Q4 2023 PG&E Corp Earnings Call

It was this team's commitment to living the culture using the tools and building the capabilities that enabled our results and this will cause future success.

In 2023 alone the underground team eliminated $68 million in waste for the benefit of our customers.

They did this by updating our standards deploying optimal construction methods and better managing spoils.

With additional improvement average unit costs came in below our target of $3 $3 million to just under $3 million per mile and the average construction cycle time improved from five and a half months back in February 2023 to three and a half months today.

This was a total game changer, and meeting and exceeding our 350 mile goals.

Thanks to our 2023 underground efforts, we can avoid proactively turning off power to about 15000 households during dangerous high wind events.

These customers who live in our highest risk areas can now sleep at night, knowing they do not have to trade safety for reliability.

<unk> that a tree might land on the power line in their backyard.

This is climate resilient infrastructure for all weather conditions and for generations to come.

The team reminded us that before lean we would've manage the underground effort through spreadsheets and phone calls that was the old P. G anyway.

Underground team is showing us the new P. Janney.

Imagine the impact our performance playbook can have enterprise wide.

It's great that we achieved our 2023 goals, what's even better is that we've created a playbook, enabling consistent premium performance year and in Europe.

As I like to say performance is power this means delivering safe affordable and reliable service to our hometowns, along with consistent predictable financial results.

With that let me turn it over to Carolyn.

Carolyn: Thank you Patty and good morning, everyone.

Carolyn: Today I'm excited to cover three topics with you first a recap of our 2023 results.

Carolyn: Our differentiated growth opportunities and third how are we making this growth affordable for our customers by executing on our simple and affordable model.

Carolyn: Starting here on slide 10, I am pleased to report that we met or exceeded all of our 2023 goals, both operational and financial and we're on track for each of our longer term commitments.

Carolyn: Our 2023 report cards is another proof point that our performance playbook is working.

Carolyn: The culture and capabilities. We are building here at <unk> are enabling our delivery of consistent predictable results.

Carolyn: It's a virtuous cycle setting industry, leading targets using our lean operating system to manage the day to day work and then delivering on our promises building trust with our customers and our investors.

Carolyn: This is how we've made our system safer faster, it's how we delivered on our 2022 and 2023 EPS guidance and it's how we can further strengthen our balance sheet, while keeping bills affordable for our customers.

Carolyn: I'm, especially proud that we reduced non fuel operating and maintenance costs by five 5% in 2023. That's in addition to fully absorbing inflation and on top of the 3% we achieved in 2022.

Carolyn: Looking forward, we see no shortage of opportunities to continue delivering better outcomes for customers at a lower cost all across the business.

Carolyn: I'd note that not all of the 2023 reduction hit the bottom line with the majority directly benefiting customers.

Carolyn: <unk>, our self insurance solution and substantial efficiencies in our vegetation management work.

Carolyn: Our mid teens by 2024 episodes of that target is on track and there is no change to our plan to reduce parent company debt by at least $2 billion by the end of 2026.

Carolyn: We remain firmly committed to achieving solid investment grade ratings in December we were pleased to see S&P revised its rating outlook from stable to positive, indicating the potential for an upgrade in the next 12 months.

Carolyn: And earlier this week underlying as you say that Moody's upgraded our rating by one notch also leaving us on positive outlook.

Carolyn: This puts us one notch away from investment grade one step closer to our goal.

Carolyn: We value the support we've received from our regulators, helping us strengthen our balance sheet, while we execute our plan to affordably serve customers and investors.

Carolyn: For example on February one the commission issued a proposed decision authorizing interim rate relief in the amount of $560 million, while our wildfire and gas safety cost application is pending.

Carolyn: Interim relief may be voted on as early as March 7th and will provide for collection to start as soon as practical over a 12 month period.

Carolyn: Moving to slide 11, as you can see here and as expected the largest discrete driver of fourth quarter and full year results was the approval of our 2023 general rate case, which added 15.

Carolyn: We also saw a benefit of <unk>, partly attributed to our non fuel O&M savings, including better resource management and improved planning and execution.

Carolyn: Please recall that our O&M savings are part of our simple affordable model, which allows us to complete more work for the benefit of our customers while delivering affordability.

Carolyn: That's exactly what you see here with <unk> of redeployment.

Carolyn: Our savings allowed us to stand up 10 additional model yards designed to improve frontline productivity with more efficient processes, minimizing rework and eliminating waste as we deliver for our customers.

Carolyn: We also provided additional training resources for our coworkers and we accelerated inspections cooling forward work to protect 2024 and ensuring we're doing the highest priority work for our customers.

Carolyn: We use every extra resource to better serve our customers and achieve our commitments to you our investors, we weather the ups and downs to deliver consistent predictable results.

Carolyn: As Patti highlighted we ended 2023 at the top of our EPS guidance range, Although our core philosophy remains to redeploy excess earnings back into the system benefiting customers, while de risking and extending premium growth on behalf of investors.

Carolyn: On slide 12, we are extending our capex and rate base growth projections. Another year to include 2028, showing a five year annual rate base growth of nine 5%.

Carolyn: Our new five year capital plan represents an increase of over $10 billion or.

Carolyn: We're approximately 20% over the 2023 to 2027 plan.

Carolyn: This also was over 45% higher than the previous five year period from 2019 to 2023.

Carolyn: The amount shown on this slide reflect our base capital plan, including how much of our rate base is already approved by regulators the vast majority or 93% of our rate base for this year is already authorized as is 90% of our 2026 forecast.

Carolyn: In addition to our plan there are substantial needs to do more.

Carolyn: Specifically, we have at least an incremental $5 billion of capex opportunities, which we will seek to fold into our plan, while still meeting our affordability commitments. These.

Carolyn: These include capacity investments and transmission upgrades to support continued system wide growth.

Carolyn: As we work to drive affordability under a simple affordable model and ongoing deployment of lean and we will look for opportunities to add this important work.

Carolyn: As you know this capital investment fuels, both earnings growth and improves our operating cash flow as illustrated on slide 13, which we have updated and extended since we first showed it at last year's Investor Day.

Carolyn: As shown we're projecting substantial improvement in our operating cash flow in 2024, partly as a result of the final <unk> decision.

Carolyn: Operating cash flow grows from $5 billion in 2000 $23 billion to $11 billion by 2028.

Carolyn: Providing resources to grow our capital investment for customers from $9 8 billion in 2000 $23 billion to $14 billion in 2028.

Carolyn: And substantially improving our cash flow before dividends.

Carolyn: As Patti mentioned our guidance includes no new equity in 2024, as we look forward. We have many good efficient financing choices, including close to $2 5 billion of annual retained earnings today and rising from there at our present low level of dividend payout <unk>.

Carolyn: Of our funding provided from normal utility debt.

Carolyn: Substantial levels of prior cost recovery.

Carolyn: Favorable tax conditions or working capital improvements the sale of a minority interest in our non nuclear generation assets.

Carolyn: And potentially reintroducing an at the market or ATM equity program in 2025.

Carolyn: While we are not giving the final mix of our 2025 financing plan today rest assured that our plan only includes choices, which are accretive to our guidance in light of this we are extending our core EPS growth rate of at least 9% through 2027 and 2028.

Carolyn: Moving to slide 14. This is our simple affordable model and a breakdown of the five 5% O&M savings last year Patti shared details about our underground achievements in 2023 and there are many more similar stories throughout the business.

Speaker Change: I'll share just one more with you today.

Speaker Change: At our Investor Day, you heard about improvements, we were making to the new customer connections process by leveraging our performance playbook.

Carolyn: Now here's how we ended the year.

Carolyn: The team was able to save $24 million, while decreasing average end to end lead time by 13%.

Carolyn: That's a 50 day reduction.

Carolyn: We also reduced engineering design time by 33%, a 37 day reduction.

Carolyn: As a result customer on time delivery improved by 25 percentage points.

Speaker Change: I share. This example to make an important point.

Carolyn: Is not a cost cutting program at PGD.

Carolyn: This is about good business decisions, which are sustainable for the long term and it's about using the performance playbook, including the lean operating system to improve how we do our work every day.

Carolyn: Our actions are improving the customer experience and making capital and safety investments affordable.

Carolyn: I'll end here on slide 15, with regulatory catalysts on the horizon in 2024.

Carolyn: As you can see they are still plentiful and include resolution of our proposed package and sale of.

Carolyn: A proposed decision in phase two of our GSE implementing Senate Bill 410, and unlocking our potential to meet the new customer demand here in California.

Carolyn: <unk> of our 10 year underground plan, and bringing our $5 billion of incremental capital opportunities into the plan, while still meeting our affordability goals.

Carolyn: Finally, I'll comment on our cost of capital adjustment advice letter, which was approved by commission staff in December raising our allowed ROE from 10% to 10, 7% and Truing up our cost of debt.

Carolyn: While this adjustment is already approved and in customer rates. Starting this month in January a joint intervenor groups filed a late request for a review of fast approval.

Carolyn: While we recognize this creates some uncertainty for investors. We were pleased that the commission staff upheld the operation of the adjustment mechanism in December as intended.

Carolyn: Intervenors offered no new fundamental arguments in their request for review and we look forward to this issue being resolved expeditiously.

Carolyn: In the meantime, as we have said consistently our EPS growth guidance is not dependent on the outcome and we value the opportunity to redeploy the revenue uplift for the benefit of customers, while delivering consistent predictable results for investors.

Carolyn: There's a lot to look forward to in 2024 and beyond including our 10% core EPS growth guidance and or at least 9% growth rate now extended through 2028.

Carolyn: With that I'll hand, it back to Patti.

Patti: Thank you Carolyn.

Patti: Before we take your questions. Let me introduce our new report card here on slide 16 against which you'll be able to track our record of differentiated performance, we're showing our results for 2022 and 2023, along with our goals for 2024 and beyond.

