Q1 2024 Edison International Earnings Call

Good afternoon, and welcome to the Edison International first quarter 2024 financial teleconference. My name is messy and I'll be your operator today when we get to the question answer session. If you have a question press star one on your phone today's call is being recorded I would.

Missy: Good afternoon, and welcome to the Edison International First Quarter 2024 Financial Teleconference. My name is Missy, and I'll be your operator today. When we get to the question and answer session, if you have a question, press star 1 on your phone.

Unknown Speaker: Today's call is being recorded. I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your question.

I'd like to turn the call over to Mr. Sandler I'm Raj Vice President of Investor Relations. Mr. <unk> you may begin your conference.

Sam Ramraj: Thank you, Missy, and welcome everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Rigatti. Also on the call are other members of the management team. Materials supporting today's call are available at www.edisoninvestor.com. These include a Form 10-Q, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we will make forward-looking statements about the outlook for Edison International and its subsidiaries.

Thank you Maria and welcome everyone. Our speakers today are president and Chief Executive Officer, Pedro Pizarro and execute our Vice President and Chief Financial Officer Maria regarding also on the call are other members of the management team materials supporting today's call are available at Www Dot Edison Investor Dot Com.

These include our Form 10-Q prepared remarks from Pedro and Maria and the teleconference presentation.

Tomorrow, we will distribute our regular business update presentation. During this call we'll make forward looking statements about the outlook for Edison International and its subsidiaries.

Sam Ramraj: Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure. During the question and answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.

Actual results could differ materially from current expectations.

Important factors that could cause different results are set forth.

The SEC filings. Please read these carefully the presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure.

During the question and answer session. Please limit yourself to one question and one follow up.

Now I'll turn the call over to Pedro.

Pedro J. Pizarro: Well, thank you, Sam, and good afternoon, everyone. Edison International's core EPS for the first quarter of 2024 was $1.13. We are pleased with our start to the year, and we are confident in affirming our 2024 core EPS guidance of $4.70 to $5.05. We also remain confident in delivering on our long-term EPS growth targets of 5-7% for 2021-2025 and similarly for 2025-2028. Our conviction remains grounded in the drivers that continue to support our outlet.

Pedro J. Pizarro: Well, thank you Sam and good afternoon, everyone.

Pedro J. Pizarro: Edison International's core EPS for first quarter 'twenty 'twenty four it was $1.13. We are pleased with our start to the year and we are confident in affirming our 2024 core EPS guidance of $4.70 to $5 and five we also remain confident in delivering on our long term EPS growth.

Pedro J. Pizarro: Targets are 5% to 7% for 2021 through 'twenty, 'twenty fives, and similarly for 2025% to 2028.

Pedro J. Pizarro: Our conviction remains grounded in the drivers that continue to support our outlook.

Pedro J. Pizarro: Starting with Sce's legacy wildfires. So utility continues to advance the process of resolving claims based on the latest information available, which Maria will expand on the best estimate of losses increased by $490 million or $333 million after tax.

Pedro J. Pizarro: Starting with SCE's legacy wildfires, the utility continues to advance the process of resolving claims. Based on the latest information available, which Maria will expand on, the best estimate of losses increased by $490 million, or $333 million after tax.

Pedro J. Pizarro: With wildfires now a national issue, litigation outcomes outside of California are impacting the cost to resolve claims everywhere. We remain committed to achieving ultimate certainty by working through the process expeditiously and seeking cost recovery. We are confident about the case SCE has made in TKM and will make for Wolsey.

Pedro J. Pizarro: Wildfires now a national issue litigation outcomes outside of California are impacting the cost to resolve claims everywhere.

Pedro J. Pizarro: We remain committed to achieving ultimate certainty by working through the process expeditiously and seeking cost recovery.

Pedro J. Pizarro: We are confident about the case SCE has made and T K L and will make for Wall Street.

Pedro J. Pizarro: I would like to reiterate that we strongly believe that cost recovery is warranted and in the public interest, and we have conservatively not reflected this significant potential in our financial projections. On the operations front, I want to start by highlighting Edison's leadership in the industry's response to climate change. Recent wildfires across the nation have provided a stark reminder of changing climate conditions, which underscore the need for further enhancing resiliency and adaptation as we transition to a clean energy future.

I'd like to reiterate that we strongly believe that cost recovery is warranted and in the public interest.

Pedro J. Pizarro: And we conservatively have not reflected the significant potential in our financial projections.

Pedro J. Pizarro: On the operations front I want to start by highlighting Edison leadership off the industry's response to climate change.

Pedro J. Pizarro: SCE is a clear leader in wildfire mitigation and is sharing its expertise with peers across the industry who are now experiencing similar conditions. We have shown that the wildfire risk associated with utility infrastructure is manageable. Also, our state has dramatically increased resources for fire suppression, including having the largest civil aerial firefighting fleet in the world. Our regulators understand the importance of financially healthy utilities.

Pedro J. Pizarro: Recent wildfires across the nation have provided a stark reminder of the changing climate conditions, which underscore the need for further enhancing resiliency and adaptation as we transition to a cleaner energy future.

Pedro J. Pizarro: SCE is a clear leader in wildfire mitigation and it's sharing its expertise with peers across the industry, who are now experiencing similar conditions.

We have shown that wildfire risk associated with utility infrastructure is manageable.

Pedro J. Pizarro: Also our state has dramatically increased resources for fire suppression, including having the largest civil aerial firefighting fleet in the world.

Pedro J. Pizarro: Our regulators understand the importance of financially healthy utilities.

Pedro J. Pizarro: AB 1054 put in place constructive prudency standards and the insurance fund. Over the past five years, SCE has invested about $5 billion in wildfire mitigation-related capital and expects to invest more than $6 billion over the next five years. On page 3, you can see the numbers and the results.

Pedro J. Pizarro: <unk> hundred 54 put in place constructive prudency standards and the insurance fund.

Pedro J. Pizarro: Over the past five years SCE has invested about $5 billion of wildfire mitigation related capital and expects to invest more than 6 billion over the next five years.

This investment ranks among the highest levels in the utility sector.

Pedro J. Pizarro: On page three you can see the numbers and the results I.

Pedro J. Pizarro: I will point out that SCE has not seen ignitions due to the failure of covered conductors, and the program is well recognized for its effectiveness. Putting this all together into what it means for reducing future risk of losses from wildfires, we estimate the risk is 85 to 88% lower than pre-2018. Turning to page 5, let me highlight three key points that enhance the significance of this reduction. First...

Pedro J. Pizarro: I will point out that SCE has not seen ignitions due to the failure of covered conductor and the program is well recognized for its effectiveness.

Pedro J. Pizarro: Putting this all together into what it means for reducing future risk of losses from wildfires, we estimate the risk is 85% to 88% lower than pre 2018.

Pedro J. Pizarro: Turning to page five.

Pedro J. Pizarro: We highlight three key points that enhance the significance of this reduction.

Pedro J. Pizarro: Burst physical mitigation dominates.

Pedro J. Pizarro: Physical Mitigation, Dominic. Unlike heavy reliance on operational measures like power shutoffs or fast growth settings. The primary driver behind this risk reduction is physical mitigation. This is important because it means a much lower burden for customers. Second, SCE's estimate comes from Moody's RMS industry-leading model, widely trusted by insurers. This model considers intricate factors, terrain, vegetation, historical data, and more to predict wildfire probabilities. Third, to estimate the probabilities of losses in dollar terms, we employ a stochastic model.

Pedro J. Pizarro: Unlike heavy reliance on operational measures like power shut offs, our vascular settings.

Pedro J. Pizarro: The primary driver behind this risk reduction is physical mitigation.

Pedro J. Pizarro: This is important because it means a much lower burden for customers.

