Q2 2024 Edison International Earnings Call
Good afternoon, and welcome to the Edison International second quarter 2024 financial teleconference. My name is Julie and I will 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 now like to turn the call over to Mr. Sam <unk>, Vice President of Investor Relations. Mr. <unk> you may begin your conference.
Thank you Julie and welcome everyone. Our speakers today are president and Chief Executive Officer, Pedro Pizarro and executed Vice President and Chief Financial Officer Maria regarding.
Also on the call a lot of other members of the management team.
Cereal 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.
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.
Actual results could differ materially from current expectations.
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 Okay. Thanks, a lot Sam and Hello, everyone.
Edison International core EPS for second quarter, 2024 was a dollar and 23 cents.
Bringing year to date core EPS to $2.37.
With this strong start to the first half of the year. We are confident in reaffirming our 2024 core EPS guidance of $4.75 to $5.05 based.
Based on the progress in Sce's 2025 general rate case, including many partial settlements. We are also confident in getting a strong outcome for customers.
Funding authorized in the G. R C to continue making investments in a reliable resilient and ready grid is the linchpin for achieving our 2025, EPS guidance and delivering a 5% to 7% EPS CAGR through 2028.
My remarks today includes four important insights.
Load growth trends are materializing sooner than expected, we enforcing SCE substantial capex opportunities with potential upside.
Second SCE is now forecasting system average rate increases through 2028 to be closely aligned with inflation rates, ensuring more stable costs for customers.
Third the company's overall operational and financial risk profiles have significantly improved and are only getting better.
Fourth Edison International is leading the charge toward a carbon neutral, California with sustainability at the core of our strategy.
Leading off with load growth trends I highlighted last quarter that we are seeing 2% to 3% annual sales growth in the coming years with an inflection point above 3% annual growth beginning in 2028.
However, these demand trends are materializing sooner than expected.
As you can see on page three our 10 year load growth forecast has increased substantially and just are you relatively short time since Sce's 2022 distribution system plan was prepared.
We now expect 35% higher 10 year load growth far exceeding all prior internal and external forecasts. One significant driver is more customers, calling SCE to request slowed growth projects, including commercial developments, particularly logistics related buildings transportation.
Electrification and new residential housing.
Parallel forecasted policy driven electric vehicle and building electrification demand has increased.
We expect new policies will drive higher customer adoption in the near future.
And we have incorporated this information so the greatest ready when customers reach out to us.
We see two major implications from growth showing up sooner and at a larger scale than anticipated.
Over a 10 year system planning horizon radar upgrades, we will need to be implemented several years ahead of schedule to accommodate the increased load.
SCE highlighted in its DRC request, serving customers with a reliable resilient and ready grid will require the utility to significantly expand the electric system to substantial investments that will drive continued rate base growth.
Oh, sorry investment levels grow to support economy wide electrification affordability remains top of mind.
Speaker Change: We have demonstrated cost leadership over the years, resulting in the lowest system average rate among the major California investor owned utilities.
You will notice that Sce's current system average rate of $26 seven.
Kilowatt hour is actually lower than at the start of the year.
On June one SCE reduced rates by about 2% driven by removing historical costs that had been fully recovered in rates.
Speaker Change: <unk> recently filed an application with the CPUC for approval of its 2025 fuel and purchase power costs, which are projected to be lower than in 2024.
Based on current projections this application would reduce our system average rate by another 9%.
This offsets most of the increase in rates that will follow the 2025 <unk> final decision.
On page four we now project Sce's rate increases through 2028 to be closely aligned with local inflation levels.
To put this in context, let me emphasize two important underlying assumptions.
This two 6% projected rate growth incorporates both the requested increases in SCE is JRC and full recovery of SCE is logical see wildfire costs.
You will recall SCE has recovered a significant amount of historical costs tracked and regulatory accounts over the last few years.
These historical costs rolling out or if rates combined with rising electricity consumption, partially offset the increases I just mentioned.
You have all witness how the company's overall operational and financial risk profiles has significantly improved in recent years on.
