Q1 2020 Earnings Call
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Good afternoon, and welcome to the Edison International first quarter 2020 financial Tele Conference. My name is too and I will be your operator today.
When we get to the question and answer session. If you have a question Chris Star one on your telephone.
Today's call is being recorded and I would now like to turn the call over to Mr., Sam Ramraj, Vice President of Investor Relations Mr. room Raj you May begin your conference.
Thank you Sue and welcome everyone Oh speakers today, our president and Chief Executive Officer Pedro Pizarro.
And they could get to vice President and Chief Financial Officer Maria Bugatti also on the call, although the Memphis, what's the management team I.
I would like dimension that youre doing this call with executives in different locations because of California is stay at home older. So please bear with us in the field experience any technical difficulties on the call.
The two real supporting today's call lot available at Www Dot Edison Investor Dot Com.
These include a form 10-Q prepared remarks from Peter and Maria into teleconference presentation.
Moreover, we will distribute a regular business update presentation.
During this call 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 discuss with social set forth in other Ccs filings Sling Street. These carefully.
In addition includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure.
During the question and answer session. Please limit yourself to one question and one follow up.
I'll now turn the call over to Pedro.
Thanks, Sam and good afternoon, everyone.
Let me begin by saying that our thoughts go out to those here in California and elsewhere, we're been directly impacted by cobot 19, including colleagues from our Edison team.
Also using an experience that Islam precedented and I know that your participation in today's earnings call is likely not the routine and has been in the past.
One thing that hasn't changed in these times. These are companies commitment to the health and the safety of these 13000 women and men of Edison International and Southern California, Edison and that 15 million people in their communities horse here by as Cds.
It's been dynamic and stay at home orders wouldn't spotlight on the role that the electric grid plays in all our lives.
Yes, and team is demonstrating their incredible commitments to continue to deliver this essential service to our customers. During this historic time.
I could not be prouder of our teams for their way they have worked together to carry out our admissions.
I will dedicate much of my prepared remarks, where response to covert 19, but first let me give you the quick financial headlines today Edison International reported core earnings per share of 63 cents for the first quarter 2020 flat compared to the same period last year.
Higher core Es and ITSI. He was fully offset by an increase in core loss per share I'd I experiment and other Maria will discuss our financial performance in more detail in her report.
I'll now turn to hold the state of California has been responding to the Colbert 19 prices, how Edison has organized and respond to it and how we are preparing and caring for our workforce.
Oh I wasn't sure some of the ways in which as he is helping customers navigate these facts well just staying at home executive order.
Lastly, I will provide an update on the continued progress as he has made on its wildfire mitigation work, which the CP you see another state agencies I've identified as essential work that must continue.
The headline on this is that we're ensuring our welfare mitigation work, it's not unduly impacted by called at 19.
In California, the Governor and legislature have taken actions to provide emergency funding of up to $1 billion to increase hospital capacity purchase medical equipment.
Schools and protects facilities with this thing most vulnerable residents.
The state is expected to spend significantly more in total to address the emergency.
When the legislature returns it is expected to pass these skills owned budget by the June 16th deadline and develop a more robust budget. After the extended you like 15 tax filing deadline.
The governors budget priorities or to address covert 19 related impacts wildfire prevention and homelessness.
We will continue to work closely with stuff and senior government officials and maintain an open line of communication on the essential work that our company continues to undertake particularly well fire mitigation work.
That is in our core focus is on ensuring the safety and health of our employees and providing them with the resources necessary to maintain critical operations for the benefit of our customers.
Early on as GE mobilized and incident management team or I M cheap to run day to day Covidien response.
I am genius, a group of individuals trained to respond to emergencies on our system utilizing protocols established by Sema.
I lead or crisis management Council made up of senior leaders from X and FCB and we check in dealing with the incident commander and GE R&D staff to provide guidance and approved millimeter corporate policies.
Well, we already had a robust endemic response plan and had tested it implanting exercises.
The reality is that the scale of the Cobrand managing prices has required us to make the number of policy changes on the fly and we continue to learn.
Leveraging the experience is reading of the empty we quickly transition about some surgical workforce to teleworking.
The same time, we remain committed to the essential nature of the service FC provides which was also called out in the governor stay at home Executive order.
Frontline workers and employees to support critical functions remain industrial or certain SCS facilities, while absorbing appropriate safety measures.
Furthermore, as he has to be closer to small number of essential personnel to ensure their availability of doesn't need is critical facilities.
Questions are already being asked about whether the cold, noting pandemic will dramatically alter how we live work and socialize once you need a crisis is behind us.
It's probably just too early to say with any certainty, but edison is already preparing for the potential of longer term changes. Some of these will be positive changes for example, I am certain that our learnings and how we tell the work will lead to improvements in how we do our work more flexibly and sustainably even after we can.
He joined her colleagues in physical offices to this end, we stood up in future planning sell to can sooner and plan for a possible change reality.
And how the company employees and our customers can adjust and continue to thrive both socially and economically.
I am honored to serve as the only utility representative on the Governor's task force on jobs and business recovery.