Pedro J. Pizarro: Second Sce's estimate comes from Moody's Rms industry, leading model.

Pedro J. Pizarro: Widely trusted by insurers.

Pedro J. Pizarro: This model considers intricate factors terrain vegetation historical data and more to predict wildfire probabilities.

Pedro J. Pizarro: Third to estimate the probabilities of losses in dollar terms, we employee stochastic models.

Pedro J. Pizarro: This model runs 50,000 simulations considering potential ignitions and fire sizes while incorporating SE's mitigation strategy. This approach contrasts with simpler deterministic methods used by some other companies and regulators that only analyze past events. In summary, our rigorous, data-driven approach, validated externally, paints a clear picture. SCE's risk profile today is dramatically different than in the past as a result of the utility's mitigation efforts. To focus specifically on grid hardening, pages 6 and 7 highlight SCE's significant progress today.

Pedro J. Pizarro: This model runs 50000 simulations, considering potential admissions and fire sizes, while incorporating SCS mitigation strategy.

Pedro J. Pizarro: This approach contrasts with simpler deterministic methods used by some other companies and regulators that only analyzed past events.

Pedro J. Pizarro: In summary, our rigorous data driven approach validated externally.

A clear picture Sce's risk profile today is dramatically different than in the past as a result of the utilities mitigation efforts.

Pedro J. Pizarro: To focus specifically on grid hardening pages, six and seven highlight sce's significant progress to date.

Pedro J. Pizarro: I'm pleased with the progress our team has made, and I look forward to continued progress making our communities even safer. By the end of 2025, SCE expects to be approaching 90% physical hardening of its distribution lines and high fire risk areas, with over 7,300 miles already underground and more than 5,700 overhead miles hardened. SCE's total hardened miles surpassed those of all other California IOUs combined.

Pedro J. Pizarro: I'm pleased with the progress our team has made and I look forward to continued progress, making our communities even safer.

Pedro J. Pizarro: By the end of 2025, SCE expects to be approaching 90% physical hardening opex distribution lines in high fire risk areas.

With over 7300 miles already underground and more than 5700 overhead miles hardened SC.

Pedro J. Pizarro: Sce's total hardened miles surpass those of all other California Ious combined.

Pedro J. Pizarro: We're really proud of these efforts to swiftly enhance grid safety for SCE's customers. Turning to load growth, after years of relatively flat demand, we are seeing two to 3% annual growth in the coming years, with an inflection point above 3% annual growth beginning in 2028. In SCE's service area, we project this growth will be driven by the continued adoption of electric vehicles, increases in industrial electrification, and higher penetration of building elect

Pedro J. Pizarro: We're really proud of these efforts to swiftly enhanced grid safety for Sce's customers.

Pedro J. Pizarro: Turning to load growth.

Pedro J. Pizarro: After years of relatively flat demand, we are seeing them, 2% to 3% annual growth in the coming years with an inflection point above 3% annual growth beginning in 2028.

Pedro J. Pizarro: In Sce's service area. We project this growth will be driven by the continued adoption of electric vehicles increases in industrial electrification and higher penetration of building electrification.

Pedro J. Pizarro: In California, one fourth of new cars sold in 2023 were zero emission vehicles and that trend is continuing into 2024.

Pedro J. Pizarro: In California, one-fourth of new cars sold in 2023 were zero-emission vehicles, and that trend is continuing into 2024. As another indication of this acceleration, the state recently reached a milestone of over 100,000 public EV chargers now installed throughout California. And that is on top of over 500,000 at-home chargers.

Pedro J. Pizarro: As another indication of this acceleration.

Pedro J. Pizarro: The state recently reached a milestone of over 100000 public EV Chargers now installed throughout California.

Pedro J. Pizarro: And that is on top of over 500000 at home Chargers.

Pedro J. Pizarro: Southern California already has a significant data center presence. So while we also see load growth potential from this sector, we expect transportation electrification to drive a more substantial increase in the region's electricity demand.

Pedro J. Pizarro: Southern California already has a significant data center present, so while we also see low growth potential from this sector, we expect transportation and electrification to drive a more substantial increase in the region's electricity demand, as our investment levels grow to support economy-wide electrification. Affordability remains top of mind. We have demonstrated cost leadership over the years, resulting in the lowest system average rate among the major California IOUs. This discipline of managing our costs is a continuous focus.

Pedro J. Pizarro: That's our investment levels grow to support the economy wide electrification.

Affordability remains top of mind.

Pedro J. Pizarro: We have demonstrated cost leadership over the years, resulting in the lowest system average rate among the major California Ious.

Pedro J. Pizarro: This discipline of managing our costs is a continuous focus for example, we previously highlighted the 2025 DRC application included $41 million of annual O&M savings as an immediate benefit for customers well.

Pedro J. Pizarro: For example, we previously highlighted that the 2025 GRC application included $41 million of annual O&M savings as an immediate benefit for customers. Well, building on that, in SCE's rebuttal testimony submitted earlier this month, the utility identified another $35 million of annual O&M savings to further mitigate the revenue.

Pedro J. Pizarro: Well building on that in Sce's rebuttal testimony submitted earlier this month the utility identified another $35 million of annual O&M savings to further mitigate the revenue increase.

Pedro J. Pizarro: 'twenty 'twenty four is very much a year of execution across the business.

Pedro J. Pizarro: 2024 is very much a year of execution across the business, and we are pleased with our start to the year. SCE continues to make significant investments and make the grid safer year after year. We continue to see constructive regulatory decisions. SCE is also making progress toward full resolution of the Legacy Wildfire. All of this allows us to remain confident in our ability to meet our near and long-term commitments. I will conclude by reemphasizing that Edison International offers an excellent investment vehicle to participate in California's clean energy transition.

Pedro J. Pizarro: And we are pleased with our start to the year.

SCE continues to make significant investments and make the grid safer year after year.

Pedro J. Pizarro: We continue to see constructive regulatory decisions.

Pedro J. Pizarro: <unk> is also making progress toward full resolution of the legacy wildfires.

Pedro J. Pizarro: All of this allows us to remain confident in our ability to achieve our near and long term commitments.

Pedro J. Pizarro: I will conclude by re emphasizing that Edison International offers an excellent investment vehicle to participate in California's clean energy transition.

Pedro J. Pizarro: SCE is hardening the grid every day to the benefit of customers and investors, and its wildfire mitigation execution has shown positive results for five wildfire seasons running. California is at the forefront of electrification, decarbonization, and climate adaptation as an electric-only, wires-focused utility. SCE is in a strong position to focus on the future, which will be electric lead. Our commitment to clean energy leadership and innovation is well recognized in the industry and has only been further elevated as the impacts of climate change become more prominent. Ensuring the greatest reliability, resilience, and readiness is paramount to achieving the clean energy transition and the driving theme of our investments and growth. With that, I turn it over to Maria for her financial report.

Pedro J. Pizarro: SCE is hardening the grid to everyday to the benefit of customers and investors and its wildfire mitigation execution has shown positive results for five wildfire seasons running.

Pedro J. Pizarro: California is at the forefront of electrification de carbonization and climate or the patient.

Pedro J. Pizarro: As an electric only wires focused utility.

Pedro J. Pizarro: SCE is in a strong position to focus on the future, which will be electric lit.

Pedro J. Pizarro: Our commitment to clean energy leadership, and innovation is well recognized in the industry.

Pedro J. Pizarro: <unk> only been further elevated as the impacts of climate change become more prominent.

Pedro J. Pizarro: Ensuring the greatest reliable resilient and ready is paramount to achieving the clean energy transition and the driving theme of our investments and growth with that turn it over to Maria for her financial report.

Maria C. Rigatti: Thanks Pedro and good afternoon everyone. In my comments today, I will cover first quarter 2024 results, provide an update on regulatory proceedings, and discuss 2024 EPS guidance. I also want to reaffirm our continued confidence in achieving our EPS growth target. Let me begin with first quarter results. EIX reported core EPS of $1.13.

