Q1 2025 Edison International Earnings Call
Thank you Michelle and welcome everyone. Our speakers today are president and Chief Executive Officer, Pedro Pizarro, and Executive 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.
Florida Form 10-Q.
Speaker Change: Prepared remarks from Pedro and Maria and the teleconference presentation Tomorrow, we will distribute our regular business update presentation.
Speaker Change: During this call we will make forward looking statements about the outlook for Edison International and its subsidiaries actual results could differ materially from current expectations.
Speaker Change: Factors that could cause different yourselves.
Speaker Change: As set forth in our SEC filings. Please read these carefully.
Speaker Change: 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.
Pedro: Well, thank you Sam and good afternoon, everyone.
Speaker Change: Just three months have passed since the devastating wildfires and all of US at Edison continue to keep everyone affected in our thoughts.
Speaker Change: We're working closely with state and county leaders and the community type Altadena and Malibu, So rebuild wildfire impacted area are stronger than ever.
Speaker Change: I will share further updates in a minute after touching on our earnings headlights.
Speaker Change: Today Edison International reported core earnings per share of $1.37 compared to $1.13 a year ago. However.
Speaker Change: However, this year over year comparison is not particularly meaningful because SCE has not received a decision in its 2025 general rate case.
Speaker Change: C E recognize revenue from CPUC activities for both the first quarter 2024, and 2025 largely based on 2024 authorized base revenue requirements with 2025 by just stretch for the lower authorized CPUC R O a.
Speaker Change: Looking ahead, we remain confident in our ability to meet our 2025, EPS guidance and deliver a 5% to 7% core EPS CAGR through 2028.
Speaker Change: Maria will discuss her financial performance in her remarks.
Speaker Change: We recently provided governor Newsome with Sce's initial comprehensive plan.
Speaker Change: Rebuild the impacted electrical distribution infrastructure in the policy if any you can fire areas.
Speaker Change: Under this plan SCE would underground more than 150 circuit miles.
Speaker Change: Including nearly all distribution power lines in high fire risk areas within the burn scars of the affected communities.
Speaker Change: Once constructed.
Speaker Change: Its grid hardening will increase reliability and make the electrical distribution infrastructure are more resilient to high win them.
Speaker Change: Other extreme weather events.
Speaker Change: Helping us better protect and serve our communities.
Speaker Change: One thing you can fire.
Speaker Change: Jeeze investigation continues.
Speaker Change: Since our last update but utility completed additional physical and video inspections with electrical equipment and Eaton Canyon.
Speaker Change: So were carried out in collaboration with stakeholders.
Speaker Change: Analysis of the images videos and equipment is ongoing.
Speaker Change: The utility also recently begun the removal of portions of the idled facilities and Eaton canyons for further expert review.
Speaker Change: While SCE has not conclusively determine that its equipment was associated with the admission of the Eaton fire.
Speaker Change: It is also not aware of evidence conclusively pointing to another source of ignition.
Speaker Change: Absent additional evidence SCE.
Speaker Change: SCE believes that its equipment could have been associated with the addition of eastern players.
Speaker Change: As such and in light of pending litigation.
Speaker Change: It is probable that EIA accident, SCE will incur material losses in connection with it you can fire.
Speaker Change: As always we are committed to being transparent throughout this process.
Speaker Change: With significant media coverage surrounding deepen fire. We have noted numerous instances where facts had been misrepresented.
Speaker Change: The address factual errors and misstatements, we launched a new page on our website called Edison for the record.
Speaker Change: Cause you to take a walk and the link can be found on page three.
Speaker Change: I will reiterate that we continue to believe that S. T E. It's a reasonable operator of its electric system.
Speaker Change: It is determined that sce's transmission equipment associated with the addition of the Eaton fire.
Speaker Change: Based on the information we have reviewed thus far we remain confident that F. C. He would make a good faith showing that its conduct with respect which transmission facilities in the Eaton Canyon area was consistent with actions of a reasonable utility.
Speaker Change: Turning to the Legislative front, we have continued to engage in broad discussions with legislators and the Governor's office.
Speaker Change: It supports the safety of our communities and enhance California's industry, leading E. D 10, 54 regulatory framework.
Speaker Change: The conversations we've had to leave us with no doubt that stakeholders understand the criticality of addressing the issue and.
Speaker Change: And the important role of the industrial and utilities play in supporting California's growth and economic development.
Speaker Change: We are confident policymakers are focused on the need to strengthen and restore confidence in California's wildfire framework.
Speaker Change: On the regulatory front I'm.
Speaker Change: I'm pleased to share that SCE continues to reach important milestones this year.
Speaker Change: The cpuc's unanimous approval of the Teekay M settlement agreement signals they construct this california regulatory environment.
