Q3 2022 Edison International Earnings Call
Good afternoon, and welcome to the Edison International third quarter 2022 financial teleconference. My name is Dexter and I'll be your operator today.
We get to the question and answer session.
A question. Please press star one on your phone today's call is being recorded I would like to now turn the call over to Mr. Sam ROM Raj Vice President of Investor Relations. Mr. <unk> you may begin your conference.
Thank you Dexter and welcome everyone.
Speakers today are president and Chief Executive Officer, Pedro Pizarro and.
And executed Vice President and Chief Financial Officer Maria <unk>.
Also on the call are other members of the management team.
Cereal supporting today's call are available at Www Dot Edison invest in Dot Com. These include our Form 10-Q prepared remarks from Pedro and Maria and the teleconference presentation 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 different results are set forth in our SEC filings. Please read these carefully.
The presentation includes certain outlook assumptions.
As well as 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 will now turn the call over to Pedro.
Thank you Sam.
Edison International reported core earnings per share of $1 48 for the third.
Third quarter and $3 49 for the first nine months of the year.
Based on our year to date performance and outlook for the remainder of the year. We are narrowing our 2022 core EPS guidance range to $4 48 to $4 68 from a prior range of $4 40 to $4 17.
We are fully committed to delivering our long term EPS growth rate target of 5% to 7% for 2025.
In my remarks, I will focus on three key messages first sce's excellent progress reducing wildfire risk.
We have updated the 2017 and 2018 wildfire and mudslide events, we serve.
Third I'll talk about the increasing alignment between Californias clean energy actions and Sce's vision to lead the transformation of the electric power industry.
SCE is making excellent progress in executing its wildfire mitigation plan.
I've mentioned before when we look across all 17000 circuit miles of distribution lines in Sce's high fire risk area or HSR eight.
Over 7000 miles are already underground and the utility's grid hardening measures are focused on the remaining approximately 10000 miles that were above ground.
SCE is rapidly deploying covered conductor.
And is on pace to complete 4300 miles or 43% of its overhead miles in egfr or <unk> by year end.
As depicted on page three SCE plans to continue hardening the grid to its next rate case cycle, which would result in about 8400 overhead miles pardon.
Additionally, SCE has continued to reduce the impact of P. S. P S.
With the acceleration of grid hardening activities on frequently impacted P. Sps circuits this year.
SCE anticipates, reducing P. S. P. S outage duration by over 44 million customer minutes of interruption, that's more than 17% compared to the last two years, assuming the same whether in field conditions.
As analysts investors rating agencies and members of the CPUC you have observed from visits to Sce's Emergency operations Center this year.
SCE has made March advancements in its wildfire mitigation and emergency preparedness capabilities.
Additionally, we continue to share extensive data on Sce's wildfire mitigation efforts on the Investor Relations website.
Turning to the 2017, and 2018 wildfire and mudslide events.
In the third quarter SCE paid about $350 million towards settlement of claims.
Driven by the significant new information obtained through the litigation process. Following the closing of the Woolsey fire statute of limitations in May.
And our thorough evaluation of such information.
The utility increase the best estimate of total losses by $880 million to a total of $8 8 billion.
As summarized on page four.
I would like to share with you some additional information and background on the reasons for this large estimate revision.
Claims resolution is a long and challenging process.
And we really appreciate your patience as SCE rewards to it in a prudent manner.
Which will ultimately support the utility's strong cost recovery applications.
With the statute of limitations for Wolfgang individuals' paint that's behind us.
We now know the actual number of plaintiffs bringing claims in connection with that event.
And we have obtained important additional information on the nature of the claims for many of these remaining plaintiffs, though still not for all of them.
To give you more visibility into the process.
We now have more information regarding the type of claim a plaintiff has for example, whether a plaintiff has a claim for smoke and ash damage or damaged property or entire property loss or for a business.
Based on now having a defined number of claimants.
More clarity on the nature of their respective claims.
The reserve was adjusted to reflect our experience to date settling similar types of claims including higher than expected costs to settle several types of those claims.