Maria: Thanks, Pedro and good afternoon, everyone. My comments today I will cover first quarter 2024 results provide an update on regulatory proceedings and discuss 2024 EPS guidance.

Maria: I also want to reaffirm our continued confidence in achieving our EPS growth targets.

Maria: Let me begin with first quarter results.

Maria C. Rigatti: As you can see from the year-over-year quarterly variance analysis shown on page 8, core earnings grew by 4 cents, primarily due to higher CPUC revenue authorized in Track 4 of the 2021 GRC and higher authorized rates of return, partially offset by higher interest expense associated with debt for wildfire claims payments. EIX parent and other was in line with the same period last year. Turning to SCE's capital and rate-based forecasts, shown on pages 9 and 10, these are consistent with last quarter's disclosures.

Maria: <unk> reported core EPS of $1.13.

Maria: As you can see from the year over year quarterly variance analysis shown on page eight core earnings grew by four.

Primarily due to higher CPUC revenue authorized in track for the 2021 G. R C and higher authorized rates of return.

Maria: Partially offset by higher interest expense associated with debt for wildfire claims payments.

Maria: <unk> parent and other was in line with the same period last year.

Maria: Turning to Sce's capital and rate base forecast shown on pages nine and 10. These are consistent with last quarter's disclosures.

Maria C. Rigatti: The bulk of the capital plan will be addressed by SCE's 2025 GRC. The rate case includes investments necessary to meet the critical objectives of reliability, resiliency, and readiness to meet customers' needs today and in the future. This includes gearing up traditional distribution grid investment on activities such as infrastructure replacement and load growth, as well as continued wildfire mitigation. SDE is facing the fastest electricity demand growth in decades.

Maria: Both of the capital plan will be addressed by Sce's 2025 G. R C.

Maria: The rate case include investments necessary to meet the critical objectives of reliability resiliency and readiness to meet customers' needs today and in the future.

Maria: This includes gearing up traditional distribution grid investment on activities, such as infrastructure replacement and load growth as well as continued wildfire mitigation.

SCE is facing the fastest electricity demand growth in decades.

Maria C. Rigatti: Thus, the capital plan reflects resuming traditional levels of infrastructure replacement necessary for system reliability and making significant investments to support load growth driven in large part by transportation electrification. During the first quarter, intervenors submitted their testimony and recommendations in the GRC proceedings. The key points are summarized on page 11.

Maria: The capital plan reflects resuming traditional levels of infrastructure replacement necessary for system reliability.

Maria: And making significant investments to support load growth driven in large part by transportation electrification.

Maria: During the first quarter intervenor submitted their testimony and recommendations in the DRC preceding that.

Maria: The key points are summarized on page 11.

Maria C. Rigatti: In summary, we are not surprised by Cal Advocates Intern's focus areas, and we are confident that we will secure a good outcome for customers. All together, their recommendations would translate to rate-based growth of approximately 6%, which is consistent with our projected 6-8% rate-based growth range. Further on the regulatory front, SCE is advancing a handful of other key proceedings, including the 2022 SEMA, the TKM cost recovery application, and the recently filed WMCE application.

Maria: In summary, we are not surprised by Cal advocates and turns focus areas and we are confident that we will secure a good outcome for customers.

Maria: Altogether, the recommendations would translate to rate base growth of approximately 6%, which is consistent with our projected 6% to 8% rate base growth range.

Maria: Further on the regulatory front SCE is advancing a handful of other key proceedings, including the 2022 sema.

Maria: Cam cost recovery applications and the recently filed WMC application.

Maria C. Rigatti: Earlier this month, SCE received a favorable proposed decision in the 2022 SEMA proceeding. If adopted, it would authorize $191 million of revenue that would be recovered over 12 months and fully approve $312 million of capital expenditures. The PD is scheduled to be voted on at the CPUC's May 30th meeting. It's a big positive to get this decision earlier in the year, and its approval strengthens our 2024 EPS guidance. Additionally, the ALJ and the Cost of Capital Proceeding recently issued a proposed decision that would deny intervenors' petition for modification that sought to suspend the cost of capital mechanism.

Maria: Earlier this month SCE received a favorable proposed decision in the 2022 seem a proceeding.

Maria: If adopted it would authorize $191 million of revenue that would be recovered over 12 months and fully approved $312 million of capital expenditures.

Maria: The PD is scheduled to be voted on at the Cpuc's may 30th meeting.

Maria: It's a big positive to get this decision earlier in the year and its approval strengthens our 2024 EPS guidance.

Maria: Additionally, the ALJ and the cost of capital proceeding recently issued a proposed decision that would deny intervenors petition for modification that sought to suspend the cost of capital mechanism.

Maria C. Rigatti: This decision is consistent with the intent articulated by the CPC when the cost of capital mechanism was originally adopted and reinforces our views on the topic and the constructive California regulatory environment. Page 12 provides an update on the resolution of SCE's legacy wildfires, which continues to advance. The change in the estimated losses was primarily driven by information obtained related to the Woolsey Fire Mediation Program. Recall that plaintiffs who had opted into the program were required to submit their demands by a deadline in February.

Maria: This decision is consistent with the intense articulated by the CPUC when the cost of capital mechanism was originally adopted.

Maria: Reinforces our views on the topic and the constructive California regulatory environment.

Maria: Page 12 provides an update on the resolution of Sce's legacy wildfires, which continues to advance.

Maria: The change in the estimated losses was primarily driven by information of pain related to the Woolsey fire mediation program.

Maria: Recall that plaintiffs who have opted into the program. We are required to submit their demands by a deadline in February.

Maria C. Rigatti: The demands received reveal that more plaintiffs intend to continue to pursue claims, as considerably fewer plaintiffs have dropped their litigation in Woolsey than observed in the TKM process. Settlement outcomes during the quarter also exceeded previously estimated values. SCE has now resolved 97% of TKM individual plaintiff claims and 86% of Woolsey individual plaintiff claims and is on track to file the Woolsey cost recovery application in Q3. I will remind you that SCE intends to seek full recovery of all eligible costs, so the increase will be reflected in the cost recovery application. In the TKM proceeding, the next steps include intervener testimony due May 29th and SCE's rebuttal testimony due June 28th.

Maria: The demands received reveal that more plaintiff intend to continue to pursue claims as considerably fewer plaintiffs have dropped their litigation and woolsey and observed in the PJM process.

Maria: Settlement outcomes during the quarter also exceeded previously estimated values.

SCE has now resolved 97% of Teekay them individual plaintiffs claims and 86% of all the individual plaintiff claims and is on track to file the will the cost recovery application in Q3.

Maria: I will remind you that SCE intends to seek full recovery of all eligible costs. So the increase will be reflected in the cost recovery applications.

Maria: And if he can proceeding next steps include intervenor testimony due may 29th in Sce's rebuttal testimony is due June 28.

Maria: Turning to EPS guidance page 13 shows our 2024 core EPS guidance and modeling considerations.

Maria C. Rigatti: Turning to EPS guidance, page 13 shows our 2024 core EPS guidance and modeling considerations. We are pleased with our start to the year and are confident in affirming the range of $4.75 to $5.05. As Pedro mentioned, the estimated losses for the 2017 and 2018 events increased.

Maria: We are pleased with our start to the year and are confident in affirming the range of $4 75 to $5 5 million.

Maria: As Pedro mentioned, the estimated losses for the 2017 and 2018 events increased.

Maria C. Rigatti: As a reminder, SCE funds the cost of resolving claims with debt, which is excluded from its regulatory capital structure. Thus, SCE expects to issue additional debt, which will result in about two cents of incremental interest expense in 2024. Regardless, we maintain our confidence in achieving our EPS guidance. SCE's cost recovery applications include the financing costs associated with resolving claims. So this increase will also be reflected in the cost recovery application.