Speaker Change: Last month, the Wuxi cost recovery ALJ issued the scoping memo adopting the scheduled S. T E N interpreters giant jointly proposed.
Speaker Change: The next major filings will be intervenor testimony in early June and rebuttal testimony in mid July.
Speaker Change: This schedule also includes the emotion for consideration of a settlement agreement for a joint statement of stipulations of issues due in mid August.
Speaker Change: As we have noted in the past SCE is open to settlement discussions if a fair and reasonable outcome can be achieved benefiting customers and shareholders.
Speaker Change: We will keep you updated as a utility continues its progress toward resolution in this proceeding Maria will highlight other milestones in her remarks.
Maria: On Sce's 2025 general rate case.
Maria: L. J recently made an administrative ruling extending the statutory deadline.
Maria: As typical and they expect that based on the prior calendar.
Maria: Nonetheless, we continue to be optimistic that we will see a proposed decision in the first half of the year.
Maria: With a final decision as soon as 30 days later.
Speaker Change: So G. R. C. He will support Sce's commitment to providing electric service that is reliable resilient and ready for customers' needs.
Speaker Change: But utilities significant investment plan is driven by the need to resume a traditional level of infrastructure replacement work necessary for system reliability.
Speaker Change: And continue its wildfire mitigation programs that protect the safety of customers and the public.
Speaker Change: That's a useful JRC request also includes about $1 $4 billion of annual capital spending on wildfire mitigation and includes hardening in additional 1800 miles of the utilities overhead distribution infrastructure.
Speaker Change: SCE will submit its 2026 wildfire mitigation plan in May.
Speaker Change: This comprehensive W. M. P reflects our collective priorities risk mitigation public safety and affordability.
Speaker Change: It also includes continued deployment of covered conductor and targeted underground it.
Our utility looks forward to executing its integrated wildfire mitigation strategy, which prioritizes industry, leading practices such as grid hardening.
Speaker Change: Inspections and vegetation management.
Maria: Before I turn it over to Maria.
Maria: Would like to take a moment to say a big big step through a few very special members of our team.
Maria: Last week, Vanessa Chang retired from our board of directions, Your directors and.
Maria: And we congratulate Vanessa on her retirement and are so thankful for her 18 years of dedicated service and leadership on the board.
Maria: I also want to recognize our former general counsel Adam you might.
We previously announced will be retiring in July.
Maria: Adam has simply been the ideal general counsel.
Maria: He is a business leader a bubble was also a constant that legal expert on top of that Adam has been a steadfast friend to many in Oregon and our organization.
Maria: And absolutely it's been that's to me.
Speaker Change: On behalf of our board and management team, we want to thank Adam for his outstanding service.
Speaker Change: At the same time I am delighted to welcome Sean doesn't walnuts, who joined US earlier this month as our new General counsel.
Speaker Change: That brings substantial expertise within our sector and a solid understanding of California's legal political and regulatory environments. We're excited to have found out here and look forward to her leadership and partnership.
Maria: Alright, Maria with that turn it over to you for the financial report.
Maria: Thanks, Pedro and I Echo the appreciation for Adam and Vanessa and welcome Shonda.
Maria: My comments today will cover first quarter 2025 results provide additional insight into key regulatory proceedings and update you on other financial topics.
Maria: Starting with the first quarter, Yeah, I extra reported core EPS of $1 37.
Maria: Page four provides the year over year quarterly variance analysis.
Maria: As Pedro mentioned the year over year comparison is not particularly meaningful because SCE has not received a final decision in its 2025 general rate case.
Maria: She is booking revenues of 'twenty 'twenty four authorized levels adjusted for the change in ROE V.
Maria: And we will record a true up when it receives a final decision.
Maria: First quarter EPS includes about 30 cents associated with the TK on settlement approval, partially offset by higher interest expense at <unk> parent and other.
Speaker Change: On the regulatory front I want to echo pages comment on SCE, making significant progress across numerous proceedings, let me highlight a few.
First SCE recently reached a settlement agreement with Intervenors and it's W. I N C E proceeding related to wildfire mitigation and restoration.
Speaker Change: The settlement, which is awaiting CPUC approval would authorize 100% of the capital expenditures along with 96% of the O&M.
Speaker Change: It would also contribute about 10 cents per share of chew up earnings and about $700 million of rate base, both of which are embedded in our 2025 guidance.
Speaker Change: Second on Sce's 2026 cost of capital application summarized on page five F. C. He requested an ROE of 11, 75% and proposed updating the embedded cost of debt and preferred equity.
Speaker Change: The request also recommended the continuation of the cost of capital mechanism and to reset the benchmark.
