Q3 2020 Edison International Earnings Call
Okay.
Good afternoon, and welcome to the Edison International's third quarter 2020 financial teleconference. My name is Michelle and I will be your operator today, when we get to the question and answer session. If you have a question press star one on your phone todays call is being recorded I would now like to turn the call over to Mr. Sam Raj.
Vice President of Investor Relations Mr. Raj you May begin your conference.
Thank you Michelle and welcome everyone. Our speakers today are president and Chief Executive Officer, Pedro Pizarro, an executive Vice President and Chief Financial Officer Maria regarding.
Also on the call are other members of the management team.
I would like to mention that they're doing these calls have been executed in different locations. So please bear with us with the experience any technical difficulties.
Perions supporting today's call are available and definitely definitely definitely a dog at this at Investor Dot Com.
These include a form 10-Q.
Furthermore, it's from Pedro and Maria and the teleconference presentation.
Moreover, we will distribute our regular business update presentation.
During this call we'll make forward looking statements about the outlook for Edison International and its subsidiaries actual.
Actual results could differ materially from current expectations.
Important factors that could cause the.
I'm going to sales support you know that's not as easy filings. Please read this carefully.
The presentation includes certain outlook assumptions as well as a reconciliation of non-GAAP measures to Anyones guess Fisher.
During the question answer session. Please limit yourself to one question and one follow up.
I'll now turn the call over to Pedro.
Well, thank you Sam.
Good afternoon, everyone.
Today Edison International reported core earnings per share of $1.67 cents for the third quarter 2020 that was up 17 cents compared to the same period last year.
This increase was primarily due to higher shipping you see related revenue from the 2018 GRC escalation mechanism.
Lower expenses from regulatory defaults related to wildfire mitigation activities.
Partially offset by equity share dilution.
Reflecting our strong year to date performance and our confidence in the outlook for the year. We are narrowing our 2020 guidance range to $4.47 to $4.62 by raising the low end 10 cents.
Maria will discuss our financial performance in detail in her report.
We continue to address the numerous impacts of COVID-19 on our operations customers and communities.
The same time, we recognized that climate change is driving unprecedented weather conditions and catastrophic wildfires in California and the state is in the mid so put another actor wildfire season.
My thoughts are with the communities and families impacted and we are hopeful for the first responders, who have worked tirelessly to contain the flyers and protect the lights on property of Californians.
But it doesn't safety remains our first and highest priority as she continues implementing measures to reduce wildfire risk working closely with local first responders and emergency managers and communicating regularly with customers to improve awareness and promote preparedness.
On the California Legislative front this year session will shorten due to COVID-19.
Legislature prioritized the state school, the 19 response and wildfire risk reduction.
The Governor signed several pieces of legislation that build on the streets investments in firefighting personnel and technology and feels management projects well.
I'm also pleased to Thats two issues advocated by S.C. you clarify.
Clarifying baby Tenfifty four insurance policy year on obtaining the opportunity to securitize revenue under collections and bad debt expense due to COVID-19 and 2020.
For both addressed for the legislature to be unanimous passage of Assembly Bill 913.
During this won't fire season, we have seen near record deployments of firefighters to contain major wildfires throughout the state with over 19001st responders at the peak, which was the highest since 2008.
Firefighters from California, the U.S. for his service and numerous cities and counties have done a tremendous job. This year, despite being stretched due to significant lightning driven ballplayer complexes and having to work with all the precautions.
This reflects the work done over the past couple of years to significantly increase firefighting resources that enhance the ability to model and forecast fire progression to better position grounded aerial assets.
So she's ballplayer mitigation efforts augment those of state and local agencies. For example, if she has improved its situational awareness and out of local fire authorities play installing 161 cameras.
In late September S.G. contributed $2.2 million to the Orange County fire authority to secure the largest heavy lift how we can go in the world for this fire season people of night time, flying and making water drops to 3000 gallons.
This helicopter, what's working all feel last night and today on the sliver auto fire in Orange County.
Also this morning, the Orange County fire afford you reported that this fire has spurred over 11000 acres and is 5% contained with no structure losses.
Tragically two firefighters had been seriously injured bottling deblase.
Let's see you filed an electric safety incident, we report or yes. They are yesterday on this a broader part.
As noted in the US all Youre there was no activity on a nearby as she power line more evidence of any down power lines prior to the reported sort of the fire.