Let's see it safely providing reliable power to critical facilities, such as hospitals medical Laos and grocery stores.
As California begins to plan the future of work in a post over 19 environment.
And energy can play a critical role in a Justin equitable economic recovery with thousands of good jobs that also addressed the challenges of climate change and air quality.
Since the implementation of Speedway stay at home measures FC system load has declined by 6%.
Let's see Oh decoupling revenue from electricity sales.
We also have a mechanism already in place to track any over or under collections called the base revenue requirement balancing account. So there is no net impact on revenue in earnings.
Additionally, the commission recently approved the establishment of a new memorandum account cult decoded 19 pandemic protections mental account.
To record cost associated with consumer protection efforts related to Kobe, 19 through which s. He can seek cost recovery and subsequent proceedings.
I will address this topic and our remarks.
We remain focused on supporting our customers in our communities S.C. He was one of these first utilities nationwide to voluntarily suspend service disconnections for non payment for residential and commercial customers impacted by covered 19 before it was mandated.
S. C. has waived late seats and is offering flexible dealing arrangements.
To further support our communities Edison International has pledged $1 million do nonprofit organizations, providing support to those facing economic hardship due to cover 19.
I am grateful and proud of the Edison employees, who contributed more than $250000 for cover 19 really.
The funds they contribute it will be matched by it as an international.
In addition to our own efforts to support customers. The C.P.U.C. has continued to function during the pandemic and has itself identified initiatives to help utility customers. Some of these initiatives parallel what else he had already implemented and which I covered earlier.
Additionally, we are encouraged to the C.P.U.C. has moved on many of S. He's planning applications for instance on April 16.
Mission issued a final decision on S., he eats grit safety and resiliency program approving the settlement agreement without any change.
The decision authorizes $407.3 million in capital and $119.2 million in on M. 420, 18 to 2020.
Additionally earlier this month F.C. receipt. They proposed decision on its capital structure waiver application that seeks to exclude from S. east come on equity. The previously recorded net charge of $1.8 billion and any future charges associated with each when he 17 and 2018 wildfire events.
The P.D. also excludes debt issuance for the purpose of pain claims related to these events.
This waiver continues for the earlier of a two year period or until 2017, and 2018 wildfire cost recovery claims are resolved.
The C.P.U.C. also continues to move forward in the proceedings of the I.O.U.'s wildfire mitigation plans, which are slated for approval as early as June.
On April 3rd the wildfires safety Advisory Board issued its draft recommendations on the W.M.P. and those were approved on April 15.
Further last month S.C. files track to have its 2021 GRC proceeding.
Filing seats Reasonableness review of $810.5 million up incremental Oh, and M. and capital expenditures incurred for 2018, and 2019 wildfire mitigation activity.
And cost recovery of the associated revenue requirement of $500.1 million.
Turning to operations.
As he continues to perform critical work related to public safety wildfire mitigation unreliability wild differing non critical outages for as long as our communities are staying at home.
S. He has also developed a 14 day look ahead of plant outages across her service area to better coordinate with local jurisdictions and address any concerns.
Additionally, s. he has made tremendous strides to meditate fire risk in the last year and we also file their 2022 2022 wildfire mitigation plan in February.
This plan calls for F.C. to continue to harden infrastructure bolster situational awareness capabilities and enhance operational practices, all while implementing enhanced data analytics in technology.
We are executing these programs as quickly as possible as they are critical to ensuring the safety of our communities interviewed us essential by the state and by Us.
At the same time, we continue to prepare for potential public safety power shut off or P.S.P.S.
This is one of the more significant areas of wildfire related work and S.C. established another incident management team earlier this year to focus on further reducing the potential impacts of P.S.P.S. on our customers.
This dedicated team is working on measures like further automating the process to provide timely information to local jurisdictions and customers.
Developing more detail playbooks to reroute power and minimise customer outages, and advancing customer care programs in or higher risk areas, including use of backup generators.
We remain committed to yeah, I axis longterm strategy and its focus on clean energy consistent with the state's policy sentiment and objectives.
The foundation of our clean energy strategy is found in pathway 2045.
A blueprint for how California's broader economy, and our company can come back to climate change a cattle Isis extreme weather events and exacerbates wildfires.
It calls for the transformation of our industry to clean energy electrification of the transportation sector, where deployment of electric vehicle charging stations place a major role and the electrification of building space and water heating.
I expect these areas will all be key elements as the Governor's task force looks to reopen the California economy and position or states to prosper in the exciting decades ahead.
I want to close Mike comments with an emphasis on the essential nature of the service we provide.
We help power the economy, we power both life saving machines and lifestyles.
Supporter employees, we serve and help protect the public.
Once again.
I am very proud of my 13000 colleagues were working so hard on doing all of his safely.
I also think or investors for your commitment can support and I hope that all of you and your loved ones are staying safe well unhealthy.
With that Maria will provide her financial report.
Thanks daycare.
My comments today will cover our first quarter 2020, without our capital expenditure and late they forecast 2028, P.S. guidance and other topics, including the impact of 19, and our operation and financial performance.
