Q4 2023 Edison International Earnings Call

Good afternoon, and welcome to the Edison International fourth quarter 2023 financial teleconference. My name is Sheila.

Sheila: My name is Sheila, and I will be your operator. Thank you for your questions and answers. Thank you, Sheila, and welcome, everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Rigatti. Also on the call are other members of the management team. Materials supporting today's call are available at www.EdisonInvestor.com.

Speaker Change: Your operator today.

Speaker Change: Get to the question and answer session.

Speaker Change: Had a question press star one on your phone.

Speaker Change: Call is being recorded I would now.

Speaker Change: Like to turn the call over to Mr. Sam <unk>.

Sam: Vice President of Investor Relations Mr. Ron.

Sam: And your conference.

Sam: Thank you Sheila and welcome everyone our speakers today.

Sam: President and Chief Executive Officer, Pedro Pizarro, and Executive Vice President and Chief Financial Officer, Larry Everybody also on the call are other members of the management team.

Speaker Change: Materials supporting today's call are available at Www Dot Edison Investor Dot Com. These include our Form 10-K.

Sam Ramraj: These include a Form 10-K, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute a regular Business Update presentation. During this call, we'll make forward-looking statements about the outlook for Edison International and its subsidiaries, but actual results could differ materially from current expectations.

Speaker Change: Prepared remarks from Pedro and Maria and the teleconference presentation Tomorrow, we will distribute our regular business update presentation.

Speaker Change: 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.

Sam Ramraj: 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 reconciliation of non-gap measures to the nearest gap 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. Well, thank you, Sam. And good afternoon, everyone.

Speaker Change: Important factors that could cause different yourselves set forth in our SEC filings. Please read these carefully.

Speaker Change: The presentation includes certain outlook assumptions as well as a reconciliation of non-GAAP measures.

Speaker Change: US GAAP measure.

Speaker Change: 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.

Pedro J. Pizarro: Well, thank you Sam and good afternoon, everyone and thanks for joining us.

Pedro J. Pizarro: Thanks for joining us. I am pleased to report that Edison International's core EPS for 2023 was $4.76, which was above the midpoint of our guidance range, despite the pending SEMA decision shifting into 2024. This strong performance demonstrates our ability to manage the business and extends our track record of meeting annual EPS guidance over the last two decades, as shown on page three. Today, we are introducing 2024 EPS guidance of $4.75 to $5.05. This range incorporates a planned investment in O&M for reliability-focused activities and redeploys savings from prior years into operational excellence initiatives. The spending will benefit customers and, therefore, shareholders in the long run. I also reaffirm our strong confidence we have in our long-term EPS growth targets of 5 to 7% for 2021 to 2025 and also 2025 to 2028. Maria will discuss her financial performance and outlook later on in the call.

Pedro J. Pizarro: I am pleased to report that Edison International core EPS for 2023 was $4 76, which was above the midpoint of our guidance range. Despite the pending see my decision shifting into 2020 for.

Pedro J. Pizarro: This strong performance demonstrates our ability to manage the business that extends our track record of meeting annual EPS guidance over the last two decades as shown on page three today.

Pedro J. Pizarro: Today, we are introducing 2024 EPS guidance of $4.75 to $5.05. This range incorporates a planned investment in O&M poor reliability focused activities and redeploy savings from prior years into operational excellence initiatives.

This spending will benefit customers and therefore, our shareholders in the long run.

Pedro J. Pizarro: I also reaffirm our strong confidence we have in our long term EPS growth targets of 5% to 7% for 2021 to 2025 and also 20, 25% to 2028.

Pedro J. Pizarro: Maria will discuss our financial performance and outlook later on the call.

Pedro J. Pizarro: Page four shows our accomplishments in 2023. First, we once again delivered on our annual EPS guidance. Second, SCE exceeded its wildfire mitigation plan target to install 1,100 circuit miles of covered conductor, bringing the total to more than 580 in just five years. We are proud of this progress, which, combined with enhanced vegetation management, asset inspections, and other programs, has significantly reduced the need for public safety power shutoffs. Incorporating this progress into the independent wildfire risk model managed by Moody's RMS, you can see on page 5 that SCE has achieved an 85 to 88 percent risk reduction as compared to pre-2018 levels. Third, SCE filed its cost recovery application for the TKM events, requesting $2.4 billion.

Maria: Page four shows our accomplishments in 2023.

Speaker Change: First we once again delivered on our annual EPS guidance.

Speaker Change: Second SCE exceeded its wildfire mitigation plan target to install 1100 circuit miles of covered conductor.

Speaker Change: The total to more than 50 580 in just five years.

Speaker Change: We are proud of this progress, which combined with enhanced vegetation management asset inspections and other programs has significantly reduced the need for public safety power shut offs.

Speaker Change: Incorporating this progress into the independent wildfire risk model managed by Moody's RMS you can see on page five that SCE has achieved 85% to 88% risk reduction as compared to pre 2018 levels.

Speaker Change: Third SCE filed its cost recovery application for the Teekay Yummy best requesting a $2 $4 billion.

Pedro J. Pizarro: SCE provided a compelling case that it prudently designed, managed, and operated its equipment and that the associated costs were reasonably incurred. Lastly, we raised our annual dividend by 5.8%, reflecting the board and management's continued confidence and commitment to delivering on our EPS growth target. Our dividend yield is in excess of 4% and remains a key component of our total return proposition. This marks the 20th consecutive annual increase in Edison International's dividends.

Speaker Change: You provided a compelling case that it prudently the signed managed and operated its equipment.

Speaker Change: The associated costs, we're reasonably on Kurt.

Speaker Change: Lastly, we raised our annual dividend by five 8%, reflecting the board and management's continued confidence and commitment to delivering on our EPS growth targets.

Speaker Change: Our dividend yield is in excess of 4% and remains a key component of our total return proposition.

Speaker Change: This marked the 20th consecutive annual increase in Edison International's dividend.

Pedro J. Pizarro: Page 6 provides an update on the 2017 and 2018 wildfire resolution and our approach for 2024. I would like to emphasize three takeaways. First, SCE continues to make solid progress, and overall claims are settling in line with expectations. SCE revised the best estimate of total losses upward by $65 million, with the majority of this based on a single settlement.

Speaker Change: Page six provides an update on the 2017 and 2018 wildfire resolution at our approach for 2024.

Speaker Change: I would like to emphasize three takeaways first SCE continues to make solid progress and overall claims are settling in line with expectations.

Speaker Change: SCE revised the best estimate of total losses upward by $65 million with the majority of this based on a single settlement.

Pedro J. Pizarro: The deadline in the Wolsey Settlement Protocol to provide complete claims packages was yesterday, and SCE is now evaluating the response. Second, the utility targets resolving more than 90% of WOLSI claims and filing the cost recovery application in Q3. Third, CPUC President Reynolds issued the scoping memo earlier this month for the TKM proceeding, which largely adopts SCE's framing of the issues. We are encouraged by this ruling because the issues will be handled in a single phase, allowing for a final decision as soon as Q1 of 2025. Also, the schedule provides an opportunity for parties to submit a settlement agreement.

Speaker Change: The deadline into Wuxi settlement protocol to provide complete claims packages was yesterday and she is now evaluating the responses.

Speaker Change: Second the utility targets resolving more than 90% of all she claims and filing the cost recovery application in Q3.

Speaker Change: Third CPUC President Reynolds issue, a scoping memo earlier this month for the Teekay M proceedings, which largely adopt SCE framing of the issues.

Speaker Change: We are encouraged by this ruling because the issues will be handled in a single phase, allowing for a final decision as soon as Q1 of 2025.

Speaker Change: Also the schedule provides an opportunity for parties to submit a settlement agreement.

Pedro J. Pizarro: I would like to remind you that our financial assumptions for 2025 and beyond do not factor in cost recovery applications, which would represent substantial value for the company and SEA's customers. Page 7 summarizes the key management focus areas for 2024. On the wildfire mitigation front, SCE plans to install an additional 1,050 miles of covered conductor in 2024, after which this program will start to ramp down.

Speaker Change: I would like to remind you that our financial assumptions for 2025 and beyond do not factor in the cost recovery applications, which would represent substantial value for the company and SaaS customers.

Speaker Change: Page seven summarizes the key management focus areas for 2024.

Speaker Change: On the wildfire mitigation front as he plans to install an additional 1050 miles of covered conductor in 2024.

Speaker Change: After which this program will starts to ramp down.

Pedro J. Pizarro: By the end of next year, SCE will be approaching a significant milestone, 90% hardening of its total distribution lines and its high fire risk area. You can see this on page 8. Also, SCE will continue its GRC advocacy for funding critical investments that will enable efficient electrification and the state's clean energy transition. I want to emphasize that distribution grid investment accounts for more than 85% of SCE's capital plan, and these investments are crucial for ensuring reliability, resiliency, and readiness. The CPUC has consistently approved this type of spending in previous GRCs, reinforcing our confidence in SCE's request.

Speaker Change: By the end of next year SCE will be approaching a significant milestone 90 per cent hardening of its total distribution lines and its high fire risk area.

Speaker Change: You can see this depicted on page eight.

Speaker Change: Also SCE will continue its DRC advocacy for funding critical investments that will enable efficient electrification and the state's clean energy transition.

Speaker Change: I want to emphasize that distribution grid investment accounts for more than 85% of Sce's capital plan.

Speaker Change: These investments are crucial for ensuring reliability resiliency and readiness.

Speaker Change: The CPUC has consistently approved this type of spending in previous <unk> reinforcing our confidence in Sce's request.

Pedro J. Pizarro: As for the legal and financial categories, I just discussed our legal approach, including filing the Woolsey application in the third quarter, and Maria will discuss our financial targets shortly. We at Edison are equally focused on the long term, as we have highlighted in several industry-leading white papers. The grid will be a key enabler for realizing California's pathway to net zero. To get there, it will be critical to rapidly expand the high-voltage transmission system and the localized distribution networks that serve customers.

Speaker Change: As far as the legal and financial categories I, just discussed our legal approach, including filing the Wuxi application in the third quarter and Maria will discuss our financial targets shortly.

We at Edison are equally focused on the long term.

Speaker Change: As we have highlighted in several industry, leading white papers, so grid will be a key enabler for realizing californias pathway Tonight to New York.

Speaker Change: To get there it will be critical to rapidly expand the high voltage transmission system and the localized distribution networks that serve customers.

Pedro J. Pizarro: This aligns well with the underlying drivers of our investment outlook. As more and more vehicles and buildings are electrified, electricity demand will increase by 80% over the next 20 years, which will benefit customer affordability through a 40% decrease in their total energy costs across electricity, gasoline, and natural gas. After years of flat demand, SCE is projecting an uptick in electricity usage of about 2% annually over the coming years.

Speaker Change: This aligns well with the underlying drivers of our investment outlook.

Speaker Change: As more and more vehicles and buildings are electrified.

Speaker Change: Electricity demand will increase by 80% over the next 20 years, which will benefit customer affordability through a 40% decrease in their total energy costs across electricity gasoline and natural gas.

