Good afternoon, and welcome to the Edison International Third Quarter 2014 Financial Teleconference. My name is Sheila and I'll be the operator today. (Operator Instructions) Today's call is being recorded. I'd now like to turn the call over to Mr. Scott Cunningham, Vice President of Investor Relations. Mr. Cunningham, you may begin your conference.

Thank you, Sheila, and good afternoon everyone. Our principal speakers today will be Chairman and Chief Executive Officer, Ted Craver and Executive Vice President and Chief Financial Officer, Jim Scilacci. Also with us are other members of the management team. The presentation that accompanies Jim's comments, the earnings press release and our Form 10-Q are available on our Web site at www.edisoninvestor.com. After the call, we will be posting Ted's and Jim's prepared remarks. We will be filing and distributing our regular business update the week of November 3rd, ahead of the EEI financial conference in Dallas. The presentation will have the usual additional information on current topics. During this call, we will make forward-looking statements about the financial outlook for Edison International and its subsidiaries and about other future events. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. We encourage you to read these carefully. The presentation includes certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure. When we get to Q&A, please limit yourself to one question and one follow-up. If you have further questions, please return to the queue. With that, I'll turn the call over to Ted Craver.

Thank you, Scott, and good afternoon everyone. I intend to keep my remarks fairly short today. I'm pleased to report that Edison International has delivered another quarter of strong financial results with third quarter core earnings of $1.52 per share up 7% from last year. I'm particularly pleased to note that we have also increased our full year earnings guidance. We now anticipate 2014 core earnings will be in the range of $4.25 to $4.35 per share. This is an increase of $0.60 per share over the midpoint of guidance we provided last February. We continue to deliver solid growth in returns from investing in needed infrastructure to support public safety and reliability as well as California's public policy objectives of creating a low carbon economy and technological innovation. We should note that some of the increase in our core earnings outlook for the year is made up of items such as taxes that we cannot expect will reoccur each year. These items create a higher base against which earnings growth in the future years will look less impressive in year-over-year comparisons. However, these additional earnings increase equity which allows us to make more substantial investments in needed electric infrastructure in the future without needing to issue stock. The high level of investment we have made over the last several years in electric infrastructure coupled with our firm belief that it was not financially prudent to issue equity to manufacture larger dividend increases has caused our dividend to fall below the industry averages for yield and earnings payout ratio. To repeat what I've said before, we are committed to bringing our dividend back into our targeted payout ratio of 45% to 55% of SCE's earnings in steps over time. We recognize that readdressing this imbalance is job number one for…

Thanks, Ted and good afternoon everyone. My comments will cover third quarter and year-to-date earnings. I will reaffirm 7% to 9% rate-based growth forecast; our increased earnings guidance and our plans for 2015 earnings guidance. Please turn to Page 3 of the presentation. As Ted as already mentioned, the EIX's third quarter core earnings per share are $1.52 per share or $0.10 above last year. SCE's third quarter core earnings increased $0.08 per share to $1.54 per share largely driven by higher revenues for rate-based growth. This increase was partially offset by lower income tax benefits. In the third quarter of last year, SCE recorded benefit of $0.06 per share related to IRS guidance for generation prepared deductions. Their earnings drivers shown right on the Slide are consistent with this year's trends of core earnings holding results. Higher CPUC and FERC authorized revenues provide for escalation of O&M return, depreciation, financing and taxes much of this is consistent with ongoing rate-based growth. SONGS results are at $0.03 per share lower than the third quarter last year. As we look ahead to 2015, we expect to recover our actual SONGS costs from the nuclear decommissioning trusts. We have submitted an advice letter to the CPUC to access the trust and have filed our decommissioning plans with the NRC assuming the amended settlement agreement is approved by the CPUC; it provides a return on long-term debt and preferred stock which should be roughly convertible to our cost of financing the SONGS regulatory asset. We will also share with ratepayers cost savings of any refinancing the SONGS regulatory asset at a lower – at a rate lower in the settlements authorized rate of 2.62%. At this point in time, we are not forecasting any savings between the 2.62% and the expected refinancing cost.…

Thank you. (Operator Instructions) The first question is from Greg Gordon of ISI Group. Your line is open.

