Q2 2020 Edison International Earnings Call
Good afternoon, and welcome to the Edison International second quarter 2020 financial teleconference. My name is Ted and I'll be your operator today when we get to the question answer session showed a question for star one or so.
Today's call is being recorded.
Let's turn the call Mr. Sam.
President of Investor Relations Mr. <unk> you may begin your conference.
Thank you did and welcome everyone speakers today, well, President and Chief Executive Officer Pedro So.
That makes a good to vice President and Chief Financial Officer Murray of any Gotti also on the call or other members of the management team.
I'd like to mention that they're doing this call with their executives in different locations. So please bear with us to see experienced any technical difficulties.
The real supporting today's call on available at Www Dot Edison Investor Dot Com decent little form 10-K prepared remarks from Pedro and Maria and to teleconference presentation Tomorrow, we will distribute a regular business updates 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 distance ourselves are set forth in RCC filings leased fleet. These carefully.
The presentation includes certain outlook assumptions.
Yes. The lives reconciliation of non-GAAP measures to the nearest GAAP measure.
During the question answer session. Please limit yourself to one question and one follow up I will now turn the call over to Pedro.
Well. Thank you Sam Yeah, let me start by hoping that all of you listening today and your loved ones are staying safe and healthy so well continues to work its way to covert 19.
Today Edison International reported core earnings per share of one dollar for the second quarter 2020 down 58 cents compared to the same period last year.
The decline in year over year.
This was primarily due to higher on M. expenses equity share dilution and that will for the final 2018 GRC decision. We recorded in the second quarter of last year.
Consistent with recent quarters, we sold with this period were impacted by the timing of Olin and span and deferrals shortens well probably related expenses.
However, the year over year, yes impact, so well probably related expenses should improve in the second half and we remain confident in our outlook for the full year.
Therefore, we are narrowing or 2020 bps guidance range to $4 on 37 cents to $4, that's 62 cents by regime or lewin like plates as.
Maria will discuss our financial performance in more detail when how report.
Well the legislative front, we're pleased to the Governor legislature prioritized wildfires funding in the recently adopted budget. Despite its projected 54 billion dollar doesn't deficit due to the pandemic.
The budget provides over $200 million in one time and ongoing funding for committee was really cheap preparedness additional pipeline firefighting personnel and equipment.
Enhancement of the stage emergency preparedness response, and coordination what state agencies local governments and utilities.
We're also encouraged by distinct enhanced well probably mitigation capabilities as we prepare for this year a small player season.
Well, that's just Calfire reported that it completed all of the plant 35 emergency feels management projects can make.
Making 19000 acres safer well ahead of wildfire season, and protecting 200 vulnerable communities.
Some of these projects were located in or adjacent to see service territories.
Oh fire has also made substantial investments to support its firefighting capabilities.
During the addition of C 150, airplanes, and new helicopters with better night quite fighting capabilities.
Turning to operations during this call the dumping pandemic asked you remain steadfast and focusing on practices aimed at the safety and health with employees and customers.
Two thirds of our children thousand employees continue to Telework and we recently moved our earliest we entry dates for them from after labor day to the beginning of next year.
Importantly, as she also has a full focus on maintaining clinical operations for customers benefit, including those laid out in S. you used twentytwenty, so 2022, well pad mitigation plan.
This plan calls for LCD depends you need to harden infrastructure, most of the situational awareness capabilities and improve operational practices, while implementing enhanced data analytics and technology.
Since the beginning of the year as she he has completed more than 330 miles of covered conductor installed nearly 400 additional weather stations and completed over 125000 blown based inspections hopeful infrastructure and high fire list areas.
She is also making good progress in acquiring more high definition imagery through a combination of helicopters and drones to facilitate additional assessments that are not possible from the ground.
The CPG approved the 2020 to 2022 Walpole mitigation plan on June 11 <unk>.
Paving the way for the renewal Cds and you'll see people deprecation of keep we work with it for access to the wildfire fun.
Looking ahead, we anticipate another active fire season, mainly driven by lower than expected precipitation and very dry conditions across California.
However, as you use entry the more active buyer period better prepared than ever.
In addition to advancing well play mitigation measures. The company has made improvements to public safety power shut off warp, yes, yes protocols since last year's.
Well they use appeals, yes, it's mostly dependent on temperature wind and fuel conditions would the improvements it as she has made since last year, we would expect to see 30% reduction in the number of customers affected by Dsps events under the same conditions as last year.
