The paragraph is a transcript of the introduction to Edison International's Fourth Quarter 2024 Financial Teleconference. It starts with the operator, Michelle, welcoming participants and introducing Sam Ramraj, the Vice President of Investor Relations. Sam introduces the speakers: Pedro Pizarro, the President and CEO, and Maria Rigatti, the EVP and CFO. He directs listeners to supporting materials available online and mentions the release of a business update the next day. Pedro Pizarro expresses sympathy for those affected by recent wildfires in Southern California, including Edison team members, and emphasizes the company's commitment to safety.

SCE is actively working on restructuring efforts following the Eaton and Palisades fires, with a focus on investigating the Eaton fire. The investigation is complex and ongoing, involving various experts reviewing evidence to determine if SCE's equipment was involved. This process may take months and requires collaboration with various stakeholders. SCE emphasizes transparency and contends that their operations adhere to the standards of a reasonable utility. They believe they can demonstrate prudent decision-making if their equipment is found to be linked to the fire, in alignment with legal standards set by AB 1054.

The paragraph discusses Southern California Edison's (SCE) efforts in wildfire mitigation, highlighting its approved risk-prioritized wildfire plan and infrastructure improvements like installing covered conductors and hardening distribution lines. SCE has invested in operational measures like vegetation management and AI-enabled cameras for better situational awareness. The company has consistently received safety certification approval, benefiting from a wildfire fund with a $21 billion capacity that limits liability. This fund provides liquidity for claims, protecting the utility's balance sheet. It also notes California's legislative support for both customers and investor-owned utilities.

The paragraph discusses the author's 25-year experience at Edison, highlighting the challenges faced in the energy sector, including crises and natural disasters. It emphasizes Governor Newsom's leadership in implementing AB 1054, legislation designed to address wildfire risks in California. The law balances wildfire cost recovery with utility accountability, benefitting stakeholders by enhancing safety, providing funding for wildfire-related claims, and ensuring financial stability for investor-owned utilities. The ongoing focus is on maintaining the fund's durability, engaging with key stakeholders to ensure community safety, manage customer costs, and reinforce investor confidence in California's utilities.

The paragraph discusses several key points about Edison International. It expresses confidence that policymakers will enhance the AB 1054 regulatory framework. It announces that former U.S. Secretary of Energy, Jennifer, has joined the Board of Directors for both EIX and SCE, highlighting her expertise in energy policy and sustainability. The company reports its 2024 core EPS of $4.93, which surpasses the midpoint of their guidance, and they are optimistic about meeting the 2025 EPS guidance and achieving a 5% to 7% growth through 2028. Additionally, the Board declared a first-quarter 2025 dividend of $0.8275 per share, maintaining the current dividend policy to balance investor expectations with reinvestment into infrastructure. This growing dividend reflects confidence in the company's financial outlook, aiding in raising capital and benefiting customer rates.

The paragraph discusses recent regulatory developments for Southern California Edison (SCE). The California Public Utilities Commission (CPUC) unanimously approved a settlement agreement allowing SCE to recover 60% of wildfire claims and costs, signaling a positive cost recovery framework in California. CPUC President Reynolds emphasized that if SCE acted prudently, wildfire-related costs would be covered by customers, and future claims would be covered by the wildfire fund due to AB 1054. SCE plans to file a TKM securitization application in March, and the Woolsey cost recovery proceeding is ongoing. Key upcoming filings include intervener and rebuttal testimonies and potential settlement agreements. SCE is open to settlements and aims to strengthen partnerships while maintaining core operations. After discussing these developments, the paragraph concludes by transitioning to Maria Rigatti for a financial report.

The paragraph highlights the company's financial and operational achievements and future outlook. It begins by acknowledging the team's efforts in managing the response to the Southern California fires. The company reported strong financial results for the fourth quarter and full year 2024, with core EPS above the guidance midpoint. Progress was made in grid safety improvements, regulatory developments, and resolving claims. Additionally, the company continued its advocacy in regulatory proceedings and raised its dividend for the 21st consecutive year, reflecting confidence in achieving long-term growth targets. Key focus areas for 2025 are also outlined.