Speaker Change: The utility made a strong case for its ROE based on risks that differentiate California utilities from their peers in other jurisdictions.
Speaker Change: Sce's proposed schedule calls for a P D in November which would allow for a final decision by year end.
Speaker Change: Historically, the CPUC has issued timely decisions on cost of capital application.
Speaker Change: Third SCE filed its nextgen ERP application with the CPUC seeking total capital investment of about $1.1 billion.
Speaker Change: The utility expects this program will provide substantial benefits to customers and enable business improvements as a reminder, this program is not currently embedded in our capital and rate base projections.
Speaker Change: Lastly, with the $1 $6 billion T Cam cost recovery settlement now approved within the next few weeks SCE will file an application requesting authorization to issue securitized bonds.
Speaker Change: Moving to S. T E. G. R. C. The utility's request provides the foundation for advancing critical customer objectives reliability, resiliency and readiness as well as supporting our growth outlook through 2028.
Speaker Change: As you can see on page six we will refresh our guidance following a G. R. C final decision.
Speaker Change: Wanted to be proactive in sharing with you that six weeks. After a final decision we will provide our updated capital and rate base projections 2025 core EPS range long term core EPS growth and financing plans.
Speaker Change: Turning to Sce's capital expenditure and rate base forecast shown on pages seven and eight the utility continues to execute against our capital plan that targets key programs.
Speaker Change: Maintaining flexibility in later years to adapt to what is ultimately authorized in the G. R C.
Speaker Change: As I highlighted in comments going into 2025, we continue to see substantial additional capital opportunities that are incremental to the plan.
Speaker Change: This includes investments to enhance our distribution system and more than $2 billion of FERC transmission spending.
Speaker Change: In addition, SCE plans to file an application for the advanced metering infrastructure program to request funding to replace its smart meter fleet, the majority of which were installed more than decade ago.
Speaker Change: This program will address technology obsolescence and offers a chance to incorporate future capabilities that benefit customers.
Speaker Change: The program is expected to provide insights into energy usage and enable smarter energy management, thereby enhancing grid efficiency.
Speaker Change: Turning to the financing activities I will highlight two recent transactions in March <unk> issued $550 million of senior notes, which successfully addresses our parent debt needs for 2025. Additionally.
Speaker Change: Additionally, SCE issued $1 $5 billion of long term debt as part of its planned financings for the year.
Speaker Change: Both of these offerings saw strong investor support and was significantly oversubscribed.
Speaker Change: Moving to EPS guidance on pages nine and 10, we are confident in affirming the 2025 range of $5 94 to $6.34 and reaffirming our long term EPS growth expectation of 5% to 7% from 2025 to 2028.
Speaker Change: Which translates to $6.74 to $7.14 of 2028 E. P. S.
Speaker Change: Let me conclude by reinforcing our confidence in delivering on our financial targets.
Speaker Change: With a strong regulatory backdrop and robust rate base growth, coupled with a significant need for incremental grid investment we are well positioned to deliver on the company's near and long term growth expectations.
Phil: That concludes my remarks and back to you Phil.
Phil: Michelle Please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow up.
Phil: And in line has the opportunity to ask questions.
Phil: Thank you if you would like to ask a question. Please press star one on your phone one moment for the first question. Please.
Speaker Change: Nicholas Campanella with Barclays. You May go ahead Sir.
Nicholas Campanella: Hey, Thanks for taking my questions and for all the disclosures today.
Speaker Change: Hmm.
Speaker Change: Hey, So I just you know I appreciate the new material loss disclosure that you mentioned and I guess, just what drove you to kind of put that out there now versus you know.
Speaker Change: In the fourth quarter update and then I guess, just now that you're in this situation now that you've had kind of more time to digest. The situation. You know how do you kind of see the potential liability stacking up versus the $21 billion funds that you also kind of talk about in the disclosure. Thanks.
Speaker Change: Okay. Thanks, Nick for the question and also for the comments.
Speaker Change: You can imagine this is an ongoing process, but we are all of these are three months here since the start of the fire. The community is still still recovering and will be for for quite a long time and as I mentioned in my prepared remarks. The investigation continues and so I think as I mentioned in my comments I think one of the key factors here.
Speaker Change: Is that while we have not yet concluded that our equipment.
Speaker Change: Started the fire what was the cause of admission yeah, there's certainly a lot of.
Speaker Change: Number of pieces of Paul's circumstantial bugs, but importantly, we also are not finding another likely hypothesis for the cause of the fire. So I think it's really when you combine those two.
Speaker Change: No elements.
Speaker Change: It felt appropriate to in this quarter.
Speaker Change: Got it.
Speaker Change: Make the disclosure about this being a probable event.