Speaker Change: After years of flat demand sce's projecting an uptick in electricity usage of about 2% annually over the coming years.

Pedro J. Pizarro: To accelerate the development of new markets over time, SCE has developed innovative proposals, including its nation-leading suite of transportation electrification programs. Recently, although the CPUC denied SCE's building electrification application due to its near-term affordability pressures, it acknowledged SCE's leadership in proposing programs to accelerate much-needed building decarbonization. The utility will continue to evaluate the results of other building electrification pilots it has in progress and will also look for different ways to support the state in advancing its clean energy priorities.

Speaker Change: To accelerate the development of new markets over time, SCE has developed innovative proposals, including its nation, leading suite of transportation electrification programs.

Speaker Change: Recently, although the CPUC denied S. He's building electrification application due to their near term affordability pressures it acknowledge sce's leadership in proposing programs to accelerate much needed building de carbonization.

Speaker Change: The utility will continue to evaluate the results of other building electrification pilots it has some progress.

Speaker Change: And well also look for different ways to support the state and advancing its clean energy priorities.

Speaker Change: Another area, where we continue to innovate is building, our digital and AI capabilities to drive greater efficiency.

Pedro J. Pizarro: Another area where we continue to innovate is building our digital and AI capabilities to drive greater efficiency. We are investing in technologies to improve our data analytics skills to enhance decision making and strengthen operational excellence. For example, we are using generative AI to improve inspections, customer experience, and grid planning. Today, our team is also using AI for research, workflow automation, and code development. In SCE's customer service operations, AI is enabling call center agents to retrieve information faster, perform speech and sentiment analysis, and support billing operations.

Speaker Change: We are investing in technologies to improve our data analytic skills to <unk>.

Hence decision, making and strengthen operational excellence.

Speaker Change: For example, we are using generative AI to improve inspections customer experience and grid planning.

Speaker Change: Today, our team is also using AI for research workflow automation and Cogent development.

Speaker Change: NFC East customer service operations, AI is enabling call center agents to retrieve information faster.

Speaker Change: Forming speech and sentiment analytics and supporting building operations.

Maria C. Rigatti: We will continue this proactive approach to capture value using new technology. To conclude, our operational agenda is driven by safety first, reliability, affordability, and resiliency in our overall utility operation, including SCE's wildfire mitigation and industry-leading covered conductor program. Our financial agenda is very clear, delivering on our 2024 EPS guidance and achieving our EPS target for 2025. Our team and I are very committed to executing strongly, and we will continue to share our progress with you. And with that, let me turn it over to Maria for her financial report. Thanks, Pedro, and good afternoon, everyone.

Speaker Change: We will continue this proactive approach to capture value using new technology.

Speaker Change: To conclude our operational agenda is driven by safety first reliability affordability and resiliency in our overall utility operations.

Including Sce's wildfire mitigation and industry, leading covered conductor program.

Speaker Change: Our financial agenda is very clear.

Speaker Change: Over on our 2024, EPS guidance and achieve our EPS target for 2025.

Speaker Change: Our team and I are very committed to executing strongly and we will continue to share our progress with you and with that let me turn it over to Maria for her financial report.

Maria: Thanks, Pedro and good afternoon, everyone. In my comments today, I will discuss fourth quarter and full year 2020 results S.

Maria C. Rigatti: In my comments today, I will discuss fourth quarter and full year 2023 results, SCE's CAPEX and rate-based opportunities, and 2024 EPS guidance. I want to reaffirm our unwavering confidence in achieving our long-term EPS growth target of 5 to 7% from 2021 to 2025. I'll elaborate on the factors underpinning this confidence shortly, but let me begin with the fourth quarter results. EIX reported a core EPS of $1.28.

Maria: These capex and rate base opportunities and 2024 E. P S guidance.

Maria: I want to reaffirm our unwavering confidence in achieving our long term EPS growth target of 5% to 7% for 2021 and 2025.

Maria: Elaborate on the factors underpinning this confidence shortly.

Speaker Change: Let me begin with fourth quarter results.

Speaker Change: Yeah, I extra reported core EPS of $1.28.

Maria C. Rigatti: As you can see from the year-over-year quarterly variance analysis shown on page 9, core earnings grew by 13 cents, primarily due to higher GRC revenue and lower O&M, partially offset by an increase in interest rates. The parent company also had a gain on preferred stock repurchase. For the full year, EIX's core EPS of $4.76 was above the midpoint of our guidance.

Speaker Change: Can see from the year over year quarterly variance analysis shown on page nine core earnings grew by 13 cents, primarily due to higher G. R. C revenue and lower O&M, partially offset by an increase in interest expense.

Speaker Change: The parent company also had a gain on preferred stock repurchases.

Speaker Change: For the full year <unk> core EPS of $4.76 was above the midpoint of our guidance range.

Maria C. Rigatti: For context, you'll recall that we identified two specific items in this guidance. The pending SEMA decision and the tender offer for EIX's preferred stock. The SEMA decision shifted into 2024, and the gain on the preferred stock repurchase was $4.6 billion. I'm also pleased to inform you that our Operational Excellence Initiatives are off to a solid start, and we are seeing this translate into higher operating efficiency throughout the country.

Speaker Change: For context, you'll recall that we identified two specific items in this guidance the pending seem a decision and the tender offer for <unk> preferred stock.

Speaker Change: The FEMA decision shifted into 2024 and the gain on the preferred stock repurchase with four cents.

Speaker Change: I'm also pleased to inform you that our operational excellence initiatives are off to a solid start and we are seeing this translate into higher operating efficiency throughout the business.

Maria C. Rigatti: This was reflected in better-than-expected SCE operational variance. Summing up our 2023 performance, the key takeaway is that we continue to manage the variability in the business and yet again deliver core EPS above the minimum. Page 10 shows the components of our performance versus guidance. Turning to SCE's capital and rate-based forecasts, shown on pages 11 and 12, I want to emphasize two messages. First, SCE has a robust and high-quality capital investment plan for 2023 through 2028. The utility plans to invest $38 to $43 billion, the majority of which is in the distribution grid.

Speaker Change: This was reflected in better than expected SCE operational variances.

Speaker Change: Summing up our 2023 performance. The key takeaway is that we continue to manage the variability in the business and yet again deliver core EPS above the midpoint.

Speaker Change: Page 10 shows the components of our performance versus guidance.

Speaker Change: Turning to Sce's capital and rate base forecast shown on pages 11, and 12 I want to emphasize two messages.

Speaker Change: First SCE has a robust and high quality capital investment plan for 2023 through 2028.

Speaker Change: Utility plans to invest $38 billion to $43 billion, the majority of which is in the distribution grid.

Maria C. Rigatti: This spending covers several critical areas, including infrastructure replacement, wildfire mitigation, load growth, new service connections, and inspections and maintenance. This type of spending has been approved in prior GRCs, so we view it as high quality and lower risk. Moreover, they directly support California's leading role in transitioning to a carbon-free economy. Second, these forecasts do not incorporate substantial additional long-term CAPEX opportunities in several areas. The utility will file stand-alone applications with the CPUC for the next-gen ERP and AMI 2.0 programs once they have been fully developed.

Speaker Change: This spending cover several critical areas, including infrastructure replacement wildfire mitigation load growth, new service connections and inspections and maintenance.

Speaker Change: This type of spending has been approved in prior G. Our seed. So we view these as high quality and lower risk.

Speaker Change: Moreover, they directly support California's leading role in transitioning to a carbon free economy.

Speaker Change: Second these forecasts do not incorporate substantial additional long term capex opportunities in several areas.

Speaker Change: The utility will file standalone applications with the CPUC for the Nexgen ERP and Ams to Plano programs once they have been fully developed.

Maria C. Rigatti: On the FERC side, SCE is the incumbent transmission owner for 17 projects approved in CAISO's transmission plans, which we expect will result in more than $2 billion of investment. Turning to 2024 EPS guidance, the range of $4.75 to $5.05 and modeling considerations are outlined on page 13. As you can see, rate-based earnings growth is strong, though our EPS guidance implies modest growth for the year. There are three primary reasons.

Speaker Change: On the FERC side SCE is the incumbent transmission owner for 17 projects approved in case those transmission plan, which we expect will result in more than $2 billion of investment.

Speaker Change: Turning to 2024 EPS guidance.

Speaker Change: A $4 75 to $5.05 and modeling.

Speaker Change: And considerations are outlined on page 13.

Speaker Change: As you can see rate base earnings growth is strong so our EPS guidance implies modest growth for the year.

There are three primary reasons for this.

First interest expense on the wildfires settlement related debt grows by about 16 cents.

Maria C. Rigatti: First, interest expense on the wildfire settlement-related debt grows by about $0.16, driven by refinancing $2.1 billion of maturities and issuing additional debt to fund the balance of the claims. I want to be very clear that the utility expects to seek full CPUC cost recovery of all eligible claims payments, including financing. Second, SCE operational variance is 15 to 34 cents lower year over year.

Speaker Change: Driven by refinancing $2 $1 billion of maturities and issuing additional debt to fund the balance of the claims resolutions.

Speaker Change: I want to be very clear that the utility expects to seek full CPUC cost recovery of all eligible claims payments, including financing costs.

Speaker Change: Second SCE operational variance is 15 to 34 cents lower year over year.

Maria C. Rigatti: As we've noted, this captures SCE's variations from authorized levels, including such items as AFEDC, O&M, depreciation, financing, and true-ups from regulatory approvals. Pedro talked earlier about the planned increase in O&M as SCE spends on targeted, reliability-focused activities and redeploys savings into operational excellence initiatives. This accounts for 15 to 20 percent of the total year-over-year change. Utility continues to invest in its operations, including distribution, customer service, and IT, to support reliability and benefit customers in the long run. Third, parents' and other costs are higher, primarily due to the absence of the gain on last year's preferred stock repurchase and also having a full year of interest on the junior subordinated notes issued in excess of the amounts needed to fund the repurchase.

Speaker Change: As we've noted this captures ftes variations from authorized level, including such items as a L. P. D C O&M depreciation financing and true ups from regulatory approvals.

Pedro talked earlier about the planned increase in O&M as SCE spends on targeted reliability focused activities and redeploy savings into operational excellence initiatives.

Speaker Change: This accounts for 15% to 20% of the total year over year change.

Speaker Change: The utility continues to spend and its operations, including distribution customer service and I T to support reliability and benefit customers in the long run.

Speaker Change: Third parents and other costs are higher primarily due to the absence of the gain on last year's preferred stock repurchase and also having a full year of interest on the junior subordinated notes issued in excess of the amounts needed to fund the repurchase.

Maria C. Rigatti: Turning to page 14, I want to emphasize the strong underlying business growth that is being masked by the growing interest expense on wildfire claims debt. As you can see on the chart, we are on track to achieve 5-7% core EPS growth for 2021-2025. This is despite the burden of about $325 million of pre-tax insurance, or $0.61 per share, which reduces our core EPS growth by 250 basis points over this period.

Speaker Change: Turning to page 14, I want to emphasize the strong underlying business growth, but it's being masked by the growing interest expense on wildfire claims data.

Speaker Change: As you see on the chart, we are on track to achieve 5% to 7% core EPS growth for 2021 through 2025.