Well I think he's investigation is at an early stage I would like to note that preliminary investigation suggests study lashing wire attached to a third party owned telecommunication line. That's it's been nice as she east power line may have gone for good seasonally light above it possibly.
During the fire.
However, it is early to draw any definitive conclusions at this point.
I've mentioned before that public and Dr. <unk> is the most effective and expeditious waits for the C. diff, but I don't public safety risk by preventing admissions that can lead to catastrophic wildfires.
Yes. He is on track to meet or exceed the target of 700 miles are then spoke to ligand Doctor said in the 2020 wildfire mitigation plan.
Our utility made substantial enhancements over the past year or two its public safety. Both showed all four P.S.P.S. program.
As she has enhanced communication and coordination with governments and communities.
An improved its capabilities to sectional voice circuits to reduce the number of customers. In fact, it went up we want to be Energization is initiated.
In addition to our efforts to help reduce the risk of wildfires. The company continues to work to resolve wildfire related litigation.
As we noted on September 20, food, that's G., we sold all insurance obligation claims for the Tom isn't going to play players and one at Sito Mudslides wood.
This and other information in hand, we were able to move or a telling we shows from the low end of the us mobile range to a best estimate.
Writing investors greater clarity on this and our related equity needs.
Moving to regulatory actions at the CP you see we are very pleased to see continued timely decisions and progress on our key filings as originally scheduled this.
This is a significant improvement in action and progress under the leadership of precedent Badger.
We commend the commission and its staff for their continuing efforts in ensuring the proceedings are staying on schedule. Despite challenges from the new remote working environment during the pandemic.
During this quarter. The CPC is your decisions in several of Etsys Q4 legs.
These include the 2020 safety certification the charge ready to program and the we my application authorizing $505 million of wildfire insurance cost recovery and supporting continued treatment up insurance as a reasonable cost of service.
We also received a proposed decision on our initial Eaton 54, Capex securitization applications and she timely progress on track one okay, well the 2021 GRC proceeding.
Furthermore, if she has reached a settlement in principle to resolve all issues spending and truck to the GRC.
Let's see a numerous other parties filed or 2020 integrated resource plans.
One of the principal objectives of this I repeat just to help California meet its 2030 and 2045 G.H.G. reduction targets.
<unk> is plan, we urge the commission to adopt the 38 million metric ton target for 2030, you put California on a Bible trajectory towards meeting at some carbonization goals.
She also reiterated and highlighted the substantial CAISO system capacity needs of 5400 megawatts and the 2024 through 2026 timeframe due to planned power plant retirements.
To address this as he has recommended that the commission updates its reliability planning methodology.
Including increasing the planning we sort of margin.
But I always like to state evolving electricity market and ensure system reliability.
These recommendations are consistent with a conclusion stones I'd tell you so the CPC and the California Energy Commission and the recent preliminary root cause analysis will be August rotating out I guess.
Last month, the Governor issued an executive order that moves up the timeframe to help all new vehicles sold in California, the emission free to 2035.
The older aligns with our Palpably 2045 works in which the electric vehicles or an important element to achieve carbon neutrality.
Hi, I'm really proud that Edison has been recognized as a thought leader on this front.
I was wondering score the importance of making necessary investments today too.
Ensured that we have a strong safe reliable and resilient grid to accommodate increasing electrification of the economy.
Destroyed substantial investment opportunities to meet increased electricity usage and increased system complexity, including most distributed energy resources higher levels of renewable resources and energy storage.
Importantly, our analysis shows that this transition will also be affordable.
As the redo efficiency of the electric motors and appliances will reduce customer's total cost across all energy commodities by one third by 2045 with.
With that ill turn it over to Maria to provider financial report.
Thank you Pedro.
Edison International reported core earnings of $1.67 cents per share for the third quarter 2020.
Increase of 17 cents per share from the same period last year.
This increase was primarily due to higher CPC related revenue due to the 2018, GRC escalation mechanism and lower expenses from regulatory deferrals related to wildfire mitigation activities.
These were partially offset by equity share dilution.
Reflecting our solid results for the first nine months of the year. We are once again narrowing our guidance range by raising the low end of our 2020 bps estimate.
I'll discuss this in more detail later in my remarks.
On page two you can see SPE key EPS drivers on the right hand side.
I would like to highlight four items that accounted for much of the variance.
First if he has increased by 43 cents related to higher revenue.
You see related revenue can should be 25 cents and this increase due to the escalation mechanism from the 2018 GRC decision.
Work and other operating revenue had a negative variance of five cents.
