Edison International

Good afternoon, and welcome to the Edison International Fourth Quarter 2020 Financial Teleconference. My name is Missy, 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 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, Missy, and welcome, everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Riccardi. 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, so please bear with us if you experience any technical difficulties. 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 a 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.

Well, thank you, Sam. Let me start the call with our sentiments of support for the residents of Texas and all the other states that were impacted. physically and financially by last week's frigid weather. Climate change is a major part of the story there and our industry just has to continue our collective efforts on climate mitigation and adaptation. Today, Edison International reported core earnings per share of $4.52 for 2020. This exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to 44 cents of equity share dilution. On an operational basis excluding dilution, core EPS was 26 cents higher, driven by strong performance at SCE. Maria will discuss our financial performance in detail in her remarks. In 2020, SCE made substantial progress on its comprehensive wildfire mitigation strategy. This continues to advance one of SCE's top priorities, increasing grid resiliency to adapt to the changing climate and to protect public safety. SCE accomplished the vast majority of its 2020 program targets and, in many cases, exceeded those goals, despite the challenges we all faced during the COVID-19 pandemic. We have highlighted several measures of SCE's progress and execution on page two of the slide deck that we issued with our earnings release. Since the end of 2018, FCE's execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure, despite a record-setting California wildfire season last year. For the second consecutive year, we do not believe damages from any wildfire alleged to be caused by FCE equipment will exceed insurance. FCE is further accelerating its wildfire mitigation efforts. Earlier this month, the utility filed its 2021 wildfire mitigation plan update, which describes how it has matured its wildfire mitigation capabilities and outlines the long-term plan to further advance risk-informed decision-making, data management, grid hardening, and community engagement. A prime example is the Covered Cove Conductor Program. which will increase the percentage of distribution overhead circuit miles covered within SCE's high-fire risk areas from approximately 15% today to over 60% by the end of 2023, subject to CPUC approval. The utility continues to innovate and implement technology-based solutions and options, such as early fault detection for reducing ignition risks. As described in its 2021 WMP, SCE estimates a 25% reduction in ignitions in high-fire risk areas by 2022 as compared to 2020, assuming the same conditions as experienced in 2020. SCE continues to improve its public safety power shutoff, or PSPS, operations, with public safety being the paramount consideration. SCE uses PSPS only when conditions warrant. Let me underscore the need for PSPS, despite the hardships it creates by noting that in 2019 and 2020, post-PSPS patrols found at least 60 incidents of wind-related damage that could have potentially caused ignitions. In 2020, the installation of more weather stations and sectionalization devices paired with the automation of existing devices, All enabled SCE to limit PSPS footprints wherever possible based on risk assessments, achieving a 22% reduction in customer minutes of interruption. All that said, SCE recognizes there are opportunities to further improve the execution of PSPS and better support its customers. That was loud and clear in the January 19 letter from President Badger and in the CPUC and community input. that FCE leaders received during the four and a half hour PSPS hearing on January 26. All this especially underscored the need to improve FCE's communications with customers. And the PSPS action plan filed on February 12 includes important near-term commitments to use this essential tool of last resort in a way that shows better care for our customers. the state has been building on significant investments in its firefighting capabilities. In its 2021-22 budget, the governor proposed an additional $1 billion to support a coordinated forest health and fire prevention strategy that maximizes technology and science-based approaches to protect state lands. This includes prioritizing fire breaks around high-risk communities and grants for individual homeowners to harden their properties. Recognizing the needs to move quickly The governor also proposed that 323 million out of that billion would be for early action to start