The Edison International First Quarter 2024 Financial Teleconference began with an introduction from the operator, followed by remarks from Vice President of Investor Relations, Sam Ramraj. President and CEO, Pedro Pizarro, and CFO, Maria Rigatti, also spoke on the call, along with other members of the management team. Materials supporting the call were available on the company's website. During the call, forward-looking statements were made and factors that could affect results were discussed. The company reported a core EPS of $1.13 for the first quarter and affirmed their 2024 core EPS guidance. They also expressed confidence in their long-term EPS growth targets.

SCE is working to resolve claims related to legacy wildfires and has increased its estimated losses by $490 million. The company remains committed to seeking cost recovery and is confident in its case for TKM and Woolsey. SCE is a leader in wildfire mitigation and is sharing its expertise with others in the industry. The company has invested billions in wildfire mitigation and expects to invest even more in the future.

SCE's risk reduction program has been effective in preventing ignitions due to covered conductor failure, resulting in an estimated 85-88% decrease in future wildfire losses. This reduction is primarily due to physical mitigation measures, which are more reliable and less burdensome for customers. The estimate comes from a trusted industry model and a rigorous stochastic approach, which considers potential ignitions and fire sizes. The progress of grid hardening is highlighted, with SCE on track to reach 90% hardening by 2025. Currently, SCE has more hardened miles than all other California IOUs combined.

SCE is proud of their efforts to enhance grid safety for customers and is expecting 2-3% annual load growth in the coming years, driven by the adoption of EVs, industrial electrification, and building electrification. California has reached a milestone of over 100,000 public EV chargers and over 500,000 at-home chargers. SCE is also focused on cost leadership and has identified $35 million in annual O&M savings to mitigate revenue increases. 2024 is a year of execution for SCE and they are pleased with their progress in making the grid safer and resolving legacy wildfires.

Edison International remains confident in their ability to achieve their commitments, offering an excellent investment opportunity in California's clean energy transition. SCE is actively working to harden the grid, mitigate wildfires, and lead in electrification and decarbonization. Their commitment to clean energy leadership and innovation has only grown as the impacts of climate change become more prominent. In the first quarter of 2024, EIX reported core EPS of $1.13, with earnings growing by $0.04 due to higher CPUC revenue and authorized rates of return. SCE's capital and rate base forecasts remain consistent with previous disclosures.

The majority of SCE's capital plan will be addressed in their 2025 GRC, which includes investments to improve reliability and meet customer needs. Intervenors have submitted their recommendations for the GRC, but SCE is confident they will secure a good outcome for customers. SCE is also progressing in other key proceedings, including the 2022 CEMA and cost recovery applications. They have received a favorable proposed decision in the 2022 CEMA proceeding and the ALJ has issued a proposed decision to deny intervenors' petition for modification in the cost of capital proceeding.

The decision to adjust the cost of capital mechanism is consistent with the CPUC's original intent and reflects a positive regulatory environment in California. The estimated losses for SCE's legacy wildfires have increased due to new information obtained during the Woolsey Fire mediation program. SCE has resolved a majority of individual plaintiff claims and plans to seek full recovery of eligible costs in the cost recovery application. The next steps for the TKM proceeding include intervenor and rebuttal testimony. EPS guidance for 2024 remains at $4.75 to $5.05, with a potential $0.02 increase in interest expense due to additional debt. Overall, the company is confident in achieving its EPS guidance.

SCE's cost recovery applications will include the financing costs of resolving claims, which will be reflected in their cost recovery application. The company has limited equity needs and has already addressed them through internal programs. They maintain a forecast of $100 million of equity per year through 2028, and their strong cash flow generation and incremental debt will cover most of their cash needs through 2028. SCE's balance sheet has been strengthened through efficient financing and regulatory asset recovery. S&P has affirmed their credit ratings and lowered their FFO-to-debt downgrade threshold, recognizing the company's efforts to mitigate wildfire risk. The company has provided modeling sensitivities to help quantify the impact of cost recovery for the 2017 and 2018 events on key metrics.

The speaker expresses confidence in meeting financial targets and discusses the benefits for customers, such as avoiding excess financing costs. They also mention the possibility of another revision to the charge in the third quarter and the need to constantly reassess and adjust reserves.