Thanks. Can you hear me okay?

Yes, Greg.

Couple of questions. One is, can you tell us whether or not the ex parte communication situation that has evolved at PG&E has had any impact at all on your ability to conduct business at the CPUC, and if there is any potential for either a self-policing review or an external party looking for – looking into your communications with PUC?

Greg, its Ted. In terms of as that caused any kind of interruption and the business we have before the CPUC, I think probably the best thing I can point to is, the ongoing general rate case activities I think I mentioned in my comments that we are actually just finished up evidentiary hearings as scheduled. So at least from what we can see, there seems to be really something that's primarily focused on the San Bruno item as opposed to the activities that we have before the PUC. So we are certainly trying to make sure that all of our personnel know what's expected of them in terms of proper conduct with the PUC. We have compliance program. We have training. We have kind of redoubled efforts along those things just to make sure that that's very present in everyone's mind. But, beyond that really we are pretty much in business as usual.

I know that you haven't been approached by the Attorneys General to disclose your communications in lieu of what they are doing over ECG?

No.

Okay. Thanks. Second question, you said that you thought the energy efficiency decisions would all be multiple years of 2015. I know you keep telling us to use the rate base math when we think about the earnings power of the company and you have exclusively not given guidance for 2015 and beyond. Can you give us any sense of whether or not there will be items that are beyond rate base math that could potentially impact 2015 earnings and beyond?

Greg, this is Jim. What we will find on doing is, putting out a schedule that shows the energy efficiency potential earnings. This is on the public domain, we are just going to put it on a schedule where you can see which year was earned from and when we expect to receive it. That will be one helpful bit of information. But beyond that we won't predict shorter general rate case decision, if there is any potential O&M or tax benefit that could result in future periods. We would assume as a working assumption a lot of that is past back as part of the rate making process. And we will need a decision before we can really O&M in that number.

Okay. When we will see that schedule?

That will probably be as part of our February where we could come out with our year end earnings. We will provide that information. Most of it's already in the public domain. We are just trying to get it so people can see it in one place.

Great. Final question, when would you expect to make the next move on the dividend, is it going to be in the normal cycle year coming in December?

Greg, this is Ted. You are triple-dipping here today.

I think that was four, something like that.

Sorry, I only have one question but it's in 27 parts.

It's creative. On the dividend, I mean I think everyone knows we have typically looked at that during our December Board meeting, but there is no such schedule to it. And that's something that we really leave for the Board to make a decision on and kind of the normal course when they have all of the facts in front of them. So there is a general practice, but no such schedule.

Okay. Thanks guys.

You are welcome.

The next question comes from Jonathan Arnold of Deutsche Bank. Your line is open.

Good afternoon guys.

Hi, Jonathan.

Could I just ask on the SONGS item in the guidance which is $0.07 negative but its composition is kind of different from what it was before. If I heard you right, the $0.04 piece the philanthropic contribution you booked the whole five-year thing upfront in 2014 or you intend to, is that correct?

Correct.

Okay. And then the settlement is that sort of ongoing impact of the settlement or a one-time aspect of the settlement?

So the return on the debt in 50% of the preferred that's what I was referring to for the $0.03 positive with the assumption we will get a decision.

So that's sort of full year impact?

Yes, yes.

As we think about that line going forward Jim, is there and it's a slight drag from SONGS items in 2015 and beyond, is that the right way to think about that?

We will reset. As we said before a couple of years ago when this got started that the rate base is going to be readjusted and the debt and preferred and the common will now be based on the actual rate base. And we wouldn't expect that we have is separate SONGS item ongoing.

That will just going to be a feature of whatever the new guidance has?

Correct.

Okay. That's very helpful. Thank you. But then, could I just ask on the parent and other, your number to the tick down slightly, is that – is it directionally where parent costs are heading?