Our preparedness includes reestablish switching playbooks for each of our approximately 1100 circuits, which reversed life I was curious, enabling a more surgical approach to isolate the smallest portion of the sort the possible for given weather condition.
It also includes many facets of our customer care programs, such as providing generally the rebates for customers in a high play Listeria and data we bought the systems for qualified political killed customers.
We continue to focus on minimizing customer impacts, but yes deals will remain a tool to mitigate the risk of a catastrophic wildfire.
Well monkey well play related proceedings and this would be you see a CE submitted its 2020 say people just vacation request on June nine teams outlining how the company meet safety culture, and conduct requirements, including implementing or approved ballpark mitigation plan and linking executive compensation to safety.
The CBC has 90 days to add some as easily quest until then the initial CP certification Lucy last July will remain in effect.
Well the legal front I would like to give you an update on the 2017 in 2018 wildfire and mudslide events.
Let's see he announced an agreement last November to settle claims with 23 public entities.
Since that time, the utility has continued to explore settlement opportunities with numerous individual plaintiffs.
During the quarter SC reached a confidential settlement agreements with some of these lenses and they represent the first individual claims but the company has settled and B 27 deals in 2018 wildfire and much like basis.
There are thousands of similar individual claims against as <unk>.
I've been utility is committed we're exploring settlements with all reasonable parties, who wish to do so.
According to generally tool 2021 has to start of the Thomas flavor Bellwether trial, but this maybe further impacted by cold in 19.
According to the July 2020, Bellwether trial date for the Woolsey fire and has yet to sets a new date.
I would like to briefly discuss how sustainability is central to our vision for meeting the transformation of electric power industry.
Our vision aligns with California covert 19 recovery efforts. That's the states is working to hope Californians recover as fast asleep, we possible from the cold in my opinion, this recession and to shape, an equitable green and prosperous future.
Or recently published 2019 sustainability report highlights Edison International Scrubbers towards meeting our long term goals.
They include delivering 100% carbon free power to L.C. customers like 2045.
Expanding infrastructure NFC East service failure to support includes vehicle electrification and electrical I see on fleets, including 100% of light duty vehicles like 2030.
I would note that at the end of 2019, 51% will be electricity that us either live or came from carbon free resources.
We also remain focused on advancing or clean energy and electrification strategy.
Let me see announced 770 megawatts of energy storage procurement one of the largest in the nation, which will help enhancing electric system local reliability needs also last month as C. In partnership with other utilities publish the west coast Clean tranche Corridor initiative study.
Oh, this looks at infrastructure needs to serve medium and heavy duty electric trucks.
Additionally, we were pleased that the California Air Resources Board flavor, just states commitments to electrification by adopting the nation's first zero emission electric vehicle.
We'll comment on the initial proposed decision issued just yesterday and is to use charge ready to proceeding.
Let me conclude by saying that California commitments to the 20 facility and 2045 climate change goals can play a critical role any just an equitable economic recovery.
Investments in clean energy and electrification and address climate change and also the lower greenhouse gases affordably for California communities.
Edison International we're committed to when ably mistakes efforts to achieve its objective of a clean energy economy.
With that in other words Maria do provider financial report.
Thank you Pedro.
The International reported core earnings of one dollar per share its second quarter 2020, a decrease of 58 cents per share from the same period last year.
This decline was primarily due to higher when inexpensive equity share division and the true up for the final 2018 GRC decision, we recorded in the second quarter last year.
As Pedro had mentioned, we expect the year over year EPS impact of wildfire related expenses to improve in the second half and we are narrowing our full year 2020, yes guidance I raising the low end of the range.
On page two you can see as CD key EPS drivers on the right hand side.
I would like to highlight four items that negatively impacted the variance.
Sorry.
He has declined by 20 cents due to the 2018 true up recorded in the second quarter 2019 upon receipt of the final GRC decision.
Second Oh in N. had a negative variance of 24 cents.
Including from increased expenses that are offset by revenue to the balancing account treatment.
As long as the timing of deferrals related to both while foreign mitigation expenses included 19 related costs.
The variance related to wildfire mitigation expenses due to the timing of regulatory deferrals for vegetation management and inspection and preventative maintenance costs.
For the quarter negative variance from wildfire litigation expenses was six cents per share.
During the quarter certain wildfire related expenses reach the total amount authorized GRC any began to defer incremental costs were approved memorandum account.
You'll begin to defer other categories and cost in the third quarter. When we these exceed the GRC authorized levels.