Patti: We believe we have a differentiated plan and the right team in place to deliver on these objectives as I said earlier performance is power and we have significant operational momentum with a healthy set of catalysts in front of us.

Patti: <unk> turnaround is on track we trust you feel the momentum as we do.

Patti: We look forward to seeing you at upcoming Investor conferences, as well as our Investor meeting scheduled for June 12 in New York.

Speaker Change: With that operator, please open the lines for questions.

Patti: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Patti: We ask that you please limit yourself to one question and one follow up question.

Patti: We will now take a moment to compile a roster.

Patti: Our first question comes from the line of Shar Peraza with.

Shahriar Pourreza: Doing harm partners. Please go ahead.

Shahriar Pourreza: Hey, guys good morning.

Shahriar Pourreza: Thanks sharpening.

Shahriar Pourreza: Good morning.

Shahriar Pourreza: Just putting on the production process.

Speaker Change: Have you received any feedback after the last round of communications with the commission any sort of thoughts on hurdles and deliberation and then as you guys are sort of planning around the scenarios does the delay potentially move your equity needs, especially as you return opco cap structure to authorized levels.

Speaker Change: Yeah. Thanks for the question Shar.

Speaker Change: I'd say, our communications with the commission have been very constructive regarding patch and we know that pack Jan is a good transaction for customers, California has very long term clean energy ambitions and this is a beautiful fleet of clean energy resources that need investment over the coming years and to be able to share that with an investment partners good for cat.

Speaker Change: <unk> clean energy ambitions and good for customers and so our extended time with the commission on these topics.

Speaker Change: They have been good that that that helps us truly make the case and frankly the commission has had a lot on its plate and so I can understand why they wanted a little more time. They know this is an important transaction they want to give it a full look and our conversations have been very constructive with them regarding that.

Speaker Change: I'll I'll hand, it over to Carolyn and let her discuss about our financing plans, both with and without pack, Jim because we know pack Gen isn't the only thing Carolyn referenced an important set of choices that we have <unk> is one of our choices for financing, but I'll, let Carol and go ahead and take that thanks for your question. Yeah. If you don't mind I I covered a lot of it's in the.

Carolyn: But I do recognize it's been a busy morning for many of you. So let me just cover a couple of points first as you know we raised an extended our core EPS guidance today, it's 12% in 2023 and at least 10% in 'twenty four and at least 9% now through 2028.

Carolyn: Our refreshed five year plan includes improvement in our operating cash flows rising from about $5 billion in 2000 $23 billion to $11 billion in 2026, and Thats, providing the resources to grow our capital investment and further improve our cash flow.

Carolyn: Three.

Carolyn: Key point here our guidance includes no new equity in 'twenty, four with or without <unk>.

Carolyn: And then as we look forward beyond 2024, as we said on the call we have many good financing choices.

Carolyn: And they include.

Carolyn: Close to $2 5 billion of annual retained earnings today, which is rising at our present load level of dividend, we have half of our funding provided from normal utility debt.

Carolyn: We've talked about substantial levers of prior cost recovery favorable tax conditions, we are constantly working our working capital improvements.

Carolyn: And of course, we have potentially reintroducing, an aftermarket or ATM equity program in 2025.

Carolyn: We're not giving you all the final mix of that 2025 financing planned today, but one thing that you can count on is that our plan will include choices, which are accretive to our guidance.

Carolyn: Perfect you think it's just simply.

Speaker Change: Perfect, Okay, well, if I just one thing on it because I do know and I, just now I'm gonna get lots of questions on the ATM.

Speaker Change: And so I just want to close that I think it's I just want to say very clearly to everyone that is just simply too soon to size the potential ATM.

Speaker Change: As we've said on this call we have a number of other good financing choices.

Speaker Change: Available to us and we have other things that we need to consider which include our growing leading capability in O&M savings the pace at which we introduce the additional 5 billion of Capex and then our own advocacy and timely regulatory outcomes and of course, the pace of our dividend growth.

Speaker Change: So just there's a lot there and I just thought maybe because it's been a busy morning wanted to just restate all of that for you all and charges to close out. This subject you asked a very fulsome question. So we gave you a fulsome answer just to close out you know we ride. The rollercoaster. This is this is what we do there ins and outs ups and downs, we ride that so that we can deliver this.

Speaker Change: Consistent earnings growth profile that we've described and we've committed to.

Speaker Change: We intend and we plan and we are very confident that we can stand by our EPS growth guidance through 2028, even with the range of equity assumptions.

Speaker Change: Got it and then count this is super helpful. Thank you and just two.

Speaker Change: To make sure we confirm this it sounds like your.

Speaker Change: I don't want to say shifting but some of your prior messaging with the stock price kind of dictating your equity timing to now being a little bit more focused around a more systematic approach to raising equity through the trajectory like the rest of this industry is transitioning towards is that a fair statement.

Speaker Change: I think what's important is that we standby.

Speaker Change: Our commitment to you that we will find the most efficient financing available to us and at this point in time as we look at our stock it is not the most efficient financing.

Speaker Change: Fantastic. Thank you guys. So much I appreciate it.

Speaker Change: Great. Thanks Shar.

Speaker Change: Our next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead.

Steve Fleishman: Great Good morning.

Steve Fleishman: Hey, good morning, good morning.

Steve Fleishman: You pick the wrong data report and.

Steve Fleishman: In video blowing out.

Steve Fleishman: Yes.

Steve Fleishman: So thanks for all of them, it's a long game, it's a long game, we know it's going to be all right.

Speaker Change: Yes, you bet.

Steve Fleishman: Yes.

Steve Fleishman: So.

Steve Fleishman: Just on the.

Steve Fleishman: In the past when you've talked about the growth rate you also kind of talk to total return.

Steve Fleishman: As part of that I don't know that you thought you reinstate your dividend.

Steve Fleishman: Any kind of.

Steve Fleishman: The reason that you didn't talk to that.

Steve Fleishman: You can get about.

Steve Fleishman: But as we stand today.

Speaker Change: Yeah. Thanks, Steve for that question and we know that this obviously are our dividend is low today and the growth rate of our dividend isn't it area of interest for a lot of people. So I'm glad you asked you know our intent truly is to have a competitive payout ratio and we intend to show meaningful progress during this five year.

Speaker Change: And so I'm happy to be able to share more about this five year planning horizon. So as we think about it this catch up growth rate will be significant.

Speaker Change: No.

Speaker Change: Radically different from peers, given our starting point.

Speaker Change: So how quickly we move within these five years is obviously driven by our differentiating and differentiated.

Steve Fleishman: Financing choices that Carolyn just described.

Speaker Change: So in this near term I do think it's important for people to remember that we are prioritizing our healthy balance sheet affordable investment for customers our premium EPS growth and then we will feather in that dividend over time, but it will obviously as I said have a dramatically different growth rate from peers, given our starting point.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Makes sense.

Speaker Change: I guess, it's kind of the starting from disposition Felicia.

Speaker Change: Sure.

Speaker Change: And then and then just one on the.

Speaker Change:

Speaker Change: Yes, just on <unk>.

Speaker Change: The.

Speaker Change: The commission just on Apache and again, there's nothing too.

Speaker Change: We've had delays in a lot of things over time, you can just kind of the normal.

Speaker Change: Yes.

Speaker Change: Or is something else going on with respect to the powertrain approvals yes.

Speaker Change: No I think a couple of things just in terms of context I do believe the adjudication of our rate case provide a lot of good visibility and discussion about cash flow. Its importance. So I do think we definitely have better alignment with the commission on that subject for US, which is why we would be pursuing a pack.

Speaker Change: <unk> transaction I think they value the resources and they want to make sure on behalf of the customers of California that its a good transaction for customers. We believe that it is a great transaction for customers it.

Speaker Change: It sets us up to have a partnership over time to invest in these clean energy resources, we see growing load growth in California, we see need for new generation. This allows us to have a partner in that in that journey and we know that that will be the lowest cost of financing them for customers and so we standby the transaction.

Speaker Change: We know that additional time with the commission only allows us to better communicate align with them on that.

Speaker Change: Okay, Great and then one more.

Speaker Change: More question just on the cash flow slide which is.

Speaker Change: On slide <unk>.

Speaker Change: And thinking about.

Speaker Change: I guess that's.

Speaker Change: That's fair.

Speaker Change: Each year.

Speaker Change: I mean, it's relatively modest.

Speaker Change: Ken a lot of that just being met with a utility.

Speaker Change: So mutual or not.

Speaker Change: Not included in that.

Speaker Change: Yes.

Speaker Change: No I think I think thats the way Youre thinking I think that's right the way youre thinking about it but I'll just remind you that there is an additional $5 billion of incremental capex that we're looking at.

Speaker Change: Financing as well and we would again consider that.

Speaker Change: And ensure that we are financing that so that its accretive to earnings.

Speaker Change: Okay.

Speaker Change: Thanks I appreciate it.

Speaker Change: Thanks, Steve.

Speaker Change: Our next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Nicholas Campanella: Hey, Thanks, so much for taking my question.

Nicholas Campanella: Hi, Nick So I apologize, it's been a little all over the place open not repeating another question, but just the positive outlook VA one.

Nicholas Campanella: And then obviously good to see that move back to a degree.

Speaker Change: Green here.

Speaker Change: On the report card.

Nick: Mr milestone, what's your understanding of the milestones and just kind of a timeline to get to investment grade now.

Speaker Change: Yes. Thanks for the question, Nick we've been having good conversations.

Mr milestone: With both Moody's and S&P, we remain intently focused on improving the credit quality.

Mr milestone: We're laser focused on achieving investment grade.

Mr milestone: We continue to make good progress on improving our credit metrics every year and we're continuing to target mid teens <unk> to debt to 2024.

Mr milestone: Our five year plan shows the significant progress in 'twenty four 'twenty five with sustained high levels of cash generation as you mentioned and.