Speaker Change: In terms of liability again, it's still very early days here. The liability is simply not estimable today and I'm not sure when it may become estimable that could take quite some time too.
Speaker Change: Oh, Yeah, there's a number of third parties out there in the public who have come up with estimates of various pieces of this.
Speaker Change: Those seem to suggest that you know.
Speaker Change: Perhaps the fire might be somewhere in the range of the fund, but I think it's just it's really too early for us to be able to make any sort of estimates around the size of the liability and therefore campaigns through your question forward.
Speaker Change: Maria or everybody else anything you would add.
Speaker Change: No I think you covered it Pedro.
Speaker Change: I certainly appreciate.
Speaker Change: <unk> been.
Speaker Change: Moving factors and I appreciate that color there and then just in regards to the financing plan refresh six six weeks after the JRC decision can.
Speaker Change: Can you just remind us or kind of give us color on how you're thinking about how you would reflect any liabilities from the Eaton fire like how would that would that would that go into the financing considerations at that point.
Speaker Change: Yeah, Nick that's a great question for you. So when you think about the potential and the probable losses that Pedro talked about remember that now at this point in time. Unlike when we were dealing with she came in royalty we have the wildfire fund that we will be accessing so when it comes to it we will take our first billion dollars.
Speaker Change: Of of customer funded self insurance will be we would be paying claims from that initially and then we would access to funds and the benefit of that is that we will not need to be issuing debt.
Speaker Change: In order to pay claims as we did for T. Camden Woolsey there'll be another avenue for that and that's not only benefits sort of the financing plan, but obviously that's there is a protection for the community that suffered a loss. So when we do our financing plan, we will be just basing it on sort of the normal course things that we'll be looking at which is our capital plan et cetera. So that is how we will be.
Speaker Change: Freshening, our plan and that's what we'll be communicating once we get the G. R. A C final decisions.
Speaker Change: Thanks for taking the questions appreciate it.
Speaker Change: Correct.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next caller is Michael Lungan with Evercore ISI you May go ahead Sir.
Michael Lungan: Alright, Thanks for taking my question I'm, just wondering if you could share more color about the latest options being considered for Wow.
Speaker Change: Wildfire legislation in California.
Speaker Change: The confidence the legislation will give investors more certainty about the start to the financial backstop in the state and then also are you confident that the legislation will be passed this session ending in September.
Speaker Change: Yeah, Thanks, and your phone line was just a little shaky, but I think I got the bulk of that if you were asking about that.
Speaker Change: Prospects for legislation and what drives the level of confidence.
Speaker Change: Yeah, So as I mentioned in my remarks Mark.
Speaker Change: Hmm.
Speaker Change: The good news here is that clearly you know the Governor's office as engaged as our legislative leaders.
Speaker Change: You know, they're getting their arms around what is admittedly.
Speaker Change: Admittedly a very complex issue.
Speaker Change: But they are they are on the case and we are having discussions as folks who are looking for information.
Speaker Change: Again, it's very very early days here in terms of those discussions I think what gives me confidence is that may put it. This way we are confident that they understand the the.
Speaker Change: The need for <unk>.
Speaker Change: Expansion of the <unk> 54 framework.
Speaker Change: And the need for action.
Speaker Change: Beyond that though while I think that there is I'm sensing a lot of good intent around action in this session.
Speaker Change: Yeah.
Speaker Change: We need to let this play out and.
Speaker Change: You know continue to engage constructively on our side.
Speaker Change: Never any guarantees and anything like this but I'm certainly very encouraged by the level of diligence and an engagement that I'm seeing on the part of a.
Speaker Change: Key leaders across the legislature and the Governor's office.
Speaker Change: Thank you and then you know I think last disclosure on your Moody's risk management model. You said you had reduced the probability of catastrophic wildfire by 88%.
Speaker Change: Obviously wildfire mitigation has been focused on distribution asset in this this one could potentially had been on transmission. Just wondering have you had discussions with Moody's.
Speaker Change: Dating that probability and if so where where you stand now.
Speaker Change: Well I I myself, a little differently for starters and Steve Paul to weigh in here as well.
Speaker Change: But the Moody's RMS model is really a comprehensive model that looks across our various risk areas, whereas historically distribution had less.
Speaker Change: That's true.
Speaker Change: Missions, we haven't seen them.
Speaker Change: From the transmission side.
Speaker Change: But the model is comprehensive and we always knew that the unfortunately, the risk would never be zero, but Steve is there any other color you would add here for Mike.
Steve Paul: I would just say that.
Steve Paul: The grid hardening that we've done as well as all the other mitigation. We've deployed really are the driver of that risk reduction and so that's how it looks from the modeling perspective that doesn't really change, let's say, we will continue to evaluate other models I know RMS will what you know.