On page five we reemphasize the estimated wildfire risk reduction of 85% to 88% compared to pre 2018.
As you know we've been reporting on the $1 billion annual and $3 $5 billion over three years losses, because those tied to a be 10 54. They are the thresholds for accessing the wildfire insurance fund and Sce's liability gap when we began reporting this metric.
We are now also showing you the loss level that would result from hitting the liability capped in a single year, which is about $4 billion.
The risk reduction of this scenario is over 90%.
The differentiator for Sce's wildfire risk mitigation and operational risk profile SD substantial physical grid hardening it has completed.
A key benefit of physical grid hardening is that it reduces the burden on customers are rising from heavy reliance on operational measures like power shut offs are fast stripped settings.
Speaker Change: And just five and a half years.
Speaker Change: <unk> has deployed approximately 5900 miles of covered conductor.
As you see on page six combined with miles underground.
<unk> has 84% of its planned hardening incomplete.
And that's permanent physical and observable risk litigation.
It is getting even better by the end of 2025, SCE expects to be approaching 90% of total distribution lines in high fire risk area being hardened.
As you can see on page seven SCE.
SCE is leading the way in physical risk reduction with its total hardened miles in high fire risk area exceeding those of all other California Ious combined.
In addition to all the successful wildfire mitigation work by SCE and also by a sphere utilities. The state of California itself has the strongest wildfire risk reduction profile in the nation.
As outlined on page eight that is due to notable improvements via legislation regulation and suppression.
California's legislature passed the landmark Assembly Bill $2 54 in 2019, which codified the prudency standard for I O U's created the $21 billion wildfire insurance fund and establish a utility liability cap.
These are now models informing other states as the threat of wildfires have spread nationwide.
Speaker Change: On regulation, the CPUC and other agencies have implemented processes for rigorously reviewing and approving wildfire mitigation plans and safety certifications.
On suppression, California has consistently shown its commitment to resource allocation.
<unk> buyer's budget has doubled since 2017 to 18, along with an 80% increase in staffing.
I'll fire has the largest civil aerial firefighting fleet in the world and recently contracted for 20 additional helicopters and four airplanes.
Speaker Change: CE is also contributing to local fire agency suppression capabilities to the funding of the year round quick reaction force. This.
This is made up of the world's largest fire suppression helicopters with unique night firefighting capabilities.
This partnership with the La County Fire Department, Orange County, Fire Authority, and Ventura County Fire Department helps suppressed buyers regardless of how they start.
It helps protect the communities SCE serves.
This is the sixth straight year. The utility has funded aerial suppression resources as part of its wildfire mitigation efforts.
Turning to sustainability, we continue to lead the way towards a clean energy future.
Speaker Change: SCE is a leader in California's efforts to reduce greenhouse gas emissions, while also focusing on the grid investments needed for a more resilient equitable clean energy economy.
I am proud of all that we've done to execute on our long term net zero commitment and alignment with California's ambitious policy goals I.
I encourage you to read our 2023 sustainability report for details about our accomplishments our goals and our long term ESG commitments pages, nine and 10 and highlight a few of our accomplishments and.
In 2023, ASE delivered 52% carbon free power to customers and that's 55% cleaner than the national average.
SCE contract at approximately 200 megawatts of energy storage, bringing the total at year end to about 7200 megawatts and that's currently standing at 80 to 100 megawatts. This is simply one of the largest portfolios in the nation.
Speaker Change: Lastly, the utility met or outperformed nearly all wildfire mitigation targets last year and invested heavily in hardening the grid, leading to the 85 to more than 90% risk reduction I discussed earlier.
Let me conclude by saying that Edison International is leading the charge towards a carbon neutral, California.
We're committed to ensuring that the clean energy transition remains reliable resilient and affordable.
Equitable and accessible to all customers and communities.
Maria will provide her financial report.
Pedro and good afternoon, and my comments today I would like to emphasize four key financial messages.
First we are pleased with <unk> financial performance for the first half of the year.
Combined with the outlook for the second half Edison is on track to deliver yet another year of solid results for 2024.