Mr milestone: And the rating agencies, obviously are looking beyond just the credit metrics and beyond just our cash flow. They're also looking at improvements in our risk mitigation as it relates to wildfires.

Mr milestone: One more season, perhaps from a per S&P Moody's is laser focused as well on the wildfire.

Mr milestone: We're mitigation governance and management and improvement in our credit metrics I think that's the most important gauge for you to look at when you consider.

Mr milestone: Milestones is the rating agencies and their reports themselves.

Mr milestone: We're very happy to see the recent upgrade.

Mr milestone: And that we continue to be on positive outlook with both Moody's and S&P. So we're going to continue to execute on our plan continue to execute on our risk mitigation continue to execute on our O&M savings and and continue to execute on on ensuring that we.

Mr milestone: See those improvements in our credit metrics for our rating agencies.

Speaker Change: Alright, Thanks, a lot and then I guess, just the June 12, Investor Day in New York.

Speaker Change: Just given you've extended the plan out to 28, which is great to see by the way, but just how do we kind of think about what that investor day with bringing this kind of more of a fine.

Mr milestone: Financing update just given the moving pieces in the strategic financing right now is that fair or how would you characterize it.

Mr milestone: I'd say one of the things that we want to make sure people know is the California context in the California backdrop for the clean energy transition. This I would say, it's going to be a very differentiated part of our story relative to peers, we see the transition here in full swing.

Mr milestone: And we are a key player in that transition. So we look forward to sharing more about our load growth forecast what that means what is electrification really hold for both <unk>, our shareholders, our investors as well as our customers and our hometowns.

Mr milestone: We look forward to really give me a better long term business outlook.

Mr milestone: Of course further refinement of our financial plan.

Speaker Change: Great looking forward to it thanks a lot.

Speaker Change: Nick.

Speaker Change: Our next question comes from the line of Julien Dumoulin Smith with Bank of America. Please go ahead.

Speaker Change: Hey, Jim can you guys hear me okay.

Speaker Change: We can hear Natalie and good morning.

Speaker Change: Wonderful with the cell phone that is I got to resorts.

Speaker Change: So I just wanted to follow up on a couple of things that were said thus far in terms of just updates around this ATM I know you said, you're expecting a lot of questions, but just to frame it out really.

Speaker Change: In terms of the timeline here I mean, you've got to know what happens with tax in my middle Middle part of the year, but I suspect you're going to continue to evaluate asset sales that would be something incremental that would tax headwind materialize that and then by the end of the year. If there was nothing else that would materialize. Then you would kind of go back to that sort of critical lapses or an ATM.

Speaker Change: I mean, given the success in cost cuts et cetera.

Speaker Change: And kind of interpret that as effectively saying.

Speaker Change: There's a lot of other levers will probably pull in the near term and a successful outcome at least at this stage with this equity price would be not necessarily pursuing an ATM is that kind of a fair way to frame it.

Speaker Change: The way I would frame it is more of that you know it's one it's really as I said, it's just too soon to size that potential ATM in 2025, but.

Speaker Change: But we have a lot of good options to consider and so and we're looking in particular as you just mentioned.

Speaker Change: Our growing lean capability in those O&M savings, you'll see you saw that we achieved 3% in 2022 and last year five 5%. So we're very excited about the success, there and think that could be a factor.

Speaker Change: We've talked about the additional $5 billion in new Capex.

Speaker Change: Going to make sure that that's affordable to bring into our plan and that we can finance it.

Speaker Change: With one of these all of these options. So what's the timing that we introduced that $5 billion of new Capex.

Speaker Change: And as you know we do have a number of in flight regulatory outcomes that we've been advocating for and so the timing of those will really depend on how we're thinking about the ATM a potential <unk> ATM in 2025 and of course as Patty just covered.

Speaker Change: The timing of our dividend growth, we will have more clarity on that.

Speaker Change: And as we go into 2025 as well.

Speaker Change: So all of those are what really will drive a potential size of an ATM.

Speaker Change: I appreciate you entertaining another question on this.

Speaker Change: And maybe just coming back speaking of investment and success is great I appreciate your story Patty.

Speaker Change: Can you talk a little bit too.

Speaker Change: In light of those successes, how do you think about the cadence of underground.

Patty: If you think about this year and further years I mean has that sort of.

Patty: Unlocked an ability to actually accelerate what you were doing earlier and really remain on track in a more structural way.

Patty: What would be the regulatory considerations around that would be to the extent to which that was an avenue that you now see increasingly as is possible.

Patty: Yeah, I do think last year was an important proof point for everybody ourselves included that it can be done and we can do underground at scale and in an affordable way for customers.

Patty: Fundamentally changing the health and well being of the customers who live near those lines. So that's that's our first point, but remember the general rate case did reduce our mileage from what we had filed so this year, we're actually probably going to do about 250 miles of under grounding in line with the.

Patty: The rate case, we will be filing our 10 year underground plan as required by SBA eight four and that will then give us a window into and hopefully an approval by the end of 'twenty. Five early 26 that we can see that in 2026 and beyond our 10 year plan for underground as an important.

Patty: Part of the climate resilient infrastructure of California, and again I'll remind you our underground plan.

Patty: It's not a big bet, it's about 8% of our total line miles, but it's the 8% in the highest risk areas. So it eliminates this choice between reliability and safety for customers. They can have both and they can have that affordably.

Patty: We will be able to make that case very well in our in our filing and our 10 year filing and show. The total long term net present value benefit to customers of doing that kind of infrastructure in those places, but our capital plan is.

Patty: Very fulsome with a variety of our capital investments and it doesn't hinge on the underground plan, though we standby that important infrastructure again.

Patty: As climate resilient infrastructure for the people of California, the future not the climate of the past, but the climate, that's becoming more and more real and we need to have infrastructure that is up to the challenge.

Speaker Change: Excellent fair enough guys see you soon.

Speaker Change: Great. Thanks Julien.

Speaker Change: Our next question comes from the line of Greg oral with UBS. Please go ahead.

Speaker Change: Yeah.

Greg Gordon: Yes, Thank you and good morning.

Greg Gordon: Hey, Greg earnings right.

Greg Gordon: Just coming back to the.

Greg Gordon: Cash flow slide.

Speaker Change: I was wondering if you could help.

Greg Gordon: Fill in some of the some of the drivers between.

Patty: <unk> 24, and 25 25, the Dod looks to be around 10.

Patty: $10 billion in cash flow.

Patty: Versus the eight in 'twenty, four but you've got the wildfire recoveries coming down. So obviously depreciation is a driver.

Patty: Growth.

Speaker Change: I'm just struggling to connect the dots a little bit.

Patty: So the $5 billion to the $8 billion from 23% to 24 is your question.

Patty: What's driving that just making sure.

Patty: Because you've got the <unk>.

Patty: The wildcard and I was wondering Bruce round down, but you've got the cash flow going up.

Patty: Well, primarily that is the that is our JRC from 'twenty four to 'twenty for the additional.

Patty: Revenues from there in.

Patty: In addition to that.

Patty: Just remember we have our 2% savings being compounded.

Patty: And so we see that the other key part of 24 versus 25% as we see a decrease in litigation.

Patty: Litigation as it relates to our wildfires has been part of our puzzle.

Patty: And then.

Patty: As a as we our outlook on.

Patty: Commodity prices, we have lower collateral postings as well so theres a lot of moving parts, but the primary driver of the increase really is our rate base cost recovery from our DRC that is the main part of the story, but theres a lot of other moving parts.

Speaker Change: Okay got it thanks.

Patty: Our next question come from the line of Ryan Levine with Citi. Please go ahead.

Ryan Levine: Good morning.

Ryan Levine: Ryan Booth.

Ryan Levine: Hi.

Ryan Levine: It would be the ratepayer impact of a year delay to potential <unk> sale as you see it.

Ryan Levine: But just the savings from Pac Gen sale is that it in terms of the benefits from that and some farms.

Ryan Levine: Yes.

Patty: Calculated publicly.

Patty: There is great benefits. This transaction so I'm just trying to I think there's like.

Speaker Change: Yeah. We think this is a great transaction for customers right. It provides customer affordability, primarily through financing cost at Pac Jen as well as it because its improving our balance sheet, we expect to be able to pass.

Speaker Change: <unk> lower financing cost for our finance for our customers at <unk> as well, but as Patti mentioned, we also see significant benefits for customers.

Speaker Change: Because these assets are so key to the clean energy goals and having a partner that is bringing both the resources and the interest and expertise in supporting these future capital growth needs.

Speaker Change: Of this very important portfolio, we think that's where it's particularly going to benefit customers.

Speaker Change: So there there were the two things I would point to.

Patty: Okay.

Patty: What is the enterprise lean maturity percentages in your scorecard measuring.

Speaker Change: Terrific around 44% for the recent here.

Speaker Change: Yes.

Patty: Do it.

Patty: Assessment of all of our leaders and what.

Patty: Their maturity is.

Patty: The adoption and implementation of our five basic place and it's a self assessment. So the team reviews, what's the standard and how are they performing to the standard of these five plays.

Patty: And you know the the point of the 44% score is that that means that we have lots of room to grow our maturity and so if you can imagine delivering five 5% non fuel O&M savings at a maturity level on the <unk>, just think of the potential benefit for customers and our processes.

Patty: In our O&M savings over time, when we grow that maturity enterprise wide.

Patty: Okay, and then what are the practical implications of those bills going out for gas in February and March for electric it's the cost of capital trigger doesn't hold.

Patty: Okay.

Patty: The cost of capital triggered does not hold what's the implications. It's very minor in terms of the monthly bill rate for the cost of capital adjustment. It was a couple of Bucks.

Patty: With that get reimbursed or.

Patty: Three years or.

Patty: Mechanically how does that work.