Maria: As a reminder, SCE filed its a cost to resolve claims with debt.

Maria: Is excluded from its regulatory capital structure.

Maria: That SCE expects to issue additional debt, which will result in about two cents of incremental interest expense in 2024.

Maria: Regardless, we maintain our confidence in achieving our EPS guidance.

Maria: Sce's cost recovery applications include the financing cost associated with resolving claims. So this increase will also be reflected in the cost recovery applications.

Maria: On the financing front I want to underscore that we have limited equity needs as we continue to deploy substantial amounts of capital and extend our dividend track record.

Maria C. Rigatti: On the financing front, I want to underscore that we have limited equity needs as we continue to deploy substantial amounts of capital and extend our dividend track record. As shown on page 14, the Parents 2024 Financing Plan is nearly complete, and we have already addressed our equity needs via internal programs. Also, we maintain our forecast of about $100 million of equity per year through 2028.

Maria: As shown on page 14, the parents 'twenty 'twenty four financing plan is nearly complete and we have already addressed our equity needs via internal programs.

Maria: Also we maintain our forecast of about $100 million of equity per year through 2028.

Maria C. Rigatti: As you can see on the right side of page 15, SCE's strong cash flow generation and the incremental debt to finance accretive growth address nearly all our cash needs through 2028. We have significantly strengthened our balance sheet through efficient financing execution, along with regulatory asset recovery of about $4 billion over the last three years and approximately $2 billion expected through 2025. This ability to track and recover prior spending is yet another constructive feature of our regulations, which balances the ability to execute critical work with strong regulatory oversight.

Maria: As you can see on the right side of Patriot team Sce's strong cash flow generation and the incremental debt to finance accretive growth address nearly all our cash needs through 2028.

Maria: We have significantly strengthened our balance sheet through efficient financing execution, along with regulatory asset recovery of about $4 billion over the last three years and approximately $2 billion expected through 2025.

This ability to track and recover prior spending is yet another constructive feature of our regulations, which balances the ability to execute critical work with strong regulatory oversight.

Maria: In recognition of our balance sheet strength, we were pleased that last week S&P affirmed our credit ratings and stable outlook.

Maria C. Rigatti: In recognition of our balance sheet strength, we were pleased that last week S&P affirmed our credit ratings and stable outlook. Importantly, they lowered our FFO2DET downgrade threshold to 14% from 15%, noting the key driver of this action is the company's decreasing business risk.

Maria: Importantly, they lowered our episodes that downgrade threshold to 14% from 15%, noting the key driver of this action is the company's decreasing business risk.

Maria C. Rigatti: We're proud to see S&P's recognition of our leadership role in mitigating wildfire risk, especially in an environment where climate risk and credit thresholds across the industry are increasing. Lastly, I'll remind you that we've provided modeling sensitivities to help you quantify what cost recovery for the 2017 and 2018 events means for a few key metrics. Each billion dollars of recovery would improve our FFO to debt ratio by about 40 to 50 basis points and reduce interest expense by 35 million dollars per year. These benefits don't only accrue to our owners. We believe customers will benefit by potentially avoiding as much as $4.9 billion of excess financing costs. A clear win for overall affordability.

Maria: We're proud to see S&P's recognition of our leadership role in mitigating wildfire risk, especially in an environment, where climate risks and credit threshold across the industry are increasing.

Maria: Lastly, I'll remind you that we've provided modeling sensitivities to help you quantify with cost recovery for the 2017 and 2018 events mean for a few key metrics.

Maria: Each billion dollars of recovery would improve our <unk> to debt ratio by about 40 to 50 basis points and reduced interest expense by $35 million per year.

Maria: These benefits don't only accrue to our owners, we believe customers will benefit by potentially avoiding as much as $4 $9 billion of excess financing costs.

Maria: A clear win for overall affordability.

Let me conclude by saying that our confidence in meeting our financial targets remain strong.

Maria C. Rigatti: Let me conclude by saying that our confidence in meeting our financial targets remains strong. Underpinning this conference in the near term and long term is our focus on execution. Execution to Deliver on Our Earnings Targets. Execution to Advance Regulatory Proceedings, and execution of our cost management initiative, the cornerstone of SCE's cost leadership and the lowest system average rate among major IOUs in California. That concludes my remarks, and back to you, Sam

Maria: Underpinning this conference in the near term and long term is our focus on execution.

Maria: Execution to deliver on our earnings targets.

Maria: Execution to advance regulatory proceedings and.

Maria: And execution of our cost management initiatives, the cornerstone for Sce's cost leadership and lowest at system average rate among major ious in California.

Maria: That concludes my remarks and back to you soon.

Missy: Missy, please open the call for questions. As a reminder, we request you limit yourself to one question and one follow-up so everyone in line has the opportunity to ask questions. Thank you, sir.

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

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

Unknown Speaker: Thank you, sir. If you would like to ask a question, please press star one on your phone. One moment for the first question, please. Our first question comes from Nick Campanella with Barclays. Your line is open.

Speaker Change: Our first question comes from Nick Campanella with Barclays. Your line is open.

Nicholas Joseph Campanella: Hey, good afternoon, everyone. Thanks for taking my question. Hey, so I guess just to start with the charge, I guess it's good that we moved past this kind of mediation program deadline, but you did highlight an unfavorable litigation environment and settlements kind of exceeding previous estimates. Can you maybe kind of talk about your confidence level that we wouldn't see another kind of revision higher here as we get to the third quarter and knock out that remaining $800 million? Is this the kind of last remaining revision in your mind, or what should we kind of think about as you kind of progress to that third quarter deadline?

Nicholas Joseph Campanella: Hey, good good afternoon, everyone and thanks for taking my question.

Nicholas Joseph Campanella: Hey, So I guess just to start with the charge I guess its good that we move past this kind of mediation program deadline, but you did highlight an unfavorable litigation environment in settlements kind of exceeding previous estimates can you just maybe kind of talk about your confidence level that we wouldn't see another kind of revision higher here as we get to the third quarter and not.

Nicholas Joseph Campanella: Out that remaining 800 million is this is this the kind of last remaining revision in your in your mind or how should we kind of think about as you kind of progressed to that third quarter deadline.

Pedro J. Pizarro: Nick, I appreciate the question. Look, I'll just start by pointing you toward the disclosures.

Speaker Change: So I think I appreciate the question and look at I'll just start by pointing you towards is closer to what we've said all along that you know every quarter. We go back in we test whether this needs to change research and adjust them. So that we are providing.

Pedro J. Pizarro: We've said all along that every quarter we go back in, we test whether there's a need to change reserves and adjust them so that we are providing our best estimate of the best estimate. We really want to make sure we're doing this down the middle of the road by the buck per cap. And so we did pass a pretty important milestone, as you said, with And so we now have the benefit of analyzing what came in, with Less drop-off in overall claims and higher expectation of awards.

Our best estimate of the best estimate right really want to make sure. We're doing this down the middle of the road by the book a break out and sell.

Speaker Change: Did pass a pretty important milestone as you said with that we will see event.

And so we now have the benefit of analyzing what came in and we saw the factors. So we commented honest both the.

Speaker Change: Less drop off in an overall claims and a higher expectation of awards.

Speaker Change:

Pedro J. Pizarro: You know, as we continue here, I think, like I said in my comments. Honestly, Nick, true certainty here will come with moving through this process as quickly as we can, doing it right, and, you know, getting to the finish line. And I'm really pleased that, you know, we're certainly a lot closer to the finish line on TKM, as you saw from our having made the filing last year. We are approaching that important milestone with WOLSI, where we'll be ready to do our filing, and we continue to be on track to do that in Q3.

