Q4 2020 Edison International Earnings Call
Good afternoon, and welcome to the Edison International fourth quarter, 'twenty and 'twenty financial teleconference. My name is messy 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 and today's call is being recorded.
I'd now like to turn the call over to Mr. Sam <unk>, Vice President of Investor Relations. Mr. <unk> you may begin your conference.
Thank you Michelle and welcome everyone. Our speakers today are president and Chief Executive Officer, Pedro Pizarro, and Executive Vice President and Chief Financial Officer Cathy.
Also on the call and other members of the management team I would like to mention that we are doing this call with that executives and different locations. So please bear with us if you experience any technical difficulties with.
Materials supporting today's call are available at Www Dot Edison and best about call. It <unk>.
These include our form 10-K prepared remarks from Pedro and Maria and the teleconference presentation Tomorrow.
Tomorrow, we will distribute our regular business update presentation.
During this call we 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 but central sales are set forth and all that.
Filings. Please read these carefully.
The presentation includes certain outlook assumptions as well and 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.
Well, thank you Sam.
Let me start the call with our sentiments of support for the residents of Texas and all the other states that were impacted physically and financially by last week's frigid weather.
Climate change is a major part of the story there and our industry just has to continue our collective efforts on climate mitigation and adaptation.
Good day Edison International reported core earnings per share or $4.52 for 'twenty and 'twenty.
This exceeded the midpoint of our initial guidance range and is within the narrowed range, we updated and our last earnings call.
Core EPS of $4.52 was lower than $4.70, a year ago and low.
The decline was due to 44 cents of equity share dilution.
And on operational basis, excluding dilution core EPS was <unk> 26 cents higher driven by strong performance at SCE.
Maria will discuss our financial performance in detail in her remarks.
And 2020 SCE made substantial progress on its comprehensive wildfire mitigation strategy. This.
And this continues to advance one of Sce's top priorities, increasing grid resiliency to adapt to the changing climate and to protect public safety.
SCE accomplished the vast majority of its 'twenty and 'twenty program targets and in many cases exceeded those goals.
The challenges, we all face during the COVID-19 pandemic.
We have highlighted several measures of sce's progress and execution on page two of the slide deck that we issued with our earnings release.
Since the end of 2018 SCS execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure. Despite a record setting, California wildfire season last year.
For the second consecutive year, we do not believe damages from any wildfire alleged to be caused by SCE equipment will exceed insurance.
SCE has further and accelerating its wildfire mitigation efforts earlier this month the utility filed its 2021 wildfire mitigation plan update which describes how it has matured its wildfire mitigation capabilities and out license to a long term plan to further advance risk informed decision, making data management group.
Hardening and community engagement.
A prime example is the covered conductor program, which will increase the percentage of distribution overhead circuit miles covered within Sce's high fire risk areas from approximately 15% today to over 60 per cent by the end of 'twenty and 'twenty three subject to CPUC approval.
The utility continues to innovate and implement technology based solutions and options such as early fault detection for reducing ignition risks.
As described and it's 2021 W. M. P. S E estimates, 825% reduction and Ignitions in high fire risk areas by 'twenty and 'twenty, two as compared to 2020.
Assuming the same conditions as experienced in 'twenty and 'twenty.
SCE continues to improve its public safety power shutoff or P. S. P S operations with public safety being the Paramount consideration.
C uses P. S T S only when conditions warrant.
Let me underscore the need for P. S. P S. Despite the hardships it creates.
By noting that in 2019, and 2020 post PSB S patrols found at least 60 incidents and wind related damage that could have potentially cost technicians and.
In 'twenty and 'twenty, the installation of more weather stations and sexualization devices paired with the automation of existing devices.
All enabled SCE to limit P. S. P S footprints wherever possible based on risk assessments.
Leaving a 22% reduction and customer minutes of interruption.
All that said cash.
She recognizes there are opportunities to further improve the execution of P. S T S and better support its customers.
That was loud and clear and the January 19, later from Brexit and Badger and and the CPUC and community input at SCE leaders received during the four and a half hour P. S. P. S hearing on January 26.
All of this especially underscored that needs to improve Sce's communications with customers and the P. S. P. S action plan filed on February 12 includes important near term commitments to use this essential tool of last resort and a way, but shows better care for our customers.
