Q2 2025 Edison International Earnings Call
Good afternoon and welcome to the Edison International second quarter 2025 Financial teleconference. My name is Denise and I will be your operator today.
Would we get to the question-and-answer session? If you have a question, press star 1 on your phone. 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 conference.
Thank you, Denise, and welcome everyone. A speakers today, our president and chief executive officer, Pedro, Pizarro and Executive Vice, President, and Chief Financial Officer of Maria regardie. Also on the call are other members of the management team.
Prepare the marks on 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
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 a certain Outlook assumptions as well as reconciliation of non-gaap measures to the nearest Gap measure.
During the question and answer session, please limit yourself to 1 question and 1 follow-up.
I will now turn the call over to Peter. Hey, thanks a lot, Sam, and good afternoon, everyone.
Today, I will address three key topics for our investors and update on the Ethan fire.
Our confidence in California's legislature will support healthy, investor-owned utilities, and provide an update on regulatory decisions and future actions. That positions us well to deliver on our commitments for customers and other stakeholders.
Let me start with a brief comment on earnings.
Today, Edison International reported second quarter core earnings per share of 97 cents compared to a 1.23 a year ago.
However, as I have mentioned before, this year-over-year comparison is not particularly meaningful because SE has not received a final decision in its 2025 general rate case.
Nonetheless, we remain confident in our ability to meet our 2025 EPS guidance and deliver a core EPS growth of 5% to 7% through 2028.
I will touch on the GRC proposed decision in a few minutes, and Maria will discuss her financial performance in her remarks.
On the Ethan fire.
The investigations by SC and the LA County Fire Department remain ongoing.
There are no additional disclosures on the ignition or estimated cost at this point.
The recap SE is not aware of evidence pointing to another possible source of ignition.
Absent additional evidence, we believe that the equipment could have been associated with the ignition.
In addition, numerous lawsuits have already been brought against SCE.
If it is determined that the transmission equipment was associated with the ignition of the Eaton fire.
Based on the information we have reviewed thus far, we remain confident that we would make a good faith showing that its contact with respect to its transmission facilities in the Eaton Canyon area was consistent with actions of a reasonable utility.
As we know from prior wildfire events, engaging with and helping the community is critical.
That's why we announced last week, the Wildfire, recovery Compensation Program, which SE will launch this fall.
The program will provide direct payments to eligible individuals and businesses. We saw claims come in quickly.
Allows the community to focus on recovery and minimizes the overall cost by mitigating the impacts of interest, expense and inflation.
This will also help use the Wildfire Fund efficiently and have more of the cash support for impacted community members, instead of being spent on higher illegal costs.
on the legislative front, we are encouraged by the continuing discussions with the governor's office and legislators to enhance California's industry-leading, AB 1054 regulatory framework.
Given the economy wide consequences of inaction, We Believe policy makers will strengthen California's Wildfire framework during the current legislative session.
The issue of wildfires is not just a utility regulation issue.
The full solution must include broader actions across multiple sectors and could be addressed during next year's legislative session.
Separately, a number of affordability, bills are being discussed.
Our track record on cost management, which I will discuss in a few minutes shows our commitment to affordability.
There are good steps to legit, the legislature can consider to improve affordability, like right sizing, public purpose, programs, and any am
And streamlining, sighting and permitting.
However, Provisions like securitizing capital.
May be well-intentioned, but in fact would actually raise customer costs by deteriorating credit quality.
We will continue to engage with legislators to help them make decisions that are grounded in the facts.
Moving to the regulatory. Front SE continues to build on its progress across multiple proceedings. Further de-risking our financial Outlook
Span on several of those proceedings in her remarks, but let me touch on the proposed decision in SEES, 2025 GRC issued by the administrative law judge on Monday. Page 3 provides a summary.
The PD overall generally aligns with our range case rate-based forecast.
we share the alj's view that critical Investments are needed to maintain a safe reliable and increasingly clean electric grid.
On the other hand, key areas of the PD require improvements. So as we'll seek revisions,
the PD would authorize base revenue of 9.8 billion or 93% of sees, requested Revenue requirement.
It also supports significant Capital investments in Wildfire mitigation with modernization and infrastructure replacement while incorporating affordability considerations for customers.
Be advised that Say's requests primarily relate to scope, pacing, or cost, rather than to the underlying need or effectiveness of the programs.
Most notably, the PD finds that covered conductor has been a highly effective wildfire mitigation strategy and that no party recommended a reduction to Say's request.
It also notes that no party disputed. That targeted undergrounding is an effective tool for SE
Although it would authorize fewer miles than SE proposed.
The PD affirms, the reasonableness of the utilities base load growth forecasts and recognizes the importance of Sayes planning methodology which integrates Statewide forecasts with local system knowledge.
this supports our long-term strategy to ensure the greatest ready for California's electrified future,
however,
There are some areas where the PD is not fully aligned with customer needs and will be part of the utilities' opening comments. Maria will say more in her remarks.
The January wildfires, underscore the importance of mitigation plans and the need for continuous and evolving tools to maintain infrastructure. Resiliency.