This one has been periodically, its hard to predict. We had some earnings going out from Edison Capital. Remember, we have been liquidating a low income housing portfolio there and it's hard to predict and we don't forecast earnings coming from that and periodically we get some earnings. So that's the primary reason why the parent other was down this quarter. But, that's what we said and I will keep by that statement that it's roughly it's a little – it's a little over $0.01 per month in cost from the holding company only.

Is that what we should anticipate as a steady-state modeling outcome going forward absent some other change?

I will standby by 2014. And I don't see it changing appreciably going forward.

Okay, great. Thank you, Jim.

Okay.

The next question comes from Hugh Wynne of Sanford Bernstein. Your line is open.

Hi. Congratulations on a great quarter. I'd just like to know how one achieved an increase in cost savings from $0.37 to $0.69, how does that gets up?

Hugh, its Jim. Across the board a lot of different things going on, higher revenues, labor expense, its lower tax expense for related benefits. It's a lot of little things and remember we had higher severance expense last year lower this year. So the year-over-year changes had a factor on it too. So it's a number of different things. We have been predicting all long that there would be savings coming out this year that we will pass back as part of the rate making process that we are just seeing higher level of savings than what we had originally anticipated.

These are -- one that the savings are so substantial on the rate of increase and the savings are so substantial, but when it come to that kind of extrapolate into the future, the possibility that you might find savings in the next general rate case budget that could allow you then to exceed your expected earnings in the GRC, the coming GRC as well. Is that a realistic expectation? Or do you think that this is just sort of one-off cut in your operating maintenance expense that really cannot be replicated in the future?

Well, what I did say in my script that we will continue to look for cost and service improvements. The key thing that's not available here is, in terms of what the commission decides is going to be the O&M levels and our spending levels for 2015, 2016 and 2017. What the attrition mechanism might be for 2016 and 2017, those unknowns. So I think that's why we have been taking you back in my comments for 2015 guidance was, the one thing that we have a higher degree of confidence around is the rate-based forecast. And that's the true driver of earnings and we may have some transitory earnings or potential losses depending upon things how they evolve in both O&M and tax benefit. But the rate base is the true one guide towards a future earnings.

Great. Thank you very much.

Okay, Hugh.

The next question comes from Julien Dumoulin-Smith of UBS. Your line is open.

Hi. Good afternoon.

Hi, Julien.

So following up on the GRC if you will, what's the latest timeline, could you give us a little bit of an update on where we stand just given everything going on in the CPUC? And then perhaps the follow-up question and I will stick with just one follow-up here. How could that potentially impact the CapEx on the various timing outcomes of the GRC here?

Yes. Julien, its Jim. It's a good question. We concluded, Ted said today, hearings. That was an important milestone. And the next real key thing we got coming up, we have update hearings unless they change them in January, don't we Maria, Pedro? That is the last bit of information where the update for known changes that have occurred and there are some hearings around that. And then you got to get into filing your briefs and your closing briefs, reply briefs. And then it's on to the judges for drafting of the proposed decision. Normally just if you go back in prior years, the update hearings were typically in November of the year. So it looks like we're at least two, maybe three months behind just from looking at that schedule. But, I can't predict once we turn it over to the LJ's how long it's going to take them prepare the proposed decision. That is the key unknown. Your second question, thank you for keeping to two. The capital expenditures, part of what we do is, we look out over the three year period and we tend to send our capital expenditures, so we can have a steady state of work. If you go back and look over the last couple of years, we have been challenged to ramp-up our capital expenditures to reflect the level that was authorized and it had a lot to do with getting the crews in place in order to get the constant steady state of work. And we are trying to maintain that constant steady state of work without dropping back to a lower level of capital expenditures because we don't have certainty. So our view is, if they do come in, in lower capital expenditures, you can adjust your rate of spending in the prior year, so beyond 2015, so 2016 and 2017. So we have some flexibility around and how you schedule things over that three year period. But, we were trying to maintain a level of overall expenditures at this higher level because it really reflects a lot of work to get the crews ramped up to where we are today.