Largely because of the true up for the 2018 Formula rate case, we recorded last year.
It was also a positive variance of 23 cents primarily related to the balancing accounts for the G. SRP settlement that was approved in April.
However, they were offset in expenses related to this variance.
Second Oh, and then had a positive variance of eight cents, primarily due to recognizing lower wildfire mitigation expenses as a result of deferrals to regulatory assets.
Third income taxes had a negative impact of 13 cents.
Early reflecting lower tax benefits captured through our top balancing account.
Lastly, as C E S. In the quarter was lower by 16 16 cents because of dilution from the increase in shares outstanding.
On page three you will see at the east capital expenditure and rate baseball.
Capex is consistent with last quarter's forecast, that's 2021 through 2023 with a slight increase to 2020.
Additionally, we updated the weight based forecast primarily for charge ready to and GRC rebuttal testimony.
We continue to see significant opportunities to grow rate base over time, driven by investments in electric infrastructure and.
And this is reflected in our robust capital program of $20 billion to $21 billion over this period.
This request level represents a compound annual growth rate of 7.6% and we think over to rate case period.
After applying a 10% reduction to the total capital forecast to reflect our experience of previously authorized the mouse and other operational considerations.
The low end of the range still reflects a strong rate base growth of 6.6%.
Please turn to page four.
Track one of the 2021 GRC proceeding on schedule and during the quarter all related repairs were completed.
We are now waiting for a decision and continue to expect that in first quarter 2021.
To emphasize our previous statements.
C E core business will require minimal equity to fund our ongoing capital expenditures program beyond 2020.
We'll be able to quantify these levels. After we received the final approval the GRC.
Page five summarizes our progress on the eve cost recovery filings for incremental 2018, and 2019 wildfire litigation costs.
In April as CE recede CPC approval for the G.S.R.P. settlement, which authorized recovery of $476 million of capital and $123 million of I went out.
The decision approved a revenue requirement of $159 million, which went into late October.
The balance of the capital costs that were approved will be recovered as we securitize amounts related to wildfire mitigation has authorized an 80 tend to people.
In September the we know application to recover a $505 million of costs for wildfire insurance.
This is now included in rates and will be recovered over the next 24 months.
Importantly, the CPC noted in its decision that SPE had acted reasonably and prudently and its procurement of insurance policies.
The commission also recognize that wildfire liability insurance. So this is an important protection for customers against third party legal claim invoking was kinda nation doctrine and allegations of negligence.
These decisions and able estee each would cover approximately $665 million of cash over the next two years and further strengthen its balance sheet and credit metrics.
In addition, the CPC recently issued a proposed decision on Etsys application to securitize, the G.S.R.P. capital noted about.
When the financing is completed it will add approximately $335 million to the cash position.
I see and all Interveners reached a confidential settlement in principle regarding all issues in track to between 21 GRC.
Once a definitive settlement is executed a motion will be filed with the CPC seeking approval.
I see he expects the proposed decision on the track to settlement in Q1 2021.
We were we will record the impact of the settlement once the commission.
Do not expect a negative earnings impact.
I will highlight a number of other pending filings and future applications related to wildfire mitigation.
First we are due to receive a decision on our scheme of filing for certain drought restoration costs in first quarter 2021.
In the next few months, we also anticipate filing an application or excess insurance premium costs for July to December 2020.
Finally, we will make our GRC track three filing <unk> first quarter 2021, with a proposed decision expected a year later.
As for other regulatory actions during the quarter. The CPC approved estee, Charles ready to program, which supports approximately 38000 light duty he charging ports.
This is the largest light duty he charging program by Investor owned utility in the U.S. and will add approximately $400 million to use rate base by 2026.
Turning to guidance you just six and seven show, our updated 2020 guidance and key assumptions for modeling purposes.
Let me highlight that we are once again narrowing our full year 2020 bps guidance range to $4.47 to $4.62 per share raising the low end of the range.
It also increases the midpoint of the EPS range by five cents to $4.55.
Well most of the earnings assumptions are essentially unchanged from last quarter. There are a couple of factors driving the majority of this upward revision.
First we now expect FC earnings to be four cents higher than our previous assumption.
This is driven by improvements in one sense, we think.
Three cents from the east variances related to the timing of financing activities as well as operational items.
Second the I. ex parent and other forecasts has improved by one cents versus our previous estimate.
These factors and our strong performance so far this year make us increasingly confident in our narrowed to 2020 bps guidance range.
