Good afternoon and welcome to the Edison International First Quarter 2019 Financial Teleconference. My name is Michelle and I'll be your operator today. [Operator Instructions] Today's call is being recorded. I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. You may begin, sir. Thank you.

Thank you, Michelle, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro; and Executive Vice President and Chief Financial Officer, Maria Rigatti. Also here are other members of the management team. Materials supporting today's call are available at www.edisoninvestor.com. These include our Form 10-Q, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our 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 Pedro.

Thank you, Sam. Before I begin my business remarks, I want to pause to mourn the loss of one of our directors, Ellen Tauscher, who passed away last night. Ellen accomplished so much: she was one of the first and youngest women, at 25, to hold a seat on the New York Stock Exchange; a talented Congresswoman who built bridges across the aisle; a nuclear arms nonproliferation leader who truly made all world safer; a thoughtful director on the boards of multiple companies and national labs; an unstoppable cancer survivor who then led national efforts to help others; an inspiring mother for her daughter Katherine; and above all a deeply caring individual whom I, and all of us at Edison, will miss deeply Well, knowing Ellen, I can sense that she's hearing me and smiling from a better place, but also telling me to get back to work, so let me turn to our quarterly update. First quarter core earnings were $0.63 per share, which was $0.17 below the first quarter last year, largely driven by increased wildfire mitigation costs. As we’ve mentioned before, year‐over‐year comparisons are not particularly meaningful because SCE did not receive the proposed decision in its 2018 General Rate Case until April 12th of this year. Since our policy is to account for a regulatory decision in the period in which it is received, SCE recognized revenue from CPUC activities for both the first quarter 2018 and 2019 largely based on 2017 authorized base revenue requirements, with reserves taken for known items, including the 2017 cost of capital decision and tax reform. If adopted, the GRC PD would result in base rate revenue requirements of $5.1 billion in 2018, $5.4 billion in 2019 and $5.8 billion in 2020. This is lower than our request. The primary…

Thank you, Pedro, and good afternoon, everyone. My comments today will cover first quarter results for 2019 compared to the same period a year-ago, plus comments on the proposed decision in our General Rate Case, our updated capital expenditure and rate base forecasts, and other financial updates for SCE and EIX. As we’ve said, year-over-year comparisons are difficult given the timing of the GRC. Through the first quarter, we continued to recognize revenue from CPUC activities largely based on 2017 authorized base revenue requirements with reserves taken for known items including the 2017 cost of capital decision and tax reform. SCE will account for the impacts of the final decision in the 2018 GRC in the period in which that decision is received. Please turn to Page 2. For the first quarter 2019, Edison International reported core earnings of $0.63 per share, a decline of $0.17 from the same period last year. From the table on the right‐hand side, you will see that SCE had a negative $0.20 core EPS variance year‐over‐year. There are a few items that account for the bulk of this variance. To begin, higher revenues had a positive impact of $0.08, including $0.06 at the CPUC and $0.02 at FERC. Higher CPUC revenues primarily relate to customer refunds in 2018 for prior over‐collections, and incremental return on rate base recorded through the pole loading balancing account. FERC revenues were higher primarily due to higher operating costs There was a negative impact of $0.18 due to higher O&M primarily due to wildfire mitigation costs, including enhanced overhead inspections and other preventative maintenance costs. Through our grid safety and resiliency program and 2019 wildfire mitigation plan filings, we’ve regulatory mechanisms in place to track and request recovery of these increased costs. Through the course of the year, we…

Michelle, please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow-up, so everyone in line has an opportunity to ask questions.

Yes. [Operator Instructions] Our first question comes from Agnieszka Storozynski from Macquarie. Your line is now open.

Thank you. So first the additional equity, so you don’t yet know if the increased equity layer will be approved and yet you’re already starting the ATM program. And secondly, the scope of capital proceeding would not kick in until the beginning of next year, right? So you’re adding this ROE adder even though we’re hopeful, I think we’re all hopeful that before the end of this year there's going to be either a legislature for a regulatory fix to wildfires. And so is this just a contingency or are you trying to send a message that it is unlikely, then those issues will be resolved before the end of this year. Thank you.