these prevention projects before the next fire season. For fire suppression, the budget adds funding to support 30 additional statewide fire crews and seven large air tankers. The state will continue phasing in Black Hawk helicopters, with seven expected to be in operation this fire season and another five in 2022. These new suppression resources will help the state move more quickly to combat wildfires before they become catastrophic. The governor and the California Insurance Commission also announced a plan to establish statewide standards for home and community hardening that will reduce wildfire risk and help make insurance available and affordable to residents and businesses. Shifting to past wildfires, SCE has made significant progress toward resolving pending litigation. Last month, SCE resolved all insurance segregation claims in the pending 2018 Woolsey Fire litigation. The utility continues to make solid progress settling remaining individual plaintiff claims across the 2017 and 2018 wildfire and mudslide events. In total, SCE has resolved approximately two-thirds of the best estimate of total losses established last September. Maria will provide an update on the equity financing needs related to these events later on the call. Turning to regulatory actions, we welcome the reappointment of CPUC President Batcher for a six-year term subject to confirmation by the Senate. President Batcher's leadership has energized the Commission's implementation of the state's greenhouse gas emission reduction goals. Yesterday, the CPUC hosted an en banc to share ideas about affordability across many stakeholders. Given the economic impacts of COVID-19, this is a timely discussion, and it follows on many years of SCE leadership to manage system average rate growth well below the other California utilities, which we were proud to see acknowledged by the Commission staff report and others. The discussion reinforced many of the issues we have raised in our Pathway 2045 analysis, including that the grid investments needed to decarbonize the economy and improve local air quality through clean energy and electrification may increase electric costs, but will actually result in greater affordability and equity, with the average customer spending 30% less across all forms of energy in 2045 than they do today, thanks to the greater efficiency of electric technologies. Looking ahead, SCE is planning for the critical role it plays in sustainability, particularly from the unique vantage point of a wires-focused business. This will include significant capital investment opportunities to support the electrification of transportation and buildings, as outlined in FCE's Pathway 2045 and Reimagining the Grid white papers. The governor's budget proposal also underscores this, with its proposed $1.5 billion comprehensive strategy to achieve zero emission vehicle goals by 2035 and 2045. This includes infrastructure investments for and improved access to new and used zero-emission vehicles. FCE has received CPUC approval for over $800 million to support electric vehicles, including investing in electric charging infrastructure for light, medium, and heavy-duty vehicles. The utility launched its Charge Ready 2 program, the largest light-duty EV charging program by an investor-owned utility in the United States, which will support approximately 38,000 light-duty charging ports. Charge-ready transport, SCE's program to build charging infrastructure for medium and heavy-duty vehicles, will grow through 2024, eventually building charging infrastructure to power 8,500 electric medium and heavy-duty vehicles. SCE has also committed to a long-term goal to electrify its own vehicle fleet, including 100% of all light-duty vehicles by 2030. In the area of building electrification, SCE launched new programs in 2020 to incentivize heat pump installations and expects to continue to expand these offerings going forward. Before I conclude, I would like to say that I am just very, very proud of what our employees accomplished over the last year in spite of the COVID-19 pandemic. COVID-19 has reshaped the way that all of us do business and how we interact with our customers and communities. And we adapted to continue delivering an essential service. We cared for each other, whether working in the field or teleworking. We cared for our customers, providing relief for those facing economic challenges. And we cared for our communities and their safety. Looking forward, I am excited about our near and long-term business opportunities. SCE is well positioned as an electric-only utility with investments highly aligned with the states and now the federal government. long-term decarbonization goals. We will continue to accelerate our wildfire mitigation efforts while building toward an equitable, clean energy future. With that, Maria will provide her financial report.