The continued progress settling claims enables us to move further along and resolving these historical 2017 and 2018 events.
I want to be clear that we still expect SCE to filed the application for TTM cost recovery by late 2023 and to seek full CPUC cost recovery of claims statements. Excluding of course amounts recoverable from insurance or for core forgone under the agreement with the safety enforcement Division.
I will also note that our financial assumptions for 2025 and beyond do not factor in any potential upside from this cost recovery applications.
My final comments focus on California's clean energy auctions, and Edison international efficient to lead the electric utility industry through the clean energy transition.
In August the California Air Resources Board or carb.
Our proved the rule requiring 100% of new cars sold in California to be zero emission vehicles by 2035.
The regulation codifies, the light duty vehicle goals set out in an executive order earlier this year.
In September carb voted to ban the sale of new gas furnaces and water heaters beginning in 2030.
This built on the Cpuc's unanimous decision a week earlier, who eliminate subsidies for new natural gas hookups, beginning July 2023.
At the federal level. The administration is proceeding with multiple implementation of actions for the bipartisan infrastructure Bill the infrastructure in place should reduction act and the chips at.
Just this week the U S EPA announced the first 960 point $965 million tranche of funding for the Electric School bus program.
Authorized by the infrastructure built with about $35 million supporting school districts in Sce's area.
We are pleased to see this state and federal support for electrification, which is also consistent with our vision laid out in our pathway 2045 White paper.
SCE is a leader in electrification with the country's largest suite of transportation electrification programs led by an investor owned utility.
Each benefit FTE in a differentiated manner is.
Electric vehicle adoption continues to accelerate here in California over the last three months <unk> accounted for roughly 20% of new car sales in California.
Sce's service area has about 400000 of the 3 million Evs in the country.
EV charging accounts for over two and a half million megawatt hours or about 3% of Sce's projected 2022 retail sales.
However by 2045, this could grow to about 50 million megawatt hours.
Meanwhile, we are awaiting CPUC review of Sce's $677 million building electrification application.
Which will help catalyze this market in tandem with California's plans to include around $1 billion in state budgets over the next five years.
We are excited about working in partnership with state and federal governments and with other stakeholders, including the communities we serve to advance policies that rapidly cut greenhouse gas emissions.
With that Maria will provide her financial report.
Thanks, Pedro and good afternoon, and my comments today I will highlight that we had strong third quarter itself and have narrowed our 2022 EPS guidance range to $4 48 to $4 68 times.
Before I move to that there are three additional takeaways for today's call first we remain committed to delivering on our 5% to 7% growth target through 2025.
Second our near term maturities are manageable.
Finally, sce's current operational excellence program, which we call catalyst is off to a strong start and we have high expectations for the program.
Let's move to third quarter results as shown on page five Edison.
Edison International reported core earnings of $1 48 per share.
Recall that in the third quarter 2021, SCE received its 2021 <unk> final decision and recorded a 35 central at.
This resulted in an unfavorable year over year comparison for this quarter.
Okay.
All key variances.
These earnings were driven by an increase in CPUC related revenue in 2022 due to the GIC escalation mechanism.
And previously unrecognized return related to the customer service Rep platform project final decision.
Moving to page six Sce's capital forecast has been updated slightly primarily to reflect the timing of the spending related to the utility owned storage project.
The project is now expected to be online before summer 2023, and consequently, some of the capital spending has shifted to 2023.
As shown on page seven our capital forecast continues to result in projected rate base growth of 7% to 9% from 2021 to 2025.
This forecast incorporates sce's current view of their quest to be made in the 2025 JRC and other applications.
With respect to 'twenty guidance as shown on page eight we are narrowing our 2022 core EPS guidance range to $4 48 to $4 68 from $4 40 to $4 70.
Based on our year to date performance and outlook for the rest of the year. We are confident we will deliver results within this narrowed range.
I would now like to provide a brief update on our 2022 financing plan as outlined on page nine we continue to expect to refinance the last $300 million of parent debt maturing this year with new debt.