Second Sce's regulatory outcomes. This year have been positive and based on our continuing progress on the two key ongoing CPUC proceedings for 2025, DRC and T. Cam cost recovery, we are confident in getting good outcomes for customers.
Third with SCE, having the lowest system average rate among California Ious. It is best positioned to address load growth and resulting capital needs as customers dependency on end user of electricity crowd.
Well, what <unk> equity needs to fund our substantial capital program over the next several years are among the lowest in the industry.
Speaker Change: Let's begin with a brief review of our second quarter results.
<unk> reported core EPS of $1 23.
As you can see from the year over year quarterly variance analysis shown on page 11 core earnings grew by 22.
This EPS growth was primarily due to higher CPUC revenue authorized in track for the 2021 <unk>.
Higher authorized rates of return and the final decision on Sce's FEMA application.
Partially offsetting these drivers with higher interest expense associated with debt for wildfire claims payments.
<unk> parents and other was in line with the same period last year.
Speaker Change: On the regulatory front, we are pleased with the outcome this year.
For instance, as I just mentioned the CPUC recently issued a favorable decision on Sce's FEMA application.
Additionally, SCE received approval in July for interim rate recovery, and it's 2022, Wm VM proceeding, enabling the collection of $210 million of the $384 million request in customer rate beginning in October.
Also in July the CPUC approved the energy Division resolution regarding the implementation of the cost of capital mechanism for 2024.
Speaker Change: When we look at where bond yields are today, it's clear that the interest rate environment that triggered the mechanism was sustained.
The 10, 75% Roe.
Day in place also for 2025.
These regulatory decisions plus the numerous others. We have received over the last few years has significantly strengthened our balance sheet and credit metrics.
Since 2021, SCE has recovered more than $4 billion with another approximately $2 billion expected through 2025, all of which you can see on page 12.
I would like to now comment on the two key ongoing regulatory proceedings, starting with Sce's 2025 Trc.
Page 13 provides an update on the proceedings, which remains on track.
During the second quarter SCE filed its update testimony and all parties recently filed their opening brief.
We are pleased with the tremendous work SCE has done to narrow the focus of the proceedings.
CE has reached partial settlement covering 12 areas of the GIC.
Presenting nearly 20% of the O&M request and about 8% of the capital request.
On the TTM cost recovery application Cal advocates was the only party to submit prepared testimony.
Criticized the maturity of Sce's pre fire mitigation measures, leading up to the unprecedented 2017 fire season, but did not put forward a specific disallowance proposal.
SCE served strong rebuttal testimony on July 11th identifying key flaws in Cal Advocate's testimony and highlighting the intervenors heavy and incorrect reliance on hindsight in its review of the record.
Speaker Change: As for next steps the ALJ extended the schedule such as the motion for settlement approval or case management statement is due on August 7th.
And hearings will be in November or January.
In summary, based on the evidence put forward so far in this proceeding we reaffirm the strength of our cost recovery request.
We look forward to keeping you informed on further developments on this front.
Please turn to page 14 for an update on the resolution of Sce's legacy wildfires.
Having made substantial progress SCE has now resolved 98% of GKN individual plaintiff claims and 92% of all the individual plaintiffs claims.
He will file its royalty cost recovery application in the third quarter.
Sce's capital and rate base forecast shown on pages 15, and 16 are consistent with last quarter's disclosures.
Speaker Change: Sce's 2025, Trc underpins our forecast as the utility continues to make investments necessary to meet the critical objectives of reliability resiliency and readiness to meet customers' needs today and in the future.
Speaker Change: In addition to our forecast SCE continues to target filing standalone applications over the next couple of years that will give us opportunities to deploy capital above and beyond the rate case outcome.
The Nexgen ERP system application is tracking for late this year, we did with the advanced metering 2.0 application expected in 2025.
Speaker Change: I would also like to mention that in May cases, selected SCE and partnership with Lotus infrastructure as the winning bidder for the north of songs just Serrano transmission project.
I would expect to completion in 2032. This project will add about $245 million to Sce's FERC rate base.