Thanks, Pedro, and good afternoon, everyone. My comments today will cover fourth quarter 2020 results, our capital expenditure and rate-based forecast, and an update on our financing plans for 2021. Edison International reported core earnings of $1.19 per share for the fourth quarter 2020, an increase of 20 cents per share from the same period last year. Full year 2020 core EPS was $4.52, which exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to 44 cents of equity share dilution. On an operational basis, excluding dilution, core EPS was 26 cents higher, driven by strong performance at SDE. On page three, you can see SDE's key fourth quarter EPS drivers on the right-hand side. I would like to highlight four items that accounted for much of the variance. First, EPS increased by 16 cents related to higher revenue. CPUC-related revenue contributed $0.22 of this increase due to the escalation mechanism from the 2018 GRC decision. There was also a negative variance of $0.11, primarily related to benefits captured in our tax balancing account. This is offset in the income tax line with no effect on earnings. FERC and other operating revenue had a positive variance of $0.05, largely due to higher rate base. Second, O&M had a positive variance of 11 cents, primarily due to higher regulatory deferrals related to wildfire mitigation activities and customer uncollectibles, and from approval of the GRC Track 2 settlement. Third, depreciation had a negative variance of 7 cents due to higher ratings. Lastly, SDE's EPS in the quarter was lower by 7 cents because of dilution from the increase in shares outstanding primarily associated with the equity offering in May 2020. I would now like to comment on SCE's capital expenditure and rate-based growth forecast, which are shown on page four. We continue to see opportunities to significantly grow SCE's rate base, driven by investments in electric infrastructure. The capital program reflects expenditures of $15 to $16 billion between 2021 and 2023. This represents compound annual rate-based growth of 7.6%, over two rate case periods at the request level. Our total CapEx forecast during this period is unchanged, as we are awaiting a proposed decision in SDE's 2021 GRC Track 1. In 2020, SDE's capital spending was $5.5 billion, approximately $400 million higher than forecast, primarily as a result of higher fire restoration costs. For 2021, SCE has developed and will execute against a robust capital plan that targets key programs while maintaining flexibility in later years to adapt to levels authorized in the final GRC decision. Please turn to page five. While the Commission's schedule calls for a proposed decision this quarter on track one of SCE's 2021 GRC, based on the level of inquiry to date from the CPUC, Compared to our past experience, we believe it is unlikely that SDE will receive a PD by the end of the first quarter. We remain hopeful that SDE will receive a PD in the second quarter. As a reminder, the CPUC can vote out a final decision no sooner than 30 days after it issues a proposed decision. Consistent with our prior practice, we will issue earnings guidance after we receive a final decision on the GRC. Page six shows a summary of the substantial progress on receiving approvals for recovery of incremental wildfire mitigation costs. SCE expects to receive over $1 billion of cash flow through September 2022 as the utility implements CPC approvals. This is in addition to ongoing securitization of AB 1024 capital. You may recall that last quarter, the CPUC issued a financing order authorizing SCE to securitize the first tranche of 80-1054 capital expenditures approved in the Grid Safety and Resiliency Plan settlement. Yesterday, SCE successfully closed that securitization, issuing $338 million of AAA-rated recovery bonds. The proceeds will be used to repay short-term borrowings issued for 80-1054 capital expenditures. In January, the CPC approved SCE's GRC Track 2 settlement, which allows SCE to request another financing order to securitize the approved AB 1024 capital expenditures and recover the O&M expense. Additionally, SCE filed a REMA application for wildfire insurance premiums for the second half of 2020. If approved, SCE will recover $215 million beginning January 2022. I would now like to provide an update on the approximately $1 billion equity issuance that we had discussed previously. As Pedro noted, SCE has been making significant progress resolving pending wildfire-related litigation and thus far has settled claims that represent approximately two-thirds of the best estimate that we established. We continue to ground our financing plan in a framework that supports investment grade ratings by targeting consolidated FFO to debt in the 15% to 17% range. To support this outcome, EIX will issue securities with up to $1 billion of equity content in 2021, consistent with the previously identified need. We will consider a range of options to achieve this equity content, including preferred equity, internal programs, and, if needed, our existing ATM program. We will be flexible regarding the specific timing and monitor market conditions to efficiently finance the need. Beyond this year, we expect to have minimal equity needs associated with our ongoing capital program, and we'll plan to buy these after receiving a final decision in the 2021 GRC. Overall, the company is well positioned to achieve the growth associated with the safety and resiliency investments being made in the grid and the longer-term opportunity associated with our clean energy objectives. That concludes my remarks.