Speaker Change: I think it would depend on the determination and how that determination is implemented.

Speaker Change: Okay. Thanks for taking my questions.

Speaker Change: Yeah. Thanks Ryan.

Speaker Change: Our next question comes from the line of Anthony crowd, though with Mizuho Securities. Please go ahead.

Anthony: Hey, good morning team just I wanted to do a quick follow up to what our next questions I guess on the credit rating curious Carolyn on S&P I think it's stated there waiting for one more season do you know.

Anthony: What they want is seeing one season prior to an upgrade.

Carolyn: I think it's another season of of performance by our team.

Carolyn: I think there are some folks and we've heard this from even analyst calls that on the last two winters have been.

Carolyn: Not significantly in terms of our wildfire season, but we've proven with our numbers when you even adjust for the weather that we are continuing to reduce wildfire risk and I know Patti has huh.

Carolyn: And this year and I would just say in our conversations with S&P. They focus on three main things I would say first its management and governance pulse bankruptcy. So I do believe thats, what theyre looking at first and then they want to see additional wildfire performance, which we feel very confident about and then finally, obviously the financial metrics and so.

Carolyn: We do where we've been on positive outlook with them. They put us on positive outlook at the end of the year. So we look forward to them moving on that sometime in 2024.

Speaker Change: Great and then just one follow up on the cost of capital Challenge is there a date where.

Speaker Change: I don't know if the right term is the challenge gets dismissed or I know, it's already in rates I know, it's not going to impact the company's 2000 and for guidance, but just is there is there a date, where the commission denies the challenge.

Speaker Change: There is nothing a firm or a definitive about that.

Speaker Change: Thanks for taking.

Speaker Change: My question.

Speaker Change: There your thoughts are correct, though that it is in rates and it doesn't have a bearing on our 24 earnings other than to say that we have planned conservatively for either outcome.

Speaker Change: Great. Thank you.

Speaker Change: Our final question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

David Arcaro: Oh, Hey, good morning, Thanks, so much.

Speaker Change: Yes.

David Arcaro: Great to see your extending the EPS growth rate here I was just wondering kind of what gives you the confidence now to provide those EPS growth assumptions through 28, given that there's another cost of capital proceeding another GSE.

David Arcaro: In the midst of that planning period.

Speaker Change: We have a great plan and it's anchored in our simple affordable model, we have ample capital demand and this is the thing that I want to just to.

David Arcaro: Acknowledged for our customers who are feeling the catch up in our bills right now we know that we can.

David Arcaro: Deliver this.

David Arcaro: Capital infrastructure, which they have been demanding and requesting and asking for us to deliver in an affordable way. So as we look forward we have a.

David Arcaro: Conservative plan, we ride that roller coaster. So we can deliver a consistent outcome for investors and better service every single year for customers and frankly, we look forward to a time in the not too distant horizon, where we're gonna be lowering bills for customers as we do that the simple affordable model will work here in California, we are.

David Arcaro: In the early days, but as we look forward, we see the capital demand matched by our cost savings low growth and efficient financing, which allows for affordable bills for customers. That's a formula that can work for a long time forward. It gives us a lot of confidence as we give forecasted EPS growth guidance.

David Arcaro: In the next five year plan.

Speaker Change: And David I will just remind we always plan conservatively and so.

David Arcaro: So that's what gives us also lots of confidence.

David Arcaro: Okay excellent. Thanks, and then maybe on load growth.

David Arcaro:

David Arcaro: The data center backdrop seems to have changed quite a bit maybe since you've given that 1% to 3% load growth figure and it sounds like you might address that on an upcoming analyst day I was just wondering if that's reflective of what you've seen in your service territory in terms of that data center demand is that accelerating ramping up from what your prior expectations had been.

Speaker Change: Yes, well I can share that.

Speaker Change: Just in 2023, we had a three <unk> increase in data center applications versus the prior four years. So as we look at the five year forward load growth forecast. The back end of that forecast will reflect then the additional data data center demand and look I think we all can agree that the only.

Speaker Change: Thing Thats happening with data centers as they need more of them and so part of the deal here is we need to make ourselves available and accessible and show that we can in fact serve that load here in California, which is what we're doing and we'll look forward to sharing more about that.

Speaker Change: In June.

Speaker Change: Okay, great much appreciate it.

Speaker Change: Thank you David.

Speaker Change: I wouldn't dare I'd like to turn the call over to Patti Poppe for closing remarks.

Patti Poppe: Thank you Mandy well. Thank you everyone for joining us today I know it was a busy one and we appreciate your time and attention. We're we'll look forward to staying in touch with you I just wanted to give a final remark and thank the entire pega team for delivering an outstanding 2023 for customers. They delivered for our hometowns, we're serving our plan.

Patti Poppe: And we're leading with love it P J D and I couldnt be more proud to stand alongside with the men and women of <unk> need to do just that so we feel really great about our turnaround we know that that turnaround is on track. Thanks to all of those great people here at the company and we look forward to seeing.

Speaker Change: Seeing all of you in the coming months.

Speaker Change: And definitely in June on June 12 in New York. Thanks, So much have a safety.

Speaker Change: This concludes today's call you may now disconnect.

Speaker Change: Yeah.

Looking forward, we see no shortage of opportunities to continue delivering better outcomes for customers at a lower cost all across the business.

I would note that not all of the 2023 reduction hit the bottom line with the majority directly benefiting customers, including our self insurance solution and substantial efficiencies in our vegetation management work.

Our mid teens by 2024 <unk> to debt target is on track and there is no change to our plan to reduce parent company debt by at least $2 billion by the end of 2026.

We remain firmly committed to achieving solid investment grade rating.

In December we were pleased to see S&P revised its rating outlook from stable to positive, indicating the potential for an upgrade in the next 12 months.

And earlier this week underlying as you say that Moody's upgraded our rating by one notch also leaving us on positive outlook.

This puts us one notch away from investment grade one step closer to our goal.

We value the support we've received from our regulators, helping us strengthen our balance sheet, while we execute our plan to affordably serve customers and investors.

For example on February one the commission issued a proposed decision authorizing interim rate relief in the amount of $560 million, while our wildfire and gas safety cost application is pending.

The interim relief may be voted on as early as March 7th and would provide for collection to start as soon as practical over a 12 month period.

Moving to slide 11, as you can see here and as expected the largest discrete driver of fourth quarter and full year results was the approval of our 2023 general rate case, which added 15.

We also saw a benefit of <unk>, partly attributed to our non fuel O&M savings, including better resource management and improved planning and execution.

Carolyn: Please recall that our O&M savings are part of our simple affordable model, which allows us to complete more work for the benefit of our customers while delivering affordability.

Carolyn: That's exactly what you see here with <unk> of redeployment.

Carolyn: Our savings allowed us to stand up 10 additional model yards designed to improve frontline productivity with more efficient processes, minimizing rework and eliminating waste as we deliver for our customers.

Carolyn: We also provided additional training resources for our coworkers and we accelerated inspections, calling forward work to protect 2024 and ensuring we're doing the highest priority work for our customers.

Carolyn: We use every extra resource to better serve our customers and achieve our commitments to you our investors, we weather the ups and downs to deliver consistent predictable results.

Carolyn: As Patti highlighted we ended 2023 at the top of our EPS guidance range.

Carolyn: Our core philosophy remains to redeploy excess earnings back into the system benefiting customers, while derisking and extending premium growth on behalf of investors.

Carolyn: On slide 12, we are extending our capex and rate base growth projections. Another year to include 2028, showing a five year annual rate base growth of nine 5%.

Carolyn: Our new five year capital plan represents an increase of over $10 billion or approximately 20% over the 2023 to 2027 plant.

Carolyn: <unk> also has over 45% higher than the previous five year period from 2019 to 2023.

Carolyn: The amount shown on this slide reflect our base capital plan, including how much our rate base is already approved by regulators the vast majority or 93% of our rate base for this year is already authorized as is 90% of our 2026 forecast.

Carolyn: In addition to our plan there are substantial needs to do more specifically.

Carolyn: Specifically, we have at least an incremental $5 billion of capex opportunities, which we will seek to fold into our plan, while still meeting our affordability commitment fees.

Carolyn: These include capacity investments and transmission upgrades to support continued system wide growth.

Carolyn: As we work to drive affordability under a simple affordable model and ongoing deployment of lean and we will look for opportunities to add this important work.

Carolyn: As you know this capital investment fuels, both earnings growth and improves our operating cash flow as illustrated on slide 13, which we have updated and extended since we first showed it at last year's Investor Day.

Carolyn: As shown we're projecting substantial improvement in our operating cash flow in 2024, partly as a result of the final DRC decision.

Carolyn: Operating cash flow grows from $5 billion in 2000 $23 billion to $11 billion by 2028.

Carolyn: Providing resources to grow our capital investment for customers from $9 $8 billion in 2000 $23 billion to $14 billion in 2028.

Carolyn: <unk> substantially improving our cash flow before dividends.

Carolyn: As Patti mentioned our guidance includes no new equity in 2024, as we look forward. We have many good efficient financing choices, including close to two 5 billion of annual retained earnings today and rising from there at our present low level of dividend payout.

Carolyn: Half of our funding provided some normal utility debt.

Carolyn: Substantial levels of prior cost recovery.

Carolyn: Verbal tax conditions.

Carolyn: Our working capital improvement the sale of a minority interest in our non nuclear generation assay and potentially reintroducing and at the market or ATM equity program in 2025.

Carolyn: While we are not giving the final mix of our 2025 financing plan today rest assured that our plan only includes choices, which are accretive to our guidance.

Carolyn: In light of this we are extending our core EPS growth rate of at least 9% through 2027 and 2028.

Carolyn: Moving to slide 14. This is our simple affordable model and a breakdown of the five 5% O&M savings last year.

Carolyn: Patti shared details about our underground and achievements in 2023 and there are many more similar stories throughout the business.