Steve Paul: Sure as their models and we look at other models as well is there more to learn about wildfire risk and how that's evolving and can be modeled to continue to evaluate that risk reduction, but the fact is that the work that we've done. This system has lowered the risk of ignitions in frankly of catastrophic wildfires being associated with our equipment.
Steve Paul: Both on the distribution and the transmission system. So that's all incorporated into that to that analysis and so we.
Steve Paul: We will continue to focus on reducing the risk further, but also paying paying attention to the tail risk that exists.
Speaker Change: Great. Thanks for taking my questions.
Mike: Yeah. Thanks, Mike.
Speaker Change: Thank you our next caller is Carly Davenport with Goldman Sachs. You May go ahead.
Carly Davenport: Hey, thanks, so much for taking the questions maybe just a follow up on the last one there just as you continue to investigate and with the potential of the idled facilities took been involved can you just talk a bit about your wildfire mitigation plans related to any other idled or abandon lines that could potentially pose risks going forward.
Carly Davenport: Yeah, so at a high level.
Speaker Change: I think you've heard us comment before.
Speaker Change: We maintain idled lines and we don't take them down it's because we believe that the utility may have future use. So they are inspected they are maintained now certainly as we look at this latest experience, but also every year as we update the wildfire mitigation plans.
Speaker Change: You know we look at are there any further learnings that we can bring to bear to continuing to make the system stronger.
Speaker Change: We have disclosed for example that are coming out of the the recent experience.
Speaker Change: Realize you could bring some added clarity to of for example, the transmission operations manual.
Speaker Change: In terms of the detail around how you ground title lives and.
Speaker Change: Those are always very case by case basis, but Steve's team added more specificity.
Speaker Change: So there's more clarity to how grounding has done out in the field. That's one example of the continuous improvement cycle that we go through not only for this but really for all aspects of operations.
Speaker Change: Got it that's really helpful. Thank you and then maybe just also as you think about the current capital plan can you talk a little bit about if you've done any work quantifying exposure to two tariff risk and how you might be working to mitigate that.
Speaker Change: Yeah. Currently I mean, obviously I think like most other companies in the U S. We've been thinking about that and as we look at it and step back really by about 5% of our total purchases or foreign materials. So it's a relatively relative to our whole program. It's a relatively small number if you translate that into dollars.
Speaker Change: It's probably about $125 million on an annualized basis now we're going to continue to monitor that we're going to continue to look for any kind of secondary impacts that might occur, but what we're in that zone and the customer impact will be mitigated to some extent because all of that is really related to capital.
Speaker Change: And the capital well and will enter rates and recovery of that capital into rate interest rates over a very long useful life for most of our assets. So that that's where we are right now in terms of the tariff evaluation.
Speaker Change: Great. Thank you so much for the time and the color.
Speaker Change: I think it's early.
Speaker Change: Thank you our next caller is sharp who's that with Guggenheim you May go ahead.
Speaker Change: Oh sure definitely and it's actually yeah.
Speaker Change: It's actually a common theme here for Shar. Good afternoon, thanks for taking the questions.
Speaker Change: Just starting off maybe on shifting deadline for the S. E rate case do you anticipate any offsets in lieu of new rates through the first half of the year and is there enough visibility to continue executing on capex or would there be a little bit more focus on critical kind of versus discretionary as you get that clarity.
Speaker Change: Yeah. So yeah I'll take the second part of your question first in terms of the capital plan because of the general rate case is a four year cycle, we can execute against our plan and continue on with our priorities and once we get the general rate case final decision, we can always adjust what what the spend is in the back end over the next.
Speaker Change: Three you know the three years in three and a half years beyond the us the decision. So I think that's how we're thinking about the capital plan in terms of offsets in rates and the like obviously, where we're charging folks in rates include right now the 'twenty 'twenty four revenue requirement adjusted for the ROE as we get into the final decision.
Speaker Change: Any changes to the revenue requirement will be amortized into the builds over time. So I think we have a handle on the rates and I think maybe just pointing back to you know where we think our rates are going on a longer term trajectory I think you've seen the analysis that we've done that looks at you know the general rate case, you know 100% of that request it looks at additional.
Speaker Change: Capital that we might deploy it looks at you know recovery on Teekay, and Woolsey and even with those other pieces add it into the right trajectory, we see our rates growing again back in line with local inflation.
Speaker Change: Well, thanks for that and as you're working on the incremental capex items like the ERP Eni among the other items, especially in children.
Speaker Change: Certainly investors thinking about financing alternatives on the incremental capex in terms of maintaining capital efficiency in their potential need for a capital structure waiver or any of that sort.