Let's see. Please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow-up, so everyone in line has the opportunity to ask questions.

Yes, sir. If you would like to ask a question, please press star 1 on your phone. One moment for the first question, please. First question comes from Julian DeMolen-Smith from Bank of America. Your line is open, sir.

Hey, good afternoon, everyone. Thanks for the time and the opportunity. Hi, Julian. How are you? Good. Thank you very much. I appreciate it. Perhaps if I can start with the balance sheet here. I'm just curious to get a little bit of an update. I appreciate your remarks, but curious on how you would characterize the conversations with the rating agencies and where you stand with Cushion. I know the GRC is outstanding, but if you can provide any context as to how you think about your metrics relative to what the agencies are thinking about, would really appreciate any commentary here. And, again, I appreciate perhaps commenting around, you know, perhaps the proposed GRC, your file, for instance.

Sure, Julian. As you can probably imagine, we are talking to rating agencies all the time. You know, we're talking to them about our operational risk mitigation as well as just what's going on more generally in California. and providing them with updates, you know, as we have with all of you, you know, on where the settlements, you know, landed back last year and all of that. So we've been having those sorts of conversations. As we've mentioned before, we think that the equity plan that we have in place or the financing plan that we have had in place and announced last year is very supportive of the FFO to debt range that we're targeting and supportive of investment grade ratings. You know, I'm sure you've read all the recent reports that the agencies have put out. The metrics on a, you know, look-back basis are skinny, but that's why the plan to issue equity and to move forward with that so that we can support the balance sheet appropriately.

Got it. Appreciate it. And then if I can pivot over to the PSTS commentary, I appreciate what you guys provided in the remarks. Can you elaborate a little bit on the action plan and the expectations for response from CPC around their inquiry with respect to TSPS events from the last year here? What should we expect in terms of process at a minimum, if anything?

Yeah, I'll start with this, and Marie, I'm going to have more. Kevin Payne is also on the line, so he can add as he said. So it's just a process. You saw the letter that President Batchelor sent. You monitored the hearing that the PUC had where Kevin and Steve Powell and other members of the team participated. You know, that provided a lot of, frankly, good, helpful input from, you know, commissioners and communities and other state agencies. Based on that, SE developed the action plan that has a series of steps and commitments You saw there's, there are some things in there around continuing work on trying to minimize just the impact and scope of PSPS. I would put that in the category of work that's been going on in continuous, right? Areas like continue to deploy sectionalization and continue to work on continuous improvement of weather modeling and the like. to just really to help to, you know, narrow the gap between the approach we have, which is frankly the right approach for SCE to have of notifying customers based on forecast conditions, but then de-energizing on real-time conditions. But the more that we can narrow the gap between the number of customers that get notified versus those who get de-energized by having better and better forecasting and modeling, you know, that helps. So you saw some actions around those lines. But I'd say a lot of the focus was really on how do we, you know, help the SLE team better improve the communications process, communications with the, you know, emergency agencies, with government, with, you know, community leaders, with end-use customers. And so you saw, you know, member organizations around that. There's going to be a series of meetings every couple of weeks for the next while with commission staff just to continue to keep them updated. FCE has taken the step of now dedicating a vice president to PSDS who's likely a strong leader, and he's moving from the T&D business to, you know, over the next few months, to spend all of this time along with the dedicated team on the PSPS improvement approach. So, you know, that's a somewhat informal process, and then there's the action plan, more formality to it, and formal discussions with the Commission on how it's coming along, and check-ins with them, but, you know, frankly, wanting to make sure the BSE team can move on all the elements and meet its commitments. Kevin, anything you would add there?

I think you covered it really well, Pedro, the pieces of the action plan and also the process with the commission. So, good.

Thanks, Kevin, and thanks, Julian.

Excellent team.

Cheers.

Thank you. Next question comes from Jonathan Arnold from Vertical Research. Your line is open.

Good afternoon, guys. Thank you.

Hey, Jonathan.

Just if I could ask one on the – success you've had with settling the legacy wildfire claims and appreciate the quantification, you know, in simple terms around the two-thirds. But have you seen any, you know, change in the pace of being able to move these things along, you know, now that you've reached the subrogation settlement with Woolsey? If anything, you can report sort of latest update, Pedro.