The honest E. The state has been building and significant investments and its firefighting capabilities.
And as <unk> 'twenty 'twenty, one 'twenty two budget, the governor proposed and additional $1 billion to support a coordinated force health and fire prevention strategy and.
Maximizes technology and science based approaches to protect state lands.
This includes prioritizing fire breaks around high risk communities and grants for individual homeowners to harden their properties.
Recognizing the need to move quickly. The governor also proposed that 323 million out of that $1 billion would be for early action to start these prevention projects before the next fire season.
For fire suppression the budget adds funding to support 30 additional statewide fire crews and seven large air tankers.
And the state will continue facing and Blackhawk helicopters with seven expected to be in operation and this fire season, and another five and 2022.
These new suppression resources will help to state and move more quickly to combat wildfires before they become catastrophic.
The Governor and the California Insurance Commission also announced a plan to establish sleep white standards for home and community hardened and that will reduce wildfire risk and help make insurance available and affordable to residents and businesses.
Yeah.
Shifting to past wildfires SCE has made significant progress toward resolving pending litigation last.
Last month, SCE result, all insurance subrogation claims and the pending 2018 will see fire litigation.
And utility continues to make solid progress settling remaining individual plaintiff claims across the 2017 and 2018 wildfire and mudslide events.
And total SCE has resolved approximately two thirds of the best estimate of total losses established number.
Maria will provide an update on the equity financing needs related to these events later on the call.
Turning to regulatory actions, we welcomed the reappointment of CPUC President voucher for a six year term subject to confirmation by the Senate.
Person and Bachelors leadership has energized the commissions implementation of the state's greenhouse gas emission reduction goals.
Yesterday, the CPUC hosted and on Bonk to share ideas about affordability across many stakeholders.
Given the economic impacts of COVID-19, and this is a timely discussion and it follows on many years of SCE leadership to manage system average rate growth well below the other California utilities, which we were proud to see acknowledged by the Commission staff report and others.
The discussion reinforced many of the issues, we have rates and our pathway 2045 analysis, including that the grid investments needed to decarbonize, the economy and improved local air quality through.
Clean energy and electrification may increase the electric costs, but will actually result in greater affordability and equity.
With the average customer spending 30% less across all forms of energy and 2045 than they do today, thanks to the greater efficiency of electric technologies.
Looking ahead SCE is planning for the critical role it plays and sustainability, particularly from the unique vantage point of a wires focused business.
This will include significant capital investment opportunities to support the electrification of transportation and buildings and.
Outlined in Sce's pathway, 2045, and re imagining the great White papers.
The Governor's budget proposal also underscores this with its proposed $1 5 billion dollar comprehensive strategy to achieve zero emission vehicle goals by 2035 and 2045.
This includes infrastructure investments for and improved access to new and used zero emission vehicles.
SCE has received CPUC approval for over $800 million to support electric vehicles, including investing and electric charging infrastructure for light medium and heavy duty vehicles.
The utility launched its charge ready two program the largest light duty EV charging program by and Investor owned utility and the United States, which will support approximately 38000 light duty charging ports.
Charge ready transport Sce's program to build charging infrastructure for medium and heavy duty vehicles will go growth through 'twenty and 'twenty four eventually building charging infrastructure to power 8500 electric medium and heavy duty vehicles.
SCE has also committed to our long term goal to electrify its own vehicle fleet, including 100% of all light duty vehicles by 2030.
And the area of building electrification SCE launch new programs and 2020 to incentivize heat pump installations and expects to continue to expand these offerings going forward.
Before I conclude I would like to say that I am just very very proud of what our employees accomplished over the last year in spite of the COVID-19 pandemic.
COVID-19 has reshaped the way that all of US do business and how we interact with our customers and communities and.
And we adapted to continue delivering and essential service.
We cared for each other where they're working and the field our teller working.
We cared for our customers providing relief for those facing economic challenges and.
And we cared for communities and their safety.
Looking forward I am excited about our near and long term business opportunities.
SCE is well positioned as an electric only utility with investments highly aligned with our states and now the federal government's long term de carbonization goals.
We will continue to accelerate our wildfire mitigation efforts, while building toward and equitable clean energy future.
And that Maria will provide her financial report.
Thanks, Pedro and good afternoon, everyone.