Therefore wildfire related expenses will be left of the driver of year over year variances in the second half.
Oh and expenses were also negatively impacted by the time in customer Uncollectibles labor and other expenses, resulting from the Tobin 19 pandemic axes response to it.
As we've noted previously there are tracking accounts for corporate related expenses.
Some of these expenses are similar to call authorizing the GRC for example, uncollectable, we must reach full year GRC authorized levels before we begin to the for them.
Yes impacting the quarter for these items until they reach the authorized level was six cents.
However for the full year, we do not expecting earnings impact due to cold related expenses.
As for deferral through June Thirtyth, we have recorded $49 million into coven related memo account.
Third depreciation and amortization negatively impacted EPS by 13 cents.
This was primarily due to changes in Q1 2019 depreciation rates that were recorded in the second quarter last year. Following the GRC decision as well as higher plants.
Finally, EPS in the quarter was lower by 17 cents because of dilution from the increase in shares outstanding.
On page three you'll find at these capital expenditure Enrique for Cat.
We have a robust capital program of $19.4 billion to $21.2 billion, which include at these revised capital request reflected in the 2021 GRC rebuttal.
Based on the capital expenditure levels requested in the 2021, GRC total weighted average CPC and both jurisdictional rate base <unk> increased to $41 billion by 2023.
This request level represent a compound annual growth rate of 7.5% over to Rickys period.
Applying a 10% reduction to the total capital forecast to reflect our experience a previously authorized amount and other operational considerations.
Result in a compound annual rate base growth of 6.6 with them.
Have you done in the past projects in programs that have not yet been approved by the CPC such as charge ready to are not included in the rate baseball cap.
Yesterday evening, we received a proposed decision in the charge ready to proceeding.
The PD would authorize a total program budget of $442 million, including a capital budget a $314 million.
Is expected to be voted on at the commissions August 27 business meeting.
Please turn to page four for an update on the 2021 GRC.
During the quarter at the E file that your buttle testimony focusing on a number of the Interveners recommendation.
Including their positions on reductions to the public conductor program and depreciation.
Well the magnitude or the revenue increase its higher than prior GRC. We continue to underscore that our quest is necessary to make the longer term investments required to deliver safe reliable affordable and increasingly clean electricity for more than 15 million, California.
That's for next steps in the GRC evidentiary hearings were completed on July 20 seconds and brief and oral arguments are scheduled for the fall.
We are encouraged at the CPC has kept this proceeding on schedule, even while working remotely during the cobot 19th and Dennis.
The CPC is expected to issue a final decision for track one in Q1 2021.
I would now like update you on other key financial topics. Please turn to page five.
First we completed our 2020 <unk> financing plan in May with the direct placement of $800 million equity with several existing long term investors.
We have minimal equity needs to fund our ongoing capital expenditures program beyond 2020.
As noted previously this is also predicated on timely cost recovery of the requesting memorandum account and the current level of liabilities reflected on our balance sheet for the 2017 in 2018 wildfire and much light events.
Turning to wildfire insurance coverage, we have secured $1 billion of growth insurance coverage on July 2020 to June 2021.
Which is $870 million net adult and co insurance.
You will recall that we had net coverage of about a billion dollars in the previous policy.
The insurance market continues to be tight and based on the cost of insurance premiums. The 1 billion dollar gross coverage optimizes risk mitigation in cost to customers.
We believe that this insurance coverage meet the requirements of 80 tend to be more.
Based on policies currently in effect wildfire insurance expense in 2020 is approximately $450 million.
Moving to our 2019 FERC formula rate case at the filed a settlement on its formula rates in June.
Approved by FERC. This settlement will provide a CE with an all in our we have 10.3 person and an equity layer that is the higher of actual 47.5%.
At the he can file a new rate case, beginning in January 2022.
Lastly earlier this month, we filed an application with the CPC to allow us to securitize $337 million wildfire related capital expenditures.
80 tend to do for allows us to securitize wildfire related costs, including $1.6 billion CPC approved wildfire mitigation capital thing, which can't be included in the equity portion of it seems reaping.
Its application requested bharti to securitize, a portion of the recently approved grid safety and resiliency program spending.
The bonds legal paid from a dedicated <unk> ammonia.
He just 67 chart 2020 guidance and key assumptions for modeling purposes.
I'll start by highlighting that we are narrowing the EPS guidance range to $4.37 to $4.62 per share by raising the low end to the range.