I'll give you a quick answer. Maria may have more. You know, the remaining plaintiffs are largely the individual plaintiffs and just by the nature of that, you're not talking about thousands of individual cases. In many cases, multiple individual plaintiffs might be represented by a common legal counsel and so you might see, you know, packages of settlements that can be done, but it's just a more, It's a time intensive, you know, laborious process to work through that. There is a more formal process that's been established on the Thomas-Konigstein much like cases. You know, we're working through that. We're working with individual cases and the Wilson cases. And so, it's just harder to pin down a timeframe for that, Jonathan. But, you know, the team is going at it and, frankly, has a good steady pace of progress. And so, you know, I think from an investor perspective, you'll see the outcome of that every quarter as we, you know, update the kinds of numbers that we shared with you today. What am I missing there, Maria?

Yeah, I think that's a pick. I mean, we have a process on Thomas Kamekaia and March 5 where, you know, we are trying to move through, you know, with various plaintiffs, it's not going to be, you know, sort of an endpoint that we can pinpoint for you exactly, Jonathan. But as Pedro points out, we'll be updating that every quarter. So you'll see the progress as it occurs.

Okay. So that slide nine is going to be a live thing, effectively.

Very much so. And just to put a fine point on it, don't expect a big bang when it comes to, you know, individual plaintiff cases. You should expect just continued measured progress because it's, you know, case by case. And those cases are all very individualized, you know, different stories of, you know, facts and circumstances for a homeowner in this kind of area versus a business owner in that kind of area.

I think this is a good way of helping people track it, though, so I appreciate that.

Well, thanks for the feedback.

May I just ask one other thing? You've obviously said that the GRC PD might not come until the second quarter. At what sort of point does a delay start to affect your decision-making about spending capital and sort of throwing you off a bit, as has happened in the past? I mean, how long a delay can you sort of work with?

Well, you know, obviously we like to know sooner rather than later. But from an operational perspective, what we've done this year, which is, you know, what we've done in the past in the first year of a GRC cycle as well, is we've just planned the work. We're going to do the work. We're going to progress against it. We can see that the capital plan is very robust in 2021. But we have the flexibility in the back end to adjust based on what the final decision comes out with. So I think we have degrees of freedom there. Again, we'd still like to get the decision sooner rather than later, but from an operational perspective, I think we have it well in hand.

Great. Thanks a lot. Thanks, Jonathan.

Thank you. Next question comes from Steve Fleischman from Wolf Research. Your line is open.

Hi, Steve.

Hi. Good afternoon, Pedro, Marina. Thank you. Just on the comments on the GRC timing, you mentioned that, you know, based on the CPUC questioning later, is it just a lot more questions than normal or just the timing of things or just any more color on that comment, please?

Yeah, just it's really more about timing. You know, we have experience with these cases every three years. I guess now it'll be every four years after this one. And so, as the PD is getting put together and as the commission staff go through the analysis they need to do, you typically see, you know, different pace and nature of questions as you get closer to the PD. And we haven't really seen a lot of that yet at this point. So that's what suggests to us that, you know, a PDE is not likely imminent within the quarter. So it's really about, you know, there's just a different set of questions, kinds of questions that you get as you're getting down to, you know, that final evaluation and writing of the PDE and staff don't seem to be quite at that point yet.

Okay. Great. That's helpful. Thank you. And then with respect to the equity commentary, you know, I think you said a billion of equity content. So that's, I guess, if you did preferreds or some things that are not full equity content, you're kind of saying focus on equity content, not total dollars.

Is that the way you think about that? That's right. We are trying to, you know, think about this very holistically, monitor market conditions. So when we talk about equity content, it's the equity content that we're targeting. So absolutely right, Steve.

Yeah. One last question along those lines. I'm sure you saw that PG&E did this transmission tower sale of access to SBA. Is that something that you could potentially look at as well?