Speaker Change: Yeah. So we typically at a C E.
Speaker Change:
Speaker Change: Finance capital in line with the Doctor authorized capital structure I don't think you would really see a need for any capital waiver that came about during the T. Canon royalty process, but the capital plan is very different than that as we think about just more generally the financing plan. We've run a lot of scenarios I think you've seen our financing plan right now through 2028 are very <unk>.
Speaker Change: Minimal equity largely debt financed you know between the parent and the utility as we get the final G. R. C decision, we can rerun all of those numbers, but again I think we have a lot of capacity to to fulfill our capital needs.
Speaker Change: Okay excellent.
Speaker Change: I appreciate taking the questions.
Speaker Change: Thank you. Thank you.
Speaker Change: Our next caller is Paul Zimbardo with Jefferies. You May go ahead Sir.
Paul Zimbardo: Hi, good afternoon. Thank you team.
Speaker Change: Okay.
Speaker Change: Following up on Nick's question, a little bit on the Eaton disclosures round up potential material loss just does that.
Speaker Change: Like do you think there could be a reimbursement back to the wildfire fund or just is there any kind of signal around that because if it's contained within the fund I would think there would be a.
Speaker Change: The material loss. If you were found to be prudent. So if you could just help.
Speaker Change: Pack that disclosure a little bit it would be helpful.
Speaker Change: Now, let's just.
Speaker Change: That's what made me Paul.
Speaker Change: Sorry, if I may I'll just go through how you account for it you have to actually think about the two pieces separately do you think about the loss of the liability and you disclose information around that and then you think about the recovery of that so we would record you know sort of receivables from insurance or the normal course insurance and then as we go.
Three we will also record receivables from the wildfire fund so it's not it's not trying to be a signal that showed positioning around what we think in terms of prudency I think that our refunding to find I think you've heard us say before that based on everything we know today and the information that we've reviewed we believe that SCE will make a good faith showing that it was prudent.
From an accounting perspective, you kind of show the piece parts not a net number yeah.
Speaker Change: Yeah, that's that's what I wanted to I wanted to start there because the signal we're giving you is what Maria just said.
Speaker Change: Based on what we know today, we believe we'll see what's a reasonable operator of the system alright.
Speaker Change: Shift to probable just indicates that we do see a material losses probable now.
Speaker Change: Because of the absence of another likely costs, having come to the delight so far.
Speaker Change: But yeah, we we view this as you know after a fire ultimately if we conclude that it is God Edison related fire. Then we have access to the fund in terms of prudency.
Speaker Change: Believe me I guess, you will be able to make that good faith, they're showing a reasonable limits.
Speaker Change: Sure Crystal clear on that.
Speaker Change: Yes, no. Thank you for clearing that up.
Got it so I appreciate you asking the question. Thank you.
Speaker Change: Yes, and I'll take it and then the other I know you said things are going to take a long time to play out to get more clarity and you did mention like litigation strategies and.
Speaker Change: The Q is there any time when based on other events you would think about like approaching settlement conversations with parties.
Speaker Change: Yeah.
Speaker Change: You will have heard this answer from us regarding fires, they're all case by case right specific.
Speaker Change: Specific facts and circumstances of each fire Paul said, it's really difficult to extrapolate any timing for this one based on other experiences.
Speaker Change: One one timing item, we've pointed to is that.
Speaker Change: When it comes to the core.
Speaker Change: Formal investigation materials coming out of the fire authorities. Those can take 12 to 18 months right that that seems to be a a.
Speaker Change: Broad timelines that we've seen elsewhere, but you know beyond that timing towards.
Speaker Change: And making decisions about it.
Speaker Change: Engaging with plaintiffs and settlements et cetera that are very difficult to handicap at this point.
Speaker Change: Okay understood. Thank you very much team.
Speaker Change: Paul.
Speaker Change: Thank you our next caller is Richard Sunderland with J P. Morgan you May go ahead Sir.
Richard Sunderland: Hey, Rich Hey, guys Hey.
Speaker Change: Good afternoon can you hear me.
Speaker Change: Great.
Speaker Change: Great. Thank you just following up on the last one there it sounds like this hasnt changed but do you have any revised timing expectations on the investigation just as your own progresses here.
Speaker Change: No we haven't been able to provide an estimate and we still can't provide enough signal.
Speaker Change: [laughter].
Speaker Change: Understood and then.
Speaker Change: Unpack to that.
Speaker Change: Material losses disclosure a bit but just have you ruled out any third party potential sources of ignition at this point I mean, I know you said you haven't read all your aim equipment and Theres still some others out there, but just trying to understand if that.
Speaker Change: Impacted the language coming this quarter.
Speaker Change: Yeah.