The company is focused on completing the process of handling claims related to the Woolsey event and TKM. They have passed a milestone and have analyzed the factors of claims and awards. They will continue to test and retest their estimates every quarter. The completion of the process will bring certainty. The majority of individual plaintiffs have already been settled. The company plans to file for Woolsey cost recovery in Q3. They remain committed to only raising $100 million of equity per year.

Maria Rigatti, speaking on behalf of SCE, reported that the company's FFO-to-debt ratio is just over 14%, which is above their downgraded range. The company's objective is to reach a range of 15% to 17% and they are making good progress towards that goal through a financing plan and recovering memo accounts. They have tested different scenarios and have determined that they will need $100 million in equity every year through 2028 to reach their target. When asked about the best estimate of lawsuits for Woolsey, Rigatti mentioned a limited number of plaintiffs who have received extensions, making it difficult to estimate the losses. This is due to the varying amounts of information provided by plaintiffs and the possibility of extensions being requested.

In this paragraph, the speaker discusses the extensions that some plaintiffs received and the information that has been gathered about their claims. They mention that they have evaluated these claims and will continue to gather more information as they progress through the next quarter. The speaker also mentions their plans to file applications for additional capital for NextGen ERP and the AMI 2.0 programs, with a potential timeline and amount of capital needed. They state that they will finance according to their authorized capital structure and will minimize the need for equity as long as they stay within their credit metric range. A question is then asked about the potential financing for these capital requirements.

The speaker is asked about any trends in transmission CapEx that they are watching for in the Cal-ISO planning process. The speaker mentions that Cal-ISO has been engaging in long-term planning to help the state achieve its net zero goals by 2045. They estimate that the rate of transmission additions will need to be four times higher than historical levels. There are currently $2 billion of capital for 17 projects that SCE is entitled to, and they expect SCE to do this work. Cal-ISO also has a competitive solicitation process for new projects, and SCE has one pending application. The speaker expects Cal-ISO to continue their planning process each year. The most recent plan had mostly projects in Northern California, but there were also $90 million of incumbent projects for SCE to build in their territory.

The speaker provides an update on the current fire conditions in their territory and mentions that it seems to be an average or slightly below average risk season. However, they emphasize that with climate change, there will be an increase in wildfire risk in the future, as stated in their Adapting for Tomorrow white paper.

The speaker discusses the main focus of their prepared remarks, which is the significant risk reduction measures that have been implemented, including grid hardening and state support for firefighting. They emphasize the ongoing vigilance in mitigating risks and the use of new technologies. The S&P report also recognizes the company's efforts in this area. They mention the use of PSPS as a tool and the sharing of learnings with the rest of the industry.

Pedro Pizarro, who is currently the chair of EEI until June, and Steve, who is co-chairing a CEO taskforce at EEI, are working to share best practices and discuss the possibility of achieving liability protections like those in California on a national level. They are taking leadership seriously and are actively engaged in discussions on Capitol Hill to find a national solution for the growing risk of wildfires. While it is a challenging environment, there is increasing recognition that a national solution is needed, and there are examples of successful national solutions for other risks in the economy.

The speaker discusses the financial risks involved in addressing fire hazards and mentions that different states have different approaches. They plan to combine state and federal efforts and may seek financial solutions in the future. The speaker also mentions that deadlines for extensions are currently unknown. In terms of cost structure, O&M expenses have increased due to timing differences and weather conditions affecting the amount of work done.

The speaker discusses the cost structure and streamlining processes in relation to wildfire mitigation plans. They mention the potential for cost reduction through the adoption of new technologies on a larger scale. The team at SCE is focused on constantly refining their understanding of the risk and prioritizing capital and O&M commitments to reduce it. They also mention the importance of balancing affordability and risk mitigation in decision-making.

The paragraph discusses the various ways in which utilities are working to mitigate the risk of wildfires, including the use of covered conductors and more efficient inspection methods. It also mentions the role of technology and government partnerships in reducing costs and improving effectiveness.

The partnership between the company and the government will continue to promote safety for everyone. The speaker, Pedro Pizarro, thanks the questioner, Ryan Levine, and the conference call is now over.

This summary was generated with AI and may contain some inaccuracies.