Yeah, so we did see the transaction, and, you know, it's interesting. So our team has been learning about it. There may be some somewhat different circumstances for FCE in that we do have, obviously, transmission towers with attachments on them already today, like Virginia did. In our case, they're part of a bit more comprehensive telecom business, Edison Care Solutions, which is essentially a competitive telco, inside the utility that not only does so antenna attachments, but also has managed fiber services, you know, dark fiber, as well as lit fiber, you know, providing bandwidth to carriers. And so, in SE's case, there's that broader telecom business that also operates under a little different framework. I noticed that, for example, revenue sharing that the PG&E deal contemplates. The SCE business operates under a different revenue sharing mechanism. So there's just a number of, you know, different bells and whistles that, you know, make for just different maturity of the business and different scope and scale today. So, you know, the PG&E transaction might not be, you know, fully transferable or applicable. Okay.

Great. Thanks for that. Thank you.

You might be surprised I said so much about a telecom business, but it's because I used to run it like 20 years ago.

Yep. Thank you.

Thanks a lot, Steve.

Thank you. Next question comes from Jeremy Tenet from J.P. Morgan. Your line is open, sir.

Hi. Good afternoon.

Hi, Jeremy.

I just want to go back to slide nine for a minute there, and you discussed that after the Wolseley recovery, you expect to exhaust insurance. Can you file for CPUC recovery of settlements or are there other kind of gating items that we should be thinking about here?

Yeah. So, if you look to the past as sort of an indicator, our experience has been that the Commission generally wants to understand sort of the quantum of the ask before they make decisions around recovery. So, I think we have a little ways to go still to get a total size of the ask. that we would make ultimately to the CPC. Obviously, you know, we said before that for a prudently incurred cost, we will be asking for recovery. You know, at this point, based on history and prior precedent, we can't say that that was probable of recovery, which is why, you know, we took the charge a couple years ago. But that's generally the framework that the Commission has.

Got it. That's very helpful. Thanks. Just thinking about, you know, PSPS discussions and just the environment in the state right now, just wondering if you might be able to comment on how you see overall kind of relationships, political risks currently, you know, in the state. Any thoughts you could provide would be helpful.

Yeah, I'm happy to chip in on that. Look, I think the headline is that we continue to view California as, as one of the most constructive states in the country when it comes to utility regulation, right? And it's both because of the, you know, backward-looking and current mechanisms like the fact that we have our forward-looking rate cases. We have the balancing accounts for elements like procurement purchases, energy procurement, I should say. We have decoupling, right? So you have a number of elements that have been here for quite a while that make for a constructive environment. You also have, frankly, looking more towards the future, a state that's been fairly aggressive in terms of wanting to push the edge of technology and, you know, have as one of the utilities to play a significant role in advancing the ball for the sector, right, for the benefit of California customers. That's meant that utilities have to take on some added operational risks in managing more distributed resources than, you know, appears in other states. and having deeper penetration renewables or being earlier in the curve around storage and the like. And that has lent itself to providing an opportunity for, you know, ROEs that have reflected a premium based on those risks that we are being asked to manage. And then finally, you know, looking, you know, solidly well out in the future, it's a state that is really committed to decarbonizing the economy. And so, you know, you've seen through our, you know, like the Pathway 2045 and re-managing the grid papers that, you know, we see that that decarbonization getting to net zero for the state will require a significant ramp up in renewable and other carbon-free, you know, resources along with storage. This will lead to a dramatic increase in load across the state, 60% or so increase in order to then electrify a lot of the economy. And that all requires a really robust grid, you know, with significant more investment than what, you know, we have in place today to make that all happen. So that all adds up to a good opportunity for utilities. Now, by the way, it's also a good opportunity for the customer because, as I said in my prepared remarks, we see all of that then leading ultimately to a 30% decline in the total energy costs that the average customer has out in 2045. It may put some pressure on utility bills. but it will help bring down overall costs for the customer and make, you know, the estate more affordable. Now, that said, there are always bumps in the road. You know, there are things that can give folks pause. The wildfire experience has been a challenge in one of the last several years. We've had a lot of encouragement in, you know, getting items like the AB1054 to help create a restored framework. We're, you know, still going through implementation of that. I know that there is a You know, some discount that utilities are carrying today relative to our peers in other states and hopefully over time as investors see that the framework is working, that, you know, the physical risks are being mitigated and that the structure is there to help mitigate the financial side of the risk too. That'll help to, you know, get investors sort of fully comfortable with that and better align, you know, the value of California opportunities with the long-term opportunity that we have. You know, one final item is there's a lot going on and it's all going on in the middle of COVID. So, you know, I feel for the CPUC staff, you know, the 800 or so of them have a lot on their plates. I think President Batcher, as I've mentioned in the comments, has done a great leadership in focusing the Commission on that clean energy future. I think generally, she's also helped the Commission to, you know, in general, be timely in its decisions. And you saw that in, you know, elements like the track to success we had recently. But there's a lot on their plate, so while I'm a little disappointed that we may not end up seeing a GRC Track 1 PD, you know, this quarter, I know that they're on the case, and they recognize the importance of overall timely decisions. And then when it comes to something like PSPS, you know, there's been some tough feedback we got. So, you know, a lot of it, frankly, was merited, and it's a good learning opportunity, and I, you know, commend Kevin Payne and the team at SCE for, you know, having sat there for four and a half hours and listened and, you know, taken note and reflected their good feedback in the PSPS action plan that SCE filed. So, you know, there will be bumps in the road in any relationship, but I think overall, if you look at, you know, maybe a couple trees that get in the way now and then, but if you look at the forest, it's a really interesting forest for the long term.