Speaker Change: This is despite the burden of about $325 million of pretax interest or <unk> 61 per share, which reduces our core EPS growth by 250 basis points over this period.

Maria C. Rigatti: On the other hand, this illustrates the substantial potential value from successful resolution of the Cost Recovery Plan. I would now like to address the big increase in 2025 Core EPS and share some insight into what makes us confident in delivering on our commitment. To do this, we are going beyond our typical one-year forward guidance and providing a bridge between the midpoints of 2024 and 2025 core EPS guidance, which is on page 15. The biggest contributor to earnings growth comes from an increase in rate base.

Speaker Change: On the other hand, this illustrates the substantial potential value from successful resolution of the cost recovery proceeding.

Speaker Change: I would now like to address the big increase in 2025 core EPS and share some insight into what makes us confident in delivering on our commitments.

Speaker Change: To do this we are going beyond our typical one year for guidance and providing a bridge between the mid points of 2024, and 2025 core EPS guidance, which is on page 15.

Speaker Change: The biggest contributor to earnings growth comes from an increase in rate base earnings.

Maria C. Rigatti: You will recall that for the last several years, we've been projecting the rate base to increase by 11 to 14% in 2025. This step-up has two components. The first relates to the 2025 GRC, which in total drives 63 cents of the chain. The drivers for this increase are 2025 CapEx and rate-based true-ups, including differences in the timing and mix of capital deployed over the prior rate case cycle. The second component relates to non-GRC applications to recover past wildfire mitigation and other spending, as well as FERC jurisdictional investments.

Speaker Change: You will recall that for the last several years, we've been projecting rate base to increase by 11% to 14% in 2025.

Speaker Change: This step up has two components.

Speaker Change: The first relates to twice the 2025 G. R C, which in total will drive 63 cents of the change.

Speaker Change: The drivers for this increase our 2025, capex and rate base true ups, including differences in the timing and mix of capital deployed over the prior rate case cycle.

Speaker Change: The second component relates to non GSE applications to recover past wildfire mitigation and other spending as well as FERC jurisdictional investments.

Maria C. Rigatti: This represents the remaining amount. A significant portion of this relates to covered conductor insulation and other mitigation spending above what was authorized in SCE's 2021 GRC. Outside the rate-based EPS, I want to underscore that operational variances are not a key driver, and its contribution is in line with historical levels. Further, we see wildfire interest expense moderating as the claims settlement process should be substantially complete, and SCE has only $300 million of wildfire debt maturing in 2025. Let me summarize by saying that our confidence is underpinned by these growth drivers, further bolstered by the fact that headwinds in 2024 are expected to moderate going into 2025. Turn to page 6.

Speaker Change: This represents the remaining 15 cents.

A significant portion of this relates to covered conductor installation and other mitigation spending above what was authorized in Sce's 2021 G. R. C.

Speaker Change: Outside the rate base EPS I want to underscore that operational variances are not a key driver and its contribution is in line with historical levels.

Speaker Change: Further we see wildfire interest expense moderating as the claim settlement process should be substantially complete at SCE has only $300 million of wildfire debt maturing in 2025.

Speaker Change: Let me summarize by saying that our confidence is underpinned by these growth drivers further bolstered by the fact that headwinds and 24 are expected to moderate going into 2025.

Speaker Change: Turning to page 16.

Maria C. Rigatti: Following an active year of capital market execution in 2023, our planned 2024 financing activities are minimal. In December, EIX pre-funded $75 million of the $100 million annual equity need with our junior subordinated notes off. The remainder will be addressed through internal programs by the end of Q1. As for the rest of the parents' funding needs, we expect to issue $500 million of debt to refinance the maturity. Turning to page 17, we are also reiterating our core EPS growth target of 5 to 7% for 2025 through 2028, which only requires $100 million of equity per year. On the right side of the page, we've now laid out the consolidated sources and uses for the. Let me conclude by saying our confidence in meeting our 2024 and 2025 EPS targets remains strong. Additionally, there are also potential value creation opportunities that are not factored into our guidance metrics or the company's equity values.

Speaker Change: Following an active year of capital market execution in 2023, our planned 2020 for financing activities are minimal.

Speaker Change: In December <unk> pre funded $75 million of the $100 million annual equity need with our junior subordinated notes offering.

Speaker Change: The remainder will be addressed through internal programs by the end of Q1.

Speaker Change: As for the rest of the parents funding needs, we expect to issue $500 million of debt to refinance the maturity.

Speaker Change: Turning to page 17, we are also reiterating our core EPS growth target of 5% to 7% for 2025 through 2028, which only requires $100 million of equity per year.

Speaker Change: On the right side of the page we've now laid out the consolidated sources and uses for this period.

Speaker Change: Let me conclude by saying our confidence in meeting our 2024 and 2025 EPS targets remain strong. Additionally.

Speaker Change: Additionally, there are also potential value creation opportunities that are not factored into our guidance metrics or the companys equity value.

Sheila: These are cost recoveries for the 2017 and 2018 events, for successfully executing our Operational Excellence Program, the cornerstone of SCE's cost leadership, and the lowest system average rate among major IOUs in California, and Incremental CPUC and FERC growth investment options. We look forward to executing on our plans and sharing progress in the next quarterly earnings report. That concludes my remarks, and I'll pass it back over to... Sheila, please open the call for questions. As a reminder, we request you limit yourself to one question and one follow-up so everyone on the line has the opportunity to ask questions. If you would like to ask a question, please press star 1 on your screen. Our first question will come from Shahriar Pourreza. Park, Ashar, we're not able to hear you at all. Can you hear me now?

Speaker Change: These are cost recovery for the 2017 and 2018 events.

Speaker Change: Successfully executing our operational excellence program, the cornerstone for Sce's cost leadership and lowest assistant average rate among major ious in California.

Speaker Change: And incremental CPUC and FERC growth investment opportunities.

Speaker Change: We look forward to executing on our plans and sharing progress on our next quarterly earnings call.

Speaker Change: That concludes my remarks, and I'll pass it back over to Sam <unk>.

Sam: <unk>. Please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow up so everyone. In line has the opportunity to ask questions.

Sam: Thank you if you would like to ask a question. Please press star one on your phone when moment for the first question. Please.

Sam: Yeah.

Sam: Our first question will come from Shar <unk> with Guggenheim Partners. Your line is open.

Sam: Shar, we're not able to hear you in conference. Please check your mute feature.

Shar: Can you hear me now.

Pedro J. Pizarro: Sorry about that, a few technical problems. Pedro, just wanted to start off on the components of the 24 drivers, in particular, maybe that 15 to 20 cents of O&M reinvestment. When you reference redeploying the savings in the future, would that be one for one with the 15 to 20 cents, and I guess, what time frame would that impact? I think I'll start, and Maria can continue there.

Shar: Hear you fine how are you sorry about that a little technical issues. Peter just wanted to start off on the components of the 24 drivers in particular, maybe that 15 to 20 cents of O&M reinvestment.

Shar: When you reference redeploying the savings in the future would that be one for one with the 15 to 20 and I guess, what timeframe would that impact.

Speaker Change: So I think they're all starting Maria can can continue here, but you.

Pedro J. Pizarro: But we're focusing on what we are investing in 24. And we see that as an investment, you know, in systems, processes, or continued work on operational excellence that we think will accrue benefits for customers over the long haul. So that's, it's really all about, you know, making sure that we are thinking long term and doing good things for the business. This is not like, you know, one big bang; there are multiple opportunities. So I think we've discussed this with investors in the past, consistent with our operational excellence work. Yeah, Shahriar, I think Pedro's captured a lot of it in that response.

Maria: We're focusing on what we are investing in 'twenty, four and we see that being an investment in <unk>.

Maria: Systems processes, our continued work on operational excellence.

Maria: Think will accrue benefits for customers over the long haul. So that's it's really all about making sure that we are thinking.

Thinking long term and doing good things for the business. This is not like one big Bang, it's multiple opportunities. So I think we've discussed with investors in the past are consistent with our operational excellence work.

Speaker Change: Yeah sure I think pedros captured a lot of it and in that response I'd also focus on the fact that the spending that we're doing the reinvestment that we're doing we felt we talk a lot about affordability, but we ought to talk a lot about reliability for our customers. So you're seeing us put some money to work and reliability efforts so grid remediation generation.

Maria C. Rigatti: I'd also focus on the fact that the spending that we're doing, the reinvestment that we're doing, we've talked a lot about affordability, but we also talked a lot about reliability for our customers. So you're seeing us put the money to work in reliability efforts, such as grid remediation, generation, as well as the operational excellence initiatives that will provide value over a long term period.

Speaker Change: As well as the operational excellence initiatives that will provide value over a long term period. So I think it's those things that we're really focused on in 2024, and you'll continue to see us make those investments as we move forward.

Maria C. Rigatti: So I think it's those things that we're really focused on in 2024, and you'll continue to see us make those investments as we move forward.

Got it okay, great and then just I appreciate you calling out the wildfires that drag that is impacting results. The 61 cents of drag I guess, how do you plan to update your assumptions on that portion going forward, especially as we're now well in progress with the T Cam recovery.

Maria C. Rigatti: Okay, great. And then I just appreciate you calling out the wildfire debt drag that is impacting results, the 61 cents of drag. I guess, how do you plan to update your assumptions on that portion going forward, especially as we're now well in progress with the TKM recovery? Thanks.

Speaker Change: Sure. So as you know we are not assuming any recovery in our long term EPS forecast, we have submitted a very compelling case and you know, we're making progress and have the scoping memo now we haven't incorporated anything there in terms of the benefit we have provided interest rates interest rate assumptions, we don't really have.

Maria C. Rigatti: Sure. But, as you know, we are not assuming any recovery in our long-term EPS forecast. We have submitted a very compelling case, and you know we're making progress and have the scoping memo now, but we haven't incorporated anything there in terms of the benefit. We have provided interest rate assumptions. We don't really have any refinancings in 24, as I mentioned earlier, we only have $300 million of refinancings coming due in 2025, but the interest rate forecast that we have today embedded there is pretty consistent with what we're seeing, so as we continue down that path, we'll just be providing sort of quarterly updates on the activity around the cost recovery application. Okay. All right. Thank you very much, guys. I appreciate it. I'll pass it on to someone else.

We have some refinancings in 'twenty four as I mentioned earlier, we only have $300 million of refinancings coming due in 2025, but the interest rate forecast that we have today embedded there is you know pretty consistent with what we're seeing so as we continue down that path will just be providing you know sort of quarterly updates on the activity around the cost recovery applications.

Speaker Change: Okay got it alright. Thank you very much guys I appreciate it I'll pass it to someone else. Thank you. Thank.

Speaker Change: Sure.

Speaker Change: Thank you next we'll hear from Steve Fleishman with Wolfe Research you May proceed.

Pedro J. Pizarro: Thank you. Thank you, sir. Thanks. This is a production of WPSU. We'll hear from you later. Fleishman, Hi, good afternoon. Hi, Steve. Hi there. Hi, Pedro.

Steve Fleishman: Hi, good afternoon.