At least said previously quarterly year over year comparison, I like little though given the timing of the 2018, she actually decision.
He's trying to page three.
And if any international recorded quarter earnings at 63 cents per share, which it's flat compared to the same period last year.
Higher court U.P.S. at S.C.E., which really upset by increasing <unk> per share at <unk> parenting either.
They do to interest expense.
On the table on the right hand side, you will see that actually had a court E.T.S. variance a positive for sense you're over here.
This is primarily driven by 12 cents and higher E.T.S. from F.D. core activity, which is partially offset by eight cents a share contribution.
There are few items that accounting for the majority of the E.P.F. <unk>.
To begin with higher revenues, Hey, positive variant of 42 cents.
This is primarily driven by 37 cents of highest C.P.C. revenue, mainly due to the adoption and the 2018 GRC final decision and Q.T. 2019.
Perk revenues had a positive <unk> five cents largely due to the increased equity layer wait based growth and higher expenses.
Hi, Oh, and inexpensive negatively impacted year over year E.T.S. like 28 cents.
The largest component, where they 15 cent increase and vegetation management cost.
This is do you take combination of higher wages in training mandated by the states new legislation S.P. 247, and an increase in the number of trends.
We have discussed this in the past, but I want to costs here to summarize the methodology and impact of mental account.
To begin there are various expenses that qualify for tracking and the wildfire related mental accounts.
From the start and each year, we track actual costs incurred and compare that to the amount authorizing the G.R.C. 40 same activities.
Only cost that are incremental to the amount authorized are eligible for <unk> and we have to encourage the full annual amount authorizing the G.R.C. fully recover record a regulatory asset where the incremental expenses probable ever covering.
As a result, when considering quarterly results or comparing year over year results impacts can be quite pronounce and not reflective of future quarter.
The timing of the expenditures and the point at which the deferrals begin dry quarter of a quarter variances.
Finally, as we said previously we will seek recovery of costs for which we have not recorded regulatory asset due to lack oppressive.
Next there was a negative for sent in packed into the recovery of wildfire insurance expenses and the prior year, which is at saving 2020.
There was also a four sent negative impact on costs related to short term incentive compensation.
Additionally, they were thing negative seven centenarians, primarily due to an increase any estimated allowance for bad debts related to the economic impact on the cover 19 pandemic.
Hire workers comp and legal expenses.
As page on mentioned earlier, the C.P.U.C. approved the establishment of the new covert 19 pandemic protections mental account the C.P.T.N. to track consumer protection cost for residential and small commercial customers.
S. C.E. will seek authority to record that that expense and access a G.R.C. authorized amounts and once we exceed the 2018 GRC authorized to not for bad debts, we will recognize a regulatory asset for the amount we conclude it's probable of recovery.
We will track these expenses and ultimately seek cost recovery and an applicable Chris eating designated by the C.P.C.
We expect to file and invites letter tomorrow, including the overall scope of costs to be tracked in this account.
Higher interest expense related to increase borrowing heading negative recent impact.
Lastly, there was a positive to send income tax there and related to benefit to pass back to customers with no impact on earnings.
Yeah, I X. parenting other had a negative for sent core variance in the corridor.
This is largely due to five cents higher interest expense related to increase borrowings like partially offset by the increase in shares outstanding.
Page four shows essays capital expenditure poor cat.
This includes C.P.C. jurisdiction L.G.R.C. capital expenditures certain non G.R.C.C.P.C. capital spending and for capital spending.
We continue to execute a robust capital program of $19.4 billion to $21.2 billion from 2022 2023.
This forecast is unchanged from what we shared with you in February.
However, due to the <unk> 19 pandemic, we are modifying our work practices to reduce the impact on customers as they comply with stayed home order.
We are working with local governments to ensure they have visibility into the essential work being planned. So we continue to have a strong focus on our wildfire mitigation efforts.
We're assessing the impact and this and the broader potential impacts of covert 19 on our 2020 capital program, but are working to ensure that our customers needs are met in the longer term and we continue to see significant investment opportunities I mean, that's in the safety and resiliency the grid and prepare for the clean energy future.
I page five we show as to evaluate they forecast at the capital expenditure levels requested in the 2021 GRC total weighted average C.P.C. and Burke jurisdiction over eight days will increase to $41 billion by 2023.
This request level represent i. compound annual growth rate of 7.5% over to vacate periods.
To give you an update on the 2021 year a fee on April 10th, California Public advocates <unk> file that's intervenor testimony in response to the track one request in line with the schedule laid out in the scoping them huh.
Cal P.A. propose to 2021 test year revenue requirement of 6.9 billion dollar.
651 million dollar reduction essays request of $7.6 million.
They also propose post testy or revenue requirement increases a 3.5% for 2022 and 2023.
Overall, Cal P.A. propose to proving approximately 90% of s. to eat the capital expenditure request.
The primary difference between our request any intervenors proposal was in the covered conductor program related to wildfire prevention and mitigation and intend the grid operations.
Turn and other intervenors are scheduled to provide testimony on may 5th and are a bottle is due on June 12th.
