Edison International

Good afternoon, and welcome to the Edison International First Quarter 2020 Financial Teleconference. My name is Sue, and I will be your operator today. When we get to the question and answer session, if you have a question, press star 1 on your telephone. Today's call is being recorded, and 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, Sue, and welcome, everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Rigotti. Also on the call are other members of the management team. I would like to mention that we are doing this call with our executives in different locations because of California's stay-at-home order, so please bear with us if you experience any technical difficulties on the call. Materials supporting today's call are available at www.edisoninvestor.com. These include our Form 10-Q, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we'll make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure. During the question and answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.

Thanks, Sam, and good afternoon, everyone. Let me begin by saying that our thoughts go out to those here in California and elsewhere who have been directly impacted by COVID-19, including colleagues from our Edison team. We're all facing an experience that is unprecedented, and I know that your participation in today's earnings call is likely not the routine it has been in the past. One thing that hasn't changed in these times is our company's commitment to the health and the safety of the 13,000 women and men of Edison International and Southern California Edison, and the 15 million people in their communities who are served by SCE. This pandemic and stay-at-home orders put a spotlight on the role that the electric grid plays in all our lives. The Edison team is demonstrating their incredible commitment to continue to deliver this essential service to our customers during this historic time. I could not be prouder of our team for the way they have worked together to carry out our mission. I will dedicate much of my prepared remarks to our response to COVID-19, but first let me give you the quick financial headlines. Today, Edison International reported core earnings per share of 63 cents for the first quarter of 2020, flat compared to the same period last year. Higher core EPS at SCE was fully offset by an increase in core loss per share at EIX parent and other. Maria will discuss her financial performance in more detail in her report. I will now turn to how the state of California has been responding to the COVID-19 crisis, how Edison has organized and responded, and how we are preparing and caring for our workforce. I will also share some of the ways in which SCE is helping customers navigate the effects of the stay-at-home executive order. Lastly, I will provide an update on the continued progress SCE has made on its wildfire mitigation work, which the CPUC and other state agencies have identified as essential work that must continue. The headline on this is that we are ensuring our wildfire mitigation work is not unduly impacted by COVID-19. In California, the governor and legislature have taken actions to provide emergency funding of up to $1 billion to increase hospital capacity, purchase medical equipment, assist schools, and protect facilities with the state's most vulnerable residents. The state is expected to spend significantly more in total to address the emergency. When the legislature returns, it is expected to pass a scaled down budget by the June 15th deadline and develop a more robust budget after the extended July 15th tax filing deadline. The governor's budget priorities are to address COVID-19-related impacts, wildfire prevention, and homelessness. We will continue to work closely with staff and senior government officials and maintain an open line of communication on the essential work that our company continues to undertake, particularly wildfire mitigation work. At Edison, our core focus is on ensuring the safety and health of our employees and providing them with the resources necessary to maintain critical operations for the benefit of our customers. Early on, SCE mobilized an Incident Management Team, or IMT, to run day-to-day COVID-19 response. The IMT is a group of individuals trained to respond to emergencies on our system, utilizing protocols established by FEMA. I lead our Crisis Management Council, made up of senior leaders from EIX and FCE, and we check in daily with the incident commander and key IMT staff to provide guidance and approve new needed corporate policies. While we already had a robust pandemic response plan and had tested it in planning exercises, the reality is that the scale of the COVID-19 crisis has required us to make a number of policy changes on the fly, and we continue to learn. Leveraging the experience and training of the IMT, we quickly transitioned about two-thirds of our workforce to teleworking. At the same time, we remain committed to the essential nature of the service SCE provides, which was also called out in the governor's stay-at-home executive order. Frontline workers and employees who support critical functions remain in the field or at certain SCE facilities while observing appropriate safety measures. Furthermore, SCE has sequestered a small number of essential personnel to ensure their availability at designated critical facilities. Questions are already being asked about whether the COVID-19 pandemic will dramatically alter how we live, work, and socialize once the immediate crisis is behind us. It's probably just too early to say with any certainty, but Edison is already preparing for the potential of longer-term changes. Some of these will be positive changes, For example, I am certain that our learnings and how we telework will lead to improvements in how we do our work more flexibly and sustainably, even after we can rejoin our colleagues in physical offices. To this end, we stood up a future planning cell to consider and plan for a possible change reality, and how the company, employees, and our customers can adjust and continue to thrive both socially and economically. I am honored to serve as the only utility representative on the governor's task force on jobs and business recovery. FCE is safely providing reliable power to critical facilities such as hospitals, medical labs, and grocery stores. As California begins