But, ultimately it seems like the timeline on the actual rate case doesn't seem to be too impacted by the latest development, if I hear you correctly?

Yes. I think that's how we are going to operate the business. We are going to launch our O&M spending obviously because O&M is different and capital – three years to deal with capital. We only have one year for O&M. So we are very much carefully watch our O&M. But our capital, we want to maintain at the levels we have identified in our documents.

Great. Thank you very much.

Okay, Julien.

The next question comes from Dan Eggers of Credit Suisse. Your line is open.

Hi, good afternoon guys.

Hi, Dan.

Just following up on Hugh's question is kind of that you have pretty remarkable improvement in O&M cost management. Can you just remind us how those adjustments are kind of that better starting point from this year gets reflected in kind of the GRC process given the relatively short open period for adjustment and docket tweaks that sort of stuff?

So really it's just part of the rate case process, no update for – they are looking at forecast and they look at some actuals because they will be able to go beyond them. The record doesn't close until next year. And so you would expect them to pick-up a lot of the factors that we have this year. And then, whatever they decide from there it's hard to predict at this point in time. Well, where they will set the actual level of O&M until you actually get a proposed decision on a filed decision.

And along those lines Jim, did I hear you correctly saying that you guys would split 50:50, if you had more IT and some other savings in 2015 and beyond?

So we said, we had some specific things that we have identified as part of the rate case process. And we offered those up as part of our showing within the rate case and said we will share 50% of the savings. And I also said that we will continue to look for additional cost savings. And so that's – so those are the facts as they are today.

And just one, last one, Ted on the payout ratio should we be thinking about that 45% to 55% based on the rate base math what earnings would be – as do you guys provide it right now or should we assume that if you start realizing better earned ROEs because some of the operating efficiency savings that that is where you calibrate your payout ratio?

Yes. There is always, I guess I will say unpredictable pluses and minuses. So what we really tend to do is just make it straightforward. It's based on the rate base that's really the durable growth and the durable earnings power of the company. And that to us seems to be the appropriate way to kind of think about the 45% to 55% payout ratio. Obviously, like in the case of this year, if you have additional earnings from taxes or whatever it maybe, now that just builds your equity and makes it stronger balance sheet from which to finance the type of significant electric infrastructure investments that we see in the future as suppose puts you in better financial strength and our balance sheet strength provides I think more certainty that you can manage the growth in electrics infrastructure investment without having to tap the equity markets, which as you know is something we've really try to keep in balance.

Got it. Thank you guys.

Okay, Dan.

The next question comes from Michael Lapides of Goldman Sachs. Your line is open.

Hey, guys. One thing, just thinking, this is a little bit follow-on the rate case question. In the rate case filing, is the O&M that you requested higher or lower than kind of – if I would have taken annualized run rate for what O&M has been at SCE so far in 2014?

I don't know if I can answer the question Michael. You have to go back compare. We have been driving the O&M down. And as I said in my prepared comments you are taking SONGS out and we are taking Four Corners out and so you would expect based on that the trajectory is lower. But trying to line it up exactly, I don't think I can do it right here.

Okay. Just trying to think about – are you incurring costs that you had already filed for in the rate case? Or if the rate case has higher 2015 O&M versus 2014, it's for costs you are not already incurring. So if you are not authorized, the revenues that go with those costs – it's not like you've got to go through a major cost-cutting exercise.

It all depends on what they authorize in the end Michael.

Got it.

So I understand the crux of your question in terms of where we are spending relative to what's in the GRC. It ultimately then goes to what they authorize.

Okay. On energy efficiency for 2015 and beyond, since you are not recognizing any of it in 2014, does that mean 2015 could be a little bit of a catch-up year, where you recognize both 2014 and 2015 in that one year? Or are you just kind of going to skip a year?

I think that's how we are thinking about it now you may have pancaking of years.