This builds on the more than $2 billion of transmission spending that was directly awarded to SCE as the incumbent utility and Kai So as 2022 2023 transmission plants.
Turning to EPS guidance page 17 shows our 2024 core EPS guidance and modeling considerations.
Speaker Change: We are pleased with our start to the year.
And with FEMA approved and no other CPUC decisions built into our 2024 guidance. We are confident in achieving the range of $4 75 to $5.05.
Also I'm pleased to share that we've completed eis's financing plans with the issuance of $500 million of debt at the end of June and having achieved our planned $100 million of equity via internal programs earlier in the year.
I would now like to reemphasize that for the 2025 through 2028 period, we have equity needs of only $400 million in total even though we plan to deploy substantial amounts of capital.
Speaker Change: As you can see on the right side of page 18, Sce's strong cash flow generation and the incremental debt to finance accretive growth address nearly all of our cash needs.
We credit this to our strong financial discipline efficient financing execution and the significant memo account recovery I just mentioned.
Let me conclude by saying that California's clean energy future depends on substantial investment in the grid as the economy depends even more on electricity.
Portability and equity will be key components to driving greater adoption of transportation and building electrification.
With SCE, having the lowest system average rate among California, Ious is very well positioned to make substantial capital investments as customers dependency on and use of electricity grows.
That concludes my remarks, and I'll pass it back to Sam Julie.
Julie Please open the call for questions.
Under we request you to limit yourself to one question and one follow up so everyone. In line has the opportunity to ask questions.
Yeah.
Thank you if you would like to ask a question. Please press star one on your phone.
You will be given the opportunity to ask one question and one follow up this is to allow others to ask a question one moment. Please for the first question.
Our first question comes from Michael Monaghan with Evercore ISI. Your line is open.
Hi, Thanks for taking my question, obviously reached a partial settlement in the DRC, representing 19% of O&M and 8% of the capital request.
Certainly a positive development, but still a good amount not settled on just wondering how youre thinking about the key debates remaining and what gives you confidence in a constructive final decision.
Well, Michael good to hear you and let me just start.
So we I think the headline continues to be that in this rate case.
When you look at the Ingoing intervenor positions.
To sum it all up they still landed with.
Rate base growth in line with a range. So that I think is a very constructive place to be at the beginning of the case and where we are with the case now we will continue to work through issues.
As you said, we have some partial settlements.
To get the SCE team has done a very nice job putting forth. The case on why we need the investments that we requested for.
Speaker Change: Reliable resilient and ready grid and we'll just continue to work our way through the process Ria or Steve Paul anything you would add.
I'll just say the proceeding is still on track from a time perspective, we have been able to use that to settle these areas that are noted in the materials that means that we can focus on a narrower and narrower set of issues, but again pedros point.
At the end of the day the proposal that the intervenors put into the.
Proceeding at this point still tied to the and are consistent with the lower end of our range. So I think we have a lot of.
Opportunity here to do something that's beneficial to customers.
Great. Thank you and then secondly from me you talked about load growth materializing faster than expected.
Speaker Change: Just wondering if you're expecting incremental investment in the planning period through 2028.
Potentially how much could we expect and when and how would you think about financing that incremental spending.
So Michael I think that our team is.
Speaker Change: So we were in the planning phase for our plans can be submitted shortly the team will need to look energy continue to evaluate the precise plans that our customers are bringing forward to us and that will allow us to then lay out when the investments well will come back into the capital plan and then come back into rate base.
Speaker Change: To the extent that we see these things materializing within the GIC cycle, we do have the ability to re prioritize capital.
And should that before we have built flexibility into the rate case, and then beyond that we'll look at other mechanisms that allow us to file separate applications and there are a number of avenues that we could pursue but Steve you've been working with the team on the plan. So you want to jump in.
Sure so.
Steven D. Powell: In terms of the loan growth, we certainly seen an acceleration of customer demand and so we're still evaluating that.
Taking a probability weighting those requests based on the completeness of them and figuring out how much additional infrastructure will be needed to support them.