SE submitted its 2026 through 2028 Wildfire. Mitigation plan in May outlining a comprehensive strategy, to address both immediate and long-term Wildfire risks with new and innovative solutions.
The plan reflects the utilities commitment to public safety risk, reduction and affordability.
And builds on foundational mitigations such as covered conductor targeted undergrounding and enhanced vegetation management.
Over the 2026 to 2028 period, SE anticipates investing $6.2 billion.
The plan also supports continued use of aerial firefighting assets. Including the, world's largest helit tankers with nighttime capabilities and aims to inspect approximately 1 million trees annually.
Public safety power shutoffs remain a critical tool in wildfire prevention.
This year's PSPs updates include revised criteria, and wind speed thresholds.
Expanded circuit coverage and broader boundaries around, High fire risk areas.
As always, SE remains focused on customer support and outreach to enhance safety and reduce the impact of PSP events.
Additional details can be found on page 4.
As you will recall.
a year ago, we shared our projection that even with 100% of sees, GRC requests
The utility expense is system average rate to grow, on average, at an inflation-like level for 2028.
Based on where things stand today, that is still the expectation.
Which is further enabled by sees enduring focus on operational, excellence and efficiently managing costs for customers.
SE has a more than 15-year track record with the lowest system average rate among California's major investor-owned utilities.
Thanks to successfully executing on its operational excellence initiatives and taking proactive measures to address customer affordability.
The technology is a major driver of better affordability, safety, reliability, and resiliency.
For example, last month, eei once again selected, eix and fce as the winner of their prestigious Edison award, recognizing distinguished leadership, Innovation and contribution to the advancement of the electric industry for the benefit of all.
Our Winning project Sayes Advanced waveform anomaly recognition engine or aware for short.
uses real time grid sensor data, Ai, and machine learning to proactively predict potential system issues and pinpoint, where failure State plays with an SE service territory
Benefit from higher safety and reliability faster, restoration times, and higher affordability through optimized screw time.
I am proud of our team for their steadfast commitment to operational excellence and for creating this ai-driven solution to help. Make the grid safer and more resilient for our communities.
I will conclude my remarks by reiterating the key messages.
First SE is continuing with its investigation on the origin and cost of the Ethan fire. And there are no new disclosures about the ignition or cost estimated at this time.
When we have additional relevant information, we will share it with you. And importantly, we'll continue our transparency with our community.
Second, we are confident that legislative action will ultimately enhance California's. AB 1054 regulatory framework.
Third SE is well positioned from a regulatory standpoint.
To the liver for customers and investors with that, I'll turn it over to Maria for her financial report.
Thanks, Pedro and good afternoon.
In my comments today, I will cover our second quarter 2025 results.
Provide additional insight into key, regulatory proceedings, and update you on other Financial topics.
Starting with the second quarter, EIX reported core EPS of $0.97 compared to $1.23 last year.
Page 5 provides the year-over-year, quarterly variance analysis.
As Pedro mentioned, the year-over-year comparison is not particularly meaningful because SE has not received a final decision in its 2025 GRC.
Asce continues to book revenues at 2024 authorized levels, adjusted for the change in ROE, and will record a true-up when a receives a final decision.
SCE's core EPS variance was primarily driven by higher O&M expense and the net impact of regulatory decisions received in each period.
Eix, parents and others variants was primarily driven by higher interest expense.
I'd like to expand on Pedro's comments on the Wildfire recovery Compensation Program for the Eaton fire.
Asce resolved claims, we would not expect to see actual or estimated costs run through the income statement, aside from the small shareholder contribution, associated with Self insurance.
The costs would be offset by sc's, customer-funded Self insurance for the first 1 billion dollars and then by receivables or regulatory assets associated with the Wildfire fund and regulation, put in place by AB 1054.
An efficient reimbursement process from the Wildfire Fund also means SE would not have to issue long-term debt to fund payments.
On fce 2025 General rate case. If adopted the PD would result in base rate. Revenue requirements of 9.8 billion in 2025 10.2 billion in 2026 1 0. 6. 2 8
Translating the rate based numbers shown in the proposed decision into total company rate base and holding all else constant, the results would be generally in line with our current range case.
Following a final decision, we will incorporate all aspects of the GRC into our long-term plans and refresh our projections.
In sce's opening comments, it will outline areas where it believes revisions or warranted to deliver better outcomes for customers and ensure. The decision aligns with the evidentiary record applicable, law and established regulatory principles.
Let me expand on a couple of areas.
On wildfire mitigation, the decision would authorize more than 18,800 miles of grid hardening, consistent with Sayes' total hardening request.
However, it ships about 400 miles from targeted undergrounding to the covered conductor program.
While the PD reflects a significant increase to the historical level of targeted undergrounding, it falls short of sc's, well-supported request.
This reduction limits sc's ability to appropriately mitigate the Wildfire risk in the most vulnerable areas.
On infrastructure replacement, the PD would approve the majority of the proposed programs but scales back the scope.