My comments today will cover fourth quarter, 'twenty and 'twenty results, our capital expenditure and rate base forecast and an update on our financing plans for 'twenty and 'twenty one.
And as an international reported core earnings of one dollar and 19 cents per share for the fourth quarter, 'twenty and 'twenty and increase of <unk> 20 per share from the same period last year.
Full year, 'twenty and 'twenty core EPS was $4.52.
Which exceeded the midpoint of our initial guidance range and is within the narrowed range, we updated on our last earnings call.
Core EPS of $4.52 was lower than $4.70, a year ago and the decline was due to 44 cents of equity share dilution.
On an operational basis, excluding deflation and core EPS was <unk> 26 on higher driven by strong performance at SCE.
On page three you can see SCE key fourth quarter EPS drivers on the right hand side.
I'd like to highlight four items that accounted for much of the variance.
First EPS increased by 16 from related to higher revenue.
CPUC related revenue contributed 22% of this increase due to the escalation mechanism from the 2018 G. R C decision.
There was also a negative variance of 11th and primarily related to benefits captured and our tax balancing accounts.
This is offset and the income tax line with no effect on earnings.
Burke and other operating revenue had a positive variance of five <unk>.
Largely due to higher rate day.
Second O&M had a positive variance of <unk> 11 cents.
Primarily due to higher regulatory deferrals related to wildfire mitigation activities and customer uncollectable and from approval of the G. R. C track to settlement.
Third depreciation had a negative variance of seven and due to higher leap day.
Lastly, SCE EPS in the quarter was lower by seven seven because of dilution from the increase and shares outstanding primarily associated with the equity offering in May 2020.
I would now like to comment on Sce's capital expenditure and rate base growth forecast, which are shown on page four.
We continue to see opportunities to significantly grow sce's rate base, driven by investments and electric infrastructure.
The capital program reflects expenditures of $15 billion to $16 billion between 'twenty and 'twenty, one and 2023.
This represents compound annual rate base growth of seven 6% over two rate case periods at the request level.
Our total Capex forecast during this period is unchanged as we are awaiting a proposed decision and Sce's 2021 G. R. C track one.
And 2020, Sce's capital spending was $5 $5 billion, approximately $400 million higher than forecast, primarily as a result of higher fire restoration costs.
For 2021, SCE has developed and we will execute against a robust capital plan and targets key program, while maintaining flexibility in later years to adapt to levels authorized and the final G. R. C decision.
Please turn to page five.
While the commission schedule calls for a proposed decision this quarter on track one of Sce's 2021 G. R C based.
Based on the level and currently to inquiry to date from the CPUC compared to our past experience. We believe it is unlikely that SCE will receive a P. D by the end and the first quarter.
We remain hopeful that SCE will receive a P D and the second quarter.
As a reminder, the CPUC can vote out a final decision no sooner than 30 days after it issued a proposed decision.
Consistent with our prior practice, we will issue earnings guidance. After we receive a final decision on the JRC.
Page six shows a summary of the substantial progress on receiving approvals for recovery of incremental wildfire mitigation costs.
SCE expects to receive over $1 billion and cash flow is September 2022, and the utility implement CPUC approval.
This is in addition to ongoing securitization of 80 tend to deploy capital.
You may recall that last quarter, the CPUC issued a financing order authorizing SCE to securitize. The first tranche of 80 tons a day for our capital expenditures are per.
And and grid safety and resiliency plan settlement, yes.
Yesterday as the he successfully closed that securitization issuing $338 million of AAA rated recovery bonds.
The proceeds will be used to repay short term borrowings issued for 80% and before capital expenditures.
And January the CPUC approved S. T E. G. R. C track to settlement, which allows SCE to request another financing and water to securitize. The approved 80 tons a day for our capital expenditures and recover the O&M expense.
Additionally, SCE filed a wiener application for wildfire insurance premiums for the second half of 2020.
If approved SCE will recover $215 million beginning January 2022.
I would now like to provide and update on the approximately $1 billion equity issuance that we have discussed previously.
As Pedro noted SCE has been making significant progress resolving pending wildfire related litigation and thus far and settled claims that represent approximately two thirds of the best estimate that we established.
We continue to ground, our financing plan and framework that supports the investment grade rating by targeting consolidated episode of debt and the 15 to 17 per cent range.
To support this outcome, yeah, I actual issue securities with up to $1 billion and equity content and 2021 consistent with the previously identified need.