Speaker Change: I'll share just one more with you today.

Speaker Change: At our Investor Day, you heard about improvements, we were making to the new customer connections process by leveraging our performance playbook.

Speaker Change: Now here's how we ended the year.

Carolyn: The team was able to save $24 million, while decreasing average end to end lead time by 13%.

Carolyn: That's a 50 day reduction.

Carolyn: We also reduced engineering design time by 33%.

Carolyn: 37 day reduction.

Carolyn: As a result customer on time delivery improved by 25 percentage points.

Speaker Change: I share. This example to make an important point.

Carolyn: This is not a cost cutting program at P. Jeanie rather this is about good business decisions, which are sustainable for the long term.

Carolyn: And it's about using the performance playbook, including our lean operating system to improve how we do our work every day.

Carolyn: Our actions are improving the customer experience and making capital and safety investments affordable.

Carolyn: I'll end here on slide 15, with regulatory catalysts on the horizon in 2024 as you can see they are still plentiful and include resolution of our proposed package and sell a proposed.

Carolyn: Decision in phase two of our geography, implementing Senate Bill 410, and unlocking our potential to meet the new customer demand here in California.

Carolyn: Eight of our 10 year underground plan, and bringing our $5 billion of incremental capital opportunities into the plan, while still meeting our affordability goals.

Carolyn: Finally, I'll comment on our cost of capital adjustment advice letter, which was approved by commission staff in December raising our allowed ROE from 10% to 10, 7% and Truing up our cost of debt.

Carolyn: While this adjustment is already approved and in customer rates. Starting this month in January a joint intervenor groups filed a late request for a review of staff approval.

Carolyn: While we recognize this creates some uncertainty for investors. We were pleased that the commission staff upheld the operation of the adjustment mechanism in December as intended.

Carolyn: Intervenors offered no new fundamental arguments in their request for review and we look forward to this issue being resolved expeditiously.

Carolyn: In the meantime, as we have said consistently our EPS growth guidance is not dependent on the outcome and we value the opportunity to redeploy the revenue uplift for the benefit of customers, while delivering consistent predictable results for investors.

Carolyn: There's a lot to look forward to in 2024 and beyond including our 10% core EPS growth guidance.

Carolyn: Or at least 9% growth rate now extended through 2028.

Carolyn: With that I'll hand, it back to Patti.

Patti: Thank you Carolyn.

Patti: Before we take your questions. Let me introduce our new report card here on slide 16 against which you'll be able to track our record of differentiated performance for <unk>.

Carolyn: Our results for 2022, and 2023, along with our goals for 2024 and beyond.

Carolyn: We believe we have a differentiated plan and the right team in place to deliver on these objectives as I said earlier performance is power and we have significant operational momentum with the healthy set of catalysts in front of us.

Carolyn: The <unk> turnaround is on track.

Carolyn: Trusts do you feel the momentum as we do.

Speaker Change: We look forward to seeing you at upcoming Investor conferences, as well as our Investor meeting scheduled for June 12 in New York.

Speaker Change: Operator, please open the lines for questions.

Speaker Change: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Carolyn: We ask that you please limit yourself to one question and one follow up question.

Speaker Change: We'll now take a moment to compile a roster.

Carolyn: Our first question comes from the line of Shar Peraza with.

Shahriar Pourreza: Dougan harm partners. Please go ahead.

Shahriar Pourreza: Hey, guys good morning.

Shahriar Pourreza: Thanks sharpening.

Speaker Change: Good morning.

Speaker Change: Just probably on the production process.

Speaker Change: Have you received any feedback after the last round of communications with the commission any sort of thoughts on hurdles and deliberation and then as you guys are sort of planning around the scenarios does the delay potentially move your equity needs, especially as you return opco cap structure to authorized levels.

Speaker Change: Yeah. Thanks for the question Shar.

Speaker Change: I'd say, our communications with the commission have been very constructive regarding patch and we know that pack Jan is a good transaction for customers, California has very long term clean energy ambitions and this is a beautiful fleet of clean energy resources that need investment over the coming years and to be able to share that with an investment partners. Good for.

Carolyn: <unk> clean energy ambitions and good for customers and so our extended time with the commission on these topics.

Carolyn: Have been good that that that helps us truly make the case and frankly the commission has had a lot on its plate and so I can understand why they wanted a little more time. They know this is an important transaction they want to give it a full look and our conversations have been very constructive with them regarding that I'll I'll hand, it over to Carolyn and let her discuss about our financing plan.

Carolyn: Both with and without pack, Jim because we know pack Jonathan the only thing Ellen referenced an important set of choices that we have Pat John is one of our choices for financing, but I'll, let Carol and go ahead and take that thanks for the question. Yeah. If you don't mind I I covered a lot of this in the call, but I do recognize it's been a busy morning for many of you. So let me.

Carolyn: Just cover a couple of points here first as you know we raised an extended our core EPS guidance today, it's 12% in 2023 and at least 10% in 'twenty four and at least 9% now through 2028 RV.

Carolyn: Our refreshed five year plan includes improvement in our operating cash flows rising from about $5 billion in 2000 $23 billion to $11 billion in 2026, and that's providing the resources to grow our capital investment and further improve our cash flow.

Patti: Three key.

Patti: The point here our guidance includes no new equity in 'twenty, four with or without <unk>.

Patti: And then as we look forward beyond 2024, as we said on the call we have many good financing choices.

Patti: And they include.

Patti: Close to $2 5 billion of annual retained earnings today, which is rising or present load level of dividend, we have half of our funding provided from normal utility that we.

Patti: We talked about substantial levers of prior cost recovery favorable tax conditions, we are constantly working our working capital improvements.

Patti: Of course, we have potentially reintroducing, an aftermarket or ATM equity program in 2025, we're not giving you all the final mix of that 2025 financing planned today, but one thing that you can count on is that our plan will include choices, which are accretive to our guidance.

Patti: Perfect. Thank it's just simply perfect. Okay, well if I just one thing on it because I do know and I, just now I'm gonna get lots of questions on the ATM.

Speaker Change: And so I just want to close that I think it's I just want to say very clearly to everyone that it's just simply too soon to size the potential ATM.

Patti: As we've said on this call we have a number of other good financing choices.

Patti: Available to us and we have other things that we need to consider which include our growing lean capability in O&M savings.

Shahriar Pourreza: The pace at which we introduce the additional 5 billion of Capex, and then our own advocacy and timely regulatory outcomes and of course, the pace of our dividend growth.

Speaker Change: So just there's a lot there and I just thought maybe because it's been a busy morning wanted to just restate all of that for you all and charges to close out. This subject you asked a very fulsome question. So we gave you a fulsome answer just to close out you know we ride the roller coaster. This is this is what we do there ins and outs ups and downs, we ride that so that we can deliver this.

Consistent earnings growth profile that we've described and we've committed to.

Speaker Change: We intend and we plan and we are very confident that we can stand by our EPS growth guidance through 2028, even with the range of equity assumptions.

Speaker Change: Got it and then count this is super helpful. Thank you and just.

Speaker Change: To be sure we confirm this it sounds like your.

Speaker Change: I don't want to say shifting but some of your prior messaging you know.

Speaker Change: With the <unk>.

Terrific.

I'm, especially proud that we reduced non fuel operating and maintenance costs by five 5% in 2023.

That's in addition to fully absorbing inflation and on top of the 3% we achieved in 2022.

Looking forward, we see no shortage of opportunities to continue delivering better outcomes for customers at a lower cost all across the business.

I'd note that not all of the 2023 reduction hit the bottom line with the majority directly benefiting customers, including our self insurance solution and substantial efficiencies in our vegetation management work.

Our mid teens by 2024 <unk> to debt target is on track and there is no change to our plan to reduce parent company debt by at least $2 billion by the end of 2026.

We remain firmly committed to achieving solid investment grade rating.

In December we were pleased to see S&P revised its rating outlook from stable to positive, indicating the potential for an upgrade in the next 12 months.

And earlier this week I'm delighted to say that Moody's upgraded our rating by one notch also leaving us on positive outlook.

This puts us one notch away from investment grade one step closer to our goal.

We value the support we received from our regulators, helping us strengthen our balance sheet, while we execute our plan to affordably serve customers and investors.

For example on February one the commission issued a proposed decision authorizing interim rate relief and the amount of $560 million, while our wildfire and gas safety cost application is pending.

Interim relief may be voted on as early as March 7th and will provide for collection to start as soon as practical over a 12 month period.

Moving to slide 11, as you can see here and as expected the largest discrete driver of fourth quarter and full year results was the approval of our 2023 general rate case, which added 15.

Carolyn: We also saw a benefit of <unk>, partly attributed to our non fuel O&M savings, including better resource management and improved planning and execution.

Carolyn: Please recall that our O&M savings are part of our simple affordable model, which allows us to complete more work for the benefit of our customers while delivering affordability.

Carolyn: That's exactly what you see here with <unk> of redeployment.

Carolyn: Our savings allowed us to stand up 10 additional model yards designed to improve frontline productivity with more efficient processes, minimizing rework and eliminating waste as we deliver for our customers.

Carolyn: We also provided additional training resources for our coworkers and we accelerated inspections, calling forward work to protect 2024 and ensuring we're doing the highest priority work for our customers.

Carolyn: We use every extra resource to better serve our customers and achieve our commitments to you our investors, we weather the ups and downs to deliver consistent predictable results.

Carolyn: As Patti highlighted we ended 2023 at the top of our EPS guidance range, Although our core philosophy remains to redeploy excess earnings back into the system benefiting customers, while derisking and extending premium growth on behalf of investors.

Carolyn: On slide 12.

Carolyn: We are extending our capex and rate base growth projections. Another year to include 2028, showing a five year annual rate base growth of nine 5%.

