Edison International

and welcome to the Edison International Fourth Quarter 2019 Financial Teleconference. My name is Michelle, and I will be your operator today. When we get to the question and answer session, if you have a question, press star one on your phone. Today's call is being recorded. I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.

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 Arigati. Also here are other members of the management team. Materials supporting today's call are available at www.EdisonInvestor.com. These include a Form 10-K, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we will make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest gap 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 Rodriguez- Well, thanks, Sam, and good afternoon, everyone. Today, Edison International reported core EPS of $4.70 for 2019 compared to $4.15 a year ago. The increase in core EPS was primarily due to the approval of the 2018 general rate case and higher FERC revenues. This was partially offset by higher wildfire mitigation costs and an increase in the number of shares outstanding. Maria will discuss her financial performance in more detail during her remarks. We believe that SCE and California are beginning 2020 with a very different wildfire risk profile than the previous two years. Edison particularly commends the state's efforts on wildfire suppression and the improved coordination among utility, state, and local emergency management personnel. Also, the state's enactment of Assembly Bill 1054 had a stabilizing effect on the financial health of California's investor-owned utilities. We have been pleased with the continued implementation of the AB 1054 regulatory framework. This includes the issuance of our safety certification last year, the appointments to the new California Catastrophe Response Council and Wildfire Safety Advisory Board, and our recently filed 2020 to 2022 Wildfire Mitigation Plan. We also are encouraged by the CPUC's timely approval of SCE's 2020 cost of capital application and the proposed schedule for SCE's 2021 general rate case. However, much work remains to be done. For SCE, this particularly means obtaining decisions on outstanding proceedings at the CPUC. This includes the Grid Safety and Resiliency Program settlement, SCE's wildfire expense memorandum account application, the capital structure waiver application related to the accounting for 2017 and 2018 charges, and the litigation of the various phases of SCE's 2021 GRC application. Additionally, in 2020, SCE expects to continue to work with legislators, regulators, and communities to improve public safety power shutoff, or PSPS-related operations. At the same time, we are moving forward with our vision for a sustainable and clean energy future. I will discuss more about this later. This past year, SCE aggressively executed a comprehensive wildfire mitigation strategy laid out in our Great Safety and Resiliency Program and 2019 Wildfire Mitigation Plan. Since 2018, SCE has installed more than 500 miles of covered conductor, over 480 micro weather stations, and more than 160 high-definition cameras covering 90% of high-fire risk areas, reaching our effective saturation point for cameras. We were able to go beyond the compliance targets in our 2019 WMP in many areas as we worked to reduce wildfire risk as quickly as possible. We also completed enhanced inspection of all of our overhead infrastructure in our high-fire risk areas during the first five months of the year, In the past, this would have been performed over a five-year period. SCE's recently filed 2020 to 2022 wildfire mitigation plan will advance our risk prioritization approach. This plan includes ground-based and aerial inspections for higher risk transmission and distribution assets beyond standard inspection cycles, building on the lessons learned from our comprehensive enhanced overhead inspection program in 2019. The plan also calls for us to further harden infrastructure, bolster situational awareness capabilities, and enhance operational practices while harnessing data analytics and technology. The plan includes specific metrics that provide transparency to the public and other stakeholders and will enable the CPUC to evaluate SCE's performance. In our filing, SCE has proposed spending approximately $3.8 billion in capital and O&M over the three-year plan period. Last October, parts of our service territory faced many days of elevated wildfire threat conditions marked by severe winds, low humidity, and dry fuel. During these periods, SCE exercised our PSPS protocols to protect the public from the risk of electric equipment causing a fire. Patrols conducted after those PSPS events found over 40 impacts from the severe conditions, including equipment damage and tree branches contacting power lines. This further validated the importance of preventive de-energization as a safety measure under severe weather conditions. SCE understands that PSPS can be a hardship for our customers and communities. We utilize an extensive community outreach effort to help customers prepare for these events. We have learned from these experiences and are working to improve our wildfire mitigation and PSPS resilience capabilities. Our number one priority continues to be the safety of the public, our customers, employees, and first responders. SCE has also spent significant time educating customers, communities, and state and local government officials on our PSPS-related efforts to demonstrate the vast amount of work and data analysis that go into our decision-making on PSPS events. As more mitigations are deployed, we expect to reduce the scope and impact of PSPS, but PSPS will have to remain