Additionally earlier this month, the C.P.C. issued an amended scoping them out on the schedule and procedure for litigating, the third attrition year of the 2021 G.R.C. cycle.
The ruling sets forth a track for schedule beginning with F.C.E. filing for 2024 May 2022, and concluding with the proposed decision and Q. for 2023.
Since the onset of the covert 19 pandemic, we've been asked about the potential impact to revenue in earnings.
Also had conversations on the action to strengthen our balance sheet liquidity enhancements and the strong funding status of our pension benefits and post retirement benefits other than pensions or p. back and related regulatory recovery mechanisms.
I'm going to take a few minutes to address these items, which are laid out on slide six and seven.
For nearly four decades, California has had a regulatory constructs that has been supportive of customers and I'll use, particularly in decoupling utility revenues from sales volumes through various cost recovery mechanism.
C.P.U.C. rates de couple authorized revenue from volume metric risk related to retail electricity. So.
So the F.C. he receives revenue equal to the authorized them out.
We track over or under collections of the C.P.C. base rate due to variations in load in our base revenue requirement bouncing account or burba.
Annually the difference between amount to build an authorized level are either collected or refunded. So there is no net impact to estes revenue and earnings from low changes.
These adjustments address all volatility in at the East L. volume, including from covert 19 related developments.
Additionally, as I noted earlier, we will request to use the news C.P.P.N.A. to record consumer protection costs.
We will see cost recovery of these in our annual energy resource recovery account GRC or other proceedings.
In addition to the C.P.T.N.A.S.T. He has activated the catastrophic event and them around and account or stena to attract other cobin 19 costs.
The cost will be track, we will be tracking include I.T. expenses to facilitate teleworking employee benefits, allowing employees to care for themselves and dependence affected by covert 19, and other costs encouraged to support the safety and well being of our workers during this crisis.
This account will also record any savings realize as a result of changes in work, which will be used to offset the additional costs recorded.
Yeah.
I also want to share with you the impact of covert 19 on s., the load and on customer bills to date, particularly given the importance of customer protection.
Through April 19th S.C., He has experienced a 6% decline and system load during the stayed home order versus the prior year.
Well total load is down experience has buried across customer classes.
On slide six you can see the low changes within each customer class.
Given the timing of billing cycles versus the start of the stayed home order we are still evaluating the full impact on customer payment behavior.
However, we have seen some increases and the number of outstanding accounts receivable for both commercial and residential customers.
This is a likely leading indicator for an increase in deferred payments are bad debt expense.
Please turn to page seven which include some information on our pension benefits <unk>.
At the end of 2019 are qualified pension plans were 96% funded.
Also we are well position with <unk>, which is managed to multiple trust that in total range from approximately 80% to fully funded as of your hand.
These plans have a diversified asset allocation, which provided a significant level of resiliency to the volatility we have seen in the early months of 2020.
S. C. He makes annual contribution says pension plans and P. BOP accounts and these contributions are recoverable do A.C.P.C. approved balancing account that allows us to true up every year to the actual contribution.
Also because we record a regulatory asset for the unfunded status of these plans there is no impact earnings.
Please turn to page eight.
We continue to focus on ensuring we have a strong balance sheet and maintaining financial flexibility.
As you can see from the bars on the page as of April 15th He I accent S.C.E. have a consolidated liquidity profile of $6.4 billion.
Which is a combination of cash on hand at $1.3 billion and available capacity on credit facility a $5.1 billion.
Yeah, Yeah, <unk> and F.D. have no long term debt maturities for the rest of the year and approximately $1 billion and debt maturities and 2021.
We have proactively d. risk dark financing needs for 2020 by accessing the capital market in January March and April.
This includes issuing $2.3 billion in long term debt at S.E.
And $400 million a note at <unk>.
The latter fun as a debt portion of the <unk> 2020 financing plan.
<unk> also couldn't plays an 800 million dollar 364 day term loan to provide financing flexibility for our 2020 equity need given the recent market volatility related to Kobe 19.
Also in the first quarter as they put in place eight 364 day revolving credit facility in turn loan for $1.3 million this'll be dedicated to capital spending related to wildfire mitigation on your A.B. 10, 54 that does not or an equity return, but is eligible to be recovered through a securitizable dedicated way component once.
Authorized by the C.P.C.
Our long term financing framework is to execute R.S.E. capital growth plans, while maintaining investment grade ratings that both S.C.E.N.T.I.X.
<unk> framework drive there previously disclosed E.I.X. 2020 financing plan, which includes the $400 million a dead at E.I.X., which I just discussed an $800 million an equity.
Out of which is $600 million in support of the growth capital me that F.C.E. per 2020.
The remaining $200 million into carry over over the equity plan, we disclose in 2019 that we expect to complete this year.
As of March 31st approximately $90 million for that amount was raised to H.T.M. and internal program.
As I've mentioned, given recent volunteer city in the capital markets, we put in a term loan at D.I.X. last month to give us flexibility as we work deliberately on executing our remaining equity financing plan for 2020.