As we continue here it looks like I said in my comments.

Honestly, Nick true certainty here will come with moving through this process as quickly as we can doing it right and getting to the finish line and I'm really pleased that we were certainly a lot closer to the finish line on TK Animas yourself from having made the filing last year.

Speaker Change: We are approaching that important milestone with wuxi, well, we'll be ready to use our filing and we continue to be on track to do that in Q3.

Speaker Change: Every quarter, we will continue to test things and you know we kind of by definition. If we're giving you. The best estimate we can I mean said it has probably an equal chance of reality being higher or being lower right. So we'll continue to do we test that every quarter, but again, our focus is on completing the process and getting this fully behind us.

Pedro J. Pizarro: Every quarter, we'll continue to test things, and, you know, by definition, if we're giving you the best estimate we can, it means that it probably has an equal chance of reality being higher or being lower, right? So we'll continue to retest that, you know, every quarter, but again, our focus is on completing the process and getting this fully behind us.

Maria C. Rigatti: And maybe, Nick, just one other thing to underscore Pedro's comment about completion driving final certainty. I'll point out two numbers that we've already said on the call.

Speaker Change: And maybe Nick just one other thing to underscore pedros comment about completion driving final certainty I would point out two numbers that we've already said today on the call.

Speaker Change: Individual plaintiffs are the largest component of what's going on here, 97% of the pecan individual plaintiffs have been settled and 86% of the woolsey individual plaintiffs have been settled so that's really what's driving us to also comment that we're on track for a Q3 filing for royalty cost recovery.

Maria C. Rigatti: Individual plaintiffs are the largest component of what's going on here. Ninety-seven percent of the TKM individual plaintiffs have been settled, and 86 percent of the Woolsey individual plaintiffs have been settled. So that's really what's driving us to also comment that we're on track for a Q3 filing for Woolsey cost recovery.

Speaker Change: Okay. Thank you for the information there.

Nicholas Joseph Campanella: Okay, thank you for the information there. And then, you know, as I kind of think about the balance sheet impacts, and you know, I think it's good to see that you're still committed to just only 100 million of equity a year here. That's not changing; you just got the 14 to 15% range, as you kind of talked about on the FFO to debt side and your prepared remarks, just net of this charge, kind of where do you stand in the ranges now? And then what are the drivers to kind of put you higher or lower, as we get through the year and into 25?

Speaker Change: And then.

As I kind of think about the balance sheet impacts and I think it's good to see that you're still committed to just only $100 million of.

Speaker Change: Equity a year here, that's not changing you just got the 14% to 15% range.

You've kind of talked about an episode of depth side in your prepared remarks, just net of this charge kind of where do you stand in the ranges now and then what are the kind of the drivers to kind of put you higher or lower as we get through the year and into 'twenty five.

Maria C. Rigatti: I think the latest report that I've seen from S&P actually shows just over 14% FFO to debt, so inside, above their downgrade threshold range. 15% to 17% FFO to debt is still our objective. The financing plan that we provided last quarter and that we have again in the materials for this quarter is consistent with moving into that range over the next several years. We're making good progress on that as we continue to get claims put behind us, but also as we continue to recover those memo accounts.

Speaker Change: Sure.

Speaker Change: The latest reports I've seen from S&P actually has us at just over 14% <unk> to debt so inside alright.

Speaker Change: Above their downgrade threshold range, 15% to 17% <unk> to debt is still our objective.

Speaker Change: The financing plan that we provided last quarter and that we have again in the materials for this quarter is consistent with moving into that range over the next several years.

We're making good progress on that as we continue to get claims put behind us, but also as we continue to recover those memo accounts $4 billion over the last three years 2 billion more through 2025 that plus the growing rate base and the ability to to to earn on that in depreciation et cetera, that's really moving us through that and we tested a lot of <unk>.

Maria C. Rigatti: $4 billion over the last three years, and $2 billion more through 2025. That plus the growing rate base and the ability to earn on that and depreciation, etc., that's really moving us through it. We've tested a lot of different scenarios, and that's how we came up with $100 million of equity every year through 2028.

Speaker Change: Arent scenarios and that's how we came up with 100 million of equity every year through 2028.

Speaker Change: Thanks for taking my questions today.

Unknown Speaker: Thanks for taking my questions today.

Speaker Change: Thanks, Nick.

Speaker Change: Thank you. Our next question comes from Michael <unk> with Evercore. Your line is open.

Unknown Speaker: Thank you. Our next question comes from Michael Lonegan with Evercore. Your line is open.

Michael B. Lonegan: Hi, thanks for taking my question. On the best estimate of losses for Wolseley, you spoke about, you know, a limited number of plaintiffs that have received extensions. Just wondering if you could share more detail about that, the kind of visibility you have into that, because obviously those losses would probably be harder to estimate.

Michael: Hi, Thanks for taking my question.

Michael: On the best estimate of losses for worldly you spoke about a limited number of plaintiffs that have received extensions. Just wondering if you could share more detail about that the kind of visibility you have into that.

Speaker Change: Because obviously those losses.

Speaker Change: Probably the harder to estimate.

Speaker Change: Yeah. So the the process that we went through with the deadline in February I think as we noted a couple of times in the past when people put their information and sometimes they put in a 100% lease out for some time that they put in less than what we've asked for and sometimes they ask for extensions in this case a number of <unk>.

Unknown Speaker: Yeah, so the process that we went through with the deadline in February, I think, as we've noted a couple of times in the past, when people put their information in, sometimes they give 100% of what we've asked for, sometimes they give less than what we've asked for, and sometimes they ask for extensions.

Plaintiffs did receive extensions we know some things about their claims we've been able to group them, but we will get more information as they get to their claims deadlines with Europe, you know over the next couple of months the.

Unknown Speaker: In this case, a number of plaintiffs did receive extensions, we know some things about their claims, we've been able to group them, but we will get more information as they get to their claim deadlines, which are, you know, over the next couple of months. The work that we've done to evaluate them is similar to the work that we did in prior quarters, where we took the experience that we had across a broad range of claims. And obviously, we keep settling more claims, so we have more information. And we've applied that understanding to these other demands. Again, we will get more information about these as we progress through the next quarter.

Speaker Change: Work that we've done to evaluate them as similar to the work that we've done in prior quarters. We've taken the experience that we've had across a broad range of of claims and obviously, we keep settling more claims. So we have more information and we've applied that understanding to these other demands again, we will get more information about those as we progress through the next quarter.

Speaker Change: Great. Thank you and then secondly for me.

Michael B. Lonegan: Great, thank you. And then, secondly, from me, you spoke about filing standalone applications for the two plus billion of incremental capital for next-gen ERP and the AMI 2.0 programs. Just wondering if you could, if you have a more specific timeline on when you plan to file these applications, when they could be, you know, rolled into your plan, and how much incremental equity we could potentially expect to finance them.

Speaker Change: You've spoken about filing standalone applications for the two plus billion dollars.

Speaker Change: Incremental capital for Nexgen ERP in the Ami as you point out programs.

Speaker Change: Just wondering if you could.

Speaker Change: If you have a more specific timeline of when you plan to file these applications when they could be.

Speaker Change: Rolled into your plan and how much incremental equity, we could potentially expect to finance it.

Unknown Speaker: We are expecting that the next-gen ERP application will be late 2024, and that the AMI, the smart meter application, will be in 2025. Across the two of them, a couple billion dollars in capital. As we think about financing for those additional or incremental capital requirements, obviously, SCE will always finance in accordance with its authorized capital structure, and we'll see where we are in terms of our credit metrics. As I said, we're growing strongly into our credit metric range, and as long as we can stay in that range, we'll be fine. Minimizing the amount of equity that would otherwise be required for those incremental capital opportunities.