available as a tool to mitigate wildfire risk during severe weather and high fire potential index events. I would now like to give you an update on our accounting reserve related to the 2017 and 2018 wildfire and mudslide events. You will recall that in the fourth quarter of 2018, SCE recorded a gross liability of $4.7 billion for the low end of the estimable loss range for these events. We regularly reassess this reserve, which includes our internal assessment of damage estimates, known and expected third-party claims, litigation proceedings and risks, and prior experience litigating and settling wildfire-related claims. In our latest assessment, we increased the estimated losses for claims related to the 2017 and 2018 wildfire and mudslide events by $232 million to a gross estimate of $4.9 billion. While this estimate is determined on an aggregate basis, Some of the factors we evaluated in connection with the review contributed to a significant increase in certain loss estimates, while others contributed to significant decrease. Also, we lowered our accrued liabilities by the $360 million settlement reached in the fourth quarter with a number of local public entities. These changes led to a revised pre-tax accrued liability of $4.5 billion for the 2017 and 2018 wildfire and mudslide events. After adjusting this gross liability for $1.6 billion of remaining insurance coverage and $149 million for a FERC regulatory asset, the net after-tax charge for these events is $1.98 billion, which is an increase of $157 million from our previous estimate. I would now like to provide an update on our operational and service excellence efforts and a few of the key non-financial metrics our board uses in measuring our performance. Operational and service excellence starts with the safety of our workers and our communities. This is a major priority across our company and is at the very top of our core values. Our 2019 performance on worker safety had mixed results. While we did not have any employee fatalities, there were three worker fatalities among our contractor workforce, and our hearts continued to go out to their families and loved ones. The number of serious SCE employee injuries in 2019 fell by more than 50 percent from 2018, but our rate of injuries leading to days away, unrestricted duty, or transfer, known as the DART rate, was worse than our target. We did, however, and importantly, successfully complete an enterprise-wide safety culture training program that has received strong reviews from our employees and lays the foundation for long-term improvement. Our goals related to improving public safety are tied to the implementation of the wildfire resiliency measures outlined in our GSRP and 2019 Wildfire Mitigation Plan. We made significant progress in these areas, as I discussed earlier. Among other key measures, our customer satisfaction and system reliability fell short of our targets. Our performance was heavily impacted by maintenance and repair activities related to wildfire mitigation, the installation of new equipment to harden our electric system, and PSPS de-energizations to safeguard our communities during dangerous fire weather conditions. We also deployed additional digital technologies to transform processes across our business and improve the quality and efficiency of our operations. For example, we rolled out new mobile solutions to support our enhanced overhead inspections, and we used robotic process automation to improve outage notification to our customers. We continued our focus on sustainability, particularly on addressing climate change. We are committed to delivering 60 percent renewable power by 2030 and 100 percent clean energy by 2045, which are among the most aggressive targets in the industry. Last quarter, I announced the release of our Pathway 2045 white paper, which shows the changes required across California's economy to meet the state's 2045 carbon neutrality goals will be profound. We are focused on doing our part such as accelerating transportation electrification. Today, SCE is implementing the largest electric truck and transit utility initiative in the nation by installing charging infrastructure to support approximately 8,500 medium and heavy-duty vehicles at 870 sites by 2024 through our $356 million charge-ready transport program. We are also awaiting CPUC approval for our $750 million charge-ready II application that will support over 50,000 passenger vehicle chargers. Those sound big, but we believe this is just a fraction of the new technologies and infrastructure that will be needed to support California's economy in the years ahead, which further underscores the need for resilient and financially strong utilities. To conclude, we are making significant investments over the near term in grid hardening and resiliency. At the same time, we continue to see significant long-term investment opportunities in our business related to addressing California's 2045 climate goals. We have a robust capital program over the next few years that, if approved, will invest more than $5 billion annually on infrastructure replacement, transportation electrification, transmission infrastructure, and wildfire mitigation. As you can see, we have a continuing focus on safety and resiliency, operational excellence, and strategic advancement of policy objectives. Our near-term priorities to improve safety and mitigate wildfire risk will enable the reliable and resilient grid that is needed to accelerate toward the state's clean energy goals and achieve our Pathway 2045 vision for California, including increased use of zero-carbon resources and broad electrification of the entire economy. With that, Maria will provide her financial report.