Page nine shows are 2020 guidance and the key assumptions for modeling purposes.
We are reaffirming our guidance range of $4.32 to $4.62 per share.
In light of the volatility introduced by covert 19, let me explain our thoughts were not showing a bridge to the mid point of this range as we've done in the past.
Previously are 2020 guidance started with the weight based earnings from C.P.C. and ferch jurisdictional assets.
As you can see from the information on the slide our assumptions for rate base earnings are unchanged.
Kobe 19 will have an effect on how we execute or operational and financing plans for the remainder of this year.
As I mentioned earlier, there are strong regulatory constructs in California that will mitigate the impact of load reduction as well as incremental costs related to cope with 19.
However, there may be cost savings that are realized because some activities such as travel had been reduced as a result of the stay at home order.
These savings driven by covert 19 government directed we used to offset new costs before additional recovery is authorized.
It will be a detailed and data intensive process to determine which costs and savings are specifically Kobe 19 related.
Therefore, I expected I expect that they only more variability within and across the various earnings drivers that are typically part of our guidance.
So it is more relevant to discuss the range rather than the midpoint.
I look forward to giving you an update on the next earning call as we continue to deliver this essential service to our customers and gaining more specific understanding of the impact of coping 19 in California.
That concludes our remarks.
So.
Please fill up on the line for persons as a minority direct 50 or the limit yourself to one question on one follow up so everyone in line, that's the opportunity to ask questions.
Thank you and if you would like to ask a question. Please press star one on your telephone one moment. Please for the first question.
That comes from Jonathan Arnold with vertical Research partners you May go ahead.
Good good afternoon guys.
All the detail.
One thing over could a sword in return.
The the <unk> the <unk> memo accounts are up to somebody like seven 950 million.
But.
Just kind of those to what you talked about in terms of attract too.
Filing for others.
Is that a filing covering come about number was it a separate.
He send them and then maybe an update on the way my proceeding itself.
Sure. So I think you're looking back in the notes, where we show the regulatory accounts and then all accounts and balancing accounts from here and two now that number has mood I'll say about $80 million really court recorded about another $80 billion in that account. So the increment that we recorded this year is actually.
In the next track that we would be filing with the conditions over your call the costs incurred in 2020 or actually part of the track that gets filed in do you want him 2021. So we'll continue to accumulate these costs and that cat and that account that you're looking at are in in the note. The line item that you're looking at is not just.
The way my account, it's it's the alphabet soup wildfire related memo accounts.
Okay, but the accountants.
Sorry, Jonathan is that for for the current <unk> you talked about is you can come to some of that because.
<unk>.
That's right tracked the track to that we filed for is seeking recovery for about $500 million revenue requirement and if we would expect to see that decision in the early part of next year.
Okay. The the.
The Wiener Huh, which is.
Early aimed at or associated with insurance costs that isn't that proceeding as a little bit ahead of the track to proceedings and we are the C.D.C. is in the process of determining whether evidentiary hearings are required and so we will understand whether or not those are required and could potentially those could take place.
In June and then a decision wouldn't be forthcoming following that right now the parties have been asked to meet and confer to see if they actually need evidentiary hearing.
Okay. Maybe this is my as my father <unk>, what are the prospects of studies or web down some of these it's gonna be out then 2020.
And then how if you'll you'll know evolve to law school.
So I think the timing is reasonably the same in terms of where we think the proceedings will play out the one they aren't they have you know there's always the issue of trying to get you know on it you get a decision and you have to get on a calendar and three days later to get the proposed decision then we have to roll it into.
So you know there could be some variability as a result of that but yeah things are still reasonably in the same places they were last quarter.
Okay. Thank you very much correct.
Yeah.
Thank you. The next question is from Steve Fleischmann with Wolf Research you May go ahead.
I was doing.
Hey, Pedro real good afternoon.
So just I wanted to just make a clarification you did reaffirm.
You're 2020 guidance, including your current view of the impact of of <unk>.
And.
Is that correct and and is your commentary related to all the.
Moving pieces.
In the bridge so to speak more just about.
Kind of deal in dealing with just the exact where you get there.
But you do think you'll be within this range.
Is that right, yes, yes, yes, I'm, a little movie business with Maria.
Yeah, I agree with page I think that we we reaffirm the range I think there are a lot of moving pieces.
And so we do want to go that bridge, because I think it.
I'll tell Ya you know I think if.
If I try to keep if we tried to keep putting things in very very precise buckets. It would it would convey level of precision that I think he would question. So I think we're just trying to be straightforward with.
The guidance range and that things are still moving and we'll be able to provide you know maybe more specificity as we move onto the year, obviously, but right now that's where we are done it.
And and just just sort of good because I think you know if you get into every detail of Hell, California mechanisms worse work, it's probably.
It's it's kind of.
Getting too much into the <unk>.
Trees are not the forest. So just if I'm going back up to the forest you.
The overall viewed despite the timing of when you record things and all the different things all the different components of this is that you do have tracking mechanisms that recover a lot of the volatility of revenue.
And cost such that a lot of the issue is just the timing inter quarter and the way you account for things it's not.