Angie, it's Pedro. Good to hear from you. Let me start with the back end of that around the adder and then Maria talk about the sequence on the ATM. Just remember reinforcing some of the comments that both Maria and I made, we asked for the adder in both the CPUC cost of capital and FERC RE proceedings, because we view that as appropriate compensation for the risks that our investors are being asked to take under the current framework. Very hopeful that the State will address that. I think I’ve said in prior calls that we remain confident that ultimately this will be resolved, because of [indiscernible] financially help the utilities, but sitting here we can't handicap a probability around whether it happens in this round or next round or what have you, right? So timing is, I think one of the question marks for us. We thought it was prudent and appropriate to go ahead and make these filings. Now that you get to the question of what’s the best way to start filling the ultimate need is different timing on the pieces, FERC ROE has a separate schedule from the CPUC cost of capital. But I think, I will let -- turn it over to Maria now, the bottom line here is flexibility, making sure that we take a nice glide path here that gives us flexibility and optimizes for investors and also for customers.

Thanks, Pedro. Yes, Angie I think that’s exactly right. We want to be flexible, we want to be disciplined, while the cost of capital proceeding has not yet been completed. Obviously, we’re in the early stages still. We want to be efficient and we will be measured in our approach to our financing plan. So we think that the ATM program initiated in 2019 really gives us that flexibility. We can meet those objectives. We can also move incrementally and address the need, while we’re still monitoring the process, the regulatory framework, how that proceeding itself is moving along. So I think that’s -- we’re trying to get at all of those objectives in terms of our financing plans.

Okay. Because I’m just -- in a sense would -- is it fair to say that if we’re assuming this equity dilution, we should be imputing your earnings power using a higher equity layer as well? Is that a way, so I’m just thinking that not to be too impute this to your earnings power if I were just dilute your earnings without giving you the benefit of the high earnings power, assuming this higher equity layer?

Well, certainly the equity layer is aimed at and sized towards the additional equity layer that we’ve requested from the CPUC, that’s for sure. Obviously, they haven't approved it yet, that’s why we’re taking a very measured approach in terms of the issuance and as you pointed out, potential for dilution.

Okay. Thank you.

Thanks, Angie.

Our next question will come from Praful Mehta from Citigroup Your line is now open.

Thanks so much. Hi, guys.

Hey, Praful.

Hi. So just clarify little bit on the equity issuance. From a timing perspective, are you willing to wait through the July 12 timing, which is the expected legislation because obviously if that goes through it helps the equity and kind of makes the issuance cost a lot lower. How do you think about -- I get the flexibility point, but how do we think about that in relation to the timing expected for the legislation?

Sure. Great question, Praful. So we definitely want to share with folks about our financing plan is for 2019. I don’t think we’re going to get pin down to exactly when we’re going to do, particular things and we did share with you that we just close the term loan at EIX on Friday. But I think once we share with the plan, the precise timing of the plan, I think is subject to a lot of different factor.

All right. I guess you want to hold off on being more specific, I get it. I guess the second question on the wildfire fund and I appreciate the three points that you laid out Pedro in terms of how you think about what’s needed. The wildfire fund as we understand that came out from that strike force seem like it was more short-term in nature as then it was funded at one-time, utilized to kind of deal with wildfires about three, four years at which point you’ve kind of dealt with the mitigation efforts are working and you don't need the fund anymore. Do you see the wildfire fund is something that is short-term in nature or do you see the wildfire fund is something that is needed more longer term to deal with the wildfire problem in California?

Yes, Praful, that’s a good question. And the short answer is it's the latter. This is a longer-term structure. Let me clarify there something in your question because the way that we read the strike force [indiscernible] a little different from the way you just described it. They actually propose two different funds. One, that’s what they call the liquidity only fund and then the second was the wildfire fund which we understood and viewed as a longer-term structure. The first one, the liquidity only fund in a sense that looks a lot different words and maybe the -- slightly the constructer. but it's a lot like what we’ve also been talking about in terms of the ability to securitize needs upfront, because we believe that can then mitigate cost impacts for customers, right? So we view that liquidity only fund essentially as a revolving fund of source to deal with the short-term needs to get cash out to fire victims with the wildfire fund and being that we’ve been thinking as a more traditional longer-term structure. Obviously, a lot of these are still to be worked out, not only the continuing strike force discussions, but importantly now and the different venue of the wildfire commission as I mentioned in my remarks already and then ultimately the legislature. But I wanted to clarify that that view to two different funds that have been suggested.

Got you. Thanks so much, guys. I will leave it to others to get into more detail as well.

Great. Thanks, Praful.

Our next call will come from Ali Agha from SunTrust. Your line is now open.

Hi, Ali.