The paragraph discusses Southern California Edison's (SCE) efforts to support communities affected by wildfires through infrastructure restoration and power restoration. It highlights SCE's ongoing commitments to wildfire mitigation and operational excellence to reduce customer costs. The paragraph also mentions upcoming regulatory decisions, including the 2025 general rate case and cost of capital applications for 2026-2028. SCE plans to file applications for new programs, including the next-generation ERP and an advanced metering infrastructure program. SCE's capital plan focuses on replacing aging infrastructure, grid hardening, and expanding the grid to accommodate future electricity demand. The company expects additional capital deployment opportunities, potentially increasing investment by at least $1 billion. Additionally, SCE has over $2 billion of FERC transmission projects in development.

In the paragraph, Southern California Edison (SCE) is awaiting a proposed decision from the Administrative Law Judge (ALJ) on its 2025 General Rate Case (GRC), expected in the first half of the year. SCE anticipates rate base growth to align with a 6% forecast. Once the CPUC decides on the GRC, SCE will update its capital and financing plans, as well as its 2025 earnings per share (EPS) guidance. The EPS guidance has been revised to include an additional $0.44 from the approved TKM settlement, with $0.30 as a one-time historical interest expense and $0.14 as a reduction in unrecoverable risk expense. Until a final GRC decision is made, SCE will record revenue at 2024 rates and make a true-up upon receiving the decision. Edison International (EIX) has $100 million in debt maturities, partly prefunded last year. They maintain a 5% to 7% core EPS growth target off a higher base of $5.84, incorporating ongoing interest expense reduction benefits from the TKM settlement into their 2028 EPS range.

The paragraph discusses the uncertainty surrounding the cause and potential implications of the Eaton fire. It highlights that the financial stability of California's utilities, such as SCE, is safeguarded by AB 1054, which allows utilities to access a wildfire fund without affecting their balance sheet and caps their liability for fund reimbursement. Utilities with a safety certification are presumed to be prudent managers. Despite ongoing investigations and pending lawsuits related to the fire, SCE remains confident in its financial stability and growth prospects, focusing on supporting wildfire response and clean energy transition. During a call, Pedro Pizarro from SCE addressed questions about potential liabilities, emphasizing that it's too early to determine the involvement of equipment or liability amounts.

The paragraph discusses the complexities of determining liability and timing for wildfire-related investigations and legal actions, noting that it often takes over a year to get official investigation reports. Nick Campanella inquires about legislative solutions, asking about current policy environments and the potential for increasing the wildfire fund or reinforcing liquidity backstops. Pedro Pizarro responds that it's early in the process, but there's a stronger understanding among policymakers now than in past years, emphasizing the importance of financially healthy utilities for both economic and clean energy goals.

The paragraph discusses the importance of financial health for companies and the steps being taken to address related issues. It mentions the government's retention of Patterson for wildfire issues and the engagement of Guggenheim for financial analysis, similar to services provided during the crafting of AB 1054. The speaker acknowledges ongoing discussions with legislative leaders, emphasizing the need for near-term solutions and the government's role in leading these efforts. Additionally, they highlight the commitment to addressing the Eaton fire causes, particularly investigating whether an idle transmission line was involved, and mention taking steps to improve the bonding process.

In the paragraph, Pedro Pizarro discusses the steps that Southern California Edison (SCE) has taken to strengthen its system operations in response to catastrophic wildfires since 2017. He emphasizes their risk-prioritized approach to closing high-risk gaps first and highlights their commitment to continuous learning and improvement. Pizarro also mentions specific actions taken during a windstorm, including exercising Public Safety Power Shutoff (PSPS) protocols with a more conservative stance. Overall, he expresses confidence in SCE's ability to maintain prudency by operating as a reasonable and responsible system operator.

In the paragraph, Steve Powell discusses operational strategies for managing and mitigating fire risks, including improved vegetation management and inspections. He emphasizes a proactive approach to preparation for the upcoming fire season. Pedro Pizarro highlights a commitment to transparency while acknowledging potential legal issues related to past fires, emphasizing caution in public communication. Michael Lonegan raises a concern about public perception and the potential impact of wildfires on the General Rate Case (GRC), noting suspicions that EIS may have started the fire.