Constantly readjusting, our plans based on various factors and so the increase in customer demand has been important it's Ben.
Speaker Change: Fair amount of electrification load, but we're also seeing growth in residential, particularly from new home starts which have accelerated the last couple of years beyond expectations.
Fair amount of commercial industrial load. So it's a pretty diverse set of load growth that we've seen.
And we will continue to make adjustments and certainly with you whether it's <unk> or alternative funding approaches will be on the table we continue to.
Provided ideas into what's called the <unk> proceeding at the public Utilities Commission, where theres still evaluating different ways that we can look for.
Hum.
Investment opportunities in the middle of a Trc cycle.
So that's our that's our approach right now.
Speaker Change: Great. Thanks for taking my questions.
Thanks, Michael.
Thank you. Our next question comes from Shar <unk> with Guggenheim Partners. Your line is open.
Sure.
Hey, guys, Hey, Pedro.
Just a couple of quick ones here.
Just on the legacy wildfire cost application, obviously constructive sinus.
Settlements potential opportunities and kind of moving procedural schedule to accommodate that can you just elaborate on any issues that remain debated that would go into hearing potentially would you settle for anything less than 100%.
Under what incentives would you do that thanks.
Hey, sure. This one as you can imagine it's life preceding and we really can't comment on potential settlements beyond just saying that were certainly open to that and always willing to engage with parties.
We think the team did.
Speaker Change: Strong job showing a prudency.
But I don't think were in a place where we can't comment on specific elements of the case at this point I apologize for that and charges mostly Julie.
August 7th is when.
Either settlement would be filed or we would file a case management statement and in the case management statement. The issues that are still to be addressed during hearings and or any other stipulations would then be part of that statement and then the hearings that will be scheduled for that November or January timeframe. So that's the process that will be going to that you're selling through that.
You can monitor.
Okay, perfect well look for that and then just and obviously you noted a small buyback program basically focused on share based comp how are you thinking about maybe capital allocation in light of the legacy wildfire claims recovery if that recovery potentially over recognizes you relative to your credit targets.
<unk>.
Sure well I mean, obviously, we have debt that's outstanding at SCE that went to fund the claims payments as we get recovery are as you know our proposal has been that we would securitize that said, we would be able to.
The disease the debt that's already been issued we can reallocate that debt to rate.
Great base.
But <unk>.
Financing if you will answer the make sure that we stay within our capital structure.
The recovery does improve our credit metrics every billion dollars of 40 to 50 basis points of improved credit metrics, but I think as we go through that process. Then we can start to look at.
Refinancings or equity content securities come up at the holding company, where we can replace those which are of course, because they are equity content, a little higher cost with regular way debt will take all of that into consideration as we look at at the recovery and from the wildfire claims I will say, we will continue to have a 15% to 17%.
<unk> to that framework for the company.
Speaker Change: Okay.
That is perfect. Thank you guys. So much I appreciate it.
Sure.
Thank you. Our next question comes from Nick Campanella with Barclays. Your line is open.
Hey, Thanks for taking my questions today, I Hope you have a great day.
I wanted to ask on the.
Notable start on full year 'twenty for just given we're kind of halfway through the year or are you kind of trending towards the higher end of your range due to still have confidence in the midpoint at this point kind of what puts you hire.
Nick Hi, its rice.
We're very confident in our guidance we've reaffirmed it I think you know that over the course of the year different quarters have different events that happen within them, but we are very confident in our guidance and we think we're right on track.
Speaker Change: Okay, and then just I guess a follow up on <unk>.
Speaker Change: <unk> question just.
Youre talking about the low demand equation that could lead to accelerated capex just as the plants than today.
Speaker Change: Can you remind us if you would is there like a level that you could fund additional capital without additional equity.
So Nick I think that really depends when the capital comes in and when we have to make the investments as I said, we have that 15% to 17% <unk> to debt financing framework that we work towards and where we are in that range will dictate whether we can continue to use.
Use our existing financing plan or if we need to do anything beyond that we will of course.