The overall picture of a forest is a lot of these most of these issues are recovered.
Yeah, I think especially mental accounts definitely create that ensure quarter in full year over year kind of variability just because of the way the mechanics work the methodology, but I I completely agree that there was a lot of mechanisms in California. Some of them. You know 40 years old at this point that allow us to recover you know.
Variety of costs are under under recovery, they're under collections of of fails.
Yeah, and you know let me just have one one piece here.
Maybe even not even before as low as won't be able to clouds level, but the reality is that.
When you think about all those moving pieces, if you bring it down to <unk> Dude actual things that we're doing there are so many decisions we've had to me than steps along the way in terms of her we're changing our workforce is working on what what things we need to be providing or teleworking employees do do the work you know efficiently.
I'm home or folks in the feel of what these there needs to be doing different practices do you know be able to keep them safe out there and and help too important to slow down the spread of over 19, and so we have always checking account there will come a time will receive a movie to not only how do you amounts track, the we'll need to them and straight.
That those were proven decisions are we made that's what we have so much process around this right in terms of the I.M.D. or describe them.
Management Council senior oversight over that you know near your decision, but it would be surrounded says you know we are having discussions informally with the C.P.U.C. with the Governor's authors with others involved because this is not not just about how we're thinking about things moods on how the state or rural is looking at managing.
Through the crisis within their neck, and then looking after building the building blocks that will allow the stage the economy in our company to go back to whatever the new normal yes, you know after this and so we're we're also trying to do what we're doing not in a vacuum by consulting policymakers consulting beer utilities in this.
Stayed outside the state so I'd be that'll help bolster the case for now we're trying to do all this prudently and through you know ultimately have a good shorted recovery.
Okay. Thank thank you very much all that others ask thank you.
Steve.
Thank you then next question as from Michael Lapidus with Goldman Sachs. You May go ahead.
Hey, guys. Thank you for taking my question.
One easy one which is on the <unk> how much flag is their meaning you know how quickly does <unk>. So it to me and there's two down caught 10 per cent in a in a in a quarter orange who quarters.
And her earnings purposes, there's no impact, but from a cash flow purposes and impact how does the mechanism work Promuc heightening perspective.
Hi, Michael It's Maria suburb of gets put into rates at the beginning of every year, there's an annual trip.
Got it so in other words, if you've got a kind of Oh, you've got term lost revenue number pick a number or whatever it is that lost revenue numbers gets put into rates at the beginning of next year, along with any other rate adjustments.
That that has that is how it's been working yeah mhm dot it working.
Name is yours.
It it's an automatic process or do you have to actually while for the for about go through adopted get regulatory approval to get updates.
<unk> Berber works, a little bit differently than era, your thing probably of our <unk> purchase tower accounts.
Ah recovery accounts that they actually file and we'd go through and and kind of talk to people that and then you get a decision. Then we were all that is raised with burba. What happens is it just really goes into rate automatically at the beginning of the year.
Got it and then one rate base growth <unk> question on your cat back sliding you've got you've got a list of things that are not included in that and I think the last one on the list was transmission infrastructure can you just remind us what what you're referring to her what that flaws.
So I think you're looking at something says what the long term gross drivers are and one of them. His transmission infrastructure. We do have some of our for transmission projects are certainly in the rate base calculations that we provided here, but I think this references to in California, as we moved to electrifying more.
The economy.
<unk> well more transmission be needed when will that be needed and it would be a growth opportunity as that played out over time. The case, there has not yet put out their plans for the longer term transmission you'd however at this point.
I just.
Remember that the Carolina, so ends of developing the overall plan to use to based on input you know they're based on input that'd be good from you know transmission owners and other market participants to these other than identify brand new projects in under for <unk> opens on fishing.
<unk> identify projects or or a breeze or extensions of existing Roger extend the utility. That's transmission owner has writer first refusal and so you know we don't know whether plan will be in the future for 2030, or 40, 2045 or whatever you, but you know if you could probably reasonable to expect there might be some combination of projects that.
Are already stations upgrades existing lines that we would have a race. So you would have it ready to first refusal on.
And some other <unk> computed frontage.
Got it okay. Thank you Pedro Maria much appreciated no like L.P.C.
<unk>.
Thank you then next question as trim Julian <unk> Smith with Bank of America, You May go ahead.
And they're Julia good afternoon, Hey, thanks for the talking about.
Oh I'm.
So I wanted to follow up on where she was a second ago here and just make sure we're crystal clear about that.
You're talking about you know, that's before us or trees here and as a whole governors you mean ultimately the variability is is pretty strictly ensure a quarter and ultimately when you think about this netting this knitting dynamic 50 reduces the ultimate amount that you're seeking from the C.D.C. in this new covert account.
To the extent to which that you're seeking some you know net number from that you're not able able to offset everything that number is still going to be deferred and that's not necessarily going to show up on your income statement as as an expense you telling me how you you're going to account for just to make sure I'm not missing the the conceptual point that you're raising about added volatility with Ya.
Mhm, so the variability obviously covered not just coded things that you.