Recall that we completed a $400 million refinancing in August combined these will complete the refinancing of $700 million of parent debt.
On the equity side, we expect that internal programs will generate about $100 million of our 2022 need a $300 million to $400 million of equity content.
In April we entered into a $600 million term loan maturing in April 2023, which provides execution timing flexibility for the equity content, we identified in our original guidance.
If we defer into 2023, we will incorporate any remaining amount into the 2023 <unk> financing plan.
All we will share our 2023 financing plan on our Q4 earnings call.
Turning to the current interest rate environment I'd like to frame the companys interest rate exposure that factors into our 2025 EPS guidance and address how we plan to mitigate the impact from higher interest rates.
Page 10 shows Edison debt maturities over the next five years.
There are three categories to consider.
The first category is the debt that funds 2017, and 18 wildfire and mudslide slide claims resolution.
George you are inconsistent that SCE plans to apply for full cost recovery of eligible losses.
Sce's cost recovery application will also include the interest on the debt that funds the claims payments.
None of this potential upside is built into our financial forecast.
The second categories SCE operational debt the interest rate.
That exposure is minimal as the updated the estimated cost of debt and preferred in September as part of our 2023 cost of capital allocation.
The third categories E. I ex parent debt. We are currently forecasting the incremental cost of debt at approximately six 1% to the extent rates go higher over the next several years, we have headwinds to manage.
Across the organization, we are always looking for operational efficiencies underpinned by a continuous improvement mindset.
Over multiple rate case cycles. The utility has a distinguished track record of implementing operational excellence initiatives focused on enterprise wide efforts to improve performance in safety reliability portability customer experience and quality.
This is also enabled SCE to have the lowest system average rate among California ious.
In the current program catalyst the portfolio includes over 600 employee driven ideas with capital efficiency and O&M benefits.
Ideas on Sce's operations and major themes include work planning procurement and technology as shown on page 11.
The expected benefits should progressively increase as we accelerate implementation through 2024 further benefiting affordability for sce's customers.
Additionally, we evaluate one off opportunities for instance, we have been evaluating our real estate portfolio for efficiencies, reducing our footprint and managing these costs will benefit customers in the longer term.
We have high expectations for the catalyst program and the ability to deliver value for customers. We expect to identify additional opportunities in the core areas of safety reliability affordability and quality as part of a multi year program.
We look forward to sharing success stories from the frontline as we go along.
Moving to page 12, we have provided you with our long term EPS guidance rooted in a significant investment opportunities aligned with our objectives of decarbonization and electrification.
In this regard I will emphasize two key points.
We have incorporated the current interest rate environment and updated other assumptions.
Second we have identified tailwind and headwind may drive variability around these eight ranges and provided sensitivities where applicable.
As you can see from individual details on the page, we believe that the combination of drivers and strong execution will deliver the 5% to 7% growth.
Let me highlight a few areas one is operational their experiences which include the catalyst work that I've just described among other items.
Also I would like to point out that embedded in our guidance as Sce's current ROE of 10, 3%.
In the 2023 preceding SCE has requested an ROE of 10, five 3%, which is strongly supported by Sce's analysis and the current interest rate environment.
The 2023 preceding also includes resetting the benchmark for the cost of capital mechanism to about four 4%.
If the bonds interest rates exceed the 100 basis point dead band the mechanism would trigger which in turn would resolve and updating the cost of debt and adjusting the ROE starting with the following year.
For sensitivity analysis, we expect each 10 basis points of ROE.
Changes EPS by about five and 2025.
Additionally, the range around the parent expense we've shown you in the past also incorporates a range of equity content needs.
Up to $250 million per year on average and the amounts will vary with rate base growth.
To conclude we are reiterating our 5% to 7% EPS growth rate guidance from 2021 through 2025, My management team and I are fully committed to delivering on this target.
That concludes my remarks, Sam <unk>.
Dexter Please open the call for questions as a reminder.
Texas do you to limit yourself to one question and one follow up so everyone. In line has the opportunity to ask questions.
