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, there.

Jeremy Tonet -- J.P. Morgan -- Analyst

Switching gears to the Blue Ridge fire, just wondering if you're able to share with us any EIX assets reside within the vicinity of the Blue Ridge ignition point or if that is not the case.

Pedro J. Pizarro -- President and Chief Executive Officer

I think -- Jeremy, thanks for the question. I think the short answer I will give you is that we have not filed an ESIR for Blue Ridge. And at this point, we don't see any basis for needing to file an ESIR.

Jeremy Tonet -- J.P. Morgan -- Analyst

Got it. That's very helpful. Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah. You bet.

Jeremy Tonet -- J.P. Morgan -- Analyst

When thinking about potential changes to California system planning, how should we think about incremental capital opportunities for EIX over the next few years, just kind of a broader question there.

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah, no, that's a great question. I'll try and keep it brief. When we think about that, I think, certainly the near-term thesis I talked about, right. So, the procurement needs that we foresee across the state for the 2024 to 2026 time frame. I would suspect that much of that will continue to be served by competitive generators in the state because the state has generally had a preference for that. There is always an opportunity for utility involvement. We have shared with investors before that we don't see SCE investing capital into traditional generation, it's just not the core business at this point.

We like the generation that we do have in rate base, but we don't see a dedicated new capital to new generation since we have a very vibrant third-party market here and we have a plenty of opportunities to invest capital in the wire system. A little different with storage because storage could well be part of that, not only the mid-term procurement, but we certainly see storage being a big part of the story in California as we go up to 2030 and 2045. And so, just to remind you, our Pathway 2045 analysis suggests that California wide, you'll see a need for 80 gigawatts of new renewables and 30 gigawatts of new storage at the bulk power level statewide.

And while I would expect a lot of storage will also be done by third parties, we have seen a certainly an interest in statutes in preserving the option for some utility on storage. You've seen in our current rate case we had filed in there, provisions for, not a large amount of capital, but some capital that would set aside. Maria, I want to say it was around $60 million, if I remember correctly, but checking on that, $60 million, right, for potential utility owned storage. And what we see storage being a more likely target for utility ownership would be where it can play a more integral role in grid operations. As an example, the 20 megawatts of batteries that we deploy at our Mira Loma substation a few years ago.

I'd say, a bigger picture though, as we think about those near and mid-term needs, and in the longer-term energy transition the big capital investment opportunity and need here is making sure we have a robust grid to be able to interconnect clean-energy resources with the increase in uses across the economy, as the economy electrifies and as we see load, which has been generally stagnant for the last decade, increased by 60% by the time we get out to 2045. So, we see a significant need for investment in the wire system.

And that along with potential upside opportunities in areas like the Charge Ready 2 program there might be other opportunities like that as the environment evolves. I hope that covers it, Jeremy.

Jeremy Tonet -- J.P. Morgan -- Analyst

Got it. Really appreciate that. And if I could slip one more in, just what's your current outlook for customer rates over the planning period with kind of the incremental recoveries authorized as expected?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

So, if you look at our current rate case, so the GRC especially the Track 1 if everything were approved, which obviously that never happens, but the average monthly residential bill would go about $13 on average. Our care customers would go up to about -- I think it's about $8 a month.

Jeremy Tonet -- J.P. Morgan -- Analyst

Got it. Thank you very much for that.

Pedro J. Pizarro -- President and Chief Executive Officer

Thanks.

Operator

Thank you. And our next question comes from Bryan Levine with Citi. You may go ahead, sir.

Bryan Levine -- Citi -- Analyst

Good afternoon.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, Bryan.

Bryan Levine -- Citi -- Analyst

In light of the blackouts in California over the last few months, can you comment around specifically blackout-related potential investment opportunities in transmission and storage that may address some of the problems the last few months and reduce risk for future seasons?

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah. Thanks for the question, Bryan. And I think a lot of the answer, in broad strokes, is what I just shared with Jeremy, I don't think that we have a more precise beat right now on, here's a specific piece of equipment that might help with that. Remember that the rotating outages were not driven by the transmission and distribution system, per se. They were driven by insufficiency in supply.

And so a lot of the focus therefore is on the kind of near-term procurement that SCE advocated for and the CPUC approved last year. So, recall that they approved something like 3,000 megawatts of procurement for the 2021 to 2023 time frame. Of that, I think, SCE has done that statewide number and I think SCE has done something like 2,700 megawatts of procurement for that time frame, largely with keeping some existing generators going for few more years that's been in tandem with the state water resources board having extended the timelines for retirements due to once the cooling restrictions.