As Steve pointed out earlier, we could re prioritize some of the spending within <unk>, we have some flexibility there and we've actually noted that in our <unk>, while we could go beyond that and look at some other mechanisms to also.
Get cost recovery on a timely basis as well.
Thank you very much.
Thanks, Nick.
Thank you. Our next question comes from David Arcaro with Morgan Stanley. Your line is open.
Hey, good afternoon, Hey, thanks, so much for taking my questions.
David Keith Arcaro: Yeah, maybe a quick clarification on load growth.
Just wondering is that already faster than what you were thinking last quarter, you mentioned, the 2% to 3%.
Load growth in the near term through 2028, and then accelerating above three.
And that are you now thinking that it's kind.
Higher within that range or even faster than you were previously thinking.
I think at this point, we're still seeing a 2% to 3% in the near term with the points. We're making you said as we look at a 10 year forecast.
We're certainly seeing that accelerating and were watching it closely in the interim.
But it was really it was fascinating to see that in just two years debt 10 year forecast jumped up by by 35% and subsea was saying as the team is getting SCE is getting customer request.
David Keith Arcaro: Putting all those together you know not all of those come through in the end. So thats why Steve mentioned that the probability weight them and track them.
So we will continue to provide updates as that changes meaningfully, but I think youre.
Looking at the near term.
<unk> continues to move along at 2% to 3% for the long term.
Necessarily showing that inquiries and we'll see what happens in between and then you would say differently. It's Dave I would just add that so like the first.
Particularly the new customer demand at specific projects certainly gives a lot more.
Dave: Certainty to the need for the investments on the front end of during the <unk> cycle.
Dave: I would want to note that the 2% to 3% we're talking about.
But you heard last time, that's about the total energy the kilowatt hour growth.
The demand is the specific local capacity needs of customers and so.
Dave: This is really driving the infrastructure that distribution level sort of upgrades as opposed to the total energy consumption. That's happening now those can head in the same direction and so I think this does bolster the.
The view around the 2% to 3%, but at this point, we don't see it driving it well out of that range in the near term.
Okay got it that's good to hear thanks.
And then let's see Pedro I was curious your perspective on I thought it was interesting just to.
Recently, the CPUC rolled out planned procurement for some kind of next generation technologies within California, Some long duration energy storage offshore wind.
Geothermal so I guess I was just wondering.
Do you have any.
Early thinking on whether utilities like yourself would be involved in.
Any of those projects are procurement and just how that could maybe restate reshape the California <unk>.
Generation landscape over time.
Yes, David I'll start with maybe a big picture comment and Steve may have more to add here as well.
At the highest level if you go back toward count on to 2045 White paper.
We see this need for California to be adding significant amounts of.
Large scale renewables.
Steven D. Powell: Other clean resources.
So.
One level, what the CPUC is doing in this proposal.
Is to start filling in the blanks in terms of some of the near and midterm procurement. The team is still going through the details of that right and some of the things we want to look at our relative timing, what's the likelihood of the technology.
Developing and frankly that development being feasible within the timeframe that the PUC is laid out so more to come on data center as our team evaluates what the PUC put out.
But directionally, we should only see the needs to develop all host of resources in order to meet the demand that's coming.
Steven D. Powell: Steve.
Steven D. Powell: I would say.
We agree with the PUC on the need for some of these next generation technologies, whether its enhanced geothermal offshore wind.
They still need to be derisked, and they still need to prove they can be built on a timely and affordable basis.
Appreciate that the state PUC is directing that procurement began so we can get that process going and they've asked the department of water resources, where they are in the process of that proposal, having DW or go and do that procurement. So we want to make sure that the procurement is doesn't really effectively because ultimately this is customer bills and we've got a monitor we've got.
The customer bills, while also advancing our technologies.
That's our focus is making sure it gets done efficiently and effectively and.
There's a there's a lot of investments like these that are going to need to be happen need to happen across the state.
Speaker Change: Okay, Great makes sense. Thank you.
Speaker Change: Thank you Sir.
Thank you. Our next question comes from Ryan Levine with Citi. Your line is open.
Ryan Michael Levine: Hi, everybody.