In the paragraph, Pedro Pizarro and Maria Rigatti discuss the progress and expectations around their General Rate Case (GRC) process and world cost recovery application. They note that settlements have been reached with intervenors on some issues, and they anticipate a proposed decision in the first half of the year. Regarding financing for potential incremental capital investments, Maria Rigatti explains that they have been analyzing different scenarios, and they plan to finance such investments at Southern California Edison (SCE) in accordance with their authorized capital structure. They maintain confidence in their financing plan, despite changes in the cost of capital.

The paragraph discusses the financial strategy and considerations for EIX (Edison International) regarding potential liabilities from events in January 2025, particularly in relation to wildfire risks and legislation AB 1054. Maria Rigatti explains that AB 1054 has established a wildfire fund that allows utilities to support claims payments and their balance sheets without issuing additional debt, which marks a significant change from past practices. The conversation also touches on credit metrics, with EIX maintaining a 15% to 17% FFO to debt range, and the potential impact of wildfire liabilities on credit ratings. Steve Fleishman from Wolfe Research inquires about the rating agencies' perspective on the updated fire risk and its effect on the company's credit ratings.

In the article, Maria Rigatti discusses the impact of climate risk on financing costs, noting that rating agencies, like S&P, are increasingly focused on climate events nationwide, including those in California. This focus impacts the financing plan, particularly for SCE, which is entering a cost of capital cycle and will soon file an application to update its cost of debt. Despite climate-related challenges and S&P’s negative outlook, EIX is running various scenarios to manage rate and spread changes from 2025 to 2028 within their projected range. Separately, Steve Fleishman asks about the complexity and time involved in legally managing infrastructure investigations.

In the paragraph, Pedro Pizarro addresses a question from Steve regarding the complexities involved in examining and moving SCE's equipment due to legal and procedural constraints. He explains that multiple plaintiffs' attorneys and stakeholders are involved, necessitating careful coordination to preserve the integrity of the materials for examination. This includes agreeing on protocols for handling and inspecting the equipment, which is a common process in such cases and may take weeks to resolve. Later, Ryan Levine from Citi asks about the impact of last month's events on future capital expenditure (CapEx) and operational and maintenance (O&M) costs, specifically concerning supply availability, which Pizarro acknowledges.

The paragraph features a discussion between Pedro Pizarro and Steven Powell on the impact of certain disruptions on their plans. They acknowledge that while the impact on local communities is significant, it is relatively small in relation to their overall annual plans and supply chain. They mention that most homes and customer premises affected have been reconnected, and future rebuilding efforts will focus on new constructions, which involves a lengthy process of siting and permitting. Edison is committed to supporting these communities, emphasizing their long-term involvement beyond technical support through charitable efforts and broader community engagement.

The paragraph discusses the ongoing court process for investigating a fire and determining the relevant protocols, overseen by a judge. Pedro Pizarro confirms this is proceeding through a legal framework, with recent court hearings, and anticipates future discussions. Konstantin Lednev asks about the timeline for a potential AB 1054 drawdown related to fire claims and settlements. Maria Rigatti responds that it's too early to determine when claims will be submitted or when the AB 1054 fund will be accessed, as they would first utilize $1 billion of customer-funded self-insurance for claims. She highlights that the processes for submitting claims are in place but clarifies the uncertainty regarding when that stage will occur. Pizarro agrees with her explanation, also indicating consideration of time for deliberations in Sacramento.

The paragraph discusses the urgency of taking action to restore investors' confidence in California, particularly in the context of utilities and the broader economy. There is an emphasis on demonstrating commitment to extending or modifying the current framework to address market concerns. While the focus is on immediate actions, there is also mention of upcoming regulatory proceedings related to the cost of capital. Despite recent events affecting capital costs, Maria Rigatti confirms that they are proceeding with their filing due in March, which will include comprehensive quantitative and qualitative information.