We will consider a range of options to achieve this equity content, including preferred equity internal programs and if needed our existing ATM program.
We will be flexible and our guidance specific timing and monitor market conditions to efficiently financed and me.
Beyond this year, we expect to have minimal equity needs associated with our ongoing capital program and we'll quantify these after receiving a final decision and the 2021 G. R C.
Overall, the company is well positioned to achieve the growth associated with the safety and resiliency investments being made and the grid and the longer term opportunity associated with our clean energy objectives.
That concludes my remarks.
Let's see Oh please.
Please open the line.
And for questions.
As a reminder, bureaucracy and limit yourself to one question and one follow up so everyone in line and hence the opportunity to ask crystals.
Yes, Sir if you would like to ask a question. Please press star one on your phone one moment for the first question. Please.
First question comes from Julien Dumoulin Smith from Bank of America. Your line is open Sir.
Hey, good afternoon, everyone and thanks for the time and the opportunity.
Drilling and Harlan.
Good. Thank you very much appreciate it.
And perhaps.
If I can start with the balance sheet here I'm, just curious to get a little bit of and update them. Appreciate your remarks.
But curious on how you would characterize this.
The.
The conversations with the rating agencies, and where do you stand with cushion.
I know that Gee, our CS outstanding, but if you can provide any context as to how you think about your metrics relative to what the agencies are thinking about would really appreciate any commentary here and now and again I appreciate perhaps commenting around you know, perhaps the proposed <unk>.
Filing for instance.
Sure Julien.
As you can probably imagine we are talking to the rating agencies all the time.
And we're talking to them about our operational recommendations as well as just what's going on and more generally and California.
And providing them with updates.
We have with all of you you now and where the settlements you know the landed back last year and and all of that though we've been having those sorts of conversations and as we've mentioned before we think that the equity plan that we have in place and the financing plan that we have and have had in place and announced last year is very supportive of the episode and that range that were.
Marketing and and and supportive of investment grade rating you know I'm sure you've read all of the recent report that the agencies had put out and the metrics on a look back basis are skinny, but that's why are the plans to issue equity and to move forward with that so that we can.
Support the balance sheet appropriately.
Got it I appreciate it.
And then if I could pivot over to the P. S. P. S commentary I appreciate that you guys provided and the remarks can you elaborate a little bit on the on the action plan and the expectations for response from CPUC around their inquiry.
With respect to the P. S. P. S events from from the last year here and what what should we be expecting in terms of process at a minimum.
And if anything.
Yeah, and I'll start with this and Maria and have more Kevin Payne.
And also on the line so he can add to it.
He said.
So just a process you saw the letter the person and Batra sent you monitored the Oh hearing that the PUC had where Kevin and Steve Powell and other members of the team participated.
That provided a lot of frankly, good helpful input from Oh commissioners and communities and other state agencies based on that S. E develop the action plan that has a series of steps and commitments you saw there's there are some things and there around and are likely container and work.
On and trying to minimize the impact and scope of P. S. P. S.
I would put it in the category of work that's been going on and continues right areas like AR continues to be poised sexualization and tuned to work on our continuous improvement.
Weather modeling and the like.
To just really to help too.
So the gap between.
The approach, we have which is appropriate the right approach for SCE to have of.
Notifying customers based on forecast conditions, but then the energizing and real time conditions, but the more that we can narrow the gap between the number of customers that get notified vs doesn't get the energized by having better and better forecasting and modeling and all that that helps so and so you saw some film actions around those lines, but sales.
A lot of the focus was really on how do we Ah.
You know help the SCA team better improve the communications process and communications with the.
And the emergency agencies with a government with a you.
You know community leaders with end use customers.
And so you saw you know a number of assets around that in terms of process.
There's going to be a series of meetings every couple of weeks or the next wild with Commission staff just to continue to keep them updated our SCE has taken the step of now dedicating.
From a vice President two P. S. P S.
And as a meaningful quickly is the strong leader and a Turkey issue and he is moving from the.
And the T&D business to you know over the next few months and I.
And then all of his time, along with a dedicated team on the P. S. P S improvement.
And approach.
So that's Oh, I'd say, it's somewhat informal process and then theres. The action plan more from that will be through it and formal discussions with the commission when and how it's coming along.