Speaker Change: Dave.

Steve Fleishman: Hi, there.

Steve Fleishman: D.

Steve Fleishman: <unk>.

Steve Fleishman: Just wanted to I.

Maria C. Rigatti: So, the... Just wanted to, you talked in the past about the kind of higher cost of capital, and a lot of that would be offset by, you know, likely reinvesting in the business, and the like. So just as we look at the guidance for 24, 25. Could you just kind of go back to that prior comment and how you think of it from that standpoint? Sure, Steve, it's Maria.

Steve Fleishman: You talked in the past about the kind of higher cost of capital.

D: Would be you know why that would be offset.

D: Like maybe reinvesting in the business.

D: And the likes so just as we look at the guidance for two.

D: 24.

D: It can be five it could you just kind of go back to that comment and how to think of it from that standpoint.

Maria: Sure Steve It's Maria.

Maria C. Rigatti: So what we've talked about in the past around the cost of capital mechanism and the trigger is that, obviously, that's driven by interest rates and the interest rate environment that we're in. And as we look forward, we do view that cost of capital mechanism and the trigger as being a hedge against interest rate changes on the expense side of the equation, if you will, but also an opportunity to reinvest in the business. Again, looking at that longer-term affordability.

Maria: So what we've talked about in the past around the cost of capital mechanism. The trigger is that obviously, that's driven by interest rates and the interest rate environment that we're in and as we look forward, we do view that cost of capital mechanism and the trigger as being a hedge against interest rate changes on the expense side of the equation. If you will but also an opportunity to reinvest in the business again.

Maria: Looking at that longer term affordability. So as you think about changes year over year, you can see as we already talked about in 'twenty 'twenty. Four you can see that we're taking dollars and we're reinvesting them in the business. As you look forward to 2025, I think there's a really interesting chart and I want to highlight it as you look forward to 2025, we have updated the rate.

Maria C. Rigatti: So as you think about changes year over year, you can see, as we already talked about in 2024, you can see that we're taking dollars and reinvesting them in the business. As you look forward to 2025, I think there's a really interesting chart, and I want to highlight it. As you look forward to 2025, we have updated the rate-based earnings for 2025. It makes sense.

Maria: Base earnings in 2025 makes sense the cost of capital mechanism is triggered we've updated our tariff sheets. When our next rate change will be implementing the cost of cap the new cost of capital. So it makes sense to update rate base earnings and then we've gone through the rest of the buckets in 'twenty five and also updated them first to reflect the changes in inter.

Maria C. Rigatti: The cost of capital mechanism is triggered. We've updated our tariff sheets. In our next rate change, we'll be implementing the new cost of capital, so it makes sense to update rate-based earnings. And then we've gone through the rest of the buckets in 2025 and also updated them first to reflect the changes in interest rates, the hedge aspect of the cost of capital mechanism. So you see that our costs excluded from authorized have been updated. That's largely due to wildfire debt.

Maria: Ralph the hedge aspect of the cost of capital mechanism. So you see that our cost excluded from authorized had been updated that's largely wildfire wildfire debt interest expense. We've also taken a look at all of the other buckets, the operational variances et cetera, but when you look at what's happening between 24 and 25 the increase in earnings is driven.

Maria C. Rigatti: We've also taken a look at all of the other buckets, the operational variances, et cetera. But when you look at what's happening between 24 and 25, the increase in earnings is driven by rate-based growth. FCE operational variances, in line with historical levels, are not a significant driver.

Maria: By rate base growth.

<unk> operational variances in line with historical level not a significant driver.

Maria C. Rigatti: EIX, Parents, and Other, not a significant driver of year-over-year growth into 2025. And frankly, now, by 2025, the wildfire debt will also have stabilized. Not a significant driver. So that's how I think about the cost of capital mechanism and then how it rolls through all the different... Okay, thank you.

Maria: <unk> parents and other not a significant driver of year over year growth into 2025, and frankly now by 2025. The wildfires that will also stabilize not a significant driver. So that's how I think about the cost of capital mechanism and then how it rolls through all the different components.

Speaker Change: Okay. Thank you just one follow up you mentioned the CRC transmission projects that are not.

Maria C. Rigatti: Just one follow up. You mentioned the FERC transmission projects that are not, in your plan. Kind of when would we have a sense of whether you're likely to get together? those and would they kind of become part of your point?

Speaker Change: And your plan kind of when would we.

Speaker Change: Sense of whether you're likely to get okay.

Speaker Change: Those in.

Speaker Change: Okay.

Speaker Change: A few points.

Maria C. Rigatti: Sure. So, we are the, you know, incumbent transmission owner for 17 of the projects that KAISO has included in their plan. That's $2 billion plus. That is, you know, largely post-2028. So, as we continue to refine the cost estimates, because although we are the incumbent transmission owner, and we are doing the engineering work currently, as we continue to update that and get a firmer view of the specific cost, we'll roll that out. But again, a lot of the spending is post-2028. In terms of the competitive bids that were out for bid, or the competitive projects that were out for bid last year, we did bid on two projects and should know sometime in the spring whether or not we've been selected.

Speaker Change: Sure. So we are the incumbent transmission owner for 17 of the projects. The queso is included in our plan that's $2 billion plus that is you know.

Speaker Change: Largely post 2028, so as we continue to refine our cost estimates because although we are or they can come in transmission owner. We are doing the engineering work currently as we continue to update that and get a firmer view of the specific cost, we'll roll that out but again a lot of the spending is post 2028 in terms of the competitive bids that were out.

Speaker Change: Forbid or the competitive projects that are out for bid last year. We did bid on two projects and should know sometime in the spring whether or not we'd been selected.

Speaker Change: And Steve I think a reminder, beyond those projects that have been identified by ISO If you go back to your account onto 2045 White paper from last year as we looked across all of California.

Pedro J. Pizarro: And Steve, I think a reminder beyond those projects that have been identified by ISO, if you go back to our Countdown to 2045 white paper from last year, as we looked across all of California, we see this continued need to invest in the grid over the long term, through 2045, with the pace of transmission additions needing to be four times statewide what it's been historically, and the pace of distribution additions needing to be ten So we see a lot of work for the utility in the two decades ahead. Great, thank you. Thanks, Steve. Our next question will come later. Campanella, Hey, thanks a lot for taking the questions and all the updates today. Hey, good afternoon, especially the EPS bridge.

Speaker Change: See this continued need to invest in the grid over the long term you know through 2045 with the pace of transmission editions needing to be four times statewide what it's been historically and the pace of distribution additions needing to be 10 times, what it's been historically, so we see a lot of work for the utility and the two decades ahead.

Speaker Change: Great. Thank you. Thanks.

Speaker Change: Thanks, Steve.

Speaker Change: Thank you. Our next question will come from Nick Campanella with Barclays. Your line is open.

Hey, Thanks, a lot for taking the questions and all the updates today.

Nicholas Campanella: Hey, good afternoon, especially the EPS bridge I just had a question on that just.

Maria C. Rigatti: I just had a question about the 30th Cents of True Up in the 25 EPS Bridge, is that just very unique to 25, or does any of that kind of continue through 26, because I just know there's a lot of programs and True Ups outside of traditional GRC. Thanks. Yeah, great, Nick.

Nicholas Campanella: The 30 to true up in the 25 EPS bridges that just very unique to 'twenty five or does any of that kind of continue through.

Nicholas Campanella: Through 'twenty six because I just know there's a lot of programs and true ups outside age.

Speaker Change: Traditional G. R C. Thanks.

Speaker Change: Yeah, great neck, so you're talking about the rate base true up that we that we show on that on that bridge and the and the dark Gray.

Maria C. Rigatti: So you're talking about the rate base true up that we show on that on that bridge in the on the deck, right? And so when you think about that, there are different components to the rate base. As I said earlier, rate base is the driver for earnings growth between 2024 and 2025. There are two buckets around rate-based growth. One is related to the 2025 GRC, and the other is related to non-GRC applications, if you will.

Speaker Change: And so when you think about that there.

Speaker Change: There are different components to rate base as I said earlier rate base is the driver for earnings growth between 2024 and 2025.

Speaker Change: Two buckets around rate base growth one is related to the 2025 G. R. C and the other is related to non G. R. C applications. If you will.

Maria C. Rigatti: I'll break down the GRC, the 2025 GRC-related item, a little bit more. Some of that's just 2025 CapEx. We spend it; it goes into rates.

Speaker Change: I'll break down the the G. R. C. The 25 G. R C related item a little bit more some of that's just 2025 Capex, we're spending we spend it goes into rate base.

Maria C. Rigatti: The prior spending and the true ups really reflect this. As an example, over the course of a rate case cycle, the actual mix of capital that we've deployed or assets that we've deployed is a little different than what's unauthorized. So we have true-ups around that prior period spending. We also have some non-CAPEX related items that get treated up in a rate case or get, as they say, litigated in a rate case. Those could be things like taxes or the manner in which customer deposits are treated.

Speaker Change: Prior spending and the true ups really reflect.

Speaker Change: As an example over the course of a rate case cycle. The actual mix of capital that we've deployed our assets that we deploy it it's a little different than Watson authorized so we have true ups around that prior period spending. We also have some non capex related items that get chewed up in a rate case or get as they say litigated in a rate case, those could be things like taxes or.

Speaker Change: Or the mathematics, which customer deposits are treated so there's a number of things in there those are not atypical for a rate case proceeding the second piece the non G. R. C piece of it the applications. They are those also relate to prior periods, Ben but those are things that we're going to seek recovery for outside of the general rate case.

Maria C. Rigatti: So there are a number of things in there that are not atypical for a rate case proceeding. The second piece, the non-GRC piece of it, the applications there, those also relate to prior periods, but those are things that we're going to seek recovery for outside of the general rate case, and we should be filing something relatively soon, in fact, particularly around the items that relate to prior-period covered conductors. So that's the flavor of the rate base. I think it's really important to note also that it's rate-based growth, it's rate-based earnings, but it covers actually a pretty diverse bucket of different elements. And so we think that that diversity also helps strengthen the move from 24 to 25. Okay, I appreciate the color.

Speaker Change: And we shouldn't be filing something you know relatively soon in fact, particularly around the items that.

Speaker Change: Relate to prior period covered conductor spend so those are that's the flavor of the rate base I think it's really important to note also that so its rate based growth its rate base earnings, but it covers actually a pretty diverse bucket of different elements and so we think that that diversity also helped strengthen you know the move from 24 to 25.

Speaker Change: Yeah.

Speaker Change: Okay I appreciate the color that's helpful. And then I guess, just a little bit of a follow up on Steve's question, just thinking through as you wrap and some of these.

Maria C. Rigatti: That's helpful. And then, I guess just a little bit of a follow-up on Steve's question, just, you know, thinking through as you wrap in some of these upside factors to the plan, just what's the type of balance sheet capacity that you have to do that and stay in higher capex? And how do we think about incremental equity funding, if at all?

Speaker Change: Upside factors to the plan.

Speaker Change: What's the type of balance sheet capacity that you have to do that and to stay at a higher capex and.

Speaker Change: How do we think about incremental equity funding if at all.

