Edison International(EIX) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Core EPS for Q2 2024 was $1.23, bringing year-to-date core EPS to$ 2.37 [9] - The company reaffirmed its 2024 core EPS guidance of $4.75 to$ 5.05 [9] - SCE's system average rate decreased to $0.267 per kilowatt-hour, lower than at the start of the year [17] - SCE reduced rates by about 2% on June 1, driven by the removal of historical costs [22] - SCE's 10-year load growth forecast increased by 35% compared to the 2022 distribution system plan [14] Business Line Data and Key Metrics - SCE delivered 52% carbon-free power to customers in 2023, 55% cleaner than the national average [30] - SCE contracted approximately 2,200 megawatts of energy storage, bringing the total to 8,100 megawatts [30] - SCE has deployed approximately 5,900 miles of covered conductor, with 84% of plant hardening complete [25] - SCE expects to approach 90% of total distribution lines in high fire risk areas being hardened by the end of 2025 [25] Market Data and Key Metrics - SCE's rate increases through 2028 are projected to align closely with local inflation levels, at 2.6% [23] - SCE's wildfire risk reduction is estimated at 85% to 88% compared to pre-2018 levels [18] - SCE's total hardened miles in high fire risk areas exceed those of all other California IOUs combined [26] Company Strategy and Industry Competition - The company is leading the charge toward a carbon-neutral California, with sustainability at the core of its strategy [12][31] - SCE is focusing on grid investments to support a resilient, equitable clean energy economy [29] - The company is well-positioned to address load growth and resulting capital needs due to its low system average rate among California IOUs [35] Management Commentary on Operating Environment and Future Outlook - Load growth trends are materializing sooner than expected, with potential upside for SCE's CapEx opportunities [12][13] - The company expects new policies to drive higher customer adoption of electric vehicles and building electrification [15] - SCE's operational and financial risk profiles have significantly improved, with wildfire risk reduction exceeding 90% in some scenarios [18][19] Other Important Information - SCE has resolved 98% of TKM individual plaintiff claims and 92% of Woolsey individual plaintiff claims [44] - SCE's 2025 GRC underpins the company's forecast for continued rate base growth [45] - The company has equity needs of only$ 400 million for the 2025 through 2028 period, despite substantial capital deployment plans [53] Q&A Session Summary Question: GRC Partial Settlement and Remaining Debates [54] - The company has reached partial settlements covering 12 areas of the GRC, representing nearly 20% of the O&M request and about 8% of the capital request [41] - Management is confident in achieving a constructive final decision due to the alignment of intervener proposals with the lower end of the company's range [55][56] Question: Load Growth and Incremental Investment [57] - Load growth is materializing faster than expected, with potential for incremental investment in the planning period through 2028 [57] - The company has flexibility to reprioritize capital within the GRC cycle and may pursue alternative funding mechanisms for additional investments [58][59] Question: Legacy Wildfire Cost Recovery [62] - The company is open to settlements but cannot comment on specific elements of the case at this time [62] - The next steps include a case management statement due on August 7, with hearings scheduled for November or January [63] Question: Capital Allocation and Wildfire Claims Recovery [65] - Recovery from wildfire claims will improve credit metrics, with every $1 billion in recovery improving metrics by 40 to 50 basis points [66] - The company plans to securitize the recovery and may replace higher-cost equity content securities with regular way debt [66][68] Question: 2024 EPS Guidance and Load Demand [70] - The company is confident in achieving its 2024 core EPS guidance of$ 4.75 to $5.05 [70] - The ability to fund additional capital without additional equity depends on the timing of investments and the company's FFO-to-debt financing framework [71] Question: Load Growth Forecast and EV Impact [74] - The company is seeing 2% to 3% load growth in the near term, with a 10-year forecast showing a 35% increase [74] - Federal incentives, such as those from the Inflation Reduction Act, are helping to lower the cost of the transition to electric vehicles [91][92] Question: NextGen ERP System and Load Growth [87] - The NextGen ERP system application will focus on cost and benefits, particularly in improving work management efficiency [87] - The system is not in competition with load growth investments, as both are necessary for meeting customer demand and running an efficient operation [88] Question: TKM Recovery and Cal Advocates Testimony [95] - The company views the lack of additional testimony from other parties as an opportunity for further engagement and does not read too much into the initial step [96]