The decision recognizes the importance of resuming infrastructure replacement after several years of wildfire focus spending, but we believe the gradual ramp-up does not fully reflect the urgency of today's reliability and electrification needs.
As for the next steps, oral argument is scheduled for August 11th and SE will file. Its opening comments on. August 18th and reply comments are due August 25th.
The earliest the commission can vote on the proposed decision is that it's August 28th. Voting meeting.
Objective and the safety and resiliency needs of the communities. We serve
As we've said before, we understand the commission's desire to balance safety, reliability, and affordability, and we will continue to work collaboratively to ensure the utilities' programs deliver value to customers.
Continuing on to the regulatory front, SCE has advanced other regulatory proceedings and outcomes, ultimately de-risking. Our financial Outlook.
I will highlight a few updates.
First, the CPU issued final decisions in SD's WMCE and WMV proceedings, providing certainty on the timing of cost recovery and contribution to our 2025 earnings guidance.
On the WMCE settlement agreement, the CPUC authorized recovery of more than $1 million of O&M and $700 million of capital for historical wildfire mitigation and restoration.
In SCE's 2022 WMV proceeding, the CPUC authorized the recovery of about $290 million of O&M and $99 million of capital while disallowing about $65 million of O&M.
I'll note that SCE has filed an application for rehearing to address certain legal and factual errors. That resulted in an incorrect disallowance of costs incurred to make the SCE system and communities safer and more resilient to wildfire threats.
Second is another step toward recovering historical costs. In April, SCE filed its application for authority to issue securitized bonds to finance the recovery of about $1.6 billion related to the TKM proceeding.
This securitization allows for the issuance of recovery bonds with the highest possible credit rating, which reduces financing costs for STD's customers.
The ALJ recently issued a proposed decision which would approve the financing order, and the schedule calls for the final decision in August.
Third on the Woolsey cost recovery application. SCE recently filed a rebuttal testimony.
The schedule includes a motion for consideration of a settlement agreement or joint statement of stipulations of issues due on August 12.
As always, SE is open to settlement discussions if a fair and reasonable outcome can be achieved, benefiting customers and shareholders.
Lastly, the 2026 cost of capital, preceding continues to progress.
With interveners submitting their testimony yesterday evening.
during the quarter, the alj also issued a scoping memo with the schedule that calls for a proposed decision in November,
Turning to Pages, 6 and 7 sees capital expenditure and rate based forecasts remain unchanged while we await a final GRC decision.
The utility continues to make investments in safety, reliability, and resiliency.
The rate case request supports investments that are essential to meet customer needs both today and through the end of 2028.
This includes critical work in infrastructure replacement and wildfire mitigation, as well as investments to meet the growing demand in our service area.
As we have highlighted before, we continue to see substantial additional capital needs beyond the GRC that are incremental to the plan.
Moving on to our EPS guidance outlined on pages. 8 and 9. We are confident in reaffirming the 2025 range of $5.94 to $6.34, and our long-term EPS growth, expectations of 5 to 7% from 2025 to 2028.
As a reminder, we will refresh our financial guidance six weeks after SCE receives a final decision in its 2025 GRC.
This will include our capital and rate based projections, 2025 core EPS, range, long-term core, EPS growth and financing plan.
That concludes my remarks, and back to you, Sam.
Denise, can you please open the call for questions as a reminder? We request you to limit yourself to 1 question and 1 follow-up. So everyone in line has the opportunity to ask questions
Thank you. If you would like to ask a question, please press star 1 on your phone.
And our first question comes from Nicholas Campanella with Barclays, your line is open.
Hey, good afternoon everyone. Thanks for taking my question.
Or through a certain period in order to kind of participate in that solution. Thank you.
Yeah, thanks, Nicholas. A very fair question. Uh, look, I'll start by saying that we saw the Article 2. There's a lot of work going on between the governor's office and, you know, legislative leaders, you know, as I mentioned, we've been in discussions. But, um, still a long ways, right? Uh, through the summer recess and into, uh, you know, hopefully seeing legislation this session.
At the end of the day,
Uh, you know, we will be looking at the balance of everything that is in a package, and the devil's always in the details. So, you know, really.
Impossible to comment right now on this one element or that one element.
I will say and I think you've heard me say before that from a a policy or, you know, principals perspective.
You know, we do believe that the investor owned utility framework makes a lot of sense, and that calls for uh, shareholders making Capital Investments, you know, having the opportunity to earn an authorized for you to return and having full recovery of all 2, newly incurred costs.
All right. So in that context, AB 1054 itself was a departure from that. And having shareholders, do an upfront contribution, you know, to, uh, to help seed the fund.
And so we've been vocal that, um, you know, moving forward and expansion of it 1054 that was, you know, purely being done along, uh, investor owned utility rate. Making principles would not have a shareholder contribution that said, we, it's a complex environment. It's a lot going on. Um, and again, you know, we will need to see the balance uh, of of a uh, an ultimate package. Uh, you know, we don't
Foresee and frankly don't see any Aid uh, for having upfront contributions, like there were in AB 1054 previously. Uh, you know, there is Cash in the fund and you probably saw the uh, comments by the, uh, fund administrator, the California earthquake Authority, that the current capacity of the fund, they estimate something like 22 billion dollars, uh, even taking into account, uh, the amounts that have been called for, for the Dixie and can Kate fires.