Last month, we issued a news release about September 2027 Nations and noted that we anticipate issuing approximately $1 billion of equity to invest in SP, enabling the utility to debt finance wildfire claims.
Since then many of you have asked questions about the timing of the equity issuance.
As we shared with you we will provide an update on the fourth quarter 2020 or any color.
The timing of the equity issuance will be dependent on the timing of future claims resolution and payments that exceed insurance.
And that concludes our remarks.
Michelle Lisa.
Please open the call for questions. As a reminder, request you to limit yourself to one question and one follow up.
Everyone that line has the opportunity to ask questions.
Thank you if you would like to ask a question. Please press star one on your salty.
Our first question comes from Jonathan Arnold with vertical research partner you May go ahead Sir.
Good good afternoon guys.
Thank you.
Gordon So your question on the the SEC.
Tempur announcement on the.
Yeah. It would show up as he was mentioned now.
Particularly you know up to 6.2 billion that is now youre accrual could you give us any sense the bedrooms, how what proportion of that is effectively settled all agreed and how much is still subject to estimate or extrapolation, just some directional sense of.
How how how how you arrive at that being moved the Eskimo as opposed to the low end these days.
Thanks, Jonathan and Maria can fill in the numbers here, but in terms of the categories you seem to be a major announcement so far.
No the various settlements that we have announced a one last fall with the public entities.
And now the subordination parties in this latest settlement.
In addition, there's the crude.
We are sure that.
There's been no settlements with a number of private parties, where I was going to lean towards Ah well those hurdles small relative to the Belgians fleet is in the individual cases. So that's you know based on that doesn't really give you. The precise number that we disclose you know that that's including the settlement.
But you know in the writing of the best estimate what we did was to have the benefit of mail habit in those major settlements under wins are done and behind US and then in addition to that are going through the discovery process for the rest of the claims you know work deeper into the discovery process.
As we think of a better understanding of the affects of him.
And what our arguments would be we are when understanding of some of the donor arguments that you know various causes of blend because white house and that just gives a better ability to now move from the low ends to the best estimates just still assumptions in there and you know we disclose the final result could be higher or lower and were not able.
To disclose the.
I don't certainty band around the Jonathan but or hope and expectation is that by now moving from the low actually this estimate that you know we're no longer talking about Ah.
You know being on one end of the roadway we're now right down the middle of the road way and I know that investors will be probably making no some trends or are.
Having their own expectations about what that I'm supposed to be banned my big really not in a place to be able to communicate that but we'll be giving you is you know.
Just a minute or a sense of what the final outcome what looks like you know on the benefit of not only things that we've locked down but you know facts that we now better understand through the litigation process.
We don't really want to get a dog.
Maybe a couple percent yeah, I think just the only thing on Jive N. New the lots because your question is you're I think asking about which portion of that amount is a the subject I think the answer but is the subject of the separation claims settlement that we reached and that's about $1.2 billion. You know I knew that I was looking for just overall.
How much of it is.
No.
Good.
Yeah, Rich I guess it Didnt answer Jonathan's question would be the <unk> business, which was billion dollar gross amount and then you know going into the settlement villages interest for 1.2 billion. The settlement that we had a last fall which was on the order of a billion.
The claim so.
We're building of the settlement was a call after the <unk> or so of that so round numbers will be more precise number one and a half or so so yeah I I guess I would probably just go back to you know what we have recorded on the books right. Now is the total risk as the total recorded liability Jonathan a portion of that that.
1.2, approximately is associated with the separation claims payment what I would say about you know your question whats known and unknown. We took all that into consideration in order to reach the best estimate I think you know Pedro his comments earlier that you know.
The non profit we went through it that you are we're not trying to break down between all of the different types of claims payments at this point in connection of line Okay.
Okay.
Maybe just on a related topic for my follow up the equity that you say you're going to talk to a full quarter. They can you would you comment at all on your interest in using the current ATM.
Between now and then and then for the mostly white or what's the thought process behind that are waiting till you need to.
Actually pay claims.
Why not just sort of put the solution behind you.
Yeah.
One of the better reason.
Yeah.
Abates.
<unk>.
So in regards to both of those questions. I think your first question about you know thoughts about what I'll say you know approaches are tactics are tool I think we have a lot of flexibility around the tools and all options I think are available to us.
Running the gamut. It leaves we've done it before ATM et cetera. So I think we have a lot of.
I think we had a lot of option.