Got it. That's very helpful there. and maybe picking up with electrifying, you know, specific to the transportation sector there. You spoke about this in the past. You spoke about it in your prepared remarks. Just wondering if you could provide some perspective, I guess, for the EV outlook, you know, how it looks today versus maybe it looked a couple years ago and, you know, kind of down the future. How big do you think this opportunity is for EIX?

So, we started talking about this a few years ago. You know, we had our charge rating application. I think a pathway 2045 paper at the time was forecasting something like a need for 7 million electric vehicles in California by 2030. You know, at the time, I think the state was talking about a 5 million mark. You know, since then, you've seen the state really look at doubling down on the electric vehicles and, you know, progress like Governor Newsom's executive order, for zero emission vehicles, you know, 100% zero emission vehicle sales by 2035, you know, that says something right there about the growing commitment by the state. And frankly, given my growing realization that that is a key tool and one of the most affordable tools to get to decarbonization, you know, at the end of the day. The other angle I'd share on this is then there's the market, right? And so when we started talking about this, there was the vote. You know, I remember when I got my first vote in 2011 and the new model year, and, you know, my colleagues were driving some of the first Teslas, there weren't a whole lot of EVs out. Now you're looking at a rollout. I was reading one of the latest articles where I think over the next year, there's going to be, what, something like 20 or 30 new model offerings across auto OEMs. And it's an area where U.S. automakers are realizing that if they don't, run fast, they could lose leadership to Chinese automakers or European automakers. So, you know, seeing things like Ford's commitment of 20 some billion dollars in investment towards EVs over the next several years, seeing GM's aspiration to not have internal combustion engines anymore in a decade or so, that is a very different landscape from where we started four or five years ago. And it tells you that this is happening, it's real, and I suspect like other technology innovations like, you know, the deployment of cell phones, folks may be surprised by how quickly that escrow takes off.

Got it. That's very helpful. Thank you for that.

Thanks, Jeremy.

Thank you. Next question comes from Michael Lapidus from Goldman Sachs. Your line is open, sir.

Hi, Michael. Hey, Pedro. A little bit of housekeeping question. So capital spend, for 2020 came in about $500 million higher than what y'all had put out when you reported third quarter earnings or just after third quarter earnings. First of all, what drove that $400 million to $500 million being done just so quickly? And then second of all, is there any change in the capital spend program potentially in terms of what you think about long-haul transmission-related spend? Or do you think you're still in a five or seven-year cycle where there's more maintenance work on the transmission grid? There's not a lot of new sizable scale development there.