Got it. Okay. Thanks Jim. Much appreciated.

Okay, Michael.

The next question comes from Kit Konolige of BGC Partners. Your line is open.

Good afternoon guys. Just I think a lot of this has been asked already. But Jim, maybe -- I'm not sure I caught a lot of detail about the positive tax impacts that we're seeing so far. Is it possible to explain those in a non-technical way that would give us some idea of what's driving that, and how sustainable they might be?

Yes. I didn't give a lot of details. You didn't miss it. We see additional repair deductions. So when you have work like pull loading or infrastructure replacement, you have repair deductions. You get faster deductions for tax purposes. And we are continuing to see those come through and we have been running behind in terms of what are our original expectation was in that area. We see additional property tax reductions. There are a number of different taxes here. Cost of removal deductions, so there is a number of different pieces here, so it doesn't add up to one item being large but all of them together selectively made a significant change from what we had previously forecasted.

But they all – moving up in the same direction, that it comes out to a pretty significant dollar amount. Is that related – does that relate to anything that's unusual about your capital spend, or acceleration of CapEx, or anything like that? Or is this just how the tax laws happen to be written?

There is more the nature of what the capital expenditures are. It has to do with more of our expenditures and as we are – we are ramping up now for infrastructure replacement and pull loading expenditures qualify for repair deductions and cost of removals. And we are seeing details relative to what we had in our forecast in the current year receipts. So that's why you are seeing these earnings pop out for this year.

Great. Okay. Thanks a lot.

Okay, Kit.

The next question comes from Ali Agha of SunTrust. Your line is open.

Thank you. Jim, just to put that bucket in your earnings guidance, the $1.10 of incremental earnings that you are picking up this year – can you just remind us how much of that was picked up in the third quarter and then year-to-date?

Of the $1.10 and I don't know if I could break it out completely. I can give you some numbers that we have seen previously. We said back in the second quarter there were $0.23 of earnings that were outside of our guidance. You can back into that from that number. And beyond that its more difficult to break it out by quarters, what was in the third, what we anticipate being in the fourth. But, the closest I can give you right now, Ali.

Okay. And then second, am I correct? When I looked at the rate base numbers in your latest slide deck, specifically for 2015 and 2016, compared them to the last time you had given us those numbers, there's about a $400 million per year reduction in the ranges for 2015 and 2016. Am I correct in that calculation?

Yes. There are some changes going on as I said in my prepared comments, we are shifting dollars out of 2015. And so they are going into 2016 and 2017 and there is a net increase in overall capital expenditures because we have a new program for converting mobile home parks from master meters to individually metered mobile homes. So its affecting both capital then ultimate rate base.

Okay. But, again, if I add in 2017 to the mix, it seems that you only pick up about $100 million to $200 million there, and you are reducing about $400 million in each of the years 2015 and 2016. So over the three-year period, it looks like a net reduction, if I'm looking at it right.

Yes. It's hard to – it really has go into how that actual closings are being forecasted, so as we have capital expenditures and then ultimately closings and how it relates to rate base. So I don't have any further detail I can give you on that that could change periodically.

I see. Last question, sorry for that. On Slide 12, where you talk about some of your growth CapEx initiatives beyond 2017, just to put that in some context, does that sustain your rate base growth at the same level, based on all the items you've listed on that Slide 12?

Yes. We haven't put out a forecast or rate base real figures. What we have been trying to indicate that $4 billion year capital expenditure is kind of like the sweet spot. Ted has mentioned that previously. And so we see infrastructure replacement going up in spending transmission has come down a little bit. And we have some of these other initiatives that are on the periphery, the horizon that we were thinking about now that could affect our overall capital expenditures beyond the 2017 timeframe. So I'm not trying to go to higher net of level capital expenditures. And I'm not providing you actual CAGRs and you would expect as the base gets bigger your CAGR will probably come down slightly just from the math on.

Right. Thank you.

Okay.

The next question comes from Shahriar Pourreza of Citigroup. Your line is open.