Speaker Change: Sure. So we are expecting that the Nextgen ERP application late 2024 and that the a M. I, there's a smart meter application would be in 2025 across the two of them a couple of billion dollars in capital as we think about financing for those additional or.

Speaker Change: Incremental capital requirements, we're really going to obviously SCE will always finance in accordance with its authorized capital structure and we will see where we are in terms of our credit metrics as I said, we're growing strongly into our credit metric range and as long as we can.

Speaker Change: Stay in that range will be midnight.

Speaker Change: Thinking about equity that would otherwise be required for those incremental capital opportunities.

Michael B. Lonegan: Great, thanks for taking my question. Thank you. Our next question comes from Gregg Orrill with UBS. Your line is open. Hi, thank you.

Great. Thanks for taking my questions.

Speaker Change: Thanks Mark.

Thank you. Our next question comes from Greg oral with UBS. Your line is open.

Unknown Speaker: Thank you. Our next question comes from Gregg Orrill with UBS. Your line is open.

Greg: Hi, Thank you.

Greg: <unk>.

Greg: Just wondering if theres anything.

Greg: To be watching for in terms of.

Trends on transmission Capex through the Cal ISO.

Greg: Planning process or.

Or otherwise.

Speaker Change: Thinking about thank you.

Speaker Change: Yes, maybe I'll start on that one.

Unknown Speaker: Yeah, maybe I'll start on that one. And Steve Powell might have thoughts as well. So you've seen that the Cal ISO has really, over the last few years, fully engaged in the long-term planning process. I think they, along with other parties in the state, recognize that in order to help the state achieve its net zero goals by 2045, there's a lot of work to be done. And our own countdown to 2045 white paper last fall estimated that the rate of transmission additions will need to be four times what they've been historically.

Speaker Change: Do you follow my thoughts as well.

Speaker Change: So you've seen that the Cal ISO has really over the last few years fully engaged in the long term planning process I think they recognize along with other parties in the state that.

Speaker Change: Order to help the state achieve its net zero goals by 2045, there's a lot of work to be done and our own count on to 2045 White paper last fall.

Speaker Change: You know I had a pretty significant investment needs statewide for the wires to make all of this work.

Unknown Speaker: So you've seen that there have been a couple of plans that the Cal ISO has cycled through in the last couple of years. Maria mentioned it already, or certainly it's in our materials, but you see there's something like $2 billion of capital for something like 17 projects, where SCE is entitled to the right of first refusal as an incumbent to do the work. So we expect that SCE will do that work. In addition, the Cal ISO has a competitive solicitation process for projects that are new and that are not extensions of existing projects.

Speaker Change: So.

Speaker Change: We estimate that the rate of transmission division's willing to be four times, where they've been historically, so you've seen that there's been now a couple of.

Plants at the Cal ISO has cycled through in the last couple of years.

Speaker Change: Maria mentioned already.

Certainly it's in our materials spread.

Speaker Change: You see something like $2 billion of capital for something like 17 projects, where SCE is entitled to the right of first refusal as an incumbent to do the work. So we expect that SCE will do that work. In addition, Cal ISO has a competitive solicitation process for projects that are new that are not extensions of existing projects.

Unknown Speaker: And SCE now has one application pending, waiting to hear on this in this current process. But you know, Steve, I know that as you engage with Cal ISO and your team, maybe comment more on what's next in terms of their continued planning process. Yeah, so the CAITO runs its annual transmission planning process each year.

Speaker Change: SCE has won applications pending.

Speaker Change: Waiting to hear on this and this current process.

But Steve I know that you engage with Cal ISO and her team.

Speaker Change: If you can comment more on what's next in terms of their continued planning process. So the caito runs its annual transmission planning process each year and so you can look to each year, having that plan come out in the most recent plan that was released for the 'twenty three 'twenty four cycle. Most of the projects are up in northern California, Although there was about 90 million.

Unknown Speaker: Yeah, so the CAITO runs its annual transmission planning process each year. And so you can look forward to each year having that plan come out. In the most recent plan that was released for the 23-24 cycle, most of the projects are in Northern California, although there was about $90 million of incumbent projects for SCE to build in our territory. So each of those plans will identify additional opportunities for us. We'll evaluate if we participate in future competitive solicitations on those.

Of incumbent projects for SCE to build in our territory. So each of those plants will identify additional opportunities for us we'll evaluate if we participate in future competitive solicitations on those and the longer term. The kite, who also does a 20 year outlook and the last one year outlook, which came out a couple of years ago, pointing towards about $30 billion of <unk>.

Unknown Speaker: In the longer term, the CAITO also does a 20-year outlook, and the last 20-year outlook, which came out a couple years ago, points towards about $30 billion of investment needed in transmission over the next 20 years. The CAITO is in the process of updating that outlook. They put out some draft information recently. But really, they'll have a final report in June that will give you more of the 20-year outlook. But it continues to show a need for more and more resources to fulfill the clean energy targets that are backed by a whole lot of transmission.

Speaker Change: <unk> needed in transmission over the next 20 years the cases in the process of updating that outlook. They put out some dropped information recently, but really don't have a final report in June that will give you that more of the 20 year outlook, but it continues to show a need for more and more resources to fulfill the clean energy targets that was backed by a whole lot of transmit.

Speaker Change: Sure.

Speaker Change: Okay. Thanks.

Speaker Change: Thanks, Greg.

Speaker Change: Thank you. Our next question comes from Jeremy Tonet with J P. Morgan Your line is open.

Unknown Speaker: Thank you. Our next question comes from Jeremy Tonet with JP Morgan. Your line is open.

Hi, Jeremy.

Jeremy Bryan Tonet: Hi, good afternoon; how are you? Hello, how are you? Good. Just want to start off with, I guess, a broader question and just with summer approaching. Can you provide an update on fire conditions you're seeing across your territory right now and, I guess, you know, overall expectations for the season, given all the de-risking that has been accomplished over time?

Jeremy Bryan Tonet: Hi, good afternoon, how are you.

Jeremy Bryan Tonet: Hello, how are you doing good.

Jeremy Bryan Tonet: Good.

Jeremy Bryan Tonet: Just wanted to start off with I guess, a broader question and just with summer approaching.

Jeremy Bryan Tonet: Can you provide an update on fire conditions, you're seeing across your territory right now and I guess overall expectations into the season, given all of the Derisking as that has been accomplished over time.

Pedro J. Pizarro: I'll answer your question quickly, and then I'll follow up with the real message I want you to walk away with. The quick answer is, I think the latest stuff I've seen published suggests that it seems to be an average or maybe even a little bit below average risk. But that's not the real message I want you to walk away with.

Speaker Change: I'll answer your question quickly and then I'll follow up with the real message I want you to walk away with the quick answer is I think the latest stuff I have seen published suggest that.

Speaker Change: It seems to be an average maybe even a little bit below average risk season, that's not the real message I want you to walk away with.

Pedro J. Pizarro: We know that in the years ahead, with climate change, we're going to see increased, not decreased, climate-driven wildfire risk conditions. Our Adapting for Tomorrow white paper a couple years ago pointed to something like a 20% increase in climate-driven wildfire risk by 2050. And so the real headline here is the stuff I talked about in my prepared remarks, right? The amount of hardening we've done, the 85 to 88% risk that we've taken off the table. And that doesn't even include the risk taken off the table by the state having doubled down on its firefighting capabilities.

Speaker Change: We know that in the years ahead with climate change, we're going to see increased not decreased climate, driven wildfire risk conditions, but are adapting for tomorrow white paper a couple of years ago.

Speaker Change: It to something like a 20% increase in climate driven wildfire risk to 2015.

Speaker Change: And so the real headline here is so stuff I talked about in my prepared remarks, right. The amount of hardening, we've done the 85% to 88% risk that we've taken off the table and that doesn't even include the risk taken off the table by the state having doublet, having doubled down on is firefighting capabilities. So yeah.