So, I think, that's a lot of the very near term action. In the mid term, that's what I was talking my earlier we see that statewide need for around 5,400 megawatts of resources beyond current contracts statewide. And so some of that may be matched by once again existing plants being able to extend the lifetime. Some of that may be driven by new resources, some of that could be combinations of additions, storage additions that might provide greater effective capacity. So, that I think it could be something that some portion of which might end up being done for utility rate base. And I think certainly there will be a large portion of that that is done through competitive processes.

On the transmission side, I don't know that I can point to any specific transmission deficiencies that would have contributed to the rotating outages. But as we think about the system adding new resources that of course will then need to lead to needs for transmission interconnection if those resources are landing in places that already have wired connections. And so, again, I don't think I have anything specific to share in terms of the near-term. I will tell you in terms of the longer-term view hitting up to 2045 in our Pathway 2045 white paper when we tried to put $1 figure around the resource needs the -- that 80 gigawatts of renewables and 30 gigawatts of storage, those new clean-energy resources added up in our estimate, the rough estimate around $175 billion need for new investments statewide, again, much of that may be done by third parties.

And the related transmission bulk power system investments through 2045 statewide will be something like $70 billion. So, there is significant investment need ahead. And I think some portion of that will need to be served by utilities.

Bryan Levine -- Citi -- Analyst

Thank you.

Pedro J. Pizarro -- President and Chief Executive Officer

Thanks, Bryan.

Operator

Paul Fremont from Mizuho. You may go ahead, sir.

Pedro J. Pizarro -- President and Chief Executive Officer

Hi, Paul.

Paul Fremont -- Mizuho -- Analyst

Hi. I guess, my first question is, can you tell us a little bit more about the Bobcat fire and I guess there were some news reports with respect to the Bobcat fire that there may have been vegetation or tree branches that came into contact with the transmission lines. Are you able to sort of give us any update there?

Pedro J. Pizarro -- President and Chief Executive Officer

Yeah. So, I don't think there are any major new updates beyond what we have reported already, but just to recap that we have reported that. This fire started in September 6, the reported start time of the fire was 12:21. We did have a relay on our system on a 12kv circuit five minutes before that at 12:16. But one of the high definition cameras that we have out there saw or captured the initial stages of the fire and saw smoke as early as 12.10 PM. So, six minutes before we saw any sort of activity in our circuit and is that 11 minutes before the reported started of the fire? The U.S. Forest Services doing investigation and they removed the 23-foot section of overhead conductor from the area of interest and we understand that they also removed and retained some tree branches. So, suggested they may be investigating if legislation was involved in addition of the fire, we don't know if the U.S. Forrest Services also looking at any other possible causes of the -- for the fire or if this equipment is their sole focus. SCE is doing its own review, it's still really early here. We will certainly be looking at any number of potential causes [Phonetic], the bottom line, Paul, is it's way too early and we have reached no conclusions in either direction in terms of causation at this point.

Paul Fremont -- Mizuho -- Analyst

And then, my other question is with respect to the Track 2 settlement you are making a statement that you don't expect a negative earnings impact. Can you elaborate on that? What -- is that relative to what?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

So, I guess, I will caveat everything by saying that since the settlement into lot of detail. I only meant didn't want people to think that there was anything in the settlement that would be untoward. We don't see any impact on earnings or anything like that, we've deferred some of the costs as being profitable of recovery. Just wanted to clarify that. This is consistent with what we had previously thought.

Paul Fremont -- Mizuho -- Analyst

Okay. So, that's not in any way, any type of the signal on future EPS.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

No. It was more to clarify that -- well, I mean, I guess, it isn't [Phonetic] signals and things that have negative impact on earnings, but it was more to point to the fact that we had previously talked about how we were deferring costs and this settlement covers a number of those costs that we've been deferring.

Paul Fremont -- Mizuho -- Analyst

Okay. Thank you very much.

Pedro J. Pizarro -- President and Chief Executive Officer

Thanks, Paul.

Operator

That was the last question. I will now turn the call back over to Mr. Sam Ramraj.

Sam Ramraj -- Vice President of Investor Relations

Thank you for joining us today. And please call if you have any follow-up questions. That concludes the conference call. You may now disconnect.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Sam Ramraj -- Vice President of Investor Relations

Pedro J. Pizarro -- President and Chief Executive Officer

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Jonathan Arnold -- Vertical Research Partners -- Analyst

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

Jeremy Tonet -- J.P. Morgan -- Analyst

Bryan Levine -- Citi -- Analyst

Paul Fremont -- Mizuho -- Analyst

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