Hi, everyone.

Hi, Shah.

I think we – just on two filings, I think we discussed in the past that there's potentially two filings next year: one distribution resource plan under AB 327; and then another proposal to potentially look to do electric vehicle charging stations. Is this sort of above your 7% to 9% rate base growth, or is it embedded in the numbers? Can it move the needle?

I think it's a good question. I think the timeframe maybe out slightly as you get into when those might take effect. And obviously, you have to file an application, the application is going to take time to process. And I couldn't anticipate that it would be well in the 2016, potentially 2017 before you actually see spending from either of those two initiatives. And so it's hard at this point in time to forecast that it might push it higher than where we are forecasting today.

Got you. Got you. And then just a follow-up. On the MHI proceedings, are you bound by ordinance to remain – to not disclose the process? Or is this sort of like you just want to update investors, once you have some data point to update investors with? What's the procedural process there?

We are going to have Rob Adler, our General Counsel comment on that. Bob?

These proceedings are typically confidential in nature. It would take the parties to agree to make them otherwise as well as the tribunal. And so at this point in time, we are simply not going to be commenting beyond the material events that would – that would require disclosure.

Terrific. Thanks. Congrats on a good quarter.

Okay, Shah. Thanks,

The next question comes from Angie Storozynski of Macquarie. Your line is open.

Thank you. I just have a quick question on GRC. Now that the hearings are over, and the commissioner assigned to the rate case is not going to be around past the end of – I mean of the CPUC – at the end of this year, is it possible that we would have a settlement instead of a fully litigated case?

Angie, its Jim. I don't think we can speculate on that. Of course, if it were appropriate, we would enter in discussions, but we can't comment beyond what we know now.

Okay. Thanks.

Okay. Talk to you then.

The next question comes from Travis Miller of Morningstar. Your line is open.

Good afternoon. Thank you.

Hi, Travis.

The income tax benefit that you've been realizing – how much, if any, ultimately would go back to ratepayers, either through the GRC or some other type of mechanism?

Travis, this is Jim. We have been forecasting and signaling clear that we would expect the tax benefits we realized during this year see to go back to customers. And that's a part of the rate case process. And so we are not indicating that would expect earnings from tax benefits going forward.

And that would ultimately show up in a lower revenue requirement?

Sure. They will just for the benefits, yes, they will take it away, lower the revenue requirement, already incorporated in our GRC request.

Got it. And then another subject, maybe Ted, what's your latest thinking on the FERC Order 1000 projects? Is that in a planning stage for you guys, or is that too far off to think about?

Well, certainly not in a place where we think we would have something to disclose about it. But, we have indicated previously that competitive transmission, if you will, FERC order 1000 base transmission projects is something that we are seriously considering and looking at. We have a subsidiary that we've formed Edison Transmission, which is really to explore those possibilities and should something come together then we, of course, would have more to say about it. But, at this point, I think like most companies out there, we are looking at it, trying to assess where the opportunities are. We have ourselves kind of organized to go after these things in a logical way, if we see good projects that make good sense. Then presumably we would go forward and those.

Okay, great. Thanks a lot.

Okay, Travis.

The next question comes from Neel Mitra - Tudor, Pickering. Your line is open.

Hi. Good afternoon. Just wanted to get your thoughts on the probability of the renewable portfolio standard going over 33%, and what the timing of that would be, and what possible investment generally that would require from you going forward.

This is Ted. It's going to be difficult to really speculate much on this. We were currently of course focused on trying to get to the 33%. And we have procurement efforts and the like to get us there. Whether this becomes something that either the Governor's Office or legislator just want to look at that's really hard to predict, I'm not aware of any specific bills that are being put together or floated at this point. So it's really just hard to speculate on it.

Okay. Thank you.

(Operator Instructions) And it appears that was the last question. I will now turn the call back to Mr. Cunningham.

Thanks very much everyone for participating. And please call our Investor Relations if you have any follow-up questions. Thanks and good evening.