If you'd like to ask a question. Please press star one on your phone one minute for the first question. Please.
Our first question comes from sharp for rubber Guggenheim Partners. Your line is open.
Hey, guys good afternoon.
Oh sure sure.
Cause you I wanted to just start off.
On the legacy claims disclosures, obviously, the estimates going up to 8.8, what are you currently embedding for financing needs associated with the increase in the overall liability and as you guys are reiterating the cost recovery process could be an upside to the current financial plan I guess, what's a good way of looking at the <unk>.
Potential range of scenarios and Alan when you would disclose any potential benefits.
Let me start with the last part of your question sure then turn to Maria for the financing fees, but just to reiterate some of my comments.
We want to be Crystal clear that we plan to and expect to have FTE recover full cost recovery.
Other than for the amounts that are already being expected to be recovered from for our core exclude R&D FCB settlement.
We as you've noted have not taken any sort of regulatory outcome for those so.
We'll leave it to investors too.
Develop your own expectations, but certainly we expect that we'll have a very strong case for cost recovery won't go through the regulatory process, we cannot guarantee results under the GAAP precedent of the San Diego gas and electric decision, where don't feel like we're able under GAAP to claim a regulatory asset, but we think we're going to have a strong.
Keys for prudency and sell.
Any recovery amounts are upside relative to the base numbers. We provided you where you want to talk about the financing assumptions.
Sure. So shar just to reiterate we don't have anything built into our 5% to 7% EPS CAGR through 2025 related to recovery on this but rather we've actually embedded all of the liability beyond the insurance recovery et cetera that we have we've embedded that in basically the SCE costs excluded from authorized so that gives them.
There.
We've updated the drag includes the update to the revision to the liabilities that we did this quarter and we've assumed about a five 3% cost of financing, which corresponds to sort of where the forward curve looks today and.
And we're assuming sort of a five year tenor on there that we will of course be as efficient as possible as we go out and finance it.
So as the market research.
Reasserts itself into shorter.
Shorter term debt looking cheaper we might decide to do some of that as well, but right now that's what we're embedding one being five year tenure is based on our current firm forward curve.
Got it and then just on one last thing on the financing side, you know could you delay beyond 'twenty three and obviously you guys have some generating assets.
And in rate base, you know one of your peers is obviously engage in a process of split and sell equity for efficient financing.
Could you envision something very similar or not.
You have a tick a little bit over four gigs.
Yeah. So I'd say you know as part of the 5% to 7% CAGR, we're assuming that we execute on our financing plans I'll say in the normal course, so what we announced earlier this year, but we just created additional runway to push that off into next year, we're always looking at opportunities I think.
Obviously, we'll be tracking the developments.
That or what's happening in other parts of the states looking at the regulatory outcomes et cetera. We're also looking at other opportunities. We're always looking through our portfolio for assets that can provide a more efficient form of financing, but every company has a different portfolio. So we'll have to just keep looking.
Perfect Fantastic guys I'll jump back in the queue. Thank you so much.
Thanks sure.
Our next question comes from Greg Excuse me, Steve Fleishman Wolfe Research your line is open.
Hi, good afternoon.
So I think just going to the claims increase sorry. Thank.
Your percent resolved actually went down.
And so could you just explain is that just because you are now assuming just a bigger total amount.
Yes that does.
<unk> Steve.
Yeah Okay.
It was all about 350 million claims this quarter. So we're still making progress on the claims but it's just a map of the increase versus the resolutions okay.
Is there any other statue of limitations left two pit.
That you have it yet.
No there is knowledge.
Okay.
And just in terms of just the.
So how are the rating agencies treating.
The claims here.
Is there any risk of more equity needed to support.
The further increase in claims.
So the rating agencies typically treat or we've actually spent the dollars yet we've just reported the reserve or the liability they treat that as either actual debt, we refinanced it or imputed debt, if we havent yet financed it so that is.
Part of it.
The calculation so it'll be embedded we do not need to change our financing plan to address this we've been as you know quite.