The paragraph features a discussion involving Pedro Pizarro about the California Public Utilities Commission (PUC) and its discretionary powers. Pizarro emphasizes the importance of the PUC's role in maintaining investor confidence by their decision to approve the TKM settlement, even after challenging events like fires. He highlights that the PUC has the flexibility to determine a utility's prudency in financial matters, allowing for a nuanced decision rather than a binary choice. This marks a departure from previous strict decisions, like those concerning the 2007 San Diego Gas & Electric fires, where only full or no recovery options were considered.

The paragraph discusses the continuous learning and operational adjustments at SCE (Southern California Edison) in response to challenging weather conditions and the need for wildfire risk mitigation. It highlights how SCE adopted a more conservative approach to implementing Public Safety Power Shutoffs (PSPS) during a windstorm with extreme winds, exceeding standard protocols to ensure public safety. The discussion also touches upon ongoing initiatives like grid hardening, use of covered conductors, undergrounding, and enhanced inspections as part of the company's wildfire mitigation strategies.

The paragraph discusses a company's focus on public safety in their wealth formation plan, specifically by integrating lessons from past incidents into their wildfire mitigation strategies. Beginning 7-8 years ago, their approach has been risk-prioritized, particularly concerning distribution due to its association with significant risks. The company aims to enhance safety continuously by adapting their mitigations based on new learnings. Pedro Pizarro emphasizes that public safety drives their system operations. The conversation shifts to Carly Davenport of Goldman Sachs inquiring about potential improvement in the CPUC ROE as they approach the next cost of capital, to which Maria Rigatti explains the sensitivities in their financial growth planning and how they account for various ROE scenarios.

The article discusses a coastal filing expected in March, similar to previous filings, which will include both quantitative and qualitative analyses. It will address the impacts of recent events and market reactions, particularly the January incidents. The speaker references past filings in 2019, highlighting that structural changes, rather than adjustments to the cost of capital, are necessary to address the issues, with a mention of AB 1054 aiding market reactions to California's challenges. David Arcaro of Morgan Stanley asks about solutions and legislative advocacy for investor certainty concerning California's wildfire financial protections. Pedro Pizarro responds, indicating it's early to make definitive statements but notes that there are multiple possible approaches, driven by investor concerns over the large-scale nature of recent events in the L.A. area.

The paragraph discusses efforts in California to adapt to increasing wildfire risks exacerbated by climate change. It mentions considerations about the durability of a liability fund and its capacity to scale. Beyond legislative focus on AB 1054, state leadership is also addressing wildfire mitigation through insurance reform, building codes, and defensible space measures. The state has increased firefighting budgets and is discussing fuel management and forest cleaning. These actions reflect ongoing efforts by the governor and legislature to tackle wildfire risks comprehensively.

The paragraph discusses the challenges faced by the legislature in handling multiple priorities, specifically in the context of demonstrating the strength and durability of AB 1054 and reassuring investors. It highlights the advantage of building on existing foundations rather than starting anew, thanks to previous efforts led by Governor Newsom. David Arcaro inquires about the potential reallocation of capital expenditure towards wildfire risk reduction, referencing a specific slide showing current expenditure distribution. Maria Rigatti emphasizes flexibility in redistributing funds based on present needs, especially in community restoration efforts. She suggests a focus on rebuilding communities and enhancing infrastructure, either through covered conductors or targeted undergrounding, and invites Steve Powell to share additional perspectives.

The paragraph discusses the evaluation and adaptation of risk models in light of recent fires to determine changes in risk and prioritize capital allocation for public safety and reliability. There's an emphasis on possibly increasing the use of underground infrastructure when rebuilding from scratch. It mentions ongoing evaluations of where to harden systems and allocate resources based on risk assessments. Pedro Pizarro adds that recent upgrades, such as modernizing electrical circuits in communities like Altadena, serve as both fire rebuilds and resiliency improvements, indicating that these efforts are also part of wildfire risk mitigation even in areas not previously classified as high fire risk.

The paragraph concludes a conference call, emphasizing that multiple categories or criteria discussed were addressed. The operator then transfers control back to Sam Ramraj, who thanks the participants for joining and ends the call, allowing them to disconnect.

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