Um,
and as we know, unfortunately, the process of going through Claims can take quite a long time. And so, you know, it's we don't anticipate that there would be a very rapid depletion of the fund. If we don't know how much it would Ethan, would deplete it, if Ethan ends up being as easy as fire, but, uh, whatever that amount is it will take, you know, multiple years. And so that would suggest that there isn't any need for an upfront, you know, piece beyond that though, you know, we'll have to take a look at what's the package and then make a determination as to whether that package is in the
Interest of both our customers and, importantly, our shareholders.
Okay. Okay, no. That's very that's helpful. I I appreciate it. Uh, um, there's there's a lot of volatility in the background too. Um, so I guess just you kind of mentioned that once you have greater visibility into the cause of the in, or even the damages, um, and liabilities that you would disclose those promptly all right. You know, should we be expecting? You know, that to be more kind of 1 off, as you know, you're going to communicate to the market or, uh, do we have to kind of wait for earnings calls and uh, 10 cues to get, you know, your your best assessment of when that of that liability. Thanks.
Yeah, Nick was a great question and uh, you know, I guess the way I would answer that would be our normal process, right is to, uh, try and provide information or provide information during the quarterly earnings calls. That is certainly the, uh, time period. When we take a look at potential reserves, Etc, right? You've seen that experience with the 17 and 18 fires. However if we you know had uh a piece of information that we thought was sufficiently material, not only for investors, but also for the community, I could certainly foresee a case, where we might do something off cycle. So long-winded way of answering it. It depends. Right. And we'll make sure that we're doing ultimately the right thing in terms of disclosure and transparency.
Okay. That's very fair. Thanks for taking the time. Thank you.
Yeah, thanks. Nicholas.
Thank you. The next question is from Richard, Sunderland, with JP Morgan. Your line is open.
All right. Hey, good afternoon, thanks for the time. Um, you're turning to the GRC PD. Could you provide finer detail on this versus the range case in your forecast? I guess it should be assumed that if the PD stands, that range case would essentially become your outlook. Or are there opportunities to bring capital back in beyond what you already flagged? Is upside potential on the right-hand side of that slide?
Going to file um, comments on the PD just, you know, as a reminder from the comments the page and I have already made because we do think there are some areas there that, um, warrant some revision, we have giving you a range case before the PD was is aligned with our range case outcome. But as you know, from other information that we share there are other opportunities above and beyond what we've already included in our forecast. So as we work through and get the results of the final decision, we'll be working through all of those other elements as well and we will be sharing with those with you after the final decision is issued
Okay, understood. So just to be clear on that, the 6 week post, final decision, update could also offer a view on those other opportunities.
Yep.
Got it, got it. Super helpful and then uh, turning to Woolsey, just following rebuttal here. How are you feeling about the ability to reach a settlement in that over the next few weeks?
Well, I, I think you know that we are always open to settlement discussions, as long as they're fair and reasonable discussions. Um we have filed our rebuttal testimony. We think we put a good showing in for that as well. I think the uh commentary from in the testimonies from interveners was really focused on our various programs and how we execute it on those. And we think we have demonstrated both in our original testimony as well as in our rebuttal that we have acted as a prudent operator.
Great. Thank you for the time today.
Thank you, rich.
Hey good afternoon, thanks so much for taking the questions. Um 1 of wanted to just ask on uh on some of the affordability.
Legislation that's been proposed in California specifically on the provisions around securitization. Um, just can we get your your thoughts on, on perhaps other Alternatives that you think could still support affordability in a more constructive way. And then, if you've done any work to to kind of quantify the potential impacts. If this is written, uh, would be curious if there's anything to share there as well. Thank you.
Yeah, let me let me start on this 1 and Maria, you know, may may have additional comments. Um,
I alluded to, it's been a high level in my remarks to, some of the other Alternatives out there to try and work on affordability for customers, you know, first and foremost, Carly. It really starts with the utility being a a, an excellent operator. And so, that's why I spend time on my comments. You have to make sure that investors understand the hard work that this company has taken on over multiple years, to continue to look at opportunities to increase, uh, om om, om efficiency, as well as capital efficiency, you know, we, we talked about making sure that we are capturing customer value across all colors of money. And so, um, that's work that continues and work.
Excited about the opportunities to use technology and continued process Improvement to attack that. And that's frankly, something that, you know, I know our Sacramento team and I personally have spent time, making sure we share with, uh, policy makers. So that they understand that starting point
Secondly, you know, there are a number of areas like, uh, public purpose programs, right? You've heard not just us, but you've heard, um, you know, other thought leaders across the industry, including academics, talk about how, you know, there are programs like, uh, you know, the subsidies that support low-income customers that today are carried in on the electric bill. But from a, you know, policy perspective, would make more sense, uh, being, uh, borne on the taxpayer bill. Um, and so that's another kind of broad category. Yet another one is net energy metering, right? You know,
so we're looking at,
Uh, you know, provisions around that, and you've seen some bill activity in Sacramento trying to, you know, address that. So, uh, you know, finally, and then maybe this leads to the back part of your question.
uh,
it's important that policy makers legislators understand.