Interested in having our metrics improve until we've built up a little cushion. This is this is leading to the cushion of it over the next several years now.
Okay.
And I mean is this might be a statement that they are the obvious but kind of this this just seems kind of like a bit maddening.
What's happening here in terms of this keep increasing and then just kind of in a wait and wait and wait.
For recovery is there any.
Is there anything else that can be done or any way to kind of further accelerate there. So it's just kind of not.
Not just doesn't continue as it is.
For several years until we get an answer.
On any recovery or Curt could you just is there any other options the company can pursue to move.
Move this quicker.
Yeah, Steve I appreciate the question and I know, it's one on a lot of Investor minds we.
We have all hands on deck.
On this.
And the reality is that we passed a major milestone in terms of information content with the closing of the we'll see statute of limitations period.
As I said in my prepared remarks, we now actually know the number of claimants, which is not something that we knew until we were able to get clawed back closer dates and be able to evaluate the data.
We said all along that you know we.
Work hard to make sure we are providing investors.
Best estimate under GAAP, but we recognize that there's things that can change our best estimate as we proceed along.
I am not aware of something you know that magic tool that we could use to somehow accelerate this although then where our legal team is working expeditiously with the thousands of remaining plaintiffs.
To get through that process.
As you may recall from prior quarters, we have worked successfully to set up processes or having that be a expedited as possible with support from the respective courts.
And so we will continue at it I know, there's some element of.
Frustration with this for all of us, but it is the reality of having this got a little mouse litigation case with thousands of individual claims are still remaining in the balance sheet.
And Steve maybe I'll just add one more thing we do plant we do plan on filing for our first application work for recovery by late 2023 through the change in the reserve has not impacted that schedule.
And just one more clarification on that filing of the could you give us some sense.
Roughly of the.
Kind of a mouth that's available for recovery.
How much that filing would capture as a percent of that is it half of it is it.
90% of it is it 20% of it.
Yeah, Steve I think because we are still in the middle of the settlement process in the litigation process, we probably don't want to break it out in too much detail, but obviously this is a substantial amount.
Okay. Thank you.
But to be clear Maria.
Helping our department misunderstanding, Steve Steve We plan to request for recovery.
Of all allowable amounts so the only amount that we will not be asking for recovery for are the amounts that we recovered already through insurance the amount. So we'll recover from FERC, we expect to recover from FERC and the amounts that we.
We agreed in the settlement with the safety enforcement division to exclude from cost recovery.
So that leaves the vast bulk of the reserve is.
We are planning to go seek full recovery of all of that goodness filing in late 'twenty three.
Between the combined filing so again remember this filing in 2023 will be for the 2017 events. The TK M events, and then that will follow later with a filing for the 2018 events. When 18 happened a year. After 2017, so it's natural that that those would not landed the finish line at the same time.
And I think what Maria was referring to is we have not broken out for investors what portion.
Is P. A M versus what portion is we'll see.
We've shown you a combined number.
We are in active litigation and that's just.
You can always finding the balance point here between providing sufficient information for our investors while recognizing we're in active litigation, so making sure that we're not providing excess of information that could end up impairing our ability to defend our customers in the litigation process.
Okay. Thank you.
Our next question comes from Greg <unk> UBS.
Your line is open.
Yeah. Thanks for taking my question.
Hi, Greg Hey.
Hey.
I think Maria May made a comment about the real estate.
Portfolio or management oven and an optimization there.
What were you referring to.
So Greg I think that that.
Real estate portfolio optimization is really about reducing the size of our footprint like many companies.
Returning to the office or have returned to the office in a different mode. There. We're looking at places to consolidate and reduce our real estate footprint I'd say that has the biggest impact on customer costs over time, as we get more efficient with the use of our facilities.
Okay. Thank you.
Thanks, Alright.
Our next question comes from Jeremy Tonet JP Morgan Your line is open.
I'll turn Jeremy.
Hey, good afternoon.
Cycling on for Jeremy, but thanks for the time today.
