Edison International

Good afternoon, and welcome to the Edison International 4th Quarter 2022 Financial Teleconference. My name is Ted, 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, Investor Relations. Mr. Ramraj, you may begin your conference.

Thank you, Ted, and welcome, everyone. Our speakers today are President and Chief Executive Officer Pedro Pizarro and Executive Vice President and Chief Financial Officer Maria Arigati. Also on the call are other members of the management team. Materials supporting today's call are available at www.edisoninvest.com. These include the Form 10-K, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During the 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 SEC findings. 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, thanks a lot, Sam, and good afternoon, everybody. I am pleased to report that Edison International Core EPS for 2022 was $4.63, which was in the upper end of our initial guidance range. Today, we are introducing 2023 EPS guidance of $4.55 to $4.85, and we are reinforcing our strong confidence in delivering our long-term EPS growth target of 5% to 7% from 2021 to 2025. Maria will discuss her financial performance and outlook. Well, let's start with our key accomplishments in 2022, and they're noted on page three. First, we once again delivered on our annual EPS guidance, as I just mentioned. Second, SCE continued to make tremendous progress in reducing wildfire risk and PSPS. SCE successfully executed its wildfire mitigation plan and updated the key statistics shown on page five. That is, that SCE now estimates it has reduced the probability of losses of catastrophic wildfires by 75 to 80 percent compared to pre-2018 levels, and critically, with much lower reliance on PSPS, now only 15 percent, as hardening and other mitigations continue, as depicted on page six. Despite the small operational and financial performance, market sentiment impacted our total shareholder return. Our TSR for 2022 trailed that of the Philadelphia Utility Sector Index and most of our peers. As shareholders ourselves, our leadership team and I are deeply committed to achieving our financial targets while strengthening SCE's ability to deliver safe, reliable, affordable, and increasingly clean electricity. Diving deeper into SCE's tremendous progress in wildfire mitigation, Despite challenging weather conditions and some fires in our service area last year, 2022 marks the fourth consecutive year without a catastrophic wildfire associated with SCE's infrastructure. Key achievements in 2022 include deploying about 1,400 circuit miles of covered conductor, bringing total installations to around 4,400 circuit miles. To put this in perspective, this is nearly the round-trip distance from Los Angeles to Washington, D.C., So I am extremely proud of SCE's ongoing execution of grid hardening activities, which have made our community safer. The utility is targeting up to another 1,200 miles of covered conductor in 2023. By year end, approximately 74% of total distribution lines in high fire risk areas, or HFRA, including the 7,000 miles already underground, are expected to be hardened. This is a significant achievement, and it is summarized on page seven. SCE completed its one millionth high-fire risk inspection since 2019, which is like visiting every structure at least three times. The utility continued to build out its network of weather stations, and now, with more than 1,600 in total, SCE has the largest privately owned weather station network in the country. providing a granular view of weather-related risk to inform operations. A key result is that total acres burned from ignitions on hardened sections of our grid are 99% smaller than those in areas not yet hardened. SCE's approach to reducing wildfire risk is differentiated by the speed of its infrastructure hardening and by reducing reliance on measures that affect customer reliability, like PSPS, For example, by prioritizing hardening circuits at risk of power shutoffs. By the end of the 2023 through 2025 wildfire mitigation plan, SCE will have hardened about 7,700 miles of its overhead distribution system and scaled innovative pilots, such as early fault detection. We look forward to SCE's continued success in reducing the greatest amount of wildfire risk in the shortest amount of time. Turning to the 2017 and 2018 wildfire and mudslide events outlined on page eight, in the fourth quarter, SCE paid about $280 million in claims settlements. SCE now targets filing the TKM cost recovery application in the third quarter of 2023. Let me emphasize that SCE will seek full CPUC cost recovery excluding amounts foregone under the agreement with the Safety Enforcement Division or already recovered. SCE will show its strong, compelling case that it operated the system prudently and that it is in the public interest to authorize full cost recovery. The utility currently expects to request about $2 billion in this first application. Our financial assumptions for 2025 and beyond do not factor in any potential upside from the cost recovery applications, which would represent substantial value. Looking ahead, I want to highlight key management focus areas for 2023. These are laid out on page nine. First and foremost, safety is foundational to our values and success, and we are targeting reducing the rates of employee injuries by 15%. Tragically, a utility troubleman, Johnny Kincaid, died from a work-related injury last month, and 1,200 of us joined his loved ones at his memorial service last week. This was our first employee work-related fatality in five and a half years, and it redoubled my resolve and it redoubled our team's resolve to make it our very last. SCE's unwavering commitment to keeping our communities safe through wildfire mitigation also continues. The utility plans to keep its base of about 100 miles per month of covered conductor, reaching a total of 5,600 miles by year end. Again, filing the first cost recovery application for the historical wildfires is a front and center focus area for us. On the regulatory front, SCE looks forward to its upcoming 2025 GRC application that will monitor the cost of capital mechanism, which could result in significant upsides to 2024 earnings should it trigger. On the financial side, we will be focused on achieving our capital expenditure and earnings goals, as well as pursuing upgrades to our credit ratings. We believe this is well-warranted considering the significant wildfire risk reduction by SCE, the state's strong firefighting capabilities, and supportive California regulation. Looking toward the future, the support for economy-wide electrification continues to grow nationally and here in California. We shared before with you that we forecast electricity usage growing 60% by 2045. Yep, that's a big six-zero. And previously, we projected almost flat annual growth through 2030, followed by a trajectory through 2045, but we are now seeing earlier increases with the breadth of legislation, regulations, and codes and standards approved last year. SCE has updated its electricity sales forecast to reflect these significant policy changes and now projects about 2% annual growth from 2023 through 2035. Both transportation and building electrification forecasts have increased significantly, narrowing the gap to our Pathway 2045 analysis. This strong electrification load growth outlook is also consistent with the California Energy Commission's forecast based on the state's decarbonization policies, providing a source of external validation. Rapid expansion of electrification sharpens the continued need to make significant investments in SCE's infrastructure. Over the coming years, SCE will continue to invest in wildfire mitigation and increase its grid work to support California's leading role in building a carbon-free economy. With growth in electricity demand, this significant grid investment will be spread over a higher volume of sales, supporting affordability overall. SCE's system average rate is already the lowest among major California industrial utilities, and we expect it will be the lowest for the foreseeable future. All of this, wildfire risk reduction, cost recovery for historical wildfires, the clean electrification investment opportunity, and importantly, our confidence in the 2025 EPS target makes me very excited about our near-term steps and our long-term growth, so I am confident that investors will fully recognize our significant value creation. Well, with that, let me turn it over to Maria for the financial report.