And chickens with them, but you know frankly are wanting to assure that the S. E T and can move and all the elements and meet its commitments and Kevin anything you would out there.
And I think you've covered it really well and Pedro the pieces of the action plan and also the process with the commission so.
Good.
Thanks, Kevin and thanks Julian.
Excellent team.
Pearce.
Okay take care.
Thank you. Your next question comes from Jonathan Arnold from vertical Research. Your line is open.
Good afternoon, guys. Thank you.
Hey, Jonathan.
Just Matt if I could ask one on the <unk>.
You've had with settling the.
Legacy wildfire claims and appreciate the.
Qualification you know in simple terms around the two third.
But if you're seeing any change and the pace of being able to move these things along and and now that you've reached the subrogation settlement with will be the kind of thing you can report sort of latest update et cetera.
And I'll give you a quick answer Maria and they have more you know.
The.
Remaining plaintiff or largely the individual plaintiffs is just by the nature of that you'll now and talking about thousands of individual cases and in many cases multiple individual plaintiffs might be represented by a common legal counsel and so you might see and our packages.
Settlement you can be done.
But it's just a more.
Okay time intensive laborious process to work through that.
And there is a more formal processes can establish on the Thomas clinics time. Most like cases are you know we're working through that.
And that we're working with individual claims and the Wuxi cases.
And so it just harder to pin down a timeframe for that Jonathan.
But.
The team has a run at it and frankly.
It's a good steady pace of progress and so you know I think from an investor perspective Youll see.
The outcome of that every quarter as we you know updates.
But then the kinds of numbers that we share with you today.
Many of them are.
Yeah, and I think that generally we have a process on Tommy Thomas kind of Guy and mudslides, where you know we are trying to move through them.
With various plaintiffs.
It's not going to be and I sort of at that point.
And point that we can pinpoint where you're exactly Jonathan but as Pedro pointed out we'll be updating that every quarter and so you'll see you'll see the progress as it happens and occurs okay. Because that's drive now and it's gonna be a line.
Alive thing effectively.
And if it very much so yes, and it's a it maybe and just to put a fine point on it don't expect a big Bang when it comes to the.
Individual plaintiffs cases, you should expect just continued measured progress because it's case by case and those cases are all very individualized and different different stories of facts and circumstances for a homeowner and this kind of area versus a business owner and that kind of area.
This is a good way of helping people track it that day.
Briefly as well thanks for the feedback that's helpful.
And just ask one other thing.
And you've obviously said that the T C P D might not come until the second quarter.
Or what sort of point the.
Delay start to affect your decision, making about spending capital and sort of throwing you off a bit as he has happened and the path.
And how how long and delay could you sort of work with.
Well.
You know, obviously, we like to know sooner rather than later, but from an operational perspective.
And what we've done with this year, which as you know what we've done in the past and the first year of a G. R season and cycle as well if you just plan. The work we're going to do the work we're gonna progressed against it and you can see and the capital plan and it's very robust in 'twenty and 'twenty, one, but we have the flexibility and the back and to adjust based on what the final decision comes out with so I think we have degrees of free.
From there and again, we don't like to get to a decision sooner rather than later, but from an operational perspective, I think we have it well and hands.
Great. Thanks, a lot.
Thanks, Jonathan.
Thank you next question comes from Steve Fleishman from Wolfe Research. Your line is open.
And it's Dave.
Hi, Good afternoon, Pedro and Maria Thank you.
Just Scott just on the comments on the G. R. C timing you mentioned.
The you know based on the CPUC question and.
Later.
Is it just a lot more questions than normal or.
Or just just the the timing of things.
Things are just any more color on that comment please yeah just.
It's really more about timing I'm.
By the way we have experienced with these cases are every three years I guess that would it be every four years. After this one and so as the PD is getting put together and as the commission staff go through the analysis. They need to do you typically see you know different pace and nature of questions as you get closer to the PD and.
We haven't really seen a lot of that yet.
Yet at this point now so that's what suggest to us that a you know a P. D is not a likely.
Likely imminent within the quarter. So this is really about you know theres just a different.
A set of questions kinds of questions that you get as you're getting down to a.
You know that that final evaluation and riding of the P. D and the staff don't seem to be quite at that point yet.
Okay.
Great now that's helpful. Thank you.
And then.
And then with respect to the equity commentary.