How the numbers end up working, right? Particularly when you look at something like Security Station, as I mentioned in my remarks a few minutes ago.
Uh, I'll say it a little differently. There is no free money here. There's no free lunch.
And from a customer perspective I appreciate. And in fact I've had very candid discussions with with with legislators around this. I appreciate they're looking to uh address affordability by uh you know we do seeing the amount of the bill that's going towards shareholder earnings.
Uh, you know, less credit quality, and that translates into cost of debt. This higher cost of debt gets passed through to the customer.
Uh, we try to come up with some estimates; they're not quite ready for prime time, but we are pretty confident that if you see a dollar of forgone earnings, you might think that that's a dollar of customer savings that will actually lead to more than a dollar of added customer cost over the long run. And so, you know, we've been very clear about that. Uh, final point that I might make is that, you know, you often hear in Sacramento concerns about, you know, utility profits in general. And so when we post the business update tomorrow or in the next couple of days, um,
you will see a chart there, uh, from new analysis that our team has done.
That is looking at a comparison of sees, average bill, you know, for an average residential customer and comparing it to an average Municipal, uh, power bill in our territory. And, you know, it, I have a lot of respect for our peers in public power. So it's not about, you know, better or worse. But it's looking at what are the differences here and, uh, just using, you know, speaking qualitatively, you'll see numbers when the chart posts, uh, in the business update, you'll see that. Yes, uh, Sayes average bill or bill for the average residential, customer is higher than that for Public Power. But the reason it's higher is
Primarily around.
Uh elements that are not in Municipal Powers built. For example, taxes that you know, they don't pay, but ultimately somebody in society has to pay right uh public purpose, programs subsidies that we're required to carry in our bill that they are not Wildfire mitigation expenses. That I would think, you know, any utility in our area where they're public, or investor owned will have to ultimately be burying in the long term.
When you then take a look at the pieces that are truly comparable, which is most of the bill, right? The operational cost for tnd and generation and purchase power.
With financing costs fully baked in there. So those utility profits are part of that analysis. You'll see that when we compared to our to our good friends at the Los Angeles Department of Water and Power, um, the SE bill that portion of the bill which is the majority of the bill is actually a few dollars cheaper every month than it is for our colleagues at La and that in spite of the fact that we have a system that should be more costly to run because we serve something like 3,100 customers per square mile. Whereas I think lvp has about around 105 customers per square mile.
And again, that is with profits embedded in that analysis. So I think it just goes to show that, uh, the investor owned utility model is 1. That has
Stimulated Innovation, it stimulated efficiency, uh, by providing, you know, frankly, a capital Market signal, uh, to our team. So I know that was a lot to fill out to you, but that's a way another way in which we're trying to quantify, what's really, what matters in the end is, you know, the uh, the impact on total bills Marie? I know, I said a lot there. But anything else you would add or correct? Yeah, I think Carly had 1 other question and I think in terms of, you know, how do you think about the math? Obviously, the utility is all about rate based math, so you can look at it from that perspective. We continue to see a tremendous amount of customer need and opportunity to support that need. That is supportive. Also of our long-term growth trajectory. I think those were the 2 parts of your question.
Thank you. The next question comes from Angie starzinski with Seaport. Your line is open.
Hi Andrew, thank you. How are you? Um, so just I mean we're waiting for a number of regulatory decisions uh for you and and your California peers. And I'm just, you know, looking at especially at at the cost of capital filing. Um, you know, given the backdrop, um, you know, a very challenging backstroke for an electric utility in your state. It doesn't seem like there's that much support and and giving you a higher Roe in order to recognize
The risk. Um, all of the, the fixes that they were hearing about from from the legislature seem temporary to me at least patches, right with, um, with Equity contributions from utilities. So, again, like if you take a step back, you know, 1 could argue, you know, you know, what's the incentive ready to uh um as an as an investor to support? Uh, California utilities, given given the headaches that I just mentioned. And and and the fact that you're not really being remunerated for the higher risk that you are accepting again.
Being blunt here.
Answer to this 1 uh California has ultimately generally gotten it, right? And so right now we're seeing proposals in Sacramento we haven't seen a final bill. You know, we've seen I think supportive action at the puc at the end of the day after you go through a lot of process. You know, not a guarantee that they'll get it right. Again, you know in this decision or that decision but overall we have a state that is committed to serving customers committed to the load growth, that's coming across the state from electrification and, you know, data centers, Etc. Um, and it's committed to the clean energy transition for which, you know, they need our infrastructure. Uh, so I, I would, you know, maybe what I qualify your your, your thesis Angie by saying, yes, it feels bumpy right now, but it's spelled bumpy before and ultimately we've seen policy makers do the right thing.
