Edison International

Good afternoon and welcome to the Edison International Fourth Quarter 2021 Financial Teleconference. My name is Missy and I'll 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, Missy, 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 they're doing this call with their 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 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.

Well, thank you, Sam. Today, Edison International reported core earnings per share of $4.59 for 2021, which exceeded the guidance range we provided on last quarter's call and was higher than the $4.52 we had a year ago. We are introducing our 2022 EPS guidance range of $4.40 to $4.70, and we are reiterating our high confidence in our longer-term EPS growth target of 5% to 7% through 2025. Maria will discuss our financial performance and outlook. In my comments today, I want to address three key themes that underpin the double-digit total return potential for EIX shares. I want to start with the tremendous progress and results achieved by FCE in recent years in reducing wildfire risk and what gives us increased confidence of further risk reduction. I will then highlight our clean energy transformation that is underway and the substantial capital investment opportunities over the next few years to support the state's goals. Lastly, I will discuss our operational excellence culture that will enable us to deliver greater value for customers, investors, employees, and other stakeholders. All these initiatives, combined with our dividend yield, present an attractive total shareholder return potential. And that's before even factoring in the increase in our price-to-earnings multiple that we believe is merited today by SE's wildfire risk reduction and ongoing utility and government wildfire mitigation efforts. I am extremely pleased to say that the 2021 fire season marks the third consecutive year without a catastrophic wildfire associated with SCE's infrastructure. This is despite another severe wildfire season and intensifying drought conditions in the state. We believe this illustrates the cumulative effect of SCE's and the state's wildfire mitigation investments and practices over the last several years, as shown on page three of the presentation. During 2021, the utility continued its strong execution of its wildfire mitigation plan and in many cases exceeded program goals. In its 2022 wildfire mitigation plan update, SCE reiterated that covered conductor is one of the most effective measures to reduce wildfire and PSPS risks in its service area. As shown on page four, several factors contribute to our confidence in the covered conductor program. Further, SCE is evaluating the potential for additional enhanced mitigation, including undergrounding in certain areas based on unique factors. Reducing wildfire risk will remain a top priority for the company, and this will require significant capital investment, including $2.2 billion over the next two years to the GRC Track 1 period. Overall, SCE estimates that its mitigation work through December of last year has reduced the probability of losses from catastrophic wildfire by 65 to 70 percent relative to pre-2018 levels. And please note that this is an increase from the 55 to 65 percent we reported previously for mitigation work through June 2021. As shown on page five, SCE expects to further reduce risk with continued grid-hardening investments, including deploying an additional 1,100 miles of covered conductor this year. This encouraging risk reduction metric does not take into account significant improvements at the state and federal levels to date and in progress. The governor's proposed budget continues the trend of increased wildfire suppression and prevention investment, with CAL FIRE's headcount set to be 45% higher than just five years ago. It also includes continued funding for aerial resources, and the investments to date already have made CAL FIRE's fleet of aircraft, more than 60 aircraft, the largest civil aerial firefighting fleet in the world. The state budget would also add $1.2 billion to the previously approved $1.5 billion wildfire and forest resilience strategy to support forest health and fire prevention. We are also pleased to see the Biden administration's multi-billion dollar plan to bolster fire prevention across the West. as 57% of the forest lands in California are owned by the federal government. Protecting against the threat of extreme weather today lays the foundation for the increasingly reliable and resilient grid necessary for the clean energy transition. Through SCE, one of the largest utilities in the country, Edison International is leading this transition through its spot leadership and SCE's programs to accelerate economy-wide electrification. On slide six, I would like to highlight that Edison International has one of the strongest electrification profiles in the industry, starting with transportation electrification. FCE has the largest programs among U.S. investor-owned utilities, and California is on the leading edge of electric vehicle adoption. In fact, one in seven EVs registered in the U.S. are in FCE's service area. EV adoption will be critical to achieving California's climate goals And we estimate this could add over 50 million megawatt hours of incremental electricity consumption by SCE's customers by 2045. Building electrification is another critical opportunity to reduce greenhouse gas emissions, and it's the area of the California economy where the least amount of progress has been made today. Last December, SCE proposed a $677 million program to jumpstart widespread adoption of electric heat pumps in buildings. And then last month, Governor Newsom's budget proposed almost $1 billion to accelerate building decarbonization. The governor's proposal is a welcome compliment to SCE's plan, and it's a meaningful addition to help meet California's climate goals. Additionally, energy storage is going to be an important part of an electric-led future to ensure reliability of the grid. As we've highlighted previously, SCE is investing $1 billion to construct 535 megawatts of utility-owned storage. The CPUC has already approved this investment, and the project is on track to be in service by August. These projects and programs all help to advance the vision set forth in SCE's Pathway 2045 analysis. Underpinning the need to electrify the economy is substantial continued investment in the grid through 2045. In late January, the California Independent System Operator released its first-ever 20-year transmission outlook, which estimates over $30 billion of transmission investment is needed by 2040 to meet the state's climate goals. We see this as generally consistent with SCE's Pathway 2045 work, and that identified over $40 billion of transmission investment CalISO-wide. FCE estimates that CalISO's outlook includes approximately $8 billion of transmission investments in our utility service area, which supports the potential for continued long-term rate-based growth beyond 2025. The FCE team is going to be fully engaged in the CalISO processes that lie ahead, and those processes will turn this conceptual plan into real projects. and they will be focused on bringing ideas to the CalISO table that maximize the value of existing transmission lines, of upgrades, and of new projects that will all make the clean energy transition as affordable as possible for all California ISO customers. In upcoming regulatory proceedings, including the 2021 GRC Track 4 and the 2025 GRC, SCE will provide greater visibility into the near-term investments that are needed to ensure that we remain on track to help achieve the state's climate goals. to achieve our ambitious long-term goals. Operational excellence is absolutely imperative, and it's going to be a constant focus for our team. For over a decade now, FCE has proactively pursued cost reduction efforts to manage affordability for its customers. This focus on cost management, along with broader operational excellence improvement, that's all allowed the utility to absorb some of the rising costs to serve customers. which in recent years has largely been driven by investments to reduce wildfire risk and strengthen the grid reliability. So I want to highlight that SCE's system average rate has grown less than local inflation over the last 20 years, and SCE's average system rate is the lowest among the large California investor-owned utilities. Last year, SCE advanced its operational capabilities with new systems and new digital tools deployed across the company and these resulted in enhanced data quality, improved power line inspection and maintenance, and enriched abilities to gather and to act on customer feedback. To further our capabilities and focus on operational excellence, we launched an employee-led continuous improvement program late last year. Our employees have been wonderful and they've enthusiastically provided thousands of ideas that we believe are going to have real, positive, measurable impact on safety, on affordability, and on quality. We expect that the ideas that SE will implement over the next two years will enable delivering greater value for our customers, for our investors, for employees, and for all of our other stakeholders. I am looking forward to telling you more about the results of this program in the future. With that, I'll turn it over to Maria for her financial report.