Options when it comes to the tools and we'll work that out as we progress closer to that point in time in which we will be issuing equity I think your your second question around you know kind of why we think Weve described before that you know the way. These processes work you know we have changed our best estimate, but that doesn't mean that cash is going out the door right now in fact.
This aggregation settlement that we announced last month really most of that was covered by insurance. So we're really going to follow that pattern of where you know when cash is actually required and that will play into our decision about the timing of the equity issuance.
Let me just put a fine let me put a fine point on it Jonathan because.
Perhaps reading so much between the launch of your question of that could be a and implication there that perhaps.
Perhaps events, probably happening within a certain certain timeframe and the reality is we just don't know what the timeframe will be for resolution of the remaining claims.
Because we said all along you know often these claims good results or settlements or they need nod results to settlement. If it goes through settlement they'll still have happened more quickly like you saw the public or goodies.
The settlement then be civilization claims, but there's no guarantee that remaining claims outstanding will be settled on a civil short timeframe and that could take much longer for those to be resolved. Then if we ultimately ended up going all the way through litigation that we would expect to be a multi year process itself.
Beagles hearing into your question Lydia well as you know.
He did by Exxon and when I go I don't do it alone. So there could be a little bit earlier, but we don't know whether there will be a little bit or a lot because we don't really know the timeframe dog. Okay fair enough that makes sense. Thanks very much for all though.
Thank you.
Thank you. Our next question comes from Julien Dumoulin Smith from Bank of America, You May go ahead.
Drilling.
Good afternoon team. Thank you very much for the time.
So if I can give it to the Silverado fire if you don't mind.
Appreciate the remarks at the outset here, but can you help frame as best you understand the liability statutes Virginian to third parties such as those potentially involved with the telecom lines indicates in and also further I. Appreciate all this is limited, but how should we think about your direct exposure shouldnt.
I've told them that you guys just alluded to about a third party, causing the fire reaffirmed and and most critically the inverse condemnation would not apply to the utility seem that at least as best I physically understand what you're describing that this wire.
Basically slightly up from below and actually touched your presumably sparked euromars sorry for long would of course, but I want to be very clear to make sure we understand the statute here.
Sure and I'm going to give you a sadly unsatisfying answer because this fire still raging you know we know very little at this point and so even what's I wont pay stubs and what legal treatment.
All would apply ultimately is still unclear I.
No. It didn't bother focusing for example, and put inverse condemnation of lives for example, and even with that whether it applies will depend upon the facts civil work to particular case ultimately will be determined by the court. So you know we'd be speculating if we would try to apply them whether somebody like universe would apply here like voice in terms of.
Liability potentially by other parties I think your understanding the picture as well what we do right now.
Oh, we shared we are.
We are aware of this you know possibility of the.
The the lashing potentially haven't gone up and Oh flown up into the.
<unk> power lines, so were above that.
Well that particular segment.
And so that you know could imply then some potential liability by the third party telecommunications carriers.
The utility could show that there were calls is like like that then they can easily be able to pursue a contribution from other responsible parties and so.
You know that certainly is a possibility here what is just way too early to draw any conclusions at all a Julien show up.
You have to leave it at that.
All right fair enough I'll ask you a little bit of an easier one here. If you don't mind I'm sure [laughter], where do you see a little your ability to your insurance as you look forward here and I'm asking this in light of continued elevated wild for activity in the state even if its admittedly not been directly tied utility matters, but rather broader environmental.
Doctors here.
Yeah, I'll start this and Maria will probably have even better detail, but I think certainly saying you saw that we were killed and truing successfully for this calendar year.
It is a tighter market than it's been in the past and other disclosures you speaking of the premiums in a mountain. We've sought recovery also indicated that the the publishing where that product is a lot higher than it was three or four years ago.
I wouldn't want to speculate on what the market will look like when we back out in the market. Yeah. I think we would expect that they would be no product available, but let's just go to when you go through every time you go to the.
Good insurance cycle Maria what's out there.
Sure. The Julian I think you know it is and it wasn't tough market. Its been tough luck. If a couple of years, we have had the ability to get the amount to.
Ask me that we wanted albeit at a higher and higher price. So that that is of course, an issue for our customers and you you may be aware that in our 2021 GRC. We've actually started to try and explore other alternatives that would help to lower the cost so funded health insurance and things like that balancing accounts so that.
If the market changes you know to the good or the bad in terms and pricing that we're not quite sure caught short nor what our customer is there an undue burden if it actually turns out to be better than we were forecasting. So I think it's just something that we continue to monitor and you know you continue to work hard to get it in it into our program at the most.