Um, 1 Thing, Angie, you meant, you said, you know, fix this thing temporary. And I think maybe that's just a follow up on something that Pedro said, in his prepared remarks, I think when you think about the things that are challenging in California right now. Affordability. Yes, but also um, enhancing you know, Wildfire protections, Etc. I think there are things that are, you know, as Peter mentioned, will happen this year. This session that really go to the foundation of stabilizing the IOU framework. And from that stable more stable and, um, Foundation can move on and really address what is a societal issue, right? So, there will be more work to come in the future around homeowners insurance around building codes and standards, uh, around. Hopefully,
Liability reform. So all of those things you're right they're not all going to happen overnight but we're starting from the foundation of build on the framework of ab 1054 stabilize and enhance that
Um Shore up people's confidence in that in that approach and then we can move on and take a longer term view of other things that need to happen.
Understood. Okay. And then and again, I appreciate that. Uh, you know, we have a few details about the the story that uh, that broke last night.
But um, you know the the the contribution that I use contribution to the fund.
I mean, uh, is it fair to assume that um, fce would have a, a disproportionately large contribution versus other utilities. Just like we saw what happened with PG at the first first time around with this, uh, Wildfire fund.
Yeah, hey Angie, be really tough to comment on that right now obviously, you know, we're advocating to issue this a fair allocation across, you know, the all the customers involved and the shareholders involved across the utilities. Um, but you know, as I said earlier, we're going to look at not just this term or that term. We're going to look at all the terms together, um, when they come together into a package and then make a decision as to, whether it's, you know, a supportive piece of legislation for our customers, and, for our shareholders. And again, I'll reinforce what Maria just said here. We said it many times before.
This is a big big societal issue. So right now I I'm grateful that there's a lot of focus on getting the first step around the utility piece done in this legislative session, but equally important will be that worked in Mario's mentioning for next year session. Uh because you know, the state really needs to work on protecting homes more and reducing fire spread and continuing the great work you've done on fire suppression, you know we doubling that and fixing the insurance Market, all these other things that add up to the Wildfire issue with large for California,
Good. Thank you.
Thanks, Angie.
Thank you. The next question comes from. Greg oral with UPS your. I'm sorry. UBS your line is now open.
Greggy. We're almost going to deliver packages there.
Yes, yes. Thank you.
um,
I, I had, um,
2 questions. Um possibly um regarding the um eaten um in investigation, can you?
remind us of kind of where that, that stands and and who's involved
um in in running that and, you know, when you expect an outcome,
Um, and then where do you stand on?
Uh,
The the the idea of issuing, uh, Equity to to fund, uh, contributions to uh the you know, the 18 billion dollar, um, wildfire replenishment.
To work with Cal Fire and others. So that's its track. You know, we don't we we we provide support to that when they asked us for uh, you know, details Etc but that is an independent investigation.
Separately you have Edison's own investigation which we are doing um frankly in close uh engagement with a number of stakeholders, including attorneys for plaintiffs as well as, uh, you know, communities, local governments, Etc.
And uh, you know, the reason for that engagement is that that way that there is there is clarity about how we're proceeding.
There are you know, all the questions get addressed up front, in terms of, how should you touch this piece of equipment, or how should you remove that bracket from that Tower? Or what have you that does mean that it adds time because every time that you're going to do a piece of work, um there's collaboration involved in developing protocols that everybody will be you know in agreement with
So that's why that is taking a while we have shared in terms of timing. Correct that what we can't predict or forecast, what the ultimate timing will be for either of the investigations.
typically in these complex Fire cases, we have seen the official investigations take
12 to 18 months, uh, from the, uh, from the
Start of the fire.
Uh, and then again, we don't have an estimate on how long ours will take particularly since then, there's just collaborative process that just adds time, you know to every step.
Yeah, so great. I'll I'll address your second question. Um,
So I think, first, you know, again we want to stage with it before understanding the entire package that is potentially in any piece of legislation that comes along. And frankly, from that perspective, something that has a large upfront payment would actually drive our cost of capital higher and would ultimately not benefit customers. We are very, very aware and sensitive to where our share prices are changing and what that valuation discount is; that's one piece of it.
Top of mind for us, the second piece of it is just from an efficiency perspective. The, the fund doesn't need to be shorted up with cash today. Hey, Joe already discussed that um, previously
If you think about the process that you want to have to go through in order to, um, get to a place where you're actually accessing the funds. If an event happens, then you have people making claims, you have to go through a claims process, as we know from our own experience, on prior events, that takes a long time.
So at this point in time, we don't actually see a need and it would be inefficient for the fund itself to have cash upfront. So those 2 pieces, how it affects overall our capital structure, and our cost of capital and what the ramifications would ultimately be then for customers as well as the actual needs of the funds? I think bring together the point that it doesn't feel necessary to us right now. But again, we will look at an entire package when we this comes available to us.
Appreciate the answers.
Thank you.
This is your line is open.
Hi team. Thank you.