Carolyn: Our new five year capital plan represents an increase of over $10 billion or.

Carolyn: 20% over the 2023 to 2027 plants.

Carolyn: This also was over 45% higher than the previous five year period from 2019 to 2023.

The amount shown on this slide reflect our base capital plan, including how much our rate base is already approved by regulators.

Carolyn: Vast majority or 93% of our rate base for this year is already authorized as is 90% of our 2026 forecast.

Carolyn: In addition to our plan there are substantial needs to do more.

Carolyn: Specifically, we have at least an incremental $5 billion of capex opportunities, which we will seek to fold into our plan, while still meeting our affordability commitment fees.

Carolyn: These include capacity investments and transmission upgrades to support continued system wide growth.

Carolyn: As we work to drive affordability under a simple affordable model and ongoing deployment of lean and we will look for opportunities to add this important work.

Carolyn: As you know this capital investment fuels, both earnings growth and improves our operating cash flow as illustrated on slide 13, which we have updated and extended since we first showed it at last year's Investor Day.

Carolyn: As shown we're projecting substantial improvement in our operating cash flow in 2024, partly as a result of the final Trc decision.

Carolyn: Operating cash flow grows from $5 billion in 2000 $23 billion to $11 billion by 2028.

Carolyn: Providing resources to grow our capital investment for customers from $9 $8 billion in 2000 $23 billion to $14 billion in 2028.

Carolyn: And substantially improving our cash flow before dividends.

Carolyn: As Patti mentioned our guidance includes no new equity in 2024, as we look forward, we have many good efficient financing choices, including close to two and a half billion of annual retained earnings today and rising from there at our present low level of dividend payout.

Carolyn: Half of our funding provided some normal utility debt.

Carolyn: Substantial levels of prior cost recovery.

Carolyn: <unk> tax conditions.

Carolyn: Our working capital improvement the sale of a minority interest in our non nuclear generation assets.

Carolyn: And potentially reintroducing and at the market or ATM equity program in 2025.

While we are not giving the final mix of our 2025 financing plan today rest assured that our plan only includes choices, which are accretive to our guidance and.

Carolyn: In light of this we are extending our core EPS growth rate of at least 9% through 2027 and 2028.

Speaker Change: Moving to slide 14. This is our simple affordable model and a breakdown of the five 5% O&M savings last year.

Speaker Change: Patti shared details about our underground achievements in 2023 and there are many more similar stories throughout the business.

Speaker Change: I'll share just one more with you today.

Speaker Change: At our Investor Day, you heard about improvements, we were making to the new customer connections process by leveraging our performance playbook.

Carolyn: Now here's how we ended the year.

Carolyn: The team was able to save $24 million, while decreasing average end to end lead time by 13%.

Speaker Change: That's a 50 day reduction.

We also reduced engineering design time by 33%, a 37 day reduction.

As a result customer on time delivery improved by 25 percentage points.

Carolyn: I share. This example to make an important point.

Carolyn: This is not a cost cutting program at P. Jeanie rather this is about good business decisions, which are sustainable for the long term and it's about using the performance playbook, including our lean operating system to improve how we do our work every day.

Carolyn: Our actions are improving the customer experience and making capital and safety investments affordable.

Carolyn: I'll end here on slide 15, with regulatory catalysts on the horizon in 2024.

Carolyn: As you can see they are still plentiful and include resolution of our proposed patch on sale.

Carolyn: A proposed decision in phase two of our GSE implementing Senate Bill 410, and unlocking our potential to meet the new customer demand here in California.

Carolyn: Eight of our 10 year underground plan, and bringing our $5 billion of incremental capital opportunities into the plan, while still meeting our affordability goals.

Carolyn: Finally, I'll comment on our cost of capital adjustment advice letter, which was approved by commission staff in December raising our allowed ROE from 10% to 10, 7% and Truing up our cost of debt.

Carolyn: While this adjustment is already approved and in customer rates. Starting this month in January a joint intervenor groups filed a late request for a review of staff approval.

Carolyn: While we recognize this creates some uncertainty for investors. We were pleased that the commission staff upheld the operation of the adjustment mechanism in December as intended.

Carolyn: Intervenors offered no new fundamental arguments in their request for review and we look forward to this issue being resolved expeditiously.

Carolyn: In the meantime, as we have said consistently our EPS growth guidance is not dependent on the outcome and we value the opportunity to redeploy the revenue uplift for the benefit of customers, while delivering consistent predictable results for investors.

Patti: There's a lot to look forward to in 2024 and beyond including our 10% core EPS growth guidance and or at least 9% growth rate now extended through 2028.

Carolyn: With that I'll hand, it back to Patti.

Thank you Carolyn.

Patti: Before we take your questions. Let me introduce our new report card here on slide 16 against which you'll be able to track our record of differentiated performance, we're showing our results for 2022 and 2023, along with our goals for 2024 and beyond.

Carolyn: We believe we have a differentiated plan and the right team in place to deliver on these objectives as I said earlier performance is power and we have significant operational momentum with a healthy set of catalysts in front of us.

Carolyn: <unk> turnaround is on track we trust you feel the momentum as we do.

Carolyn: We look forward to seeing you at upcoming Investor conferences, as well as our Investor meeting scheduled for June 12 in New York.

Carolyn: Operator, please open the lines for questions.

Speaker Change: The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.

Shahriar Pourreza: We ask that you please limit yourself to one question and one follow up question.

Speaker Change: We will now take a moment to compile a roster.

Speaker Change: Our first question comes from the line of Shar <unk> with Guggenheim Partners. Please go ahead.

Speaker Change: Hey, guys good morning.

Speaker Change: Thanks sharpening.

Speaker Change: Good morning, I'm, just wondering on the production process I mean.

Speaker Change: Have you received any feedback after the last round of communications with the commission any sort of thoughts on hurdles and deliberation and then as you guys are sort of planning around the scenarios does the delay potentially move your equity needs, especially as you return opco cap structure to authorized levels.

Speaker Change: Yeah. Thanks for the question Shar.

Speaker Change: I'd say, our communications with the commission have been very constructive regarding patch and we know that pack Jan is a good transaction for customers, California has very long term clean energy ambitions and this is a beautiful fleet of clean energy resources that need investment over the coming years and to be able to share that with an investment partners. Good for <unk>.

Carolyn: <unk> clean energy ambition and good for customers and so our extended time with the commission on these topics have.

Carolyn: They have been good that that that helps us truly make the case and frankly the commission has had a lot on its plate and so I can understand why they wanted a little more time. They know this is an important transaction they want to give it a full look and our conversations have been very constructive with them regarding that I'll I'll hand, it over to Carolyn and let her discuss about our financing plans.

Speaker Change: Both with and without pack, Jim because we know Pat John isn't the only thing Ellen referenced are an important set of choices that we have pack Jan is one of our choices for financing, but I'll, let Carol and go ahead and take that thanks for your question. Yeah. If you don't mind I I covered a lot of this in the call, but I do recognize it's been a busy morning for many of you. So let me.

Speaker Change: Just cover a couple of points first as you know we raised an extended our core EPS guidance today, it's 12% in 2023 and at least 10% in 'twenty four and at least 9% now through 2028.

Patti: Our refreshed five year plan includes improvement in our operating cash flows rising from about $5 billion in 2000 $23 billion to $11 billion in 2026, and that's providing the resources to grow our capital investment and further improve our cash flow.

Patti: Three key.

Patti: Key point here our guidance includes no new equity in 'twenty, four with or without <unk>.

Patti: And then as we look forward beyond 2024, as we said on the call we have many good financing choices.

Patti: And they include.

Patti: Close to $2 5 billion of annual retained earnings today, which is rising at our present load level of dividend, we have half of our funding provided from normal utility debt.

Patti: We talked about substantial levers of prior cost recovery favorable tax conditions, we are constantly working our working capital improvements.

Speaker Change: Of course, we had potentially reintroducing an aftermarket or ATM equity program in 2025, we're not giving you all the final mix of that 2025 financing planned today, but one thing that you can count on is that our plan will include choices, which are accretive to our guidance.

Patti: Perfect. Thank it's just simply.

Patti: Perfect, Okay, well, if I just one thing on it because I do know and I, just know I'm gonna get lots of questions on the ATM.

Patti: And so I just wanted to close that I think it's I just want to say very clearly to everyone that it's just simply too soon to size the potential HCM.

Speaker Change: As we've said on this call we have a number of other good financing choices.

Shahriar Pourreza: Available to us and we have other things that we need to consider which include our growing lean capability in O&M savings.

Speaker Change: The pace at which we introduced the additional 5 billion of Capex, and then our own advocacy and timely regulatory outcomes and of course, the pace of our dividend growth.

Speaker Change: So just there's a lot there and I just thought maybe because it's been a busy morning wanted to just restate all of that where you are in charge of the closeout. This subject you asked a very fulsome question. So we gave you a fulsome answer just to close out you know we ride the roller coaster. This is this is what we do there ins and outs ups and downs, we ride that so that we can deliver this.

Speaker Change: Consistent earnings growth profile that we've described and we've committed to.

Speaker Change: We intend and we plan and are very confident that we can stand by our EPS growth guidance through 2028, even with the range of equity assumption.

Speaker Change: Got it and then count this is super helpful. Thank you and just just to make sure. We confirm is it sounds like your.

Speaker Change: I don't want to say shifting but some of your prior messaging you know with.

Speaker Change: With the stock price kind of dictating your equity timing to now being a little bit more focused around a more systematic approach to raising equity through the trajectory like the rest of this industry is transitioning towards is that a fair statement.

Carolyn: Well I think what's important is that we standby.

Carolyn: Our commitment to you that we will find the most efficient financing available to us and at this point in time as we look at our stock it is not the most efficient financing.

Speaker Change: Fantastic. Thank you guys. So much I appreciate it.

Speaker Change: Great. Thanks Shar.