Well, I'll go take the first piece at least, a little bit of the second, and I'll let Pedro also chime in on his thoughts on long-haul transmission. But so that delta in the capital spending between last quarter and this quarter, was largely driven by wildfire restoration costs. So you will recall that late last year there were a number of large fires in our service territory, particularly up in the northern part of our service territory around Big Creek. And so a lot of the spend that's been going on since then has been to really get all of those facilities back into service and to repair them, et cetera. So that's really the driver there, Michael. We have to go through an analysis and see, you know, sort of what in there was otherwise going to have been replaced or upgraded, et cetera, what's incremental. But that's largely the capital change from last quarter. In terms of, you know, transmission and, you know, we're still in a cycle, I think, you know, obviously the state's, you know, planning for the future, the future that Pedro just described in his earlier remarks. And, you know, we have to – look for the CAICO to do that planning. There's obviously a lot of work going on around the need as well, both, you know, in the integrated resource plan as well as at the CAICO. But I'll let Pedro, you know, share his thoughts as well.

Just maybe a quick soundbite, Maria, is that, again, you know, you may have heard me share this before, Michael, from our Path 324D fire analysis, but That analysis estimated that California would need to add 80 gigawatts of bulk power to wholesale-level renewables and 30 gigawatts of wholesale bulk power-level storage by 2045. That's in addition to 30 gigawatts of distributed generation and 10 gigawatts of distributed behind-the-meter storage. But all that would require something like a $175 billion investment for the resource side, for the renewables and storage side. And the counterpart to that is that you need something like $70 billion in wire side investment with most of that being for, you know, transmission, whether it's, you know, new lines or enhancing of current lines. Now, that's statewide, right, so that's not all SCE, but that just gives you a sense of how big the investment need will be in order to accommodate that electrified future to decarbonize the economy. And then as a reminder that under the current per quarter 1,000 structure, if the Cal ISO determines that an existing line needs to be upgraded, then the utility has a right of first refusal, you know, to do that upgrade on its line, a line that it already owns and operates. If it's a brand new line that's not an extension of an existing line, then that is bid out competitively, and I would expect the utility to, you know, seek to compete with third parties for, you know, for that new build. So, you know, hard to quantify what the specific SCE opportunity will be from all of that, but it's clearly, you know, a very large pie that will need to be met across the state, and I expect that SCE will, you know, certainly play a significant role within its territory for that.

When do you think we could start seeing that roll into three- or four-year or three- to five-year forecast views? Like when do you think the southern part of the state might actually start to need it?

Yeah, that's a really good question. I'm not sure I'm going to have a sharp answer for you right now, Michael. You know, partly because the Cal ISO I don't think has turned the crank yet on the underlying analysis for, you know, what lines and in what timing. You know, my guess is that, or my sense is, not guess, my sense from the analysis is that a lot of that spend may be post 2030 spend because that's when you really see the load pick up to, you know, in our analysis. load which has been fairly flat statewide to slightly declining for the last decade to 2030, you know, interestingly, continues to be fairly flattered, right, because you have a lot of electrification between now and 2030 being counterbalanced by, you know, continued distributed generation deployment as well as continued energy efficiency. But we see a big, you know, elbow, you know, turning the curve. upswing post-2030, and that's where the state really picks up, you know, the bulk of that 60% load increase that I talked about before. It really happens mostly between 2030 and 2045. So that may suggest that a good chunk of that build may be post-debt. But in the meantime, you know, you've seen, you know, our capital spend so far, as Maria described, we had a bump up from just that creek fire restoration last year, and so I hope we don't have to do fire restoration like that for, you know, for any future fires. But, you know, we continue to say that we see an ongoing opportunity for significant capital spend just for the core capital investment in the utility. And so to think about that long-haul transmission, that becomes an adder that, you know, certainly supports the long-term growth for the company.

Got it. Thank you, Pedro. Much appreciated. Same, Maria.

You bet. Yeah. Thanks, Michael.

That was our last question. I will now turn the call back over to Mr. Sam Ramraj for final remarks.

Thank you for joining us today, and please call if you have any follow-up questions. This concludes the conference call. Have a good rest of the day, and stay safe. You may now disconnect.