Speaker Change: Sure. So you know we did include a sources and uses them. This time for the 25 to 28 period, we have a very strong commitment to our balance sheet and I think you've seen us.

Maria C. Rigatti: So, you know, we did include sources and uses this time for the 25 to 28 period. We have a very strong commitment to our balance sheet, and I think you've seen that. Demonstrate that commitment with the financing decisions we made in the past. But also, the balance sheet has been strengthened by all of the wildfire mitigation that we've deployed. It's really made a difference. I think as we move forward in time and we add capital to the capital plan, FCE will, of course, fund it for its authorized capital structure, and we're in the 15 to 17 percent FFO to debt range. So the EI Thank you so much.

Speaker Change: Demonstrate that commitment with the financing decisions, we made in the past, but also the balance sheet has been strengthened by all of the wildfire mitigation that we deploy it it's really made a difference I think as we move forward in time, and we add capital to the to the capital plan SCE will of course, you know funded app for their authorized capital structure and we are in the 15% to 17% episode of that range.

Speaker Change: So the E.

Speaker Change: Component of the financing plan, we will just have to see where we are in that 15% to 17% <unk> to debt range and we'll make our decision based on our metrics.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Mike.

Speaker Change: Our next question will come from Anthony <unk> with Mizuho. Your line is open.

Maria C. Rigatti: Thank you. Thank you. Our next question will come from Anthony Crowdell. Hey, good afternoon. I think I just have maybe one quick follow-up. I want to connect slides 14 and 6.

Anthony: Hey, good afternoon, I think I just have a couple.

Anthony: One quick follow up what I wanted to next slide 14, and slide six when I look at slide 14, it looks like interest expense.

Maria C. Rigatti: When I look at slide 14, it looks like interest expense increased, and I believe that's just as you're funding more of the liabilities. Does the, I guess, stability in the interest expenses? You show $0.61.24, $0.61.25. Is that stability in the interest expense more related to hedges, or is it related to, on slide 6, that the claims are coming in slower, and it's requiring less funding? So it's, it's probably not either exactly, Anthony.

Anthony: Increase and I believe that you said your funding more of the liabilities does that.

Anthony: I guess stability in the interest expenses you show 61, Central 24, 61 cents and twenty-five is is that stability to interest expense more related to hedges or is it related to.

Anthony: On slide six.

Speaker Change: It's more the claims are coming in slower and that's requiring less funding.

Speaker Change: So it's it's probably not either exactly Anthony basically two sorry, [laughter], it's at their choice and we have some maturities that are coming up in 2024. So that's built into the 24 number obviously also built into the twenty-five number also as we continue to settle claims.

Maria C. Rigatti: Basically, it's a third choice. We have some maturities that are coming up in 2024. So that's built into the 24 number, and obviously also built into the 25 number. Also, as we continue to settle claims, the way we've modeled this is that we will be substantially complete with that by the end of 2024. And so you're really not seeing, you know, big increases in the debt; there is a maturity that will have to be refinanced in 2025, but it's only $300 million.

Maria C. Rigatti: So those are really the drivers for why the number stays pretty constant. And we would expect that as we get closer and closer. Great. And then, just last, follow up on the claims. I believe in your prepared remarks, you stated that the increase of $65 million, and I apologize if I heard this incorrectly, was related to one claim. Could you give additional color on that, if that was the correct way I heard it?

Maria C. Rigatti: What I said was that the majority of it was from one claim, Anthony, and what we're seeing is that as we went to that, it was one claim, and then I think just a small number of other claims made up the balance of that. We're seeing that our research modeling continues to be robust, but we had a couple unique outliers that required an adjustment this time. Great. Thanks so much for taking my question. All right. Thanks, Anthony. This comes from Mike Wanigan with Evercore ISD.

Speaker Change: Our next question will come from Mike Monaghan with Evercore ISI. Your line is open.

Maria C. Rigatti: Hi, thanks for hitting my question. I have a planned asset sale related to the tower attachments. Just wondering what your expectation is on when a scoping memo will be issued. And if you could comment on, you know, the level of interest you're seeing from potential buyers. And, you know, do you still expect to receive proceeds, you know, mid-24 and 25?

Mike Monaghan: Hi, Thanks for that is my question.

Mike Monaghan: Assets are related to the tower attachments just wondering what your expectation is on when scoping memo will be issued and if you could comment on the level of interest you are seeing from potential buyers and you know you're.

Mike Monaghan: Do you still expect to receive proceeds you know mid.

Mike Monaghan: 24 2025.

Speaker Change: Okay. Michael Thanks, So we are waiting for the scoping memo, we'd gone through you know various aspects of the preceding thus far we know where intervenors to focus their questions to some extent they focus a little bit on safety, but I think that we can easily dress that there's no change in that from from a safety posture.

Maria C. Rigatti: Thanks. So we are waiting for the scoping memo. We've gone through, you know, various aspects of the proceeding thus far. We know where interveners have focused their questions. To some extent, they focused a little bit on safety, but I think that we, you know, can easily address that. There's no change from a safety posture.

Speaker Change: Due to this transaction they've also taken a look at you know the sharing mechanism. That's been proposed obviously, we we embedded assuring mechanism with customers that's already part and parcel of our tariff structure around these types of assets, but they didn't raise some questions around that so like you were waiting for the scoping memo are hopeful that it'll come out relatively soon.

Maria C. Rigatti: They've also taken a look at the sharing mechanism that's been proposed. Obviously, we have embedded a sharing mechanism with customers that's already part and parcel of our tariff structure around these types of assets, but they did raise some questions around that. So, like you, we're waiting for the scoping memo. We're hopeful that it'll come out relatively soon, but that is the next step in the process. As you recall, the request that we made was to treat the sale in a particular way that would not require a very large application to follow on to the first one.

Speaker Change: But that is the next step in the process is you will call. The requested we made was to treat the sale in a particular manner that would not require you know a very large application to follow along to the first one that will be decided as we go through and you know we could see things so quickly.

Maria C. Rigatti: That will be decided as we go through, and we could see things go quickly and do something this year, but certainly couldn't go into 2025 in terms of a sale. We won't really start marketing until we actually know what the regulatory schedule will be, because we think that's more productive from a transaction perspective. Okay. And then, secondly, for me, just a general question.

Speaker Change: Something this year, but certainly couldn't go into 2025 in terms of a sale, we won't really start marketing until we actually know what the regulatory schedule will be because we think that's more productive from a transaction perspective.

Speaker Change: Great. Thank you and then secondly for me just just the general questions you've highlighted verify the you know the 2025, you expect 90% of your distribution lines that are located in high risk areas to be hard and you don't have said that wildfire mitigation spend a stabilising.

Maria C. Rigatti: You've highlighted that by the end of 2025, you expect 90% of your distribution lines that are located in high fire risk areas to be hardened. You know, and have said, that wildfire mitigation spending is stabilizing. My question is, you know, I think presumably there are areas that are not currently categorized as high risk that could, you know, potentially become high risk over the long term. Things seem to be evolving, you know, pretty quickly. I was just wondering, you know, have you done analysis or do you have plans to do proactive work on areas that could emerge as high risk in the event that they develop that way faster than expected? Yeah, I'll give you a couple of reactions to that, and it's a good question, Michael.

Speaker Change: My question is <unk>.

Speaker Change: There are areas that are not currently categorize as high risk that could.

Speaker Change: Potentially become high risk over the longterm things seem to be evolving pretty quickly I was just wondering you know have you done analysis or where do you do you have plans to do proactive work on areas that could emerge as hungry. So you've been to date develop that way faster than expected.

Speaker Change: Yeah, I'll give you a couple of reactions to that and it's a good question. Michael you know clearly we continue to monitor how the landscape is changing we do that in partnership with you know fire agencies when with OAS. So to the extent that additional areas are designated H F. R. A a high fire risk areas in the future then we would make sure.

Pedro J. Pizarro: You know, clearly, we continue to monitor how the landscape is changing. We do that in partnership with, you know, fire agencies, and OEIS. So to the extent that additional areas are designated HFRA, high fire risk areas, in the future, then we would make sure that we're using the same standards that we use for high fire risk areas today. You know, we do expect that as climate change continues to drive more extreme weather, if you go back to our Adapting for Tomorrow white paper, you know, by 2050, we see something like a 20% increase in wildfire risk statewide. But that said, this is where we're relying on hardening.

Speaker Change: That we're using the same standards that we use for high fire risk areas. Today, you know, we do expect that.

Speaker Change: S climate change continues to drive more extreme weather. If you go back to our adopting for tomorrow White paper by 2050, we see something like 20 per cent increase in wildfire risk statewide, but that's it. It's this is what we rely on the hardening and so certainly if we see more areas come into that high high risk.

Pedro J. Pizarro: And so certainly, if we see more areas come into that high-risk fold, then we will, you know, apply the same sort of methodology, you know, to them. The other thing I'd say is that as we progress with our normal investment, we have this big push to do the rapid hardening in HFRA, but we've also upgraded our standards for just generic replacements. And so we'll also see hardening take place more organically as we continue our, you know, bread and butter infrastructure replacement throughout the state. Great, thank you very much. Thanks, Mike. Hi everybody.

Speaker Change: Fold then we will apply the same sort of methodology you know two of them. The only thing I'd say is that as we progress you know in our normal investment.

Speaker Change: You know we are we've had this big push to do the the rapid hardening in H F. R. Eight, but we'd also upgraded our standards for just generic replacements and so will also see hardening take place more organically as we continue our you know bread and butter infrastructure replacement throughout the system.

Speaker Change: Great. Thank you very much.

Speaker Change: Thanks, Michael.

Speaker Change: Next week.

Speaker Change: Please go ahead.

Pedro J. Pizarro: I'm hoping to ask you on AI, which you highlighted in your prepared remarks, how material do you see the cost cutting opportunity to be for Edison? And then more broadly, given some of your role in EI, do you see a lot of shared information to address that commercial opportunity? Yeah, and I'd say I'm getting perspectives on that not only from my EEI colleagues, but as I, you know, engage with CEOs across the economy, right, the Business Roundtable, the Business Council, it is a big topic for everybody, a big focus area. I think that this is a long-term opportunity, Ryan, and we're really excited about it. I feel proud that Edison, I think, is one of the early movers, certainly in our sector, and so the kinds of examples you heard me describe, where we have had some pilots, we've moved from pilots to actually implementing, you know, permanent additions to things like what I mentioned in the Customer Call Center support. It's a real long-term efficiency opportunity, but we're still in the very early days, right, and so handicap How quickly can they really be deployed?

Speaker Change: Everybody I'm, hoping to ask in on a I you highlighted in your prepared remarks, how material do you see the cost cutting opportunity to be for for Edison and they're more broadly given familiar you have your rolling Yeah I do.

Speaker Change: See a lot of shared information to address that commercial opportunity for the industry.

Speaker Change: And I'd say I'm getting perspectives are that they're not only for my colleagues, but as a you know engage with C. E o's across the economy right does this round table business Council. It is a big topic for everybody a big focus area.