Speaker Change: Our next question comes from the line of Steve Fleishman with Wolfe Research. Please go ahead.

Steve Fleishman: Yeah, great good morning.

Steve Fleishman: Hi, Steve Good morning, good morning.

Speaker Change: You picked the wrong data reported with Nvidia.

Speaker Change: In video blowing out.

Okay.

Steve Fleishman: So thanks, Charles it's a long game and it's a long game, we know it right.

Charles: Yes, you bet you bet.

Carolyn: So the.

Carolyn: Just on the.

Carolyn: In the past when you've talked about the growth rate you also kind of talk to total return.

Carolyn: As part of that and I don't know that he's Archie reinstating the dividend and just any kind of.

Speaker Change: Ladies and that you didnt talk to that.

Carolyn: And how you're thinking about.

Speaker Change: Hey, give it an aspect as we stand today.

Speaker Change: Yeah. Thanks, Steve for that question and we know that this obviously are our dividend is low today and the growth rate of our dividend isn't it area of interest for a lot of people. So I'm glad you asked you know our intent truly is to have a competitive payout ratio and we intend to show meaningful progress during this five year period.

Carolyn: And so I'm happy to be able to share more about this five year planning horizon. So as we think about it this catch up growth rate will be significant you know dramatically different from peers, given our starting point.

Speaker Change: So how quickly we move within these five years is obviously driven by our differentiating and differentiated.

Speaker Change: Financing choices that Carolyn just described and so in this near term I do think it's important for people to remember that we are prioritizing our healthy balance sheet affordable investment for customers our premium EPS growth and then we will feather in that dividend over time, but it will obviously as I said have a dramatically different.

Speaker Change: Our growth rate from peers, given our starting point.

Speaker Change: Okay.

Speaker Change #100: Makes sense.

Speaker Change #100: I guess, it's better to be starting from disposition choices for them.

Speaker Change #100: Opposite.

Speaker Change #100: And then and then just one on the.

Speaker Change:

Speaker Change #101: Yes, just on <unk>.

Speaker Change: Uh huh.

The commission and just on the patch and again, there's nothing too.

Speaker Change: We saw delays in a lot of things over time, you can just kind of a normal.

Speaker Change: Yes.

Speaker Change: We're on or or something else going on with respect to the powertrain approvals.

Speaker Change #102: Yeah, No I think a couple of things just in terms of context I do believe the adjudication of our rate case provide a lot of good visibility and discussion about cash flow. Its importance. So I do think we we definitely have better alignment with the commission on that subject for US, which is why we would be pursuing a pack.

Speaker Change: Then transaction I think they value the resources and they want to make sure on behalf of the customers of California that its a good transaction for customers. We believe that it is a great transaction for customers.

Speaker Change: Lets us up to have a partnership over time to invest in these clean energy resources, we see growing load growth in California, we see need for new generation. This allows us to have a partner in that in that journey and we know that that will be the lowest cost of financing them for customers and so we standby the transaction.

Steve Fleishman: We know that additional time with the commission only allows us to better communicate and align with them on that.

Speaker Change #103: Okay, Great and then one more question just on the cash flow slide which that was worth a shot.

Steve Fleishman: I D.

Steve Fleishman: And thinking about.

Steve Fleishman: I guess the justice take stuff that's there.

Steve Fleishman: Each year.

Steve Fleishman: I mean, it's relatively modest I mean, Ken a lot of that just being met with a utility.

Steve Fleishman: She mutually guys not included in that.

Steve Fleishman: Yes.

Speaker Change #104: No I think I think that's the way Youre thinking I think that's right the way you're thinking about it but I'll just remind you that there is an additional $5 billion of incremental capex that we're looking at.

Speaker Change: Financing as well and we would again consider that and shorten ensure that we are financing that so that its accretive to earnings.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change #105: Thanks, Steve.

Speaker Change #105: Our next question comes from the line of Nicholas Campanella with Barclays. Please go ahead.

Nicholas Campanella: Hey, Thanks, so much for taking my question.

Nicholas Campanella: So I apologize I've been a little all over the place open not repeating another question, but just the positive outlook be a one and then obviously.

Steve Fleishman: Good to see that move back to.

Speaker Change: Green here.

Speaker Change: On the report card.

Speaker Change: What's your milestone what's your understanding of the milestones and just kind of a timeline to get to investment grade now.

Green: Yeah. Thanks for the question, Nick we've been having good conversations.

Green: With both Moody's and S&P, we remain intently focused on improving the credit quality and we're laser focused on achieving investment grade we continue to make good progress on improving our credit metrics every year and we're continuing to target mid teens <unk> to debt to 2024.

Speaker Change: Our five year plan shows the significant progress in 'twenty four 'twenty five with sustained high levels of cash generation as you mentioned and the rating agencies. Obviously are looking beyond just the credit metrics and beyond just our cash flow. They're also looking at improvements in our risk mitigation as it relates to wildfires.

Speaker Change: One more season, perhaps from it for S&P Moody's is laser focused as well on.

Speaker Change: The wildfire mitigation governance and management and improvement in our credit metrics.

Speaker Change: That's the most important gauge for you to look at when you consider.

Speaker Change: Milestones is the rating agencies and their reports themselves.

Speaker Change: We were very happy to see the recent upgrade.

Speaker Change: And that where we continue to be on positive outlook with both Moody's and S&P. So we're going to continue to execute on our plan continue to execute on our risk mitigation continue to execute on our O&M savings.

Speaker Change: And and continue to execute on on ensuring that we.

Speaker Change: See those improvements in our credit metrics for our rating agencies.

Speaker Change #107: Alright, Thanks, a lot and then I guess, just the June 12, Investor Day in New York.

Speaker Change #107: Given you've extended the plan out to 28, which is great to see by the way, but just how do we kind of think about what that investor day with bring in this kind of more of a.

Speaker Change: Financing update just given the moving pieces in the strategic financing right now is that fair or how would you characterize it.

Speaker Change #108: I'd say one of the things that we want to make sure people know is the California context in the California backdrop for the clean energy transition. This I would say, it's going to be a very differentiated part of our story relative to peers, we see the transition here in full swing.

Speaker Change: And we are a key player in that transition. So we look forward to sharing more about our load growth forecast what that means what is electrification really hold for both <unk>, our shareholders, our investors as well as our customers and our hometowns.

Speaker Change: We look forward to really give me a better long term business outlook.

Speaker Change: Of course further refinement of our financial plan.

Speaker Change #109: Great looking forward to it thanks a lot.

Speaker Change #109: Thanks, Nick.

Speaker Change #111: Our next question comes from the line of Julien Dumoulin Smith with Bank of America. Please go ahead.

Speaker Change #112: Hey, Jim can you guys hear me okay.

Speaker Change #113: We can handle a duvernay.

Nicholas Campanella: Wonderful with the cell phone outage I got a resort.

Nicholas Campanella: Sure.

Speaker Change #114: I just wanted to follow up on a couple of things that were said thus far in terms of just updates around this ATM I know you said, you're expecting a lot of questions, but just to frame it out really.

Nicholas Campanella: In terms of the timeline here I mean, you've got to know what happens with action by middle Middle part of the year, but I suspect you're going to continue to evaluate asset sales to the extent to which that that would be something incremental to what Pak Edward materialize and then by the end of the year. If there was nothing else that would materialize. Then you would kind of go back to that sort of critical lapses or an ATM.

I mean, given the success in cost cuts et cetera, when you could kind of interpret that as in fact, we saying.

Mr milestone: There's a lot of other levers will probably pull in the interim and a successful outcome at least at this stage with this equity price would be not necessarily pursuing an ATM is that kind of a fair way to frame it.

Mr milestone: The way I would frame it is more of that you know it's one it's really as I said just too soon to size the potential ATM in 2025, but.

Mr milestone: But we have a lot of good options to consider and so and we're looking in particular as you just mentioned.

Mr milestone: Our growing lean capability in those O&M savings you'd see you saw that we achieved 3% in 2022 and last year five 5%. So we're we're very excited about the success, there and think that could be a factor we.

Mr milestone: We talked about the additional $5 billion in new Capex.

Mr milestone: Going to make sure that that's affordable to bring into our plan and that we can finance it.

Mr milestone: With one of these all of these options. So what's the timing that we introduced that $5 billion of new Capex.

Mr milestone: And as you know we do have a number of in flight regulatory outcomes that we've been advocating for and so the timing of those will really depend on how we're thinking about the ATM or a potential a P. T. ATM in 2025 and of course as Patty just cover.

Mr milestone: The timing of our dividend growth will have more clarity on that.

Speaker Change: And as we go into 2025 as well.

Speaker Change: So all of those are what really will drive a potential size of an ATM.

Speaker Change #115: I appreciate you understanding another question on this.

Mr milestone: And maybe just coming back speaking of investment and success is great I appreciate your story Patty.

Mr milestone: Can you talk a little bit too.

Mr milestone: Eight of those successes, how do you think about the cadence of underground.

As you think about this year and further years I mean has that sort of.

Mr milestone: Unlocked an ability to actually accelerate what you were doing earlier and really remain on track at a more structural way.

Mr milestone: And what would be the regulatory considerations around that would be to the extent to which that was an avenue that you now see increasingly.

Mr milestone: As possible.

Speaker Change #116: Yeah, I do think last year was an important proof point for everybody ourselves included that it can be done and we can do underground at scale and in an affordable way for customers.

Mr milestone: Fundamentally changing the health and wellbeing of our customers who live near those lines. So that's that's our first point, but remember the general rate case did reduce our mileage from what we had filed so this year, we're actually probably going to do about 250 miles of underground and are in line with the the.

Speaker Change #117: Case, we will be filing our 10 year underground plan as required by SBA eight four and that will then give us a window into and hopefully an approval by the end of 'twenty five early 'twenty six we can see that in 2026 and beyond.