Speaker Change: Obviously, it's interesting and I know investors asked us from time to time, how does this year look our hottest in any given year look, but frankly, I think that is less and less a question and more and more of a question you should be asking is how are we continuing to do it are hardening.

Pedro J. Pizarro: So, you know, obviously, it's interesting. And I know investors ask us from time to time, how does this year look? Or how does, you know, any given year look? But, frankly, I think that is less and less the question. And more and more, the question you should be asking is, how are we continuing to do in our tightening and our other measures, and I think we're doing well there.

Speaker Change: And our other measures and I think we're doing well there.

Pedro J. Pizarro: And Pedro, even with all of the risk reduction, we're constantly vigilant, so just to underscore that point. Absolutely. We're continuing not just to do more and more grid hardening but also refining our models, looking at new technologies. I think that's some of what you can see when you look at the S&P report as well, it's just that ongoing attention that we are paying to every aspect of mitigating the risk.

Speaker Change: C J, even with all of their risk reduction we're constantly vigilant. So just to underscore it absolutely. We're continuing not just to do more and more grid hardening, but also refining our models looking at new technologies I think that some of what you can see when you look at the S&P report as well as just that ongoing attention that we are paying to every app.

Speaker Change: Aspect of mitigating the risk and using new technologies at a trade show.

Maria C. Rigatti: and using new technologies to do it, right? So it was nice, as you said, Maria, to have S&P recognize that. You know, think about PSPS.

Speaker Change: It was nice that you said Maria to have S&P recognized that.

Speaker Change: Think about Sps so it's been an important tool, but now it only accounts for something like 10% of our overall risk reduction.

Pedro J. Pizarro: That's been an important tool, but now it only accounts for something like 10% of our overall risk reduction. And, you know, we continue to look for ways to refine that and minimize the potential impact on customers. The other thing I'd share is that, and Steve Powell is playing a leading role in this, we're making sure we're sharing our learnings with the rest of the industry because this is no longer a California problem, it's no longer a Western issue, it's a national issue.

Speaker Change: We continue to look for ways to refine that and minimize the potential impact to customers.

Speaker Change: Other thing is sure is that in Steve Powell is playing a leading role in this we're making sure we're sharing our learnings with the rest of the industry. Because this is no longer a California problem is no longer a western issue, it's a national level issue and so we're proud that through <unk>, which you know I'm sharing EI to through June of this year, but Steve is.

Pedro J. Pizarro: And so we're proud that through EEI, which I'm chairing EEI through June of this year, but Steve is co-chairing a CEO task force at EEI that's helping to share best practices across the industry as well as, you know, have a discussion on whether other states or the federal level could find a way to have liability protections like the things that we were able to achieve in California through AB 1054 So you know, we take leadership seriously. It's not just about protecting our customers but making sure that we're sharing that with the rest of the industry.

Speaker Change: Co chairing a CEO task force at EI, that's helping too.

Speaker Change: Sure best practices across the industry as well as have a discussion on.

Speaker Change: Were there other states or the federal level, we could find a way to have liability.

<unk> protections like the things that we were able to achieve in California. After <unk> 54. So we take the leaderships of here seriously is not just about protecting our customers, but we're making sure that we're sharing that with the rest of the industry.

Jeremy Bryan Tonet: Got it. That kind of hits my second question, but maybe just to continue with that on the national level, do you see movement in D.C., and could we actually get policymakers moving in that direction to develop something that, you know, a comprehensive, nationwide approach here? Just wondering, you know, given how divisive politics are today, if you think that could actually be in motion at some point.

Speaker Change: Got it that's kind of hits my second question, but maybe just to continue with that on the national level do you see movement in D C and could we actually get policymakers moving in that direction to develop something that.

Speaker Change: Comprehensive nationwide.

Our approach here just wondering given how divisive politics are today, if you think that could.

Speaker Change: Actually be in motion at some point.

Pedro J. Pizarro: Yes, so through EEI, we're really engaged on that and have had a number of Capitol Hill visits. And look, you're right, it's kind of hard to get a national budget past these days, right? So it is a challenging environment on Capitol Hill. But on the other hand, this is not a single state issue anymore. It's multiple states. They're red, blue, and everything in between, right?

Speaker Change: Yes, so <unk>, we're really engaged on that and number of Capitol Hill visits.

And look at our yes, youre right its kind of hard to get a national budget passed these days right. So it is a challenging environment in Capitol Hill on the other hand.

Speaker Change: This is not a single state issue anymore, it's multiple states, they're red blue and everything in between right.

Pedro J. Pizarro: And so I think there's increasing recognition that there is a challenge here that needs a national solution. Still framing that up, but I will point to the fact that there are examples of other risks across the economy where there is, you know, a national level solution. Think about managing nuclear operating risk, and the Price-Anderson Act is an example. Steve, I know you've been engaged in a number of these Capitol Hill discussions as well.

Speaker Change: And so I think there is increasing recognition that there is a challenge here that needs a national solution.

Speaker Change: Framing that up and but I will point to the fact that there's examples for other risks across the economy, where there is a national level solutions think about managing nuclear operating risk and the price Anderson Act as an example.

Speaker Change: Steve I know <unk> been engaged in a number of these capital Hill discussions as well anything you'd add.

Steven D. Powell: Anything you'd add?

Steven D. Powell: I'd just say right now that we've been really focused on education about how the risk is evolving and the mitigations that the industry is taking to manage the physical risk itself. In terms of the financial risk, I know that different states are approaching it in different ways. We'll look for ways that you can combine what's being done at the state level with potentially complementary efforts at the federal level. Some of the things that I know there's interest on the Hill are things like being able to remove timber, and there are lots of tactical things around permitting and allowing utilities to effectively streamline the process to get their work done in high-fire areas.

Steven D. Powell: I'll just say right now we've been really focused on education about how the risk is evolving and the mitigation that the industry is taking to manage.

Steven D. Powell: Manage the physical risk itself in terms of the financial risk I think there is I know that different states are approaching it in different ways. We'll look for ways that you can combine what's being done at the state level with potentially complimentary efforts at the federal level.

Steven D. Powell: Some of the things that I know theres interest down the hill event.

Steven D. Powell: Things like being able to remove timber and theres lots of tactical things around permitting and allowing utilities to effectively do streamline the process to get their work done and in high fire areas in terms of more of the financial solution again, I think that there's a lot of work to be done even just to shape what the ask is in it.

Steven D. Powell: In terms of more of the financial solution, again, I think there's a lot of work to be done even just to shape what the ask is, and it'll take some time, but it's most likely to be some combination of state solutions with attempts at the federal level.

Steven D. Powell: It will take some time, but it's most likely to be some combination of date solutions with attempts at the federal level.

Speaker Change: Got it that's very helpful and just a quick point of clarification, if I could with regards to the deadline for the plaintiff extensions. There I think I might've said in the coming months as that Don is there any specific date and time that we should be looking for there.

Jeremy Bryan Tonet: Got it, that's very helpful. And just a quick point of clarification, if I could, with regard to the deadline for the plaintiff extensions there. I think it might have said in the coming months. Is that done? Is there any specific date and time that we should be looking for there?

Unknown Speaker: Right now, the deadlines are all over the next couple of months, but we'll keep you posted.

Don: Right now the deadlines are all over the next couple of months, but we'll keep you posted.

Speaker Change: Got it thank you.

Jeremy Bryan Tonet: Thanks for the good questions, Jeremy.

Speaker Change: Oh, hey, thanks for the good questions Jamie.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Ryan Levine with Citi. Your line is open.

Ryan Michael Levine: Thank you. Our next question comes from Ryan Levine with Citi. Your line is open.