Probably in the earlier in my prepared remarks, I talked about just normal account and how that is working on welfare and medication as well so there's a little bit of activity going on in both in those areas. So there's some variability around more than just coded in the code in space <unk> correct, we are going to be tracking all of our costs.
Will always be looking at whether or not those are cost that were you know just amplifications of things that were already recover authorized in the G.R.C. and so we would be first recording all on the GRC authorized amounts and then only would be able to defer extensive we'd also go through our standard process of you know problem.
Stability of recovery, because that's part of our quarterly process as well and then we'd also have to be tracking savings that relate to these categories in terms of things that are being driven by covert 19 government directive than you know I gave an example of travel that they're really easy one right because frankly, none of US is traveling right now so we'll have to go through that.
Process and I think it could create some variability across the year and then I think we're also going to always be looking at some of those other categories as well and when when make sure that we manage across all of them and that's why while we're reaffirming the guidance range me you know didn't want to provide that level of specificity with every piece part and every component.
With what we know today.
Got it if I could follow up here. So obviously, there's a lot of orange gyration, but capsule generations of working capital generations I presume given your commentaries on shootings you respect to equity.
Notably for the year that feed the wants him working capital involved with respect to be coupling or with respect to Kobe or you have other accounts that you just alluded to the the the fundamentally does not drive any changes and how you're thinking about balance you consideration I prefer metrics or <unk>.
Et cetera et cetera, if that's even within that doesn't know so change this notion of latitude on timing as well I I forget.
There's a lot in Latin there. So obviously were very focused on you know cash flows in customer behave painted behaviors and Petra we didn't put in an additional credit facility, but I mentioned earlier that was really focused on a certain sliver of our capital spending so they 80 tend to be for capital spending it.
Announced little open ultimately be securitized, so we put that into place. So that would also free up our nor I'll say normal chorus credit facilities. We have the 3 billion dollar credit facility down at S.C.E., which would be you know the one that was aimed a customer issues customer payment issues et cetera, but yeah. So we have been managing and putting into place various.
Facilities that we think <unk> really help us managed to cash flow and liquidity impacts in terms of your question on on the equity plan for the year. I think you know we can't be announced that back in Q. for we still have the same plan the turn long and we put in place at at E.I.X., Obviously gives us flexibility around timing there.
But we still we are still you know have the same I'll say financing philosophy, which is to you know create opportunities to invest in essence growth opportunities as well as to maintained definitely great ratings at both the L.C.D. any I Act. So we we we will be you know continuing with our plan I think the weighting agent.
<unk> are you know very I think find the California regulatory constructs around some of the issues were facing probably 19 to be very helpful. But you know we're still going to be pursuing are funny I think one.
Excellent.
Till the time the well.
Oh Dear.
Thank you. Our next question as from Jeremy Tonight with J.P. Morgan You May go ahead.
Good afternoon.
Oh, you're.
Just wanted to clarify last year when it comes to the earnings and not putting the bridge here that you've done the past just want to clarify that not necessarily indicating the lower end of the range here just that there's too much uncertainty right now for you to kind of provide this type of dynamic is up right where to think about this.
In a big <unk> earlier were reaffirming behold diamonds range.
Whenever wanting a bridge to amend point and we're just pointing out that there are a lot of moving parts and visas right now so, but we reaffirm the range.
Got it that's a that's helpful. There and then just want to turn to equity bonding real quick for a second interest you know given really the unprecedented volatility we're seeing the capital markets here just wondering if anyway. This is altered your strategy for raising equity.
Looking at you know blocks rates hammer timing of either and also given that you get a portion of 2019 equity was carried into 2020 would you consider doing equity further at this point if volatility in the marketplace.
Generally I think kind of time back 20 earlier question. The 2020 financing plan that we now. Thank you for is still are financing plan. What we've done to help in terms of flexibility is put the term line in uppity I.X., which you know if you look at the quantum is about the same but our plan for 20.
20 continues to be our plan.
Got it that's helpful. Thank you.
German cute.
The next question as from Stephen Bird with Morgan Stanley You May go ahead.
Hi, Good afternoon Hope you all are doing well.
My question.
Oh, well it to just touch person that P.S.P.S. commentary picture that you gave sounds like there's been a lot of work that's been done thinking about how shut off of pages, which might just talking a little bit more about how that might look different this year in terms of whether it be scope duration or just a page any further color rounds.
How that might look this year compared to last year.
Sure you know how happy to do that and so like I said in the comments there's been a lot of work going on you know reveal all through since last year.
Just to remind me of most of your performance you don't think it was generally similar to medicine you against me electric when you look at the present customers route.
Throughout that a color, 2% or so the population lives in fact at some point drop it.
And that I think was the product for a lot of years of investment in areas like sexualizing or distribution circuits, though you know on average in high risk area. We can subdivide a circuit into four so there's a higher risk portion of those who are good for their <unk> three portions that are not heard fire is you can take.