Speaker Change: I guess I'd refer back to the way I said it in my prepared remarks.
Speaker Change: At this point.
Speaker Change: We are not aware of any evidence that conclusively points to another source of ignition.
Speaker Change: So looking at all Oh, obviously, if someone has information we would be.
Speaker Change: I'd be very interested in hearing it are seeing it but based on where we are today in the absence of evidence pointing conclusively to something else that that was one of the factors in changing our designation to probable.
Speaker Change: Understood. Thanks for the time.
Speaker Change: Yeah. Thanks rich.
Speaker Change: Thank you our next caller is Greg <unk> with UBS you May go ahead Sir.
Speaker Change: Hello, Greg.
Speaker Change: Yeah, Hey.
Good afternoon.
Speaker Change:
Speaker Change: Just regarding the <unk>.
Speaker Change: Expectation of losses disclosure again, just is there anything about the nature of.
The type of the lawsuit.
Speaker Change: That.
Speaker Change: Which would make it an unrecoverable bye.
Speaker Change: By the by the wildfire fund that that Youre seeing.
Speaker Change: Whether it's not economic damage or something else.
Speaker Change: No I'm Greg This is ray at the wildfire fund has available to pay damage claims. So curious I'll stop them, we have a safety certificate. So we also have the benefit of the liability cap. So there's nothing in the in the way, we provide a disclosure or any of that that would preclude.
Speaker Change: US from accessing.
Speaker Change: Accessing their funds and there is no limitation on that those types of claims that are paid by the fund which might be more directly your question.
Speaker Change: Okay.
Speaker Change: Just thank you one other just on the interest expense.
Speaker Change: Vince driver.
For the quarter.
Speaker Change: Is it is it possible to break that up into.
Speaker Change:
Speaker Change: Oh, you know T km.
Speaker Change: One time, and then ongoing than anything else.
Speaker Change: Yeah, so the interest expense driver.
Speaker Change: Youre looking at the at the materials that we posted there's about 30 cents that's related to the prior period true ups for Teekay on the 14th which is an annualized benefit on it on a go forward basis, you'll start to see that now as we get into the second quarter and we have now closed out the prior period.
Speaker Change: Okay. Thank.
Speaker Change: Thank you.
Speaker Change: That's it that's correct.
Anthony: Thank you. Our next caller is Anthony called out with Mizuho you May go ahead Sir.
Speaker Change: Hi, good afternoon team.
Speaker Change: I guess on the legislative efforts going on in Sacramento.
Speaker Change: Just wondering if you know I think in a rate proceeding you guys may meet with parties before just to talk about plans and everything else any of that just wondering if you could share with us any type of you know.
Speaker Change: When you're meeting with policymakers is there any.
Speaker Change: No ideas on the solutions of modifying a be 10 54 that you believe are maybe resonating with the policymakers, whether that's a replenishment mechanism or a bigger fund or anything like that that you could share.
Speaker Change: Not really Anthony again.
Speaker Change: Pretty early days right now I think a lot of the legislators are still getting their arms around this and I recognize that.
Speaker Change: A lot of our legislators are newer to Sacramento from post the 2019 period.
Speaker Change: So yeah there are.
Speaker Change: Ideas with various people were mentioning but it would be premature to get into the sort of details right. Now. So you know our tomorrow and we're just we're very committed to remaining engaged are helping educate.
Speaker Change: And so making sure that the policymakers.
Speaker Change: Policymakers understand the implications here right.
Speaker Change: This is ultimately about how do we.
Speaker Change: Maintain safety for our communities and do it at the lowest possible cost to customers.
Speaker Change: So we're making sure that for example people understand the impacts that action from the shareholder side can have on a cause of death, all credit ratings, and therefore impact to customer cost. So I think there's still in that early phase of getting our arms around the topic.
Speaker Change: Great. Thanks for taking my question.
Speaker Change: You bet. Thanks Anthony.
Speaker Change: Thank you. Our next caller is David Arcaro with J P. Morgan Stanley You May go ahead Sir.
David Arcaro: Oh, hey, thanks, so much for taking the question.
David Arcaro: Let's see a quick question on the losses and the probable losses that you may recognize would that be would there be any considerations from like a balance sheet perspective from either the CPUC or credit rating agencies when that impacts the financial statements.
Speaker Change: Yeah, David the way it would be recorded as we would have the loss again. So that's one piece of the puzzle, but we would also have offsetting receivables or regulatory asset. If you will so there'll be a balance on the balance sheet. So it wouldn't have an earnings impact and you'd be grossing up the balance sheet, but it would be offsetting on each side so far.
David Arcaro: On the.
David Arcaro: Regulatory capital perspective, as well as from sort of a rating agency perspective, we've got the basis covered.