Also increases the midpoint of the P.S. range to four hours and 50 cents.
There are several variables driving a positive revision.
Let's begin with at the E rate base earnings.
We now expect the rate base EPS outlook and three cents higher as a result of our 2018 FERC formula rate case settlement and the resolution of a tax related regulatory proceeding.
Building on this we are also now forecasting in net contribution in 27 cents.
Operating and financial bearing.
This is seven cents higher than our previous estimate.
This increase is influenced by the timing that's eat financing activities as well the number of other operational items.
As you look at the next three bars in the chart you'll note that some of the P.S. increases I. Just described are offset by higher costs at <unk> parent and other primarily from increased interest expense and dilution from outstanding share count.
We now forecast the combined EPS drag from these two items to be seven cents higher than our previous estimates and this is primarily primarily related to the completion of the iocs financing plan earlier in the year than originally anticipated.
Taking all of these variables into consideration the net impact of these changes combined with the outlook club business with another quarter behind us and it's cold and making environment gives us confidence in our now 2020, <unk> guidance range of $4.37 to $4.62 per share.
That concludes my remarks.
Ted Please open the call for questions as a reminder, because due to limit yourself to one question and one follow up.
If we want to mine has the opportunity to ask questions.
Thank you she would like to ask a question. Please press star wonderful.
One moment for the first question please.
First question is from a Jonathan Arnold with vertical research. Your line is now open.
Good afternoon guys.
The other Jonathan.
Just.
You mentioned that you reach some initial settlements with.
So can you describe some of the plaintiffs in 2017 18, fives and obviously there are thousands of others, but.
Should we read the fact that you didn't change or cruel despite reaching some of these settlements as a sign that you. All do you feel still good about you estimate or is it just.
No experience settling additional claims.
No update at this point.
Yeah. It Johnson, that's a really good question and I think just the simple answer is that she alluded to we did we did a handful films a few dozen settlements here.
Compared to the thousands of plaintiffs so that is simply just not a you know you know evidence to have any sort of material impact in our assessment of the low end of the a small range. So we did look up the range again.
And Oh, the low end, we as we've mentioned before we reassessed the re go into every quarter, but Oh, just based on the very small number of pieces that we said old that's just not sufficient to provide any sort of material input there would be to change.
Okay. Thank you.
If I could just follow up from one similar topic I see you booked a charge related to 2017 18, a small one in the quarter that's below the cool.
Just the $9 million <unk>, what was that sort of course, that's it.
This quarter.
Sure on Jonathan you can imagine as we move through that process, where accumulating legal and expert cost because those are legal and expert costs that are associated with the noncore charge were booking those it noncore as well prior to this quarter that number was really not significant.
[laughter] outside of your.
So Tim as you sort of ramping up.
So.
Oh no business, so one of our continuing litigation activities Johnson.
Alright.
Thank you very much [laughter], if things do take care.
Your next question is from June.
Bank of America. Your line is no.
<unk>.
Hey, good afternoon, thank God.
<unk>.
This is my follow up.
Can you clarify little bit on how you're thinking about the various groups of potential parties that you'd be seeking to settle with and just as you said expectations that I know, it's difficult to talk about it obviously.
Timeline shifted out can you talk about potential expectations on what kinds of parties you might expect to settle with I mean, obviously I think you said. This is just a handful basically of individuals here I'm. Just have you think about the time on occasions, given bellwether <unk> bellwether trial for one.
Established still in January versus vacated for the other one.
Yeah, and and let me start Julian by saying, but I.
I do think of the timelines as in some sense being almost to slip timelines, although obviously the related there's a timeline for the normal litigation cores, and that's where they'll bellwether trial dates or a relevant then as you noted and I think you know we mentioned earlier, there's a new date set for the on the tolling aside.
Woolsey dates husband postponed we didn't know that that's almost they could still you know move again, just because of the cold It 19 impacts on the uncertainty around that so that's a truck.
Separate tracks is you know the really multiple traction discussions with multiple classes of linkage.
And you know the reality is about Barack has a life of its own and it really depends on.
Parties on both sides and whether you know the Flinker side are there other parties that are a interested in being reasonable in achieving reasonable. So settlements were totally open for business to parties that want to have reasonable discussions and we're was open for business, where folks are they don't have a reasonable.
Point of view of how that relates to the trial timeline likely it's hard to say you know I really can't get until the head of in a specific parties and whether they view a linkage to a trial date or not in terms. So the up a little bit <unk>. Although one of your question around what do we think some of it but the various classes here.