The the follow up a little bit on the prepared marks comment, uh, you stated the PD, uh, and about the rate case, specifically, the PD General line with the range base rate base forecast is also fair to say the lines with the EPS growth rate, considering the proposed petition increases in the later years.
Yeah, so it does align with the range based.
Do as we get through this, um, final decision, run through all of that and give you more granularity around places that, um, you know, where we might see additional Capital opportunities, Etc, um, to really inform sort of the more, the more details uh, analysis that will.
Providing, but it is aligned with the range case. Forecast, yes.
Okay.
Understood. And then just as we think about that role for that, you reference, a 6 weeks afterwards. Uh, should we think about the base for that? As the? Uh, I think it's 5.84 cents. 2025 X, the tkm. Should we think about a different year? Just any color you can provide on the the leap. Off point would be helpful. Thank you. Yep. We will be we'll be um I'll say replicating. What we have there today which is our 25 through 28 analysis
Okay, very clear. Thank you team.
Thanks Paul.
Thank you. The next question comes from Anthony croell with my Zhou. Your line is open.
the package delivery for, uh,
but they do have nice Brown uniforms. Um, just
I guess.
If I could ask question, maybe it's in the same vein as Angie. And Nick's question earlier and I understand it's just um, we're just all going by a Bloomberg story last night. And is not, there's no framework out on the legislation, but it seems that in all the discussion that everyone having the maybe the core of all the discussions or what the legislature is working on is AB 1054.
And ab 1054 had some really good aspects to it, but it also it's a shared risk model between rate payers and investors.
I'm curious if you know and maybe it's in line with Andrew's question. I'm curious if we're still going to use Ave 1054 going forward as an anchor for the solution at that's going to be required. And what I'm concerned over is that it continues to be a shared risk model between customers and investors and I have 1 follow up.
Yeah, sure. You know. Thank thanks, Anthony. And let me give you a quick perspective. First, there are elements of aeb 1054 that continue to endure and frankly are really important. You've always heard me say that perhaps, the most important part of ab 1054 is the strengthening of the prudy provisions, right? And so, um, you're glad that that
That survives, uh, the existence of the fund, right? So that that's really critical. I think a question though is, you know, as they look at what the framework is for an extension is that, you know, following the template of 1054 that appears to be the overall direction. It is resharing. Um, you know, you heard my comments earlier in response to uh, I think to Angie's question about how in an Ideal World when frankly in the investor owned utility model.
Shareholder, uh, contribution to that risk. Really should be coming in.
When there's been a potency issue, right? And and there's there's a penalty, right? Because otherwise if we're managing Wildfire risk, and we've been prudent and the worst happens.
But in a exacerbated by all sorts of other conditions and it's not because of a lack of potency, that's a prudently incurred cost. That should be, you know, born by customers.
And so there was a departure from that to get to the risk sharing in 1054 what we read along with you in the article last night. And we certainly have heard, you know, behind the scenes is that, you know, there are legislators who are looking at continuing some sort of risk sharing and again, our decision ultimately on whether that's
Something that we should accept. Um, endorse will really depend on all the devils in the details and the full package that gets presented, you know, to us.
I don't know if that gets you a question and Maria. Yeah, maybe maybe just 1 more thing, Anthony.
I think it goes back to what we were talking about earlier ab54 Shoring up the you know enhancing the Wildfire fund restoring people's confidence in it. That's a step.
And I think that's a step that's very important as a foundation. And certainly is 1. We're focused on for this legislative cycle. The state of California has a wildfire issue, large beyond anything associated with industrial, Utility Equipment. I think, as we move forward in time, we will be, you know, advocating for and supporting other approaches other things that the, that the state can look at we'd be very supportive of any sort of, you know, analysis that would be ongoing because it is a lot of factors, right? We have to address building codes and standards and enforcement of those. We have to address the homeowners insurance Market. We have to address liability reform. Potentially, there are a lot of different pieces of this. And by the way, right now, AB 1054 is, I OU solution, right? What about all the munis in the states? So there is a, there are a lot of players and this is a much bigger, um, analysis that we'll need to be done what we're focused on now. And why we're referring so often to a 1054 is because we need that as a foundation, so we can continue the good work with the rest of the
The stakeholders Maria. I'm glad you raised that and I would just add 1 accent to that.
We know the state knows that the underlying Wildfire risk. You know again broadly for the state not just, you know, utility ignition, but Wildfire risk.
up in the top 1% and more floods and more droughts and importantly
Risk of you know, 20% more Wildfire ignitions across all causes. So it's imperative that this state be able to prepare for that risk that we know is coming and it's going to be made worse by climate change. I think the good news here is that I'll tell you, I
Think my discussions with the governor, he understands that right. My discussions with legislative leaders, they understand that. And you know, we have 1 article with 1 frame and you know um there's a lot more work to be done before there's a bill that gets voted on and gets signed. Uh, but I think it's really important that folks have that underpinning of you know, where where is the risk headed? What can be done this year, right? Just a kind of narrower
Extension or, you know, uh, strengthening of the 1054 piece, but importantly, work. Hopefully next year on this much broader economy wide issue.