Speaker Change: 10 year plan for underground as an important part of the climate resilient infrastructure of California, and again I'll remind you our underground plan is.

Speaker Change: It's not a big bet, it's about 8% of our total line miles, but it's the 8% in the highest risk areas. So it eliminates this choice between reliability and safety for customers. They can have both and they can have that affordably.

Speaker Change: We will be able to make that case very well in our in our filing and our 10 year filing and show. The total long term net present value benefit to customers of doing that kind of infrastructure in those places, but our capital plan is.

Speaker Change: Full sun with a variety of our capital investments and it doesn't hinge on the underground plan, though we standby that important infrastructure again as climate resilient infrastructure for the people of California, the future not the climate of the past, but the climate, that's becoming more and more real we need to have infrastructure that is up to the challenge.

Speaker Change #118: Excellent fair enough guys see you soon.

Great. Thanks Julien.

Speaker Change #118: Our next question comes from the line of Greg oral with UBS. Please go ahead.

Greg Gordon: Yes, Thank you and good morning.

Speaker Change #119: Hey, Greg running alright.

Greg: Just coming back to the cash.

Greg: Cash flow slide I was wondering if you could help.

Speaker Change: Filling some of the some of the drivers between the two.

Speaker Change: 24, and 25 25, the dot looks to be around.

$10 billion in cash flow.

You know versus the eight in 'twenty, four but you've got the wildfire recoveries.

Speaker Change: Coming down so.

Speaker Change: Depreciation as a driver.

Speaker Change:

Speaker Change: Growth.

Speaker Change #121: I'm just struggling to connect the dots a little bit.

Speaker Change #121: So the 5 billion to the $8 billion from 23 to 24 a share question.

Speaker Change: What's driving that.

Speaker Change: Sure.

Patty: Really the 25, because you've got the <unk>.

Speaker Change: The World Whoever was my Bruce round down, but you've got the cash flow going up.

Speaker Change #122: Yeah, well, primarily that is the that is our JRC from 24 to 24. The additional revenues from there. In addition to that just remember we have our 2% savings being compounded.

Patty: And so we see that on the other key part of 24 versus 25, as we see a decrease in.

Patty: Litigation as it relates to our wildfires has been part of our puzzle.

Patty: And then as a as we our outlook on.

Patty: Commodity prices, we have lower collateral postings as well so theres a lot of moving parts, but the primary driver of the increase really is our rate base cost recovery from our G. R. C that is the main part of the story, but theres a lot of other moving parts.

Speaker Change #123: Okay got it thanks.

Patty: Our next question come from the line of Ryan Levine with Citi. Please go ahead.

Good morning.

Patty: Ryan.

Patty: Hi.

Ryan Levine: It would be the ratepayer impact of a year delay to potential that gen sale as you see it.

Patty: But just the savings from Pac Gen sale is that it in terms of the benefits from that and some farms.

Patty: Yes.

Patty: Stipulated publicly.

Patty: But there is great yeah benefits. This transaction. So I'm just trying to I think there's like a.

Patty: Yeah. We think this is a great transaction for customers right. It provides customer affordability, primarily through financing cost at Pac Jen as well as it because its improving our balance sheet, we expect to be able to pass and we expect to lower financing cost for our finance for our customers at T. G N. It Deane.

Patty: As well, but as Patti mentioned, we also see significant benefits for customers.

Patty: Because these assets are so key to the clean energy goals and having a partner that is bringing both the resources and the interest and expertise in supporting these future capital growth needs.

Speaker Change: Of this very important portfolio, we think that's where it's particularly going to benefit customers.

Greg Gordon: So there there were the two things I would point to.

Speaker Change: Right.

Greg: And what is the enterprise lean maturity percentages in your scorecard measuring very specific around 44% for the recent here.

Greg: Yeah, we we do an assessment of all of our leaders and what.

Greg Gordon: Their maturity is.

Greg Gordon: The adoption and implementation of our five basic place and it's a self assessment. So the team reviews, what's the standard and how are they performing to the standard of these five plays and you know the the point of the 44% score is that that means that we have lots of room to grow our mature.

Patty: Alrighty and so if you can imagine delivering five 5% non fuel O&M savings at a maturity level and authorities just think of the potential benefit for customers and our processes and our O&M savings over time, when we grow that maturity enterprise wide.

Speaker Change #124: Okay, and then what are the practical implications of those those going out for gas in February and March for electric if the cost of capital trigger it doesn't hold.

Patty: Okay.

Patty: The cost of capital triggered does not hold what's the implications. It's very minor in terms of the monthly bill rate for the cost of capital adjustment. It was a couple of Bucks.

Patty: With that get reimbursed or in future years or.

Speaker Change #125: Mechanically how does that work.

Patty: I think it would depend on the determination and how that determination is implemented.

Speaker Change #126: Okay. Thanks for taking my questions.

Speaker Change #127: Yeah. Thanks Ryan.

Anthony C. Crowdell: Our next question comes from the line of Anthony crowd, though with Mizuho Securities. Please go ahead.

Anthony: Hey, good morning team just I wanted to do a quick follow up to one of Nick's questions I guess on the credit rating curious Carolyn on S&P I think it's stated there waiting for one more season do you know.

Ryan Levine: What they want to see in one season.

Ryan Levine: <unk> two of an upgrade.

Speaker Change #129: Oh I think it's another season of of of performance by our team.

Ryan Levine:

Ryan Levine: I think there are some folks and we've heard this from even at an analyst calls that on the last two winters have been.

Patty: No not significantly in terms of our wildfire season, but we've proven with our numbers when you even adjust for the weather that we are continuing to reduced.

Speaker Change: Wildfire risk and I know Patti has oh, yeah atmosphere, and I would just say in our conversations with S&P. They focus on three main things I would say first its management and governance a pulse bankruptcy. So I do believe that's what they're looking at first and then they want to see additional wildfire performance, which we feel very confident about and then finally, obviously the.

Speaker Change: Our financial metrics and so we do where we've been on positive outlook with them. They put us on positive outlook at the end of the year. So we look forward to them moving on that sometime in 2024.

Speaker Change #130: Great and then just one follow up on the cost of capital Challenge is there a date where.

Speaker Change: Don't know if the right term is the challenge gets dismissed or I know, it's already in rates I know, it's not going to impact the company's 20 for guidance, but just is there is there a date, where the commission denies the challenge.

Speaker Change #131: There is nothing a firm or a definitive about that.

Patty: But you're right.

Patty: You're there your thoughts are correct, though that it isn't rates and it doesn't have a bearing on our 24 earnings other than to say that we have planned conservatively for either outcome.

Speaker Change #132: Great. Thank you.

Patty: Our final question comes from the line of David Arcaro with Morgan Stanley. Please go ahead.

David Arcaro: Oh, Hey, good morning, Thanks, so much.

David Arcaro: Great to see your extending the EPS growth rate here I was just wondering kind of what gives you the confidence now to provide those EPS growth assumptions through 28, given that there's another cost of capital proceeding another GIC.

Patty: In the midst of that planning period.

Patty: We have a great plan and it's anchored in our simple affordable model, we have ample capital demand and this is the thing that I want to just to.

Patty: Acknowledged for our customers who are feeling the catch up in our bills right now we know that we can.

Speaker Change #133: <unk> deliver this.

Speaker Change #133: Capital infrastructure, which they have been demanding and requesting and asking for us to deliver it in an affordable way. So as we look forward we have a.

Speaker Change: Conservative plan, we ride that roller coaster. So we can deliver a consistent outcome for investors and better service every single year for customers and frankly, we look forward to a time in the not too distant horizon, where we're gonna be lowering bills for customers as we do that the simple affordable model will work here in California, we are.

Anthony: In the early days, but as we look forward, we see the capital demand masked by our cost savings low growth and efficient financing, which allows for affordable bills for customers. That's a formula that can work for a long time forward. It gives us a lot of confidence as we give forecasted EPS growth guidance in the next five year plan.

Speaker Change #134: David I'll, just remind you we always plan conservatively and so that's what gives US also lots of confidence.

Speaker Change #135: Okay excellent. Thanks, and then maybe on load growth.

Carolyn:

Carolyn:

Carolyn: The data center backdrop seems to have changed quite a bit maybe since you've given that 1% to 3% load growth figure and it sounds like you might address that on an upcoming analyst day I was just wondering if that's reflective of what you've seen in your service territory in terms of that data center demand is that accelerating ramping up from what your prior expectations had been.

Speaker Change #136: Yeah, well I can share that just.

Just in 2023, we had a three X increase in data center applications versus the prior four years. So as we look at the five year forward load growth forecast. The back end of that forecast will reflect then the Ah Ah additional data data center demand and look I think we all can agree that the only.

Carolyn: That's happening with data centers as they need more of them and so part of the deal here is we need to make ourselves available and accessible and show that we can in fact serve that load here in California, which is what we're doing and we'll look forward to sharing more about that in June.

Speaker Change #137: Okay, great much appreciate it.

Speaker Change #138: Thank you David.

Speaker Change: I wouldn't dare I'd like to turn the call over to Patti Poppe for closing remarks.

Patti Poppe: Thank you Mandy well. Thank you everyone for joining us today I know it was a busy one and we appreciate your time and attention where we will look forward to staying in touch with you I just wanted to give a final remark and thank the entire P. Genie team for delivering an outstanding 2023 for customers. They delivered for our hometown, we're serving our plan.

David Arcaro: And we're leading with love it P J D and I couldnt be more proud to stand alongside with the men and women of PG you need to do just that so we feel really great about our turnaround we know that that turnaround is on track. Thanks to all of those great people here at the company and we look forward to seeing.

Speaker Change #139: Seeing all of you in the coming months and are definitely in June on June 12 in New York. Thanks, So much have a safe day.

Speaker Change #140: This concludes today's call you may now disconnect.