Edison International

Good afternoon and welcome to the Edison International First Quarter 2022 Financial Teleconference. My name is Dexter and I will be your operator today. When we get to the question and answer session, if you have a question, please press star one on your phone. Today's call is being recorded. I would like to now turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.

Thank you, Dexter, and welcome, everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Arrigati. Also on the call are other members of the management team. Materials supporting today's call are available at www.edisoninvestor.com. These include a form 10-Q, prepared remarks from Pedro and Maria, and a 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 Peter.

Thank you, Sam. Edison International reported core earnings per share of $1.07 compared to 79 cents a year ago. We are reiterating our 2022 core EPS guidance range of $4.40 to $4.70 and our long-term EPS growth rate of 5% to 7% through 2025, resulting in core EPS of $5.50 to $5.90. Maria will discuss her financial performance in her remarks. Over the last year, I've been updating you on SCE's substantial reduction of wildfire risk, Relative to pre-2018 levels, SCE estimates it has reduced the probability of losses from catastrophic wildfire by 65 to 70 percent, and continued investments will further reduce this risk. When we look across all 17,000 circuit miles of distribution lines in SCE's high fire risk area, the utility's grid hardening measures are focused on the roughly 10,000 miles that are above ground, with the other 7,000 already being underground. The cornerstone of SCE's grid hardening measures is the wildfire covered conductor program. A key benefit is how quickly it reduces wildfire risk. Through the end of the first quarter, SCE has over 3,200 miles of covered conductor. This is nearly double what was covered at the same time last year. SCE continues to drive this program forward and expects to have covered 40%. of its overhead distribution lines or 4,000 of its 10,000 miles in its high fire risk areas by year end. The utility continues to adapt and update its wildfire mitigation plan to build on successes and learnings from the field. Most importantly, SCE's WMP is immediately actionable, and the execution results in real risk reduction today and each day that SCE hardens its grid. In addition, SCE is preparing for this wildfire season by prioritizing its inspections and vegetation management programs. SCE focuses its annual inspections on equipment that makes up 97% of total wildfire risk in 2022 and plans to accelerate completion of the vast majority of these inspections before September 1st. Today, 166 cameras provide this ability to about 90% of high fire risk areas. And planned installations in 2022 and beyond will increase coverage to nearly all of the utility's HFRA to enhance early fire detection. SCE is increasing installed weather stations by over 10% and using machine learning to further advance forecasting and target PSPS events more precisely. Taken together, all of these efforts give SCE confidence in its ability to mitigate wildfires associated with its equipment. Turning to wildfire-related settlements, SCE made substantial progress resolving 2017 and 2018 wildfire and mudslide events claims. In the first quarter, SCE resolved over $700 million of claims. Driven by this progress and given SCE's current assessment of claims, the utility revised the best estimate of total losses higher by $416 million. to a total of $7.9 billion. I would like to share the two factors that contributed to this revision. First, during the quarter, there were a handful of exceptionally large claims that were settled based on new information that became available during settlement negotiations. Second, as the statute of limitations for the Woolsey fire approaches, SCE saw a higher than expected increase in the number of plaintiffs making claims. SCE reviewed its estimate and determined it was appropriate to revise the best estimate, which includes new provisions for future potential exceptionally large claims. In total, the utility has resolved over 80% of its best estimate of expected losses and continues to make steady progress in resolving claims. I would like to be clear that SCE currently expects to seek full CPUC cost recovery of claims payments excluding amounts recoverable from insurance or FERC, or foregone under the agreements with the Safety Enforcement Division. A related question we've heard from the investment community is, when does SCE expect to make that filing? Well, based on the current pace of settlements, SCE anticipates filing its first application for cost recovery by late 2023. I strongly believe that SCE operated its system prudently and will make a solid case in its filing. The considerations SCE will take into account in deciding the timing of its filings are described on page four. Another action I want to highlight is SCE's recent legal challenge to inverse condemnation in the Thomas and Koenigstein fire litigation. We have mentioned in past discussions that SCE will always seek opportunities to challenge the doctrine of inverse condemnation. To that end, in April, the utility filed a notice of appeal with the California Court of Appeals challenging inverse condemnation. Cases like this generally take one to two years to reach a conclusion, and we will keep you apprised of any meaningful developments. On the regulatory front, SCE recently filed its application for the 2023 CPUC cost of capital, requesting a return on equity of 10.53%, while maintaining its authorized equity layer at 52%. As we have outlined since publishing the Pathway 2045 vision, Economy-wide electrification is necessary to meet California's policy goals. SCE will be a key enabler of the clean energy transition and will invest significant amounts of capital in its infrastructure. We believe that SCE's requested ROE will support attracting this capital necessary to meet its obligations to provide safe, reliable, and resilient service and enable the state's climate change adaptation and decarbonization goals. Separately, SCE is awaiting resolution of whether the cost of capital mechanism will operate for 2022. We have summarized SCE's outstanding cost of capital applications on page five. Let me conclude by saying that we strongly believe Edison International is the best investment vehicle to participate in California's clean energy transition. SCE's approach to wildfire mitigation has shown positive results over the last three wildfire seasons. And the utility is expeditiously hardening the grid every day to the benefit of both our customers and our investors. As an electric-only, wires-focused utility, FCE's ongoing investment in the grid will enable an electric-led future by integrating clean resources while enhancing resilience and broader climate adaptation. Economy-wide electrification is the most affordable path to achieving California's climate goals. With that, Maria will provide her financial report.