One park and not the three bars in their limits disco. So I was one major item and then the other major item last year was to factor, we particularly comparing through our or or <unk>. What do you ever been working towards is now you know we have the ability to the n. or drive space on the actual conditions are supposed to run a 48 hour ahead forecast.
Those two were really helpful last year <unk> or you will fall what has happened since last year. It sounds good drank are you in in the starting point.
We've been working on further refining when we start with the the forecasting beach, there's been a lot of words, it's been done to further refine are modeling capabilities, you know make them more granular you know tighter tighter grid. If you will there should allow us to have a no higher fidelity you know mapping.
And modeling forecasting capability that should we believe allows to just be a bit more targeted around it.
Another advancement since last year.
I mentioned was he's playbooks, alright, so rather than having to do a fair amount of work to update the number of variables as we're getting close to have you given decision or planning for one the team did a good job over the last of your trying to you know.
The the variables that are that are more static.
These are more repeatable versus the ones that you really need to update in real time, and then use you know if you have a cookbook or instructions that on a certain place we're too low so that at that time approaches. We can just move a lot more quickly.
Terms of determining what forces of a surrogate my D.V.D. energized what customers. Good a heads up the they may be turned off and would you ultimately do that for real and.
And the other thing we did was that are the team did was they took a look at our well call them to frequent Flyers from from last year. You know circuits are were the energize multiple times because during high risk areas and they looked at where there were used to further narrow the scope of the <unk> viewing or decisions on those in some cases they might have.
Then you know doing some some rewiring or doing some adding more six utilization capability to further isolate the trouble spot. If you will hire or fire response within the circuit, so that instead and I'm gonna make of numbers, you're right, but if you ever circuit, where you are drinking out.
You know 500 people I remember customers last year several times during the year.
If we can narrow that down to 50 people who are in the highest interest area that actually reduces the overall pain across our community and then finally, maybe a true story with this one you know another you remains on all the years worth of progress in terms of harden the system more cover conductor mile deployment out there.
Peas in particular will continue to improve year to year over the course of our of or W.M.P. and so we should see you know more and more risk reduction from that you brought up together Steven.
Think about it as we look at the risk informed decision do the inner Joyce or not.
That is the product of weather conditions of fuel conditions out there.
Particulars of the neighborhood, but it's also dependent on variables like how much better why or do we have in high risk areas versus covered conductor right and so that's why the hardening of the system will continue to decrease or restore from year on year and will allow us to continue to decrease the number of customers in fact that bottom line and all that sort of.
A little long winded, but there's a lot that's going on bottom line is that if we saw the same exact same weather conditions that we did last year, we would expect some proportionately smaller amount a few interpretation of course, we won't see the exact same conditions as last year, but it just gives users. So there's been some meaningful progress.
That's a extremely helpful and just a one separate question on your T.V. intersect sure program did you might just providing a high level update on the status of that program implementation key milestones from here just kind of thinking about the pace that role.
As you try to meet the increase D.V. penetration in the state. However, we generally stand on the the pace at that program.
Sure. So <unk> somewhere I says is too large programs one is be heavy sort of medium and heavy duty turns ready transport verb room for which we already have C.P.U.C. approval.
And the 340 million dollar range or so.
And that's a multi year program.
Then the second large program is her charge ready program. There we've got approval for little pilot that had been approved to the to the room $22 million from show.
We had an extension of that they're basically gave us about the same amount to continue in pilot mode or bridge mode. While the C.D. She considers a larger application for.
You know what would be around a 750 million dollar you know program all in between capital and and I went out of 550 I think is a is capital.
So the data application that you're sitting at the C.P.U.C. I believe they have the extended deadline for considering it until June 30th or this year when they extended six months ago or four months ago, a movie there'd be the six month extension, the <unk> permission or <unk>.
Who's the the the lead permission or on this docket and he said he expected that it'd be as a P.D. out early in the year I don't think we're seeing a P.D. out yet, but you know certainly understandably, there's a lot going on with the current events et cetera, but we haven't heard anything.
Different from the June 30th deadline that we've talked about as we look forward to you know hopefully getting done a bruised in the time frame in the meantime, we made a lot of parameters and drum. So you know both deployment on their children transport and the passenger vehicle charge ready.
I will tell you through the school that period some of them work has slowed down just because you know it requires working in close proximity.
You know.
<unk> essential than say working on a whole do we keep the lights on and you know customers and shows might not be ready on the customer grammars to have somebody come in and work on the installation stuff and so there's been some slow down in that and that's one of the pieces were looking at how does a good went back up as we follow the lead up the governor and the stayed in.
Re opening up once a week on.
But you know do you could just for the long term me for that.
You just don't invaded and in fact, some of the early discussions of the Governor's Task force have been all about how.
I think I mentioned this is not just about the near term reopening, but how do you bolstered economy for the long term and clean energy and electrification are viewed as a big part of a that long term last Wednesday.
That's really helpful. Thank you very much.
<unk>.
Thank you and that was the last question that will know turn the call back to Mister Sam <unk>.
Thank you and think separate from joining US today. Please call us if you have any follow Clijsters. This concludes the conference call you may know disconnect.
Mm.
[laughter].
[laughter].