I think you said 1 billion of equity content. So that's I guess, if you did preferreds or some things that are not full equity content and youre kind of saying.
Focus on equity content not total dollars.
That's right and the way to think about that.
And as we said and look and the path and we actually.
And our China, you know think about it.
That's very holistically monitor market conditions, and so when we sit and how 'bout equity content. It's the equity content that we're targeting so absolutely right Steve.
Yeah, one one last question along those lines.
I'm sure you saw the Pea journey did this.
Transmission tower sale.
<unk> access to S. P a.
Is that something that you could potentially look at as well.
Yeah.
So we did see the transaction and and I'll say that.
Interesting so a team and its been now learning about it and they.
And there might be some somewhat different circumstances for S E and that we do have obviously transmission towers.
And with attachments and them already today like like did you need it.
In our case, they're part of a bit more comprehensive telecom business Edison care solutions, which is a essentially a competitor's telco inside the utility.
That not only does so so and tenant attachments, but also has managed fiber services dark fiber.
And as well as lit fiber are providing bandwidth to carriers and sell in Sce's case, there is a.
<unk> got the broader telecom business. It also operates under a little different framework I noticed that a simple their shows from.
Revenue sharing that PV and Aviall contemplates the S. E business operates under a different revenue sharing mechanism. So they're just number of you know different bells and whistles that make for a just different maturity of the business and different scope and scale. Today. So you know my the PGD transaction might not be fully.
And transferable are applicable.
Okay, great. Thanks, Thanks for thanks.
Thanks for that thank you that you might be surprised I says so much about the telecom business, but it's because I used to run it like 20 years ago. So [laughter].
Yep. Thanks, Thank you.
Thanks, a lot Steve.
Thank you. Your next question comes from Jeremy Tonet from J P. Morgan Your line is open Sir.
Hi, good afternoon.
Hi, Jeremy.
And just want to go back to slide nine for a minute there and you discussed that after the woosley our recoveries do you expect to exhaust insurance can you file for CPUC recovery of settlements or are there other kind of gating items that we should be thinking about here.
Yeah, So and if you look.
To the past is sort of an indicator our experiences and that the commission generally wants to understand sort of the quantum of the assets before they make decisions around recovery. So I think we have a little ways to go still to get a total size of the ask.
And that we would make ultimately to the CPUC honestly, you know its and before that were prudently incurred costs and we will be asking for recovery at this point based on price on on history, and prior and precedent and we can't say that that was probable and recovery, which is why we took the charge a couple of years ago.
But that's generally that the framework that their commission.
Got it that's very helpful. Thanks and.
Just thinking about you know P. S. P S discussions and just the environment and the space and the state right now just wondering if it might be able to comment and how you see overall kind of relationships political risk currently.
And the state and.
And any thoughts you can provide would be helpful.
Yeah, I'm happy to trip and on that.
Look I think the headline is that we continue to view, California as one of the most constructive states and and the country. When it comes to utility regulation right and it's both because of the backward looking and current mechanisms like the fact that we we have oh are forward looking.
Our rate cases, we have the balancing accounts, where elements like our procurement purchases and.
Energy procurement I should say.
We have decoupling right. So you have a number of elements that have been here for quite a while that make for a constructive environment.
And you also have frankly.
And looking more towards the future and stay.
<unk> been fairly aggressive in terms of wanting to push the edge of technology.
And Uh huh.
One of utilities to play a significant role in advancing the ball for the sector and for.
For the benefit of California customers, that's meant that utilities have to take on some added operational risks and managing more distributor resources and you know our peers and other states or.
And having deeper penetration of renewables are being earlier and the curve around storage and the life and.
And that has lent itself to providing an opportunity.
For you know always that that have reflected a premium.
Based on those risks that we are being asked to manage and then finally, you know looking solidly well out into the future. It's a state that is really committed to decarbonize the economy.
And so you've seen through our papers like a pathway 2045 and re mastering the grid papers that we see that.
Got the carbonization getting to net zero for the state will require a significant ramp up and renewable and other carbon free resources, along with storage and those will lead to a dramatic increase and load across the state 60 per center show a increase in order today and electrify.
So a lot of the economy and that all requires a really robust grid, you know with significant more investment and what we have in place today to make that'll happen.
So that all adds up to a good opportunity for utilities now bye.