Well, one large close with the public entities and as you recall you know we settled with a the vast majority of those last fall than the other two big classes or the civilization parties.
We were sending insurance company interests.
And the the individual plaintiffs.
And so nothing that we've had to announce this point on on the several parties again, we continue to be open discussions with reasonable parties.
And the with the individual plan because you saw the of a handful of a settlement. So we entered so you know again I'd Bobby the longest not answer in the world and but it's really hard to give you any sense of timeline or timing because it really comes down to each of those parties or or groups of parties.
Excellent and quick clarification of again as my follow up here on your 20 guidance.
You'd commented.
Back a quarter here in light of coal.
You didn't show a bridge.
You have and there were a number of.
Introducing uncertainty in light of Cobiz et cetera, just to make sure any specific items that are still outstanding that could introduce volatility I know you all raising guidance here after not showing it earlier at least the low end is indeed, a assigned a confidence that I want to make sure that we're hearing you write about some of the key pieces that you were looking for.
For clarity last quarter.
Sure, Thanks, Julien and last quarter, well, we didn't provide a bridge we did reaffirm guidance. Obviously now we're raising the low end to the range a little bit it as well, but last quarter. What we were really saying was the piece parts could move around and that's why we didn't provide the branch I think as our team continues to move through the process. You know we had more clarity on what those piece parts.
Our obviously, we have the the memo account that we set up related to coded expenses. We have decoupling, we have all of those things in California that provide us with confidence so I wouldn't point to anything necessarily being different other than now with the passage of time that granularity as more apparent to us.
Okay.
<unk>.
No.
Okay. Thanks drilling.
Our next question is from Steve Fleishman with Wolfe Research Your line is open.
Well, Steve good afternoon.
Hi, Hi, everyone has their true so two questions are related ones first is just.
On the.
Our cash flow standpoint.
Well I know, there's a lot that moves back and forth through the.
Trackers and the like so just how are you feeling about staying within the targeted rating agency ranges for this year next year.
You see the plan and the right. We do have a lot of cash tied up particularly in those wildfire mitigation them. All accounts I think those regulatory asset that we have on the books. This quarter is you know just north of $1.1 billion. So it's it's a fair amount.
We have been moving through the process on various and those proceedings Gee I can RPM has been approved and then settlements and improved the we my work that do not decision in September that's the one about the insurance proceeds from last year. So we're moving through that process. We do think that that's moving through the timeline on those you're close to them.
This is important to maintaining our cash flow and those are some of that that's one of the assumptions that are 2020 financing plan was predicated on I think that from a rating agency perspective.
Moving related items.
They understand very well the strong supports that we haven't California, both the trackers that we had as well as decoupling.
And sales.
Terry will cover that as well I think that is something that they're they're very familiar with anything but and I think highly owes frankly I'm on the middle accounts and WAPA mitigation I think demonstrating that we can get some other decisions behind this will be important and I think that really was one of the important.
Assumptions that we made an on financing plan for this year, we'll continue to look at that for next year and it is as we get that cash in the door, obviously on that you call improves.
Okay, and I'm going to ask a clarification. If it is a really important element I agree with you.
Okay. Okay.
Okay. Thank you.
The clarification of.
Someone else's questions of just the.
So we keep looking back sort of 17 18 and potential settlements.
You know one of the things that ultimately has to come up is like did you actually do anything and prudent because again as far as I recall I don't remember any investigation that of sound that you actually did anything wrong.
In the 17 18 fire so.
Could you just like remind us.
Whether and how prudency would.
Be reviewed for the 17 18 partners.
Yeah, I'd be happy to take a quick stab at that and just remind you that there's really a whole process around obviously, but the litigation proceeding but this is due to determining that you know potential litigation exposure to potentially filament outcomes. There is a separate track.
Around the Attorney General's office, or just you know again pretty standard Oh of course in these kinda cases, where they can take a look at whether there's any a basis for no liability.
Like your Gino, we've we've discussed some viral oh <unk> calls that it seems to be passed out there now for its almost gone eckstein or events. A attorney general is can generate their investigation. So we'll see fire in any case, we don't see any basis for criminals. So we'd.
<unk>.
In any of these events.
And then the final track there would be the truck at the C B and C, which although this you'd be jeez safety and enforcement Division Engagers right away and looking at the five simplifier et cetera, but the real meat and bone. So the prudency review would start after filing by Southern California Edison.