to plan the future of work in a post-COVID-19 environment, clean energy can play a critical role in a just and equitable economic recovery with thousands of good jobs that also address the challenges of climate change and air quality. Since the implementation of statewide stay-at-home measures, FCE system load has declined by 6 percent. We have seen an increase in residential load demand, but this is more than offset by decreases in the non-residential sectors. While we are seeing reduced demand for power, I would like to remind you that California has a longstanding policy of decoupling revenue from electricity sales. We also have a mechanism already in place to track any over or under collections called the base revenue requirement balancing account, so there is no net impact on revenue and earnings. Additionally, the Commission recently approved the establishment of a new memorandum account called the COVID-19 Pandemic Protections Memo Account to record costs associated with consumer protection efforts related to COVID-19 through which SCE can seek cost recovery in subsequent proceedings. Maria will address this topic in her remarks. We remain focused on supporting our customers and our communities. SCE was one of the first utilities nationwide to voluntarily suspend service disconnections for nonpayment for residential and commercial customers impacted by COVID-19 before it was mandated. SCE has waived late fees and is offering flexible billing arrangements. To further support our communities, Edison International has pledged $1 million to nonprofit organizations providing support to those facing economic hardship due to COVID-19. I am grateful and proud of the Edison employees who contributed more than $250,000 for COVID-19 relief. The funds they contributed will be matched by Edison International. In addition to our own efforts to support customers, The CPUC has continued to function during the pandemic and has itself identified initiatives to help utility customers. Some of these initiatives parallel what SCE had already implemented and which I covered earlier. Additionally, we are encouraged that the CPUC has moved on many of SCE's pending applications. For instance, on April 16th, the Commission issued a final decision on SCE's Grid Safety and Resiliency Program approving the settlement agreement without any changes. The decision authorizes $407.3 million in capital and $119.2 million in O&M for 2018 through 2020. Additionally, earlier this month, SCE received a proposed decision on its capital structure waiver application that seeks to exclude from SCE's common equity the previously recorded net charge of $1.8 billion. and any future charges associated with the 2017 and 2018 wildfire events. The PD also excludes debt issuance for the purpose of paying claims related to these events. This waiver continues for the earlier of a two-year period or until 2017 and 2018 wildfire cost recovery claims are resolved. The CPUC also continues to move forward in the proceeding of the IOU's wildfire mitigation plans which are slated for approval as early as June. On April 3rd, the Wildfire Safety Advisory Board issued its draft recommendations on the WMP, and those were approved on April 15th. Further, last month, SCE filed Track 2 of its 2021 GRC proceeding. The filing seeks reasonableness review of $810.5 million of incremental O&M and capital expenditures incurred for 2018 and 2019 wildfire mitigation activities, and cost recovery of the associated revenue requirement of $500.1 million. Turning to operations, SCE continues to perform critical work related to public safety, wildfire mitigation, and reliability, while deferring non-critical outages for as long as our communities are staying at home. SCE has also developed a 14-day look ahead of planned outages across our service area to better coordinate with local jurisdictions and address any concerns. Additionally, SCE has made tremendous strides to mitigate wildfire risk in the last year, and we also filed our 2020 to 2022 Wildfire Mitigation Plan in February. This plan calls for SCE to continue to harden infrastructure, bolster situational awareness capabilities, and enhance operational practices, all while implementing enhanced data analytics and technology. We are executing these programs as quickly as possible, as they are critical to ensuring the safety of our communities and are viewed as essential by the state and by us. At the same time, we continue to prepare for potential public safety power shutoffs, or PSPS. This is one of the more significant areas of wildfire-related work. And SCE established another incident management team earlier this year to focus on further reducing the potential impacts of PSPS on our customers. This dedicated team is working on measures like further automating the process to provide timely information to local jurisdictions and customers, developing more detailed playbooks to reroute power and minimize customer outages, and advancing customer care programs in our high fire risk areas including use of backup generators. We remain committed to EIX's long-term strategy and its focus on clean energy, consistent with the state's policies and objectives. The foundation of our clean energy strategy is found in Pathway 2045, a blueprint for how California's broader economy and our company can combat the climate change that catalyzes extreme weather events and exacerbates wildfires. It calls for the transformation of our industry through clean energy, electrification of the transportation sector, where our deployment of electric vehicle charging stations plays a major role, and the electrification of building space and water heating. I expect these areas will all be key elements as the governor's task force looks to reopen the California economy and position our state to prosper in the exciting decades ahead. I want to close my comments with an emphasis on the essential nature of the service we provide. We help power the economy. We power both lifesaving machines and lifestyles. We support our employees. We serve and help protect the public. Once again, I am very proud of my 13,000 colleagues who are working so hard on doing all of this safely. I also thank our investors for your commitment and support And I hope that all of you and your loved ones are staying safe, well, and healthy. With that, Maria will provide her financial report.