By the way, it's also a good opportunity for the customer because as I said it might be fair remarks, we see all of that and leading ultimately to a 30% decline and the total energy costs.
Average customer house out in 2045, it may put some pressure on utility bills, but it will help bring down our overall cost for the customer and meet the state's more affordable now that's it there they're always bumps in the road and are there things that can get filled force. The wildfire experience has been a challenging winter last several years.
We've had a lot of encouragement and getting items like a beta and 54 two to help create a.
And Ah restored framework are still going through implementation of that I know, who got their share you know some discount that the utilities are carrying today relative to our peers and other states and hopefully over time as investors see that the framework is working that you know the physical risks are being mitigated and that the structure is there to help mitigate the financial.
And the rich do that'll help to you know get investors and are fully comfortable with that.
And better align you know the valley of California opportunities with a long term opportunity that we have.
One final item if there was a lot going on and it's all going on and the middle of Covid. So you know I feel for the CPUC staff and.
The a 800 or so of them have a lot on their plate.
Question, and Bachelor or as I've mentioned and the comments has done a great leadership and focusing the commission on that's clean energy future.
I think generally she's also help the commission to and journal the timely and its decisions and you saw that and you know elements like the track to success, we had recently, but theres a lot on their plate. So.
And I'm a little disappointed that we may not end up seeing a G. R. Ctrip one P D.
You know this quarter.
I know that they are on the case and a day recognize the importance of overall timely decisions and then when it comes from like P. S. P. S.
There's been some tough feedback we got.
So a lot of it frankly, it was met with it and it's a good learning opportunity and I commend, Kevin Payne and and the team at SCE for having sat there for four and a half hours and listened and you know taken note and reflected good feedback and the P. S. P. S action plan that S E filed shelf.
They will there'll be bumps in the road and any relationship but I think overall, if you look at you know.
Maybe a couple of trees, they get and the way now and then but if you look at the forest, It's a really interesting for us for the long term.
Got it that's that's very helpful, there and and maybe picking up with electrifying you know and specific to the transportation sector. There you spoke about this and the past you spoke about in your prepared remarks, just wondering if you could provide some perspective I guess for the EV outlook, you know how it looks today versus maybe at work.
A couple of years ago, when you know kind of down in the future how how big do you think this opportunity is from <unk>.
So we we started talking about this a few years ago, we had our charge ready application.
I think Oh pathways, one and 45 paper at the time was forecasting something like a need for $7 million.
Electric vehicles in California by 2030, you know at the time or shortly after I think the state is talking about a 5 million Mark you know since then you've seen the state really look at doubling down on the electric vehicles and and out there your progress like a governor Newsome executive order for zero emission vehicles and 100 per cent zero.
And vehicle sales by a by 2035 and that.
That says something right there about the growing commitment by the state and and frankly driven by growing realization that.
That is a key tool and one of the most affordable tools to get to the Carbonization you know at the end of the day.
The other angle I.
Yeah sure I'll there says.
And then there's the market right and so when we started talking about this there was the volpe, you'll remember when I when I got my first volt Ah in 2011, and the new model year and you know this is my colleagues who are driving some of the first tesla's or a whole lot of everybody's out now you're looking at a robot is reading one of the latest articles where I think over the next year, there's going to be.
And it's something like 20, or 30, new motto offerings across our auto Oems.
And it's an area where U S automakers are realizing that.
And if they don't run fast they they could lose leadership two Chinese automakers for European our automaker show you now see and things like Ford's commitment of 20, some billion dollars and investment towards Evs over the next several years seeing G M saturation to not having thrown combustion engines anymore.
And a decade or so that is a very different landscape from where we started and four or five years ago and it tells you that this is happening and it's real and I suspect like other technology innovations like you know the cause of the appointment of cell phones are folks may be surprised by how quickly that escrow if it takes off.
Got it that's very helpful. Thank you for that thanks, Tim.
Thank you next question comes from Michael Lapidus from Goldman Sachs. Your line is open Sir Hi.
And Michael Hey, Pedro and and a little bit of a housekeeping question. So capital spend for 'twenty and 'twenty came in about 500 million dollar higher than what you all had put out when and when you reported third quarter earnings or interest after third quarter earnings.
First of all what drove that four to 500 million being done just so quickly and then second of all does that all it you know is there any change and the capital spend program.