Just wanted to start on the operational variances I think first and foremost at 85 cents.
Parent and other.
It was unchanged from <unk> curious if you were already embedding.
Current interest rate assumptions in there or if there kind of other offsets you've adjusted over the quarter here.
Yeah. So we did update the financing assumptions there. So now at the parent company. We are assuming that the embedded cost is about six 1% like the rest of the company at the parent we have opportunities for both operational and performance efficiencies and so we're targeting some of those to help.
Offset the increase in rates there was a blend of things that have happened this quarter.
Okay got it understood.
I guess at a high level on these variances are.
These recurring or I guess thinking about that walk you mentioned 2020, but then the new cherish recycle them 25, do they reset and twenty-five whatever you've accomplished in 'twenty four.
It's a variety so some things will certainly we've account will accomplish some efficiencies over the course of the next few years and that will reset in the 2025 GIC. There's also things where you get misaligned over the course of the JRC and so when we bring the spend back in line with authorized or maybe vice versa authorized back in line.
The spend we'd actually see a reduction of maybe some drag that we're that we've been experiencing so I think across the different variances, there's just a variety of different inputs.
Inputs and sell other things in that line a F UGC.
We haven't.
Operational efficiencies, we have some other things, where we'll have a catch up with the G. R. C. So I think it's a number of things.
Got it that's really helpful. Maybe I'll just squeeze in one last one any any rough breakdown on what the sort of ongoing or versus the resets.
You know, it's it changes from year to year, because the other thing that impacts that line item is also the timing of regulatory approvals. So you saw that earlier. This year, we had highlighted getting an approval on the customer service platform project and so that was a big timing.
The difference potentially between this year next year, we've gotten a final decision now and so it's in 2022, you'll see some of those things over the course of the next few years the exact timing of when they hit does is impacted by when we filed the application as well so it's a little bit extra year to year.
Thanks.
Our next question comes from Nick Campanella Credit Suisse. Your line is open.
Hey, Thanks for taking my Hey, Thanks for taking my question.
I just wanted to ask kind of you know when you think about the capital.
That needs to be deployed for your de Carbonization plan covered conductor plans and then also the just the fact that fuel lines have come up and we're in just a greater inflationary environment here and then you kind of layer on the.
The recovery of the of the wildfires.
Overall confidence level, and just being able to kind of maintain.
Customer rates, where they are and kind of execute on this plan.
Yeah, let me start with that one.
And it's a great question.
So let.
Let me started the and this is where the view that we have a pathway 2045 is so important because we need to remember that this de carbonization pathway. Fortunately is one that we believe were lower customers total energy costs, there will be upward pressure over the next couple of decades on electric rates as we make the inverse.
Once that are needed.
You know there too to Decarbonize to electrify a lot of the economy Dolby customer site investments that they will need to be making in end use technologies that we're seeing the support from things like the inflation reduction act so helpful.
The punch line or one of the Punchlines from pathway 2045 was that because of the greater efficiency of your liquid technologies. We expect the average customer in 2045 to be spending one third less than they do today on their total energy Bill. That's also why if you see the business update that we'll publish tomorrow and there's some old here. The one that we did last quarter.
We have started including in there a chart that shows you the share of wallet of our customers compared to customers in other states.
What's your wallet, it's going across all energy usage, because you really need to look at this as not just electric but the entire pie of electric plus natural gas plus gasoline, that's what ultimately impacts the wallet and that youre going to have some realignments in spending going from gasoline and gas storage electric. So that's why you can't just be looking at the electric.
Side alone and you can look at the total picture. So that's the long term view in the short term Bill I think the work that Maria mentioned around catalyst builds on the work that SCE has been doing for over a decade and looking at how we control the parts that we can control in our cost structures.
To minimize rate impacts due like we make more room for the capital that's needed.
Every dollar that you save on O&M can save around okay, I'll allow us to invest around $7 in capital, while keeping rates constant and so.