Speaker Change: I I think that this is a long term opportunity Ryan and we're really excited about it I feel proud that Edison because one of the early movers and certainly in our sector and so the kinds of examples you heard me describe where where whereabouts on pilots. We've moved from pilots are actually implementing you know a permanent.

Speaker Change: Permanent additions to things like what I mentioned in the customer call Center support it it's a real long term efficiency opportunity, but we're still very early days right and sell handicapping I know, it's going to be significant health.

Speaker Change: How quickly can they can really good deployed how quickly this technology mature putting that in against you in a more specific cost estimates I think this is something we will continue to see and probably at least the next two or three rate cases overtime at SAA. So it is there's gotta be a curved to that and we're we're moving quickly with with other pieces were working.

Maria C. Rigatti: How quickly does the technology mature? Pinching that in against more specific cost estimates, I think this is something we will continue to see in probably at least the next two or three rate cases over time at SCE. So there's gonna be a curve to that, and we're moving quickly with the pieces we're working on right now. We're seeing impact from them, but it will take a while for that to mature into long-term savings where we can say, here's X cents in EPS that's coming from that, or here's the millions of dollars that we're able to save customers at a future rate. Great. Rebecca has one follow-up on the transmission opportunity. Is there any disclosure you're able to share around right-of-ways or resources that you have to... to make an argument for winning the two outstanding bids that you highlighted?

Speaker Change: Right now, we're seeing impact from them, but it will take a while for them to mature into you know Ah Ah longterm savings, where we can say here's accents and EPS, it's coming from that or here's you know the millions of dollars and we're able to save customers in the future right case.

Speaker Change: Great, Quebec has one follow up on the transmission opportunity.

Speaker Change: Is there any disclosure you're able to share around right away or resources that you have to.

Quebec: To make an argument for winning the two outstanding bills that you highlighted.

Maria C. Rigatti: Right, I'm just going to say that the CAISO has all of our information, and we'll let them go through it before we make, you know, a lot of detailed statements about our bid. I'm sorry we can't go into more detail right now. I understand. Appreciate it. Yeah. Hey, you bet.

Speaker Change: Alright, I'm, just gonna say that the case, though has all of our information and we'll let them go through before we make you know a lot of details statements about our bed.

Speaker Change: Sorry, you can't go into more detail right now another thing I appreciate I appreciate the answers.

Speaker Change: You bet. Thanks.

Maria C. Rigatti: Thanks. Our next question will come from... Hi, Angie. Thank you. Hi, how are you?

Speaker Change: Right.

Speaker Change: Thank you.

Speaker Change: Question will come from Angie.

Angie: Your line is open hi, Andrew Thank you Hi, how are you.

Maria C. Rigatti: Okay, so can I just ask about the benefit from the cost of capital? Because I understand that there is reinvestment happening in 24, I understand that, but why doesn't it reappear then in 25? I mean, again, it should be just a one-time offset, no? I mean... Again, I mean, is the GRC chewing up the costs here? Again, why am I not seeing the benefit in 25? So we did provide sort of a bridge between 2024 and 2025. And I think the way that we've done it. Thank you for joining us. Thank you. Thank you.

Angie: Okay. So can I just ask about what happened with the benefit of the cost of capital because I understand that there is reinvestment happening at 24, I get that but why doesn't it reappeared in 25.

Angie: I mean again it should be just that one time all set now I mean again I mean is it somehow <unk> chewing up the costs here again, why am I not see the benefit in 25.

Speaker Change: Sure. So we did provide sort of a bridge between 2020th four mid point to 2025 mid point and I think the way that we.

Speaker Change: Discuss the cost of capital mechanism before is that it is.

Maria C. Rigatti: It is triggered because of the interest rate environment, and we view it as, in part, a hedge against interest. We also view it as an opportunity to make investments. And those investments could be purely around creating longer-term affordability, which then provides more opportunity to invest in rate base, but also around reliability, which we know is a top focus for our customers as well as for our regulators. If you think about what we've updated for 2025, we took the rate-based update that's associated with the cost of capital. We also took a look at where interest rates had moved, which is, again, the hedge, the other part of the cost of capital is on the expense side, and we updated our cost excluded from authorized. Those movements were largely related to wildfire claims debt.

Speaker Change: It it triggered because of the interest rate environment, and we shall we view it as in part a hedge against interest rate movements. We also view it as an opportunity to make investments.

Speaker Change: And those investments can be surely around creating longer term affordability, which then provides more opportunity to invest in rate base, but also around the liability between now as a top focus.

Speaker Change: Customers as well as for a regulator.

Speaker Change: If you think about what we've updated for 2025, we took the rate base update that's associated with the cost of capital mechanism. We also took a look at where interest rates had moved which is again the hedge the other part of the cost to capitalize on the expense side and we updated our cost excluded from authorize those movements are largely related to wildfire claims.

Maria C. Rigatti: That's stabilizing, of course, post-2024, but you can see that we've updated that. We looked at the operational variances again as well, and we saw that those are pretty much flat year over year, a little bit of an increase year over year in 2024, so in line with historical levels. Obviously, as Pedro noted, we're working on a lot of different operational excellence efforts, and so we're going to continue to make those investments so that, ultimately, we get more of those benefits on the other side.

Speaker Change: At at stabilizing of course post 2024, but you can see that we've updated that we.

Speaker Change: We looked at the operational variances again, as well and we've seen that those are pretty much flat year over year little bit of a little bit of increase you over a year with 2024. So in line with historical levels. Obviously as Patriot noted, we're working on a lot of different operational excellent fs.

Speaker Change: And so we're going to continue to make those investments and it ultimately we get more of those benefits out on the other side, but those are the ways that we thought about the update to 2025 and really wanted to highlight that if you look at 2024 and then you look at 2025, it's that rate base growth that is driving earnings and that is ultimately in the.

Maria C. Rigatti: But those are the ways that we thought about the update to 2025 and really wanted to highlight that if you look at 2024, and then you look at 2025, it's that rate-based growth that is driving earnings, and that is ultimately, in the long term, the earnings growth trajectory for the company. It's always going to be tied to rate-based growth, and so I think that that really clarifies sort of the stability and the foundation for our long-term earnings trajectory. I understand, but here's my question.

Speaker Change: Longterm the earnings growth trajectory for the company, it's always gonna be tied to rate based growth and so I think that that really clarified sort of the stability in the foundation for our long term earnings trajectory.

Speaker Change: Oh, I understand but but here's my question for you. If you recall the previous couple of calls we've always had this discussion about you know is this really incremental to the great until the earnings you know range that for 25 vs. Some all set to that number and so I'm just wondering if the same is gonna be.

Maria C. Rigatti: So if you recall, on the previous couple of calls, we've always had this discussion about, you know, is this really incremental to the earnings, you know, range for 25, versus some offsets to that number. And so I'm just wondering if the same is going to be true now with the 61 cents that you guys are showing on slide 14, which is the earnings drag associated with the wildfire claims. So, again, obviously, it depends on the recovery of those costs, but I'm just wondering if 61 is really the upside scenario here, or is there something that's going to eat into this potential benefit, assuming that you get recovery of all of the wildfire costs? I think we've been really explicit.

Speaker Change: True now with the 61 cents put your guys showing them slides 14, which is the the earnings drag associated with the wildfire claims so.

Speaker Change: <unk>, obviously depends on the recovery of those costs, but I'm just wondering if 61 the three D. The appetite scenario here or is there something that's gonna eat into this potential benefit assuming that you'll get recovery off all of the <unk> wildfire a cough.

Speaker Change: So I think we've been really explicit I think there was even a chart that shows the progression even from 2001 to 2025 in terms of what that earnings drag is related to the wildfire that not trying to you know mask anything at this point, we laid out the maturity schedule that that we have related to wildfire that we've incorporated.

Maria C. Rigatti: I think there's even a chart that shows the progression even from 2001 to 2025 in terms of what that earnings drag is related to the wildfire debt. Not trying to mask anything at this point, we've laid out the maturity schedule that we have related to the wildfire debt. We've incorporated, basically, as I noted earlier, we've assumed that we will be pretty much done with the wildfire claims payments by the end of this year. All of those amounts plus the refinancing that we'll do this year and next year are baked into that number. I don't think that we're talking about anything that is an area where you would see something unexpected happen. We haven't incorporated it; we're talking a little bit about offsets and the like. We have not incorporated any benefit from the cost recovery application and recovery of those claims.

Speaker Change: You know, we basically as noted earlier, we assume that will be pretty much done with the wildfire claims payments by the end of this year and so all of those Ah mouths plus the refinancing that will do this year and next year or baked into that number. So I don't think that we're talking about anything that is you know sort of an area where you.

Speaker Change: Would see something unexpected happened we haven't incorporated.

Speaker Change: We were talking a little bit about offsets and the like we have not incorporated any benefit from the cost recovery application and recovery of those claims payments.

Maria C. Rigatti: So there is nothing that would eat into that $0.61 in a negative way. Cost recovery, obviously, creates a benefit because then that interest expense would be offset by authorized revenue. So it actually, I think, in terms of your question, would go the other way. Okay, and separately on the transmission ROE, so I'm just, you know, the assumption about a 10.3 transmission ROE. Is there any concern that there's any potential downside to that ROE? You know, if we only look at what happened with PG&E and the ISO adder, et cetera, how comfortable are you with that? Well, we are comfortable. You know, we have a black box settlement; our settlement doesn't have references to the CAISO adder or the like, so that 10.3 is the number that we have. Intervenors can ask us at this point to go in and file another rate case or another FERC formula rate case, but they haven't done so to this point.

Speaker Change: So there is nothing that would eat into that 61 cents in a negative way cost recovery, obviously creates a benefit because then that interest expense would be offset by authorized revenue does it actually I think in terms of your question would go the other way.

Speaker Change: Okay, and then separately on the transmission are we.

Speaker Change: So I'm just you know the assumption about a temporary transmission <unk> is there any concern that there's any potential downsides that are we you know if if I'll need looking at what happened with P. Jamie and the iPhone otter, etc. Uhm, how comfortable are you with that level.

Speaker Change: Well, we are comfortable you know we have a black box settlement or settlement doesn't have references to the Kai so add or are the like so that 10.3 is the number that we have.

Speaker Change: Intervenors can ask us at this point to go in and file another rate case or another another formula right case, they haven't done so to this point, obviously interest rate the interest rate environment is significantly different than the last time that we settle the case. So you know I guess, there's potential risk on both sides right.

Maria C. Rigatti: The interest rate environment is significantly different than the last time that we settled the case. So, you know, I guess there's potential risk on both sides, right? Okay, thank you. Our next question comes from Jeremy Tenet with J-P-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N-T-E-N Hi Jeremy, I just wanted to come back to an earlier point, apologies if I missed it here, but with regard to the 25 bridge and the prior spending true ups of 37 cents, is that a number that recurs going forward, or should we expect in 26 for that to drop off? I see your question, sorry, and I probably didn't understand it clearly the first time.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Andrew.

Speaker Change: Our next question comes from Jeremy J.

Jeremy J: J P. Morgan your line is open.

Speaker Change: Hi, good afternoon.

Andrew: Alright, Jeremy.