Seeking recovery of amounts related.
<unk>.
So to the fires are you the for outcomes and litigation or settlements right. So that's that has not be done yet we have children protocols as well that Oh at this point, we still don't house, a full visibility into every piece of evidence out there. There's still equipment that you know, we've yet to inspect et cetera.
So the way this work is the ones we had.
Finalized the litigation outcome for the.
Placement in they didn't know to almost going style and a much lady lands up and separately for the 28.
18, we'll see a fire event.
As we end up understanding what the final liability is would have to quote glosses or two settlements that we understand what gets down outstanding amount is it'll be on our insurance coverage and adept wage.
Based on or then understand and over prudency, unless we completed that we view and also it.
So you would could do that review then as she will decides to go to the CPSC to see cost recovery from customers and outlet stores out proceeding. So at this point, we we can tell you pretty defensively that we don't see any bases for criminal told me liability and B you know investigatory a criminal.
Well part of this led by the 20 journal, but we don't have all the pieces in place to understand or do you go your prudency and what the case would be for cost recovery.
The final reminder, in our accounting we serve we have not assume any recovery from the CBC given the president and doesn't legal case, we have assumed recovery from FERC, because they had a different president.
But you know I would expect that.
Yeah, we will be likely to be seeking cost recovery of some amount depend and ultimately on the degree of blue and see that we know we concluded we had shown.
So lots of pieces to the answer because it's a complex process that makes sense do yeah. No that was really good a review thanks. Thank you Peter.
Thanks, you take care.
Next question is from Michael Lumpiness from Goldman Sachs. Your line is.
Hey, guys. Thank you for taking my question I asked I actually have a handful and in Maria there are probably more directed at you.
Can you talk a little bit about.
Oh, the leeway, though comfort zone, you have regarding southern California, Edison dividend payment potential up to the parent relative to what both the CPC requirement and and the California corporate code requirements or.
Sure on so you know that.
In California, there are some rules around it and payments, which you did some of them or I'll say very standard you know genes or any type etcetera, and then also around you largely and believe following the even if we didn't that entity has an ability to meet obligations that they can do and we've been.
Valuating that's for ever before the wildfires as well because that's been part of the code for a long time, but I think had gotten a little bit more attention. After the dumped in 18 events. We look at a wide range of a really potentially negative outcome to ascertain the answer to that second question and we've been in a position.
You know each quarter to think about that both at the I actually level, it's out of common shareholders. But then also in between FCB and and yet. He also is looking at cash flows at alike, and you know exact timing of their financing. So you know there's a little bit of just I'll say that they make cash management the kinds of accounts as well but.
They routinely make dividends up to the parent company as far as the CPC goes obviously CPC is looking to ascertain.
That you know they are living within their own like capital structure and the like and we both the only thing it will do that as well and I guess even looking.
[music].
Got it. Thank you for that also can you talk a little bit about parent debt financing and the cost of of interest meaning that the coupon rates, you're able to realize in the market right now relative to what you're seeing other companies and if the rate is higher relative to other utility even though.
Interest rates broadly are lower how you're thinking about kind of short term long term debt balance and really the total debt balance you want up top at the holdco versus down at the opposite.
Sure. So I mean, obviously, we did $40 million and hopefully that a couple of months. It there now with a couple of months ago, now and that completed but we had announced for 2020 not surprising to anyone and call JAKKS has been trading wide of other.
Entities and I think that's a function of you know what a lot of what happened last year, even prior to Eaton before being path. So we do we do you have to deal with that I'm, hoping that as time passes that will also change obviously the underlying.
You know the treasury there are pretty pretty low right now so that's a benefit when you think about the total coupon I think as we move forward any time, you know Michael like any company will be Chad trying to balance you know timing guns market short and long term interest rates and the like I would see US you know on a go forward basis, just making that decision you know.
To determine to moves on the short term position to long term position is based on what's going on the marketing what the needs of the company wants in terms of the overall that at the holding company versus.
The complex, obviously, we're going to be thinking about that in terms of also keeping an eye on the rating agencies.
Yeah, obviously, they're looking at Holdco debt relative to total that until <unk> <unk> staying within those guidelines as well so that's kind of that thought process.
Got it thank Maria much appreciated.
Thanks, Mike.
That was the last question I'll now turn the call back to Mr. Sam.
[noise] well that concludes the conference call.
Thank you for joining us today and please call us if you have any follow up questions.
You may now disconnect.
[noise].