Edison International

Good afternoon and welcome to the Edison International Third Quarter 2022 Financial Teleconference. My name is Dexter and I'll 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 Rigotti. 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 the teleconference presentation. Tomorrow, we will distribute a 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 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 $1.48 for the third quarter and $3.49 for the first nine months of the year. Based on our year-to-date performance and outlook for the remainder of the year, we are narrowing our 2022 core EPS guidance range to 448 to 468, from our prior range of 440 to 470. We are fully committed to delivering our long-term EPS growth rates target of 5% to 7% to 2025. In my remarks, I will focus on three key messages. First, FCE's excellent progress reducing wildfire risk. Second, we have updated the 2017 and 2018 wildfire and mudslide events we serve. I'll talk about the increasing alignment between California's clean energy actions and SCE's vision to lead the transformation of the electric power industry. SCE is making excellent progress in executing its wildfire mitigation plan. As I've mentioned before, when we look across all 17,000 circuit miles of distribution lines in SCE's high fire risk area, or HFRA, over 7,000 miles are already underground. and the utility's grid hardening measures are focused on the remaining approximately 10,000 miles that were above ground. SCE is rapidly deploying covered conductor and is on pace to complete 4,300 miles or 43% of its overhead miles in HFRA by year end. As depicted on page three, SCE plans to continue hardening the grid through its next rate case cycle, which would result in about 8,400 overhead miles hardened. Additionally, SCE has continued to reduce the impact of PSPS. With the acceleration of grid hardening activities on frequently impacted PSPS circuits this year, SCE anticipates reducing PSPS outage duration by over 44 million customer minutes of interruption. That's more than 17% compared to the last two years, assuming the same weather and fuel conditions. As analysts, investors, rating agencies, and members of the CPUC have observed from visits to SCE's Emergency Operations Center this year, SCE has made marked advancements in its wildfire mitigation and emergency preparedness capabilities. Additionally, we continue to share extensive data on SCE's wildfire mitigation efforts on the investor relations website. Turning to the 2017 and 2018 wildfire and mudslide events, in the third quarter, SCE paid about $350 million towards settlement of claims. Driven by this significant new information obtained through the litigation process following the closing of the Woolsey Fire Statute of Limitations in May and our thorough evaluation of such information, the utility increased the best estimate of total losses by $880 million to a total of $8.8 billion. To summarize on page four, I would like to share with you some additional information and background on the reasons for this large estimate provision. Painter solution is a long and challenging process, and we really appreciate your patience as SCE works through it in a prudent manner, which will ultimately support the utility's strong cost recovery applications. With the statute of limitations for Woolsey individual painters behind us, We now know the actual number of plaintiffs bringing claims in connection with that event. And we have obtained important additional information on the nature of the claims for many of these remaining plaintiffs, though still not for all of them. To give you more visibility into the process, we now have more information regarding the type of claim a plaintiff has. For example, whether a plaintiff has a claim for smoke and ash damage, or damaged property or entire property loss or for a business. Based on now having a defined number of claimants and more clarity on the nature of the respective claims, the reserve was adjusted to reflect our experience to date settling similar types of claims, including higher than expected costs to settle several types of those claims. The continued progress settling claims enables us to move further along in resolving these historical 2017 and 2018 events. I want to be clear that we still expect FCE to file the application for TKM cost recovery by late 2023 and to seek full CPUC cost recovery of claims payments, excluding, of course, amounts recoverable from insurance or FERC or foregone under the agreement with the Safety Enforcement Division. I will also note that our financial assumptions for 2025 and beyond do not factor in any potential upside from this cost recovery application. My final comments focus on California's clean energy actions and Edison International's vision to lead the electric utility industry through the clean energy transition. In August, the California Air Resources Board, or CARB, approved a rule requiring 100% of new cars sold in California to be zero-emission vehicles by 2035. The regulation codifies the light-duty vehicle goals set out in an executive order earlier this year. In September, CARB voted to ban the sale of new gas furnaces and water heaters, beginning in 2030. This built on the CPUC's unanimous decision a week earlier to eliminate subsidies for new natural gas hookups beginning July 2023. At the federal level, the administration is proceeding with multiple implementation actions for the bipartisan infrastructure bill, the Inflation Reduction Act, and the CHIPS Act. Just this week, the U.S. EPA announced the first $965 million tranche of funding for the electric school bus program authorized by the infrastructure bill with about $35 million supporting school districts in SCE's area. We are pleased to see this state and federal support for electrification, which is also consistent with our vision laid out in our Pathway 2045 white paper. SCE is a leader in electrification with the country's largest suite of transportation electrification programs led by an investor-owned utility, which benefit SCE in a differentiated manner. Electric vehicle adoption continues to accelerate here in California. Over the last three months, EVs accounted for roughly 20% of new car sales in California. FCE's service area has about 400,000 of the 3 million EVs in the country. EV charging accounts for over 2.5 million megawatt hours, or about 3% of FCE's projected 2022 retail sales. However, by 2045, This could grow to about 50 million megawatt hours. Meanwhile, we are awaiting CPUC review of FCE's $677 million building electrification application, which will help catalyze this market in tandem with California's plans to include around $1 billion in state budgets over the next five years. We are excited about working in partnership with state and federal governments and with other stakeholders, including the communities we serve, to advance policies that rapidly cut greenhouse gas emissions. With that, Maria will provide her financial report.