And then final data point I'll give you there is that we're proud of the record there because it's led to sce's rate being significantly lower than those of our electric rates of <unk> in San Diego gas and electric so we've been working on this for a while we'll continue to work at it but I think it's a combination of working on a near term things, we can control and.
And also communicating their long term view that these electric side items are important to not only decarbonize, but to lower total energy cost for the customer Maria anything you would add there.
Yeah, maybe Nick just maybe one more thing I think Pedro is really focused both on the long term and the near term and recognizing that you know there are things that we want to work on over the near term to help bridge to that longer term I think it's really interesting too from a commission perspective that there they recognize the need for affordability. They recognize the work that people need to do and.
Our recent cost of capital proposed decision and alternate proposed decision you know a lot of the intervenors actually focused a lot on affordability as the reason why the trigger mechanism should be permitted to trigger and when the P. D and the a P. D came out the commission recognized that is allowed to trigger that rates would actually go down things are the weak dollar would be refunded you cut.
<unk>, but they also recognize that if you don't set the ROE at an appropriate level that reflects the utilities risk it.
It'll just make it that much harder to attract capital. So I think that youre seeing a balanced approach to affordability in California.
Okay. That's helpful. Thanks for the context, there and you know.
Lee noted the strong confidence in the long term outlook.
And the opportunities youre kind of searching for it.
Over the five to seven or you're working on to deliver this five to seven or eight.
You narrowed the 'twenty two midpoint, just how do we kind of think about 23 in the context of the five to seven range and just any drivers that are explicit into the 'twenty three that are known and knowable today. Thanks.
So, we'll obviously give our guidance on our on our 2020 guidance on our Q4 call and we've said before five years to 7% from the midpoint of our 2021 guidance through 2025. There are some nonlinear years in there you can imagine, but we are focused on delivering that value over the longer term.
Yeah.
Thank you.
Thanks.
Our next question comes from Julien Dumoulin Smith Bank of America. Your line is open.
Oh, Hey, good afternoon, and thanks again for the time I appreciate it hey, Thank you. So maybe just stepping in where we're Nick left off here just to make sure I heard this right as you think about 'twenty three relative to the course of the outlook through 'twenty five is it fair to say that there's sort of anomaly near element to get.
To that five to seven I E nearer term pressures with respect to the refinancings et cetera, but ultimately between the cost savings that you've identified and latitude on timing of equity.
That you can get to that 25 outlook.
And then kind of a non linear way.
Yeah, I think when I was speaking with Nick I did mention that it was not.
The 22, and we expect that because as you move through time, you're building up.
More efficiencies and the like obviously as we're moving through time, we're able to hit.
Leaning in our programs even more effectively so I think that that is true. There is also as I mentioned.
When I was speaking to someone earlier on the call.
You also have regulatory proceedings that we are very very focused on so that we can deliver on those decisions at the appropriate time as well and so that is part of the next to Julien. So I think it definitely is all part of the mix of getting to that 5% to 7% EPS CAGR by 2025.
Excellent and then just to clarify this is going back to Rich's question on the 85 to 95 bought by 'twenty five here, but can you elaborate a little bit on the lower total equity content issue does that basically pushing out the timeline into as you know.
26, plus.
The total equity or is there a way to actually eliminate equity from the plan altogether I just want to clarify because you you alluded before to multiple moving pieces and how you get there although in the slide you specifically called this one out.
Yeah, so in that range for a parent and other you know because that's where we're at and we're basically incorporating all of the dilution obviously the lower ends of the capital range, we would need less equity that's been part of the I mean, if you go back to when we first started to talk about the plan through 2025, we talked about $250 million per year on average.
But that's you know up that you get at the higher end of that range, if you're at the higher end of the capital range. So that that's what that variability is.
As well as <unk>.
Various operational variances too.
Right, but the core point, there being that you could actually structurally bring down equity content potentially depending what happens.
Yep.
Excellent. Thank you.
Thanks Julie.
That was our last question I will now turn the call back to Mr. Sam Robb Raj.
Well. Thank you for joining US today. This concludes our conference call have a good rest of the day and stay safe you may now disconnect.
Okay.