Great and then 1 follow-up. And again I as you just said there's there's so many different um I say proposals but different aspects of what they're going to come out with. But how does eaten the eaten event play into it? Meaning is that only going to be able to access you know this?
Current fund and I and I understand the current fund as well uh fund it right now. I think the earthquake authorities said it's fine or again no 1 know the cost estimates but should those cost estimates
Be greater or the, the actual, uh, liability be greater than what the current fund is, would they would the eaten fire be able to access whatever comes out of this legislative uh session at the end of September.
And Anthony this all matter. Uh, depending on the final Devil's in the details, I will tell you the sense that I, I think.
it's fairly broad right now in Sacramento is that, um, the current fund
Is there for, you know, current fires.
And once you have an expansion of the fund, it's really for, you know, fires that come after that. So that that I think is kind of, the general sense, but getting ahead of ski tips here because we don't have an actual piece of legislation in front of us and just to, um, reiterate. I think Pedro mentioned this earlier, Anthony, sort of what the status of the fund is, uh, the, the fund administrator just had a board meeting last week or the week before and, um, indicated that based on their analysis. They have 22 billion dollars its claims paying capacity available in the fund. Um, and that's after accounting for other buyers that um, are already um, accessing the funds if you will. So I think that's a pretty robust number and that would come after a billion dollars of Our Own.
Customer funded Self Insurance, uh, to utilize to pay claims. So it's a very robust point at which we are at this. This at this moment in time and as you know, we don't at this point, know, exactly. The, um,
You know, the the cause of eaten and the investigation is still ongoing but we have said that there is a probable loss but I think that's a very robust number based on the analysis that the fund administrator has done themselves.
Thanks so much for taking my question. I appreciate it.
Thanks Anthony.
Thank you. The next question is from Ryan Levine with City, your line.
Hi, everybody. Um, what are the—okay, what are the advantages of creating the new Wildfire Recovery Compensation Program to address the priorities of the community and key stakeholders? And what's the logic of creating this new program as the legislative session enters into a critical phase?
Yeah. Um,
I'll answer the second part first, I think totally decoupled from the legislative session. All right.
We have now.
Told our investors in the community that there's a probable loss, right? It's Maria. Just just reminded it. And folks,
Um, you know, if there's a probable lawsuit there, then that means that they'd, you know, likely be draws on the Wildfire Fund.
Uh and you know meanwhile you have a community that's been deeply impacted and it's just heartbreaking to think about everything that's happened there.
And so to the extent that, you know, we have a probable loss. And so Edison, you know, dealing with lots of legis uh uh litigation already Etc.
then um,
I think it's a good idea to support the community by moving quickly and establishing a program that can help cut through a lot of red tape and cut through, you know, the extensive time that it's required for traditional litigation.
Um, and have a place where.
Um, eligible, uh, folks have been impacted can go to get claimed satisfied quickly.
Journey. That's really, you know, welcome to do that. It's also okay to participate in the program without an attorney and taking on those legal costs. Um, we've also said, you know, we still deciding the program, but we wanted to let the community know, uh, that it's in the works and we did that also so that we can then solicit input, which we will be doing, you know, Susan input. Both from elected officials, as well as from, uh, you know, plaintiffs attorneys and other stakeholders. So lots of good reasons to just do this and do the right thing for the community given that we're facing a probable loss.
And maybe, Ryan, just to add on to that a little bit, we are going through the process still, as Pedro said, in terms of the investigation.
the fund does throughout the Recovery, Fund does support the community that SCE serves its the community that se also does business in
And we also know from prior experience that if we can move to this process and handle the claims expeditiously, which is of course helpful to the victims. Um, it also mitigates construction cost increases and escalation. It can mitigate legal expenses. So it's also good stewardship of the Wildfire funds itself, which would then go to benefit the community even further as well as you know, the risks that the company might otherwise face. So I think it's it's got a lot of benefit to it and we got a lot of um uh commentary even at the ca's board meeting about it and support of the action.
Lots of lots of parties went through this.
I appreciate that and just maybe 1 follow up in terms of the the ca hearing from a I guess 2 weeks ago. Now there's a lot of talk about segregation claims and trying to minimize that investor um group receiving Capital does this action.
In your view, have an impact, on the who will ultimately get the proceeds from from the fund.
No, I think the I think the um, the CEO is, of course monitoring that they are a lot of insurance professionals who work there. They are concerned about, you know, inflows into the fund and sort of the, the work that's going on around AB temp before enhancements. They're concerned about outflows and funds as well as the longer term Solutions. So I think all of those things are of interest to them. In terms of subregion claims they had a long discussion, but I think they recognize that, you know, they need to, you know, go through this in a measured way and figure out, you know what, actually will be the most impactful thing. I don't think that their intention is to put the um, utilities at risk in terms of accessing the fund.
Thank you.
Thanks Ryan.
And that was our last question. I will now turn the call back over to Mr. Sam ramraj.
Oh, thank you for joining us. This concludes the conference call have a good rest of the day. Um, you may now disconnect