David Arcaro: Yeah Gotcha, Okay understood and you made it pretty clear that it's not a cash cash.
David Arcaro: Cash flow impact just based on the access to the to the fund and let me see Patriot I. Just also wanted to clarify something did you mentioned that Oh are you seeing third party estimates of potential damages that suggested that the entire fund or something close to the size of the current fun could.
David Arcaro: B.
David Arcaro:
David Arcaro: <unk> used or potentially representing the liability at that level.
David Arcaro: Not not quite what I indicated was maybe a little more detail as I read the paper as you read the papers right every now and then in an article you'll see estimates by this expert or that expert or that entity.
Speaker Change: Uh huh.
Speaker Change: I'm not sure that those are all comprehensive I think so.
Speaker Change: Sometimes as I recall, if I talk about insured losses, so am I talking about some other kind of loss.
Speaker Change: Don't recall seeing any one of those elements.
Speaker Change: Add up to $21 billion, yet, but again because there are parts of the piece parts kind of hard to tell from that sale. Yeah. Certainly it is a large fire.
Speaker Change: And if it ends up being linked to Edison infrastructure.
Speaker Change: Dan.
Speaker Change: We could certainly consider them.
Speaker Change: Quantum of the fund, but at this point, we cant estimate so it's unclear, whether we would consume X percent or even extinguished of funds. So it's just again too soon to tell but a number of those estimates seem to have a whatever they're estimating they seem to be within the envelope of that.
Speaker Change: Got.
Speaker Change: You'd have to Peel the onion back on what they are looking at and how they're looking at what's the quality of those estimates L. I just wanted to acknowledge that you may be reading the same papers that we are seeing numbers pop up here and there.
Speaker Change: Yeah Gotcha, Okay, absolutely that makes sense, yeah I appreciate the color. Thanks, so much yes. Thanks Jim.
Speaker Change: Thank you our next caller is Ryan Levine with Citi. You May go ahead.
Ryan Levine: Hi, everybody.
Speaker Change: Alright, if there've been any.
Speaker Change: Have there been any changes to the wildfire mitigation plan preparation work or approach.
Speaker Change: Two forming the updated plan post the January events.
Steve Paul: Yeah, Let me, let me turn it to Steve and I'll, just remind you is as I mentioned earlier. This is something that every year. The team looks at you know what else are we alerting what else you'll be we'd be looking at but Steve Let me, let me turn it over to you.
Steve Paul: Yes, Pedro you hit the top line message, which is the plan is always evolving around the edges. The core of it remains we've got to continue to execute on our grid hardening programs right and so that means you know doing the covered conductor and the underground in as Pedro mentioned as we look at the areas at least within the burn scars, we certainly are doing more.
Steve Paul: Underground in there than was originally planned just based on the devastation that's there they need to be a build back stronger for those communities and take advantage of the fact that there's a lot of other work going on there, but beyond that we look at every aspect of our inspection programs on our vegetation management to see as to are there emerging.
Steve Paul: Risks are things we've learned over frankly fires in the last few years that would change that.
Steve Paul: Sure of those programs, but generally it's the same programs, we continue to be as aggressive as we can and deploying those and so I'd say that the wildfire mitigation plan that we've been working on as an extension of the plans modified for learnings over the past couple of years.
Steve Paul: Thanks, and then one follow up from my previous question in terms of the timetable to access the wildfire fund.
Steve Paul: Recognizing that there is a number of moving pieces is there any kroger.
Steve Paul: Early indication of when you may start to.
Steve Paul: Hi.
Steve Paul: Paul capital from that time.
Speaker Change: No I think that I'm pretty that's very premature Ryan just because we don't know what the what the processes. Obviously, we're still going through the investigation and the analysis I'm with.
We want to be through all of that then we would have to go through some sort of settlement process, but if you believe that you know you're.
Speaker Change: I'm going to skip over all of those things and think about sort of accessing the funds first we have $1 billion of customer funded self insurance. So if there were any claims that had to be paid that would be the first piece and then you would get one would go to the wildfire fund and there is a process that the and fund administrator has which is.
Speaker Change: Theatres to be going very smoothly for others or others, who have access to it where you accumulate the claims and go and you get them reimburse. So I think it's a pretty they they've made it a very streamlined straightforward process. Once you hit the point, where you need to access.
Speaker Change: Thanks for taking my questions.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thank you I will now turn the call back over to Mr. Sam Rum Raj for any closing comments.
Thank you for joining US. This concludes our conference call have a good rest of the day.
Speaker Change: You may now disconnect.
Speaker Change: Yes.
Speaker Change: Thank you you may now disconnect from today's conference have a good rest of your day.