Affordable price for our customers.
Maybe one more thing I would add Julian that might be helpful is and again this is a little bit of speculation here, but at the same time I think it's important to reflect on the fire season that we've seen so far which was then you know once again historic we've got 17 and 18 more stores, but in terms of acres burn it was.
You know were 4 million acres burned across the state with over half of that haven't been due to you know lightning strikes.
Boy doesn't make here is one that I think the middle it in my prepared remarks.
Fire suppression effort has been really strong.
And you're not going to speculate a little bit here, but I cant prove a negative here, but I.
I would house with a pretty good guess that if we had had this fire season three years ago before the state has significantly increased its firefighting resources and capabilities.
We might be seeing a much different level of damage or close to state regardless of the cause of the fire, we want to see much more damage for the lightning induced Flyers and.
The utility coal suppliers, we might see more damage stemming from those as well so I would hope that sales insurance carriers and looked at the risk profile for California.
You know they I'm sure will be taken into account some of the climate change related you know weather conditions, the wins et cetera that that.
Have contributed to the large fires this year, what I would also hope that they would be looking at you know the the flipside the fire suppression affords it helps bring the list on blow down for everyone and at the same Philadelphia would be looking at yeah first of all the utilities, that's really all utility and executing on the welfare mitigation plan.
No there isn't a year older is we'll never be zero, but I think the risk is very different today than it was three years ago as we know it and we will continue to change as we continue to harden the system as we continue to use feels feels responsibly and the like.
Got it. Thank you guys I'll follow up on <unk> one here.
You bet against <unk>.
Thank you. Our next question comes from Michael Lapidus with Goldman Sachs. You May go ahead Sir.
Hey, guys. Thank you for taking my question.
I want to I had two things one is just the payment level question for the 17 and 18 ballpark I just do back of the envelope and I'm sure the queue as more and I'll hop in offline, but.
The 6.2 billion accrual you paid out about a bill six.
We have somewhere between a bill five 2 billion of insurance lapse, and you're getting around 20 fives on FERC recovery for that.
Kind of rough your the cash out of pocket is somewhere in the two and a half to 3 billion range from the 17 and 18 ballpark my kind of in the ballpark Maria.
Yeah, and that's before taxes.
Yeah, that's about that's about right now to actually go to the math a little bit.
Went through it pretty quickly, but we have we had about six into ward.
Well I would think that seems a little low to me.
If I go through the numbers.
If he is he going all the way from the beginning you're not you know if you take all of the charges, including the ones that have already been paid for the no I didn't do the idleness back here.
I'm just trying to think about cash going out from today onwards, So 6 billion, but you've already paid a bill sick.
We have built six <unk> and you have some insurance skill to collect so and I don't remember what that number is the maxus 2 billion, but I think you've already collected so.
And you're gonna only talking about the Gulf if you're thinking about the go forward, that's probably about right about 3 billion.
Okay. Thank you and the bomb as the best in the best estimate embedded into that doesn't it.
Understood.
So I had a question just about the tone in California toward utilities, which is.
One of the major publications in Northern California today put out what seeing or maybe it was last night put out what seems like a very harsh piece on one of your peers.
And it seems to have been relatively quiet coming out of Sacramento and other public officials a belt.
<unk>.
The low utility play and wildfires and wildfire mitigation and maybe that's because we're going to offer season, but can you just talk about how the how you manage the court of public opinion from here in the sense when it.
And how that impacts in kind of flows to policy makers and the coordination with policymakers.
No that that's a good question and I'll try not to take up the whole rest of the earnings call on it because it's what probably could spend a whole afternoon on it.
Oh and your prior question I'm glad you asked that I think the real question was probably in the same zone as jonathan's and looking for the closing of the numbers. So hopefully that help everybody.
I think in terms of tone and look I won't comment on the publication, you just mentioned or or or other utilities out there [noise].
But speaking.
Two comments I'll make a general comment and then a more specific comments about Edison.
The general comment is that particularly with the 2020 wildfire season, so far.
The fact that over.
For the.
<unk> burn no stem from lightning induce fires.
The issues that everybody in the population has seen around you know fire fighting and frankly, the great efforts by firefighters et cetera.
I think at some level, there's a deeper understanding that this is not just about the social the flu, but it's about this convergence of factors, including climate change, including weather conditions, including fuel on the ground when all the choke size.