Thank you. Good afternoon. First question, just to clarify again on the equity front. And I was unclear, embedded in that amount that you’ve laid out, is there some assumption about equity or cash, I should say, that you may need to pay for the wildfires or would that be a totally separate calculation for equity needs? Is that all built in and how much do the internal plans annually drip, etcetera provide for you?

So -- hi, Ali. It's Maria. The financing plan we talked about today is really aimed at the increased equity layer that we’ve requested from the CPUC and growth capital at SCE. So that's really what this plan is about. I think we will evaluate additional considerations as we move forward in time and find out frankly the answers to the type of questions that you just posed in terms of what’s happening on the wildfire front. In terms of internal programs, I would say you probably think about $50 million or $60 million a year. I mean it vary. We have had some years that are higher, some of the years that are lower, frankly.

Okay. And then second question, on the wildfire front, I just wanted to get a sense of the sequencing and tracking from our site, the government talked about getting something done by July 12 recess, but after that the session actually run still September 13. Just curious how you are looking at the sequencing? And the point that you made about the legal challenge to inverse condemnation, wondering if your legal folks have looked at that and what’s thoughts are about the merit of that?

Yes. So, let me start with the last one first and Adam Umanoff, our General Counsel is here. Because he -- if you want to add anything, Adam. I think the short answer to that, the legal challenge is we feel very comfortable in the strength of the argument that we made in the couple of court proceedings that I mentioned. And this really goes to the core assumption that the courts have made a decision going back to the [indiscernible] decision that looked at the application of inverse condemnation as that meet essentially to your -- to socialize the cause of this risk across a broad pool of customers and it assumes that utilities had ready recourse to collect those amounts from customers in the case of investor to the CPUC. The significant uncertainty that’s been raised towards that were the San Diego Gas & Electric 2017 decision really challenge that assumption and its one of the core tenets in our arguments in court. So if you’re asking do we feel strongly about the arguments, we feel they have strong merit. The answer is, making clear a yes. Now how -- what the court say with that, that’s a different process. Let me pause there. Adam, anything you would add or is that covered?

Other than given you an honorary law degree, no other comments.

Okay. And I think -- yes, thank you, Adam. On the timing question, lots of different venues and pieces here always to just kind to recap. We now have the strike force report. We understand that the various members of the strike force team still thinking and engaged etcetera. But I think on the other -- the major report out, -- I have the wildfire commission, my shorthand for the name of the commission continue its work. They have a statutory deadline on July 1st. The governor then challenged them to finish the process earlier. I believe that they’re at a minimum on track to meet their July 1 deadline or potentially coming a little sooner. You have then the challenge that the governor laid out for the legislature to have a package done by July 12, which is clearly an ambitious timeline. I think that it's certainly possible and it's not unreasonable to imagine a scenario where you have concrete recommendations coming out from the wildfire commission that then feed the legislative process and probably some parallel work and starting to develop language. You saw probably the announcement that came out, I believe, last week on the task force in the Senate appointed by the Senate President Pro Tempore, Toni Atkins and chaired by Bill Dodd. So presumably that’s another vehicle for developing language. So there's, I think the scenario that the governor laid out of having all it done by July 12. At the same time, as you pointed out the session goes on for couple more months after that. And so there is certainly the possibility that these complex issues could take longer for drafting and for the negotiations that go on in developing the bills. I will also say it is a more negative scenario, but I want to be transparent about it that in spite of the governor's leadership and timelines that he set, that this wasn’t get done. I think that will be an unfortunate outcome. It's one that if the state needs a speedy resolution of this issues, it's costing customers significantly sort of financial uncertainty on utilities, but I can't sit here and guarantee to you that the state will actually do all this in the timeline of the current legislative session. So we said all along that there's always a possibility that this goes longer, we hope not. But there's a possibility. So that’s the sequence as we see it, Ali. Maybe more detail than you wanted.

Great. No, that’s helpful. Thanks, Pedro.

You bet. Thank you, Ali.

Our next question will come from Julien Dumoulin-Smith from Bank of America Merrill Lynch. Your line is now open.

Hey, Julien.

Hey, it's Nick Campanella on for Julien.

Oh, hi, Nick.

Hi. Just to be a little clear on the 6% adder, I guess if we get some type of framework from the legislator that allows for a liquidity fund, some type of catastrophe fund. Is that enough to remove the 6% or is this more about an IC6. And if you could just kind of expand on what you’re looking forward to actually bring the outer down?