And potentially in terms of what you think about long haul transmission related spend and where do you think you're still and a five or seven year cycle, where there is theres more maintenance work on the transmission grid theres not a lot of new day, new sizable scale development there.
Well I'll go and take the first piece at least a little bit and second and I'll, let Pedro on Sunshine and then on his thoughts and long haul transmission, but and so that delta in the capital spending.
Spending between last quarter and this quarter was largely driven by wildfire and restoration costs, though you will recall that late last year. There were a number of them large fires and our service territory, particularly.
And in the northern part of our service territory around Big Creek, and so a lot of the spend that's been going on since then has been to really get all of those facilities back into service and to repair them et cetera, but that's really the driver there Michael and.
We have to go through and analysis and say you know and sort of what what in there was with otherwise going to they've been replaced or upgraded et cetera, and with incremental but that's the that's largely the capital change from last quarter.
In terms of and you know and transmission and you know with Golan and cycle. I think you know honestly that the states and planning for the future and that each of that Pedro just described in his earlier remarks, and and you know we have to look through the queso didn't do that planning and obviously a lot a lot of work going on around the need as well, but yeah and integrated resources plan and.
Integrated resource plan, and and while as if like I said and I'll, let Pedro and share his thoughts as well, but just maybe a quick soundbite Maria is that again you know you may have heard me share this before Michael from our pathway 2045 analysis, but.
And that analysis estimated that California would need to add 80 gigawatts of a boat.
Both power and a wholesale level, our renewables and 30 gigawatts of wholesale bulk power level storage by 2045. That's in addition to 30 Gigawatts of distributed generation and 10 gigawatts of distributed behind the meter storage.
But all that.
And would require something like $175 billion investment for the resource side for the and our renewables and storage side and the counterpart day outage that you would need something like $70 billion and wire side investment with most of that being for transmission, whether it's you know new lines or.
And of current lines.
Now that statewide right. So that's not all F E.
But that just gives you a sense of how big the investment need will be in order to accommodate that electrified future did he got carbon 90 day economy.
And then also remind you that under the current FERC order 1000 structure, if the Cal ISO determinants debt and existing line needs to be upgraded and the utility has a right of first refusal to do too Bob do that upgrade on its line and line said it already owns and operates if itself.
And and brand New line, that's not an extension of an existing line then that is bid out competitively and I would expect the utility to.
Seek to compete with third parties for you know for that Newbuild. So you know it's hard to quantify what the specific SCE opportunity away from older but there's clearly.
A very large pie that will need to be met across the state and I expect that SCE will certainly play a significant role and within its territory for that and when do you think we could start seeing that roll into three or four years three to five year forecast abuse like when does when do you think the southern part of the state might actually start to need it.
Yeah, that's that that's a really good question and I'm not sure and when I have a short answer for you right now Michael partly because the Cal ISO I don't think has turned the crank yet on the.
Underlying analysis, or you know what lines and and what timing.
You know my guess is that my sense is not guess my sense from the analysis is that a lot of that spend may be.
And post 'twenty 30 spend because that's when you really see the load pick up to you know and our analysis load, which has been fairly flat statewide to slightly declining from the last decade.
2030, you know and interestingly continues to be fairly flattish right. Because you have a lot of electrification lead to an island and 10 2030.
Being counterbalanced by.
And our continued distributor generation deployment as well as continued energy efficiency, but we see a big elbow a tour and you know turned into curve upswing post 2030, and that's where they stayed really picks up you know the bulk of that 60% load increase that I talked about before it's really happens mostly between 2030 and 2045 so.
That may suggest that a good chunk of the build maybe post death, but in the meantime, you know you've seen them you know our capital spend so far ours is Mario described we had a bump up from just at Creek fire restoration last year, and so I hope, we don't have to do fire restoration and like that from you know.
For any future fires, but you know we continue to say that we see and an ongoing opportunity for significant capital spend just for the core capital investment and the utility and so I think about the long haul transmission that becomes an adder that are you know certainly supports.
The long term growth for the company.
Got it. Thank you Pedro much appreciated same Maria you bet yeah. Thanks.
Thanks, Michael.
That was our last question I will now turn the call back over to Mr. <unk> for final remarks.
And thank you for joining us today and please call. If you have any follow up questions. This concludes our conference call have a good list of the day and they save you may now disconnect.