Speaker Change: I just wanted to come back to an earlier point apologies if I missed it here, but with regards to the twenty-five bridge and the prior spending trumps of 37 cents.

Speaker Change: Is that a number that recurs going forward or should we expect in 26, two that's a drop off.

Speaker Change: Oh I see your question, sorry, and I, probably didn't understand it clearly the first time no. That's those are gonna be rapists earnings so that the the dollars and 78 cents is just the increase from right base earnings in the next year or those things will still be in rate base. So we'll just be you know if you look back at the chart that we have that shows right basically or by ear. You know we were bridging from the mid.

Maria C. Rigatti: No, those are going to be rate-based earnings. So that, the dollars, and the 78 cents is just the increase from rate-based earnings, and the next year those things will still be rate-based. So we'll just be, you know, if you look back at the chart that we have that shows rate-based year by year, you know, we were bridging from the midpoint, but it's all, it's a cumulative number as you go forward. You know, each year the rate-based will just embed the change that happened in 25, and then whatever incremental capex we have on top of that. I got it.

Speaker Change: Point, but it's all it's a cumulative numbers. He go for it you know each year the rate base will just in bed. The change that happened in 25, and then whatever incremental capex, we have on top of that and the then current year.

Speaker Change: Got it that's a helpful. Thank you for that.

Maria C. Rigatti: That's helpful. Thank you for that. And another small point, if you will, just turning to slide 26 and looking at the 2025 core earnings per share component ranges and the SEC SCE cost excluded from authorized, it seems like that goes up by a quarter or so versus 23. And I was just wondering what would be some of the drivers there.

Speaker Change: And another small point, if you will just turning to slide 26, and looking at the 2025 core earnings per share component ranges and the S. A C. S. C E cough excluded from authorized it seems like that goes up by a quarter so versus.

Speaker Change: Twenty-three and it was just wondering what would be some of the the drivers. There is it looks like the industry assumption was was unchanged. So just wondering component speeding into that.

Maria C. Rigatti: It looked like the industry assumption was unchanged. So I was just wondering what components feeding into that. Yeah, so that is largely related to wildfire claims debt, and as we've been updating the amounts that we have to pay for claims, we need to update that, and there has been volatility as we've gone in and refinanced some of the claims, so it's really the driver of the difference relative to the prior is really about wildfire claims payment-related debt. Again, our view, and we talked about this on the last earnings call as well, Sorry, just to clarify there, I didn't mean versus 23, versus the prior 25, I think that number changed. Right, it did, and it is still related. I understand your question, sorry; it is related to increases in wildfire claims related to that. Got it. Okay. Thank you very much.

Speaker Change: Yeah. So that is largely related to wildfire claims that and as we've been updating the amounts that we have to pay for claims we needed to update that in there has been volatility as we as we've gone in and refinance ton of the claim so it's really the driver and the difference relative to the prior is really about wildfire claims payment related death.

Speaker Change: Again, our view and we talked about this on the last call as well is that the cost of capital mechanism, which is driven by the interest rate environment has a corollary on the expense side until the CCM is really a hedge against the ongoing interest rate movements.

Speaker Change: Sorry, just just to clarify there I didn't mean versus the twenty-three versus the prior 25, I I think that number change and Ah right. It did and it is still really I understood. Your question sorry, It is related to increases in wildfire claims related that.

Speaker Change: Got it okay. Thank you very much.

Maria C. Rigatti: Our next question will come from Gregg Orrill with UBS. Thank you, Greg. Yeah, thank you. Just sorry if this is sort of old ground, but with the deadline to file a claim for the Woolsey, um... Recovery, how does that impact, if at all, the best estimate of total losses that you have?

Speaker Change: Mystery.

Speaker Change: Our next question will come from Greg.

Greg: Your line is open.

Greg: Right.

Greg: Yeah. Thank you hi.

Greg: Uhm.

Speaker Change: Just.

Speaker Change: Sorry.

Speaker Change: This is sort of old ground, but.

Speaker Change: With the.

Speaker Change: Deadline to file a claim for the woozy.

Speaker Change:

Speaker Change: Recovery, how does that impact if at all the the best estimate of total losses that you have.

Maria C. Rigatti: So Greg, we, as you know, every quarter take a look at all of the information that we have and then tie that back to what we think about our best estimate. The process that you just referred to ended yesterday. The team is in the process now of evaluating all of the responses that have been submitted. And so, over the course of the next quarter, we'll be taking a look at that, and we will update folks as we go through it. That's clear. I appreciate it.

Speaker Change: No grabbed we as you know every quarter take a look at all of the information that we have and then tie that back to what we think about our best estimate the process that you just referred to ended yesterday. The team is in the process now of evaluating all of the responses that has been submitted and so.

Speaker Change: Over the course of the next quarter will be taking a look at that and we will update folks as we get through that onto the next earnings call.

Speaker Change: That's clear appreciate it.

Speaker Change: Right. Thank you.

Maria C. Rigatti: Thanks, Greg. Our next question: David Arcara, Oh, hey there.

Speaker Change: Thank you how our next question will come from David.

Speaker Change: Stanley Your line is open.

David: Oh, Hey, there thanks, so much.

Pedro J. Pizarro: Thanks so much. I hate every- Let me see. I want to get your perspective on the building electrification proposal. I guess, how are you positioning that type of opportunity, you know? Is that something that you could, you know, approach in a different way, refile in the future, look for maybe different strategies or funding or affordability considerations just as you, you know, look at maybe other strategies for investing in building electrification going forward. Yeah, David. That's a great question.

David: Hey, there.

David: Let me see I want to get your perspective on the building electrification proposal.

David: I guess, Harry how are you positioning that type of an opportunity you know is that something that you could you know approach in a different way refiled in the future you know look for maybe different strategy refunding or.

David: Affordability considerations juice did you.

David: Okay, maybe other other strategies for investing in building electrocution going forward.

David: Yeah.

Speaker Change: Favorite that's a great question.

Pedro J. Pizarro: And first, let me just probably repeat myself a little bit here. But when we think about the building electrification application, I think SCE has done a really nice job of two things. One, identifying a big gap in deployment, and secondly, coming up with a solution that really has a cost-benefit of one, right?

Harry: First of all let me just let me repeat myself a little bit here, but when when you think about the building electrification application I.

Harry: I think S. He had done a really nice job of two things one identifying a big gap in deployment and secondly, coming up with a solution that cause he had a cost benefit of one right. So that it's actually pretty attractive when you have an emerging technology like coupons until the [laughter].

Pedro J. Pizarro: So that is actually pretty attractive when you have an emerging technology like... And so the second thing that they were developing this application with that cost-benefit of one that would not only stand on its own two feet, but it was going to create a demand signal that would be very powerful to then help manufacturers go off in scale and capture those economies of scale that you get as you increase the volumes that you're producing. We saw this phenomenon, right, collectively in California and, more broadly, we saw it with solar, and, you know, the early RPS targets helped drive down solar manufacturing costs. We've seen a phenomenon with battery cells, which have come down in cost dramatically. I think they're probably 10% of the cost that they used to be a decade ago. And that hasn't happened with heat pumps yet, hence the building electrification application.

Harry: There was.

Harry: That'll be this application would that cost benefit of one that not only sent on his own two feet, but it was going to agree to the men signal that would be very powerful to then helped manufacturers go often scale and.

Harry: And capture those economies of scale that you get S. U you know increase the volumes of you're producing we saw this phenomenon right collectively in California, and and more broadly we saw the phenomenon with solar.

Harry: You know the early Rpf's targets helped drive down solar manufacturing cause we've seen a phenomenon with battery cells come down.

Harry: And costs dramatically I think they're probably 10% of it cause it used to be a decade ago and that hasn't happened with heat pumps, yet instability electrification application.

Pedro J. Pizarro: We appreciated that the Commission credited SCE for creativity, and I agree, but they felt these near-term pressures on affordability and passing the application. They also pointed, though, to some of the other funding that they thought was available and perhaps didn't think that SCE had factored in sufficiently. I can respectfully disagree with that view.

Harry: We appreciate it at the commission grid that S C for creativity and I agree I agree.

Harry: And but they felt these near term pressures affordability and.

Harry: Pass on the application. They also pointed though to some of the other funding that they thought was available and.

Harry: Perhaps they didn't think that S. He had factored insufficiently I'd.

Speaker Change: Respectfully disagree with that view I think cause she had factored that in and what's ironic about it is bad that very same week actually a few days before the P. U C voted out that final decision the governor Unfortunately cut out something like $200 million from his budget proposal for building electrification Ah and so.

Pedro J. Pizarro: I think SCE had factored that in, and what's ironic about it is that that very same week, actually a few days before the PUC voted out that final decision, the governor unfortunately cut out something like $200 million from his budget proposal for building electrification. And so to me, that just shows that here, say, one of the key gaps, as we identified in our Mind the Gap white paper a few years ago, building electrification. If you think about total greenhouse gas emissions in the state, buildings account for about 10% of greenhouse gas emissions. But we saw building electrification being able to make up about a quarter of the gap that we saw in terms of new decarbonization steps needed between when we filed that or published that white paper, I don't know, two, three years ago in 2030. So sorry for the long preamble, but it kind of gives you context of how important we think building electrification is. So what do we do now?

Harry: I mean that just shows that he or she one of the key gaps persuade men to fight in a reminder, gephardt paper a few years ago building electrification. When you think about the total greenhouse gas emissions from the state buildings are gone for about 10%.

Harry: Greenhouse gas emissions, but we saw a building electrification being able to make up about a quarter of the gap that we saw in terms of newly carbonization steps needed between we filed that or publish a white paper I don't know two or three years ago and 2030. So it's always a long preamble, but it kind of gives you context of Howard.

Harry: Fortunately, we think that.

Harry: Well do you want your vacation is.

Harry: So what do we do now well for US you know, let me just remind you that that denial of B doesn't impact at all the 5% to 7% EPS growth targets, we have for twenty-five and for 28 that would've been incremental on top of that and it surely does not impact the merit.

Pedro J. Pizarro: Well, for us, you know, let me just remind you that that denial of VE doesn't impact at all the 5 to 7% EPS growth targets we have for 25 and for 28, which would have been incremental, you know, on top of that. And it certainly does not impact the merit of SCE's 25 GRC application because the infrastructure investment that's called for there is absolutely needed, you know, regardless of what happened with VE. But our team will continue to look at how the gap is shaping up for the state. How is the state doing in terms of meeting its 2030, you know, legislative target of a 40% economy-wide reduction in greenhouse gas emissions from 1990 levels? How is the state doing in terms of getting to net zero by 2045?

Harry: She used 45 G. R C application because the infrastructure investment ER skull before there is absolutely needed you know regardless of what happened with the but our team will continue to look at Oh, how is that gap shaping up for the state I always to stay doing in terms of meeting.

Harry: 2030, you know legislator target or for 40 per cent.

Harry: Lemme wide reduction in greenhouse gas emissions from 1990 levels I was just doing in terms of getting to Nigeria, like 20 or 45.