Unknown Speaker: Hi everybody. I'm really interested in terms of the cost structure. It looks like your O&M numbers ticked up year over year, and your footnotes point to inspection and maintenance costs being higher this quarter. Is there anything to read into that, or any color you could share around what's driving some of the escalation of your costs?

Ryan Michael Levine: Hi, everybody.

Ryan Michael Levine: Any interest in terms of the cost structure looks like your O&M numbers ticked up year over year in your footnotes point inspection and maintenance costs being higher this quarter is there anything to read into that or any color you could share around what's driving some of the escalation on your costs.

Ryan Michael Levine: Yes.

Unknown Speaker: Yeah, so a lot of that sometimes has to do with exactly when in each quarter you're booking the cost. So some of it's just timing differences year over year, that can be driven by weather. And years where there's worse weather than not, you're going to do less work, and then in another year, you can do more work. So I think our cost structure is not changing per se. In fact, our focus is on how to actually streamline all of those processes and reduce costs over time.

Ryan Michael Levine: A lot of that sometimes has to do with exactly when in each quarter. You are booking the costs. So some of it's just timing differences year over year that can be driven by weather and years, where there there's worse weather than not.

Ryan Michael Levine: You're going to do less work and then in another you can do more work. So I think our cost structure is not changing per se. In fact, our focus is on how to actually streamline all of those processes and reduce the cost over time, so nothing to read into that.

Ryan Michael Levine: So there is nothing to read into that.

Ryan Michael Levine: And then in terms of wildfire mitigation plans more broadly to the extent that this becomes the more national initiative for pre utilities around the country are there opportunities to streamline maybe the cost of implementation or any iterations that you can anticipate as it becomes more of a nationwide.

Unknown Speaker: And then in terms of wildfire mitigation plans more broadly, to the extent that this becomes a more national initiative for utilities around the country, are there opportunities to streamline maybe the cost of implementation, or any iterations that you can anticipate as this becomes more of a nationwide phenomenon?

Ryan Michael Levine: <unk> phenomenon.

Ryan Michael Levine: So maybe a couple of angles on that one is and I think you've heard us say this earlier Ryan.

Unknown Speaker: So maybe there are a couple of angles on that. One is, and I think you heard us say this earlier, Ryan.

Pedro J. Pizarro: Our team continues to look, you know, constantly for ways to refine, improve, how we use new technologies, etc. So maybe part of your questions comes from a place of, I'll make it up a little bit, and you tell me if this is the kind of thing you're thinking about. To the extent that you have technologies that end up being deployed on a more massive scale across multiple states, they can, in theory, you know, conceptually, that might lead to maybe some streamlining of those costs if you have greater adoption, you know, driving greater scale.

Ryan Michael Levine: Our team continues to look constantly for how do we refine improve how do we use new technologies et cetera. So maybe part of your questions comes from a place of I'll make it up a little bit and you tell me. If this is the kind of things we're thinking about.

Ryan Michael Levine: To the extent that you have technologies that ended up being deployed on a more mass scale across multiple states.

Ryan Michael Levine: In theory conceptually that might lead to maybe some streamlining of those costs. If you have greater adoption driving greater scale, but.

Pedro J. Pizarro: But, you know, I think from an SCE perspective, the team there is very focused on constantly turning the crank, refining our view of the risk, refining the view of the models underlying our description of that risk, and then... Prioritizing and reprioritizing the capital and O&M commitments that we make towards further reducing that risk. Steve, anything else?

Ryan Michael Levine: I think from a from an FTE perspective. The team there is very focused on constantly turning the crank refining our view of the risk refining the view of the models underlying description of that risk and then <unk>.

Ryan Michael Levine: <unk> is seeing an re prioritizing the capital and O&M commitments that we make towards further reducing that risk.

Speaker Change: Steve anything else, Yes, Brian and then maybe if I think about the experience we've been through and the focus we have on both balancing balancing.

Steven D. Powell: Yeah, Ryan, and maybe as I think about the experience we've been through and the focus we have on both balancing, you know, balancing affordability as we make sure we're mitigating the wildfire risk, it starts for any utility that's going down the path of making the right decisions around the risk mitigations you deploy. So, for example, for us, you know, on our grid hardening side, the covered conductor is a very cost-effective way for us to address the risks that we face. It may look different for different utilities.

Steven D. Powell: Balancing affordability as we make sure we're mitigating the wildfire risk.

Steven D. Powell: For any utility is going down the path of making the right decisions around the risk mitigation you deploy so for example for us on our grid hardening side covered conductor is a very cost effective way for us to address the risks that we face may look different for different utilities.

Steven D. Powell: As you get into things like inspections at the things we've done around combining our aerial and our ground inspection. So we're having to go out fewer times to do the inspections. The tools. We use to do that are ones that certainly if they are able to help us bring the cost down as more and more people are developing those those may improve and we may have more opportunities theres areas as you begin to go broader array.

Steven D. Powell: As you get into things like inspections, the things we've done around combining our aerial and our ground inspections, so we're having to go out fewer times to do the inspection. The tools we use to do that are ones that, certainly, if they're able to help us bring the cost down, as more and more people are developing those, those may improve, and we may have more opportunities. There are areas, as you begin to go broader, around, for example, veg management and how you do those inspections, so the detection, whether it's using LIDAR or satellite, with the whole industry focused on it, will advance faster and allow us to lower the cost.

Steven D. Powell: For example, veg management and how you do those inspections, so the detection, whether its Aegean lidar or satellite with the whole industry focused on those those will advance faster and allow us to lower the costs. So we will definitely learned from others.

Steven D. Powell: So we will definitely learn from others, and they'll learn from us, as we try to both deploy the most effective wildfire mitigation but bring the cost of all of them down. Maybe, Steve, one final thought I would add is that it's not just about what we as the industry are doing, along with technology partners, but it's also about the government's role in this. And, you know, we, you might know I co-chair the Electricity Subsector Coordinating Council, which is the CEO-led group that's really the partnership between the industry and the federal government on matters of physical and cybersecurity and resiliency.

Steven D. Powell: And they'll learn from us as we try to deploy.

Speaker Change: Deploy the most effective wildfire mitigation, but bring the cost of all of them down maybe Steve One final thought I would add is it's not just about what we as the industry are doing along with technology partners, but it's also about the government's role in this.

Steven D. Powell: And.

Steven D. Powell: You might know co chair of the electricity sector. According and council, which is the CEO of OLED group that really the partnership between the industry and the federal government on matters of physical and cyber security and resiliency.

Steven D. Powell: And so DOE is our sponsoring agency for our sector, and they've been a really good partner in engaging around how we think about technologies, how we get access to federal resources, a lot of work to be done in areas like vegetation where, you know, there's more work and more progress to be made in working with, say, the Forest Service or the Bureau of Land Management, but particularly DOE has been a great partner in looking at how we bring these sorts And so we will continue that partnership, and it makes everybody safer.

Steven D. Powell: So Doa ASR sponsoring agency for our sector and they've been a really good partner and engaging around how do we think about technologies, how do we get access to federal resources, a lot of work to be done in areas like vegetation, where where theres more more work and more progress to be made in working with say the forest service are the bureau of land manage.

Steven D. Powell: But.

Steven D. Powell: Particularly <unk> has been a great partner and looking at how we bring these sort of benefits and scale to all states that need it and so we will we will continue that partnership and that it makes everybody safer.

Speaker Change: Thanks for taking my questions.

Speaker Change: Thanks Ryan.

Speaker Change: Thank you that was our last question I will now turn the call back to Mr. Sam ROM rash.

Sam Ramraj: Thank you. That was our last question. I'll now turn the call back to Mr. Sam Ramraj.

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

Speaker Change: Thank you for joining US. This concludes our conference call have a good rest of the day you may now disconnect.

Speaker Change: Yeah.