Ryan Michael Levine: As you are preparing to file the Nextgen ERP application next quarter would you be able to frame broadly the magnitude of the investment opportunity and given the acceleration of the longer term low forecast that you highlighted in your prepared remarks.
Does that have any implication for the attractiveness of the Nextgen ERP system.
Yeah. So when we file the application we're going to lay out of course, the cost of the system, but also really importantly, we're going to lay out the benefits.
Because that is really going to be a big component. The next gen system will be of course related to the financial ripped.
Reporting aspect of the business, but also has a lot to do with work management and becoming more efficient in that regard. So there'll be a lot of benefits that we can talk through when.
When we file our application in terms of whether or not it competes with load growth, we need we need to build out the infrastructure.
To meet the demand that we're seeing from our customers, but we also need to run an efficient.
T and the operation efficient and do the financial statements appropriately as you can appreciate that I don't think they are in competition with each other also I think it's really related to the point that Pedro made earlier in his prepared remarks about where we see our system average rate going over the next several years and when you get a chance to look at the <unk>.
<unk>, you'll be able to see that those rate increases are consistent with inflation and we have built in our entire GIC request the nextgen application.
Omni application and a 100% cost recovery on the 17 18 wildfire claims so with all of that we're still consistent with Oakland face inflation in terms of our S. A our forecast.
Okay.
Thank you and then one follow up in terms of the load growth forecast the impact of EV growth is there anything you're looking for from federal policy that could impact the growth in your service territory, that's embedded in your guidance.
Speaker Change: You highlighted tonight.
Well.
One way that I think about it Ryan is that.
We have we really are being driven no pun intended in California by the states requirements.
Targets for Evs for every net zero vehicles by 2035 et cetera, so that that really in some sense such the demand picture.
Because thats the binding constraint for the federal government comes in is in a couple of ways. One is certainly the incentives that are being provided by the inflation reduction Act.
Are really helpful in lowering the ultimate cost of the transition to consumers.
And so certainly both as Edison and joined leave the industry is EI are very focused on preserving those <unk> benefits.
Listen what administration, we have next in Washington, and Thats the message that.
We've been carrying already.
You really fortunately and I think fortunately although.
You might hear some comments from some camps about potentially reverse will speak.
I think in general Youre hearing understanding that those benefits are really flowing across all states. Both more red states are more blue states. In fact, probably the majority of benefits are flowing through Red States right now and so I think this there is a sense that they are having an impact on the economy. So we're we're hopeful that.
Our customers will continue to benefit from those incentives, but at the same time, we see a commitment in California to the transition that is unwavering regardless with federal support the other federal touch point here of course is the.
The cleaner provisions in Californias waiver and so that's the other element to watch and all of this.
But again I don't see California shifting its focus away from <unk>.
Encouraging the adoption of electric vehicles, but does that help with the question.
Yeah. That's helpful. Thank you.
Yes, Thanks Ryan.
Thank you. Our next question comes from Anthony <unk> with Mizuho. Your line is open.
Hey, good afternoon team.
Alright.
Hey, I just have a quick one and I you may not want to answer it it's kind of in the lines of the one shot was asking earlier just.
How should we interpret on the T Cam recovery, how do we interpret just only Cal advocates filed testimony could we look at it is this similar to like a G. R C. When the.
The rest of the parties may not sound onto sometimes they don't turn on to the settlement of an object I'm just wondering what's the best way to interpret that.
Yes.
So I started to answer it with the last part of your question. There there are lots of opportunities for parties to voice.
Speaker Change: Oyster views in these proceedings.
Different from arrays from our general rate case.
So.
Speaker Change: Not reading a lot into.
This initial steps are certainly the opportunity for other parties to express interest as we move along.
Great. That's all I had congrats on a good quarter.
Thanks, Yes, thanks Anthony.
Speaker Change: Okay.
And that was our last question I will turn the call back to Mr. Sam Mirage.
Sam Ramraj: Thank you for joining US. This concludes our conference call have a good rest of the day you may now disconnect.
Sam Ramraj: Okay.