Moving where homes have built that adds up to two this Ah you know risk that the state bears and trying to do something about so so bad I think brings in maybe a little different tone overall.
[laughter] all make the second comment about our utility.
No one of the things we've tried to be bought all this is a.
A few things we've done what we try to be really transparent Michael.
And so you know as we have seen issues in the system as we've gone through the 2017 in 2018 wildfire experience. You know you saw us be very transparent when we saw that it might have been issues related to our equipment that might have contributed to fires because.
Well, all I want to make sure that the public can have confidence and trust and the Edison Company, you know being forthright and Ah you know not.
Not only working hard to do.
Improve things and reduce welfare was four communities, but also being transparent about when things might happen.
The reality is we operate under a prudency standard medical suction standard because we operate the system with a million and a helpful to close 50000 square miles with you know 27% of those 50000 square miles being much fire risks territory.
The other thing we try to do is to move things at all.
Second thing has been worked really hard really hard.
Continuing to learn developer Walford mitigation plans to improve on that Washington, even before there was a concept of the WSP.
Frankly, even before we've seen the town's fire in 2017, we started the work on the glitch speak English literacy program, because we saw with the combination of the one country fires in the fall of 17, and the instability, Ben and the regulatory framework for the CP CP as he is going to be definitely like her decision we sold.
At the risk profile is very different books physically and in regulatory space and that began a first generation you know Braddock what are we thinking of how we thought about wildfire risk on our system that led to the GRC filing and we haven't stopped sounds dumb and we try to communicate with the communities everything that we're doing around Oh.
The third and final thing I'll mention is even as we focus most of the attention on this near term issue and these risk. We've also <unk> <unk> on the long term ball.
And that's why you've seen US continued the thing called about things like roughly 2045, when California needs to do to address climate change both because we're seeing the climate changes that's manifest themselves in wildfire. So it's important that they care. The welfare list, but we also have to hope to states take care of the true long term was which was doing something about climate change.
But also because you know.
Taking care of you know aggressively houseguest reduction turns out so you really need a strong utility to be a major partner with the state to have a strong roots to help you know actually scan or do you know, which is why the economy and that I think that the need for a strong utility for the long run to help the state achieve its Glenn the goals is pardon.
Fabric care as early as part of the reason to ensure that the utility can help combat to keep it healthy as part of the reason that you saw state government supported and sensors before that because for the reason that you saw unanimous approval for you know either go team. So this year. So it's.
It's really a little long winded here, but we really think a lot about this in terms of what do you do in the near term what how do we think about the long term than how we help demonstrate to the states into or public.
We want to be a pulmonary and we need to be a strong partner for the long hole here in order to make California are those the great stuff that we all enjoy living.
Got it. Thank you Pedro much appreciate it thanks, Mike Hey, Michael just a one thing because I use them I scratch had Walla page I was going through it I think dog like every other times you work at some number so yeah I think the number you're looking for is more like 3.5 to 2.7 billion and we can go over it how I did my math offline if you want that sounds great.
I have to look forward to following up Maria Thank you.
Thanks much.
And the next question comes from Steve Fleishman with Wolfe Research you May go ahead Sir.
Hey, good afternoon.
So just just one technical question on the.
The the lashing wire and then I guess, the telecom wires and electric or does it is the telecom company responsible for.
Managing and servicing their own.
Wires and your your polls or do you have to do that at all.
No in general they are responsible for managing their equipment you know it gets even more complicated here because <unk>.
You could have multiples a telco companies using the assets on their drilling pull agreements.
In some cases, they might have a space on the full decimated for them, but they can then.
You know deem that are dedicated to other telco providers do you know the transaction. So it really you know that their responsibility. It is a responsibility to maintain their physical evidence that said when we go on and inspect our facilities. You know we look for any house or just could interfere with the electrical system.
And so while we don't do the deal inspection of their total assets. If we see something that was only keep an eye out for you Eddie house or its total assets might pose to the electric system and and report those to the telco companies.
<unk>.
Okay and.
And then just one other question on on the GRC the.
How it sounds like you feel pretty good on the timing of the truck won by early next year.
Do you think there's any chance.
Settling the GRC track one like you have truck to or should we assume that's going to go through the fall.
Litigated process.
Yeah, we're we're pretty far along in a in a process now I mean, we all we have left is really the.
And Jade.
She would a proposed decision and you could have oral argument after that so you know I wont say you can never do something like that but we are pretty far along in the process in terms of track. We're on track to on the other hand, obviously, we were much earlier in the process and you know how did you had gone through a lot of the different piece parts in the proceeding when we reach the.