Pedro J. Pizarro: And you know, we expect we'll continue to see building electrification be a laggard in terms of the progress in the state. So our team is already thinking about, are there other opportunities to help the state help itself? And whether that's another application like this one, you know, we truly wouldn't go back out with the same thing. There's no point in that. But we'll continue to think creatively about whether it's a standalone application. Are there other funding sources that can be tapped that might be existing today but that maybe haven't been quite fully tapped yet? Are there things that SCE can do as a utility?

Harry: And you know we will continue to see ability electrification b a ladder in terms of the progress of the states. So our team is already thinking about are there other opportunities to help to stay to help itself and whether that's another application like this one you know would surely wouldn't go back out with the same thing there's no point to that but we will continue to think creatively about is.

Harry: Is it an application stand alone or are there other funding sources that can be tapped it might be existing today, but maybe haven't been quite fully tapped yet are there are things that S. He can do so utility or there are things that S. He can encourage others to do to help address the gap thinking about the whole space right now and we'll keep you posted.

Pedro J. Pizarro: Are there things that SCE can encourage others to do, you know, to help address the gap? Thinking about the whole space right now, and we'll keep you posted. Does that help, David? Yeah, that's a helpful perspective. It doesn't seem like the opportunity has gone away. Well, the need certainly hasn't gone away. I think it's increasing, right? Right. Yep. Yep. Makes sense.

Harry: Does that help in it.

Speaker Change: Yeah, Yeah that sounds like a respected doesn't doesn't seem like the opportunity to goes away.

Speaker Change:

Speaker Change: Well they need certainly doesn't always consider anything is increasing.

Speaker Change: Right Yep, yeah, it makes sense.

Maria C. Rigatti: No, great. And then I guess my only other kind of lingering question here, and maybe I'll have to follow up separately, but just on that cost excluded from authorized, sorry, Marie, to go back to this, but are there any other moving pieces in that 25 cents versus the last slide deck? Did the amount of wildcard claims debt go up meaningfully? I would have thought that that was not changing too much, kind of quarter to quarter here, and then it looked like the interest rate assumption was flat between the two slides there. So, sorry, just curious if there was anything else that was missing. No, it's fine.

Speaker Change: Oh, Great and then I guess my only other kind of lingering question here, maybe I'll have to pull up separately, but just on that cost excluded from authorized sorry remarried. It go back to this but uhm just are there any other movie pieces and at 25 cents versus the last slide deck did the did the amount of wealth or claims that go up meaningfully I would've.

Speaker Change: Thought that that was.

Speaker Change: Not changing too much kind of quarter to quarter here and then it looked like the interest rate assumption was with flat between the two mm slides. There. So sorry, just curious if there's anything else there was missing.

Maria C. Rigatti: You'll recall that in Q3, when we did have the more sizable increase in the reserve, we didn't really update every single line item in the 2025 racket because we knew that we would be able to manage within the range. So, but now that we've got the CCM sort of, as I said, integrated into our tariffs, it'll be implemented line by line. So that's what's going on. Okay, I got it. Thanks so much.

Speaker Change: Recall that in Q3, we did when we did have the more sizeable increase in the reserve we didn't really update every single line item in the 2025 rack up because we knew that we would be able to manage within the range. So but now that we've got the C. C M.

Speaker Change: As I said integrated into our tariffs it'll be implemented in right. We wanted to go through line by line and provide us a fresher updates to so that that's what's going on.

Speaker Change: Okay got it thanks, so much I appreciate it.

Maria C. Rigatti: I appreciate it. Thanks, David. Our next question will come from: Think of America! You're lucky.

Speaker Change: I think there.

Speaker Change: Our next question will come from Julian Smith with Bank of America. Your line is open.

Maria C. Rigatti: Hmm. Hey, good afternoon, team. Thank you very much for your time. I appreciate it. Hey, thank you. So let me just ask a little bit of a follow-up from Angie here vis-a-vis the cost of capital. Just when you think about it, maybe in the reverse here, if you will, if there were to be further gyrations on the cost of capital, it sounds like there are puts and takes that you could manage around here to keep the numbers intact, right? I get that the full extent of the upwards wasn't necessarily reflected in a linear fashion in the outlook for a variety of reasons. I just wanted to clarify that piece, and then I got a quick follow-up on the long term. I'm going to get folded into a lot. Okay, so Julian, um...

Julian Smith: Hey, good afternoon. Thank you very much at the time I appreciate it.

Julian Smith: Hey, Julian.

Julian Smith: Hey, Thank you. So let me just ask off a little bit of a follow up maggi here basically the cost of capital here just when you think about it maybe even the the reverse here. If you if there were to be further Jerry raised him from across the capital. It sounds like they're puts and takes that you could manage around here to keep numbers in tact, great I I get the full extent.

Julian Smith: Upwards wasn't necessarily reflected in a linear fashion.

Julian Smith: In the outlook for a variety of reasons I just wanted to clarify that peace and then I got a quick follow up on the longterm here.

Speaker Change: Sure Yeah, I kind of got pulled into a lot [laughter].

Speaker Change: [laughter] Julian.

Maria C. Rigatti: I think that actually, if you think about what happened in 2023, where we managed the variability that we saw in the business and came out at 476, which is above the midpoint of our guidance range, we always have things that we're managing in the business. And we would do that to the extent that we needed to, relative to the cost of capital. But I want to I want to just reemphasize the cost of capital mechanism triggered because of the interest rate environment we're in. I'll reflect again that the Energy Division did dismiss our advice letter and indicated that the change would be implemented. They went through and responded to all of the intervener commentary around the sort of intervener perspectives on why they think it shouldn't be implemented, and they did a very thorough job of responding to each point.

Speaker Change: I think it actually if you think about what we what happened in 2023, where he managed the variability that we saw in the business and came out at forth any mistakes, which is about the new plan of our Guy and trained we always have things that we're managing in the business and we would do that to the extent that we needed to relative to the cost of capital, but I Wanna I Wanna, just reemphasize the cost of capital Mecca.

Speaker Change: Mm triggered because of the interest rate environment that we're in like I'll I'll reflect again that the energy division did disposition or advice letter and indicated that it would be input the change would be implemented they went through and responded to all of the intervenor commentary around sort of.

Maria C. Rigatti: No intervenors perspective on why they think it shouldn't be implemented and they did a very thorough job of responding to each point. It does now have to be resolved through the C. P. C. A writ large but none of the facts of change and we continue to move forward with it and again, it's in our town or sheets and it will be implemented.

Maria C. Rigatti: It does now have to be resolved through the CPUC writ large, but none of the facts have changed, and we continue to move forward with it. And again, it's in our tariff sheets, and it will be implemented in our next tariff sheet. And, you know, I would just use it as an opportunity, a little bit of a shameless plug, but it kind of goes back to page three in the deck.

Speaker Change: And an X ray change and.

Speaker Change: You know I would just use it as an opportunity to the litter shameless plug, but it's kind of goes back to page three into depth, we manage the business we have <unk>.

Maria C. Rigatti: We manage the business. We have met, you know, or exceeded our guidance for the last two decades, and we plan to continue doing that. I hear you on that one.

Speaker Change: Met or exceeded our guidance for the last two decades, and we plan to continue doing that Julian.

Maria C. Rigatti: I I hear you on that one excellent and well done.

Maria C. Rigatti: Excellent and well done. Maybe just speaking of guidance and the long-term outlook, just real quickly on the EPS profile. If you have this 25 to 28, we've talked a little bit with Jeremy earlier about the, you know, continuity of that 37 cents from 25 to 26. How do you think about the earnings profile from 25 to 28? That might go back to some of the variances, the cadence, and the GRC itself.

Speaker Change: Speaking of Guy. This is longterm outlook, just real quickly on the E. P. S profile. So you have this 25 to 28, we've talked a little bit with Jeremy earlier about the <unk> you know the the continuity of that 37 cents from 20 526, how do you think about the earnings profile from 25 to 28 that might go back to some of the the variances.

Maria C. Rigatti: The cadence the G. R. A C itself any comments at your offer.

Maria C. Rigatti: Any comments that you offer? Sure. And I think I just want to reiterate that 37 cents is part of our rate base each year. So if you do the rate-based math the way you've always done it, you'll capture that true-up and the ongoing impact of that.

Speaker Change: Sure and I think I, just want to reiterate that 37 cents, it's part of our rate base in each year. So if you do the rate base map.

Maria C. Rigatti: Hey, you've always done it you'll capture that show up at the ongoing impact of that so I just wanted to make sure I say that one more time to clarify for folks in terms of the ongoing through 2028 trajectory I'm gonna take it back again to rate base now.

Maria C. Rigatti: So I just want to make sure I say that one more time to clarify for folks. In terms of the ongoing, you know, through 2028 trajectory, I'm going to take it back again to rate-based math. Earnings here are driven by the rate base, and we see that growth trajectory all the way through 2028. We've given you the range and the numbers that relate to the request. We've given you some sensitivities around what the moving pieces are.

Maria C. Rigatti: Earnings here are driven by rapists, and we see that growth trajectory all the way through 2028, we've given you the range with giving you the numbers that relate to the request was giving you some sensitivities around what what the moving pieces are but fundamentally.

Maria C. Rigatti: But fundamentally, the wildfire claims debt expense has stabilized, right? Because now we're getting to the tail end of all of that. So that's stabilized. It doesn't create that, you know, not in the beginning but in the end, sort of dynamic we had in 2021 through 2025. And as we've said before, O&M efficiencies are not a driver for 2025. Yeah, and Julian, again, the same thing for 28 as for 25.

Speaker Change: The wildfire claimed that <unk>.

Maria C. Rigatti: Expense has stabilized strike cause now we're getting to the to the the tail end of all of that so that stabilize it doesn't create that you know not in in the beginning but in at the end sort of dynamic we had in 2021 for 2025 and as we said before O&M efficiencies are not a driver for 25 to 28.

Speaker Change: And Julian again.

Speaker Change: Same thing for 28 is for 25.

Maria C. Rigatti: We've shared with you our target of 5% to 7% growth rate to 28. And our growth rate will be some place in that 5% to 7% range. For 25, you're going to see a growth rate for us. It's going to be 5% to 7%. It's not 3%. It's not 4%. It's going to be 5% to 7%.

Maria C. Rigatti: We've shared with you are you know target of 5% to 7% growth rates are 28, and our grocery will be someplace within 5% to 7% range for 25, you're gonna see a grocery for us it'll be 5% to 7%. It's not three per cent on 4% is gonna be five to seven per cent. So we're gonna meet or.

Maria C. Rigatti: So we're going to meet our guidance and deliver on our expectations for you all. Excellent, guys. Cheers. Thanks, Julian. I will now turn the call back over to Sam Ramraj for closing remarks. Thank you for joining us. This concludes the conference call. Have a good rest of the day. You may now disconnect.

Sam Ramraj: Our guidance and deliver on our expectations for you all.

Sam Ramraj: Excellent terrace. Thanks.

Sam Ramraj: Thanks Jordan.

Sam Ramraj: I will now turn the call back over to send my rushed for closing remarks.

Sam Ramraj: Thank you for joining us. This concludes a conference call have a good rest of the day you may now disconnect.

Maria C. Rigatti: [noise].