Settlement in principle.
And you'll wait for that to give 2021 guidance the outcome of the GRC like you've done in the past <unk>, yeah. The check one though.
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Okay. Thank you Steve <unk>, Steve will always remain open enough parties want to discuss things what are the Maria guided by this was was it for them to them.
Thanks, a lot.
Thank you. Our next question comes from Jeremy Tonet with JP Morgan you May go ahead.
Hi, good afternoon.
Hi, there switching gears here to the <unk>.
Rich fire just wondering.
If you're able to share with us it and you know you access that's reside within the city of doubly <unk> ignition point for it that is not the case.
I think that that Jeremy thanks for the question I think the short answer I will give you is that we have not filed and yes IR.
For Blue Ridge and at this point, we don't see any basis for needing to file and he is.
Got it that's very helpful. Thank you yeah.
When when thinking about potential changes to California system planning how.
How should we think about incremental capital opportunities for you I actually over the next few years, just kind of a broader question.
Yeah, No that's a great great question I'll try and keep it brief.
When we think about that I think certainly the near term things just like talked about right. So be put human needs to we foresee across the state.
For the you know 2024 to 2026 timeframe, Oh I would suspect that much of that will continue to be served by competitive generators and the states because the state has been generally you know had a preference for that there's always an opportunity for easily involvement we have shared with them.
That's just before that you know, we don't see see investing capital into traditional generation. It's just not the core business at this point, we like the generation that we do have in rate base, but we don't see that again, new capital to a new generation since we have a very vibrant for party market here and we have.
Plenty of opportunities to.
To invest capital in the a and the wire system.
All different with storage because storage could you know we'll be part so that not only the mid term procurement, but we certainly see storage being a big part of the story in California, as we go up to 20 million 2045.
And so just to remind you are probably 2045 analysis suggests that California, why you'll see a need for 80 gigawatts of new renewables and Sony Vue Awards of new storage, a double power level statewide.
Meanwhile, I would expect a lot of stores will also be done by third parties. We have seen a certainly an interesting statutes and preserving the option for some utility owned storage you've seen in our current rate case, we had filed in their provisions for not a large amount of capital.
It was some capital to go sort of said Maria I Wanna sales rose $60 million, if I remember correctly, but trust me on that 60 million art for potential utility on storage and when we see storage being a you know a more likely target for easily ownership would be where you can play a more integral role in grid operations. That's an example of that.
20 megawatts of batteries that we deployed or Mira Loma substation, a few years ago.
I too bigger picture, though as we speak about those Ah you know near and mid term needs and in the longer term energy transition the big the big capital investment opportunity a mute here is making sure we have a robust grid to be able to interconnect clean energy resources with D. A.
Increase in USIS across the economy as the economy Electrifies, unless we see load, which was been generally stagnant for the last decade increased by 60%, but its only going up to 2045. So we see a significant need for investment in the in the wire system and.
And along with potential upside opportunities in areas like the charge ready to program.
It might be other opportunities like that as a as the environment evolves.
So hope that covers a journey.
Got it really appreciate that.
Slip one more in just some.
What's your outlook for customer rates over the planning period.
Incremental recoveries authorized as expected.
Yeah. If you look at our current rate case, so the GRC and especially the check one it.
It's everything were approved which obviously that never happened, but the average monthly residential bill would go about $13 on average our care customers would go up you.
That I think it's about $8 a month.
Got it thank you very much for that.
Thank you.
And our next question comes from Ryan Levine with Citi. You May go ahead Sir.
Good afternoon.
You know that right if the blackouts in California over the last few months can you comment around I, specifically blackout related potential investment opportunities in.
In transmission and storage that that May address some of the problems of the last few months and reduced risk for future seasons.
Yeah <unk>. Thanks for the question, Brian and I think a lot of the answer in broad strokes is what you know I just shared with Jeremy.
I don't think that we have a more precise Detroit now on you know your specific piece of equipment that might help with that remember that the road heating outages were not driven by the transmission and distribution system per se they were driven by insufficiency in supply.
And so a lot of the focus therefore is on the kind of near term procurement that as she of the beautiful and the CBC approved last year show recall that they approve something like 3000 megawatts of procurement for the 2021 to 2023 timeframe.
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That was the last question.
The call back over to Mr. sales.
Josh.
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Thank you. This concludes today's conference you May go ahead and disconnect at this time.