I think the short answer is that that was going to be in the details and we need to see actual steps taken before we can answer your question, Nick. Maybe there's slightly longer version of that is, there's a lot of pieces here. We pointed consistently though to the important need to address the issues around defining prudency which we believe is best done by linking at the compliance for CPUC approved wildfire mitigation plans, I mentioned in my remarks the analogy to the energy crisis, that’s how the state reformed its way out of the energy crisis by setting up a very similar structure that has survived very well for today. So that is really job one, right. And then linking cost recovery to that kind of framework. Wildfire fund is an important addition to that, but in our view you really need to solve the core problem. Now what you saw the problem through what we’ve been advocating here, that the framework I just discussed, where you saw that further upstream through maybe changes on the inverse condemnation strict viability standard. You saw that through court action in response to the judicial proceedings that Ali was asking about earlier. Lots of different ways to get there, but we believe you need to solve that core problem of ultimately cost recovery. Now once we see any and all of those steps, we can make judgment calls as to how much of the risk has that mitigated for investors and therefore, how --- what action can we take regarding the 6% adder. It could be one that maybe this is a great package, resolves it and we could actually pull request entirely or might be either it happens more gradually and we take steps along the way.

Thanks for that comprehensive answer. I just also want to ask about the insurance. I think you guys mentioned that there's $400 of cost for '19, ultimately some of that could get differed depending on the authorized levels of the GRC. What’s proposed right now versus those costs?

So when we filed our 2018 GRC -- that was back in 2016. We actually -- our program was a little bit different, but the allocation of insurance premium to wildfire policies was for the 2018 year about $75 million. That would then be subject to nutrition mechanism for the subsequent year. So $75 million plus, some sort of escalation for 2019. So it's in that ballpark. And then depending on what’s finally authorized, then the amounts above that subject to our belief that they’re probable of recovery would be deferred into a memo [ph] account that we already have available to us. And we will then go in subsequent to that and then move straight to the commission if they’re reasonable for recovery.

Appreciate it. That’s all for me. Thanks.

Thanks, Mike.

Your next question will come from Jonathan Arnold with Deutsche Bank. Your line is now open.

Good afternoon, guys.

Hi, there.

Just when I’m looking at slide 9, on the HoldCo financing plan, this may just be the way its laid out, but it makes it look as though the equity that you’re doing at EIX is basically to fund the higher equity layer at SCE and the debt is funding everything else. So that may just be a sort of graphic impression, because when you’re talking about it, it sounds like its more balanced than that.

Yes, so I think you have to put the bar at some place -- the pieces of the bar at some place. I will say, when we start the -- initiating the thought process, we’re thinking about what equity does that you need for the increase in the equity layer and then how much equity you need to provide for that. But you’re right, cash is somewhat fungible. And we’re trying to be flexible not only -- and balance not only in the types of products that we use, but then also the timing. We actually created a plan that gives us that flexibility in terms of timing, that’s why we did the term loan. So things coming in and out, you will see us pay down the term loan at the parent company, contribute the additional equity into SCE, that’s generally we’re trying to balance, flexible and give ourselves the right run way.

Okay, great. Thank you, Maria. But so taking a step further, as you look forward, and we think that you’re going to continue to invest in rate base growth and that may or may not be other calls on equity at SCE. How should we also think kind of those incremental investments in '20 and '21, would also be financed on a balanced basis or is the incremental HoldCo debt capacity you would look to access, sort of how should we think about the -- taking this financing plan and sort of rolling it forward a bit?

Yes. I think, Jonathan, that we’re really focused on right now solving or addressing the issue around the increased equity layer and the current capital investment needs at SCE. I think as we go forward, a lot of other things have to be taken into consideration before I can answer your question more definitively. Right now we have a lot of cash flow tied up in, for example, insurance. Once we start getting a recovery on that, that will have an impact. We will have to look and see what our 2021 GRC looks like and how much investment we have in there and the levels and the timing of that. The proceedings that our outside the GRC are also very impactful. So I think, as we go forward, we will be able to provide you some more information, but I think right now its early days.

So the HoldCo debt, you have some number that is maximum that you can carry there?

Yes, I wouldn’t say a maximum. I would say more around the philosophy. So we’re trying to, as we always have, maintain a strong resilient balance sheet. So that will continue to be one of our objectives. Obviously, there is the -- the current situation in California and people, the credit rating agencies' perception of California plays into that. As we move forward in time as we get more revolution around the wildfire issues, that could change as well. So I think it's a philosophy as much as anything else.

And Jonathan, just on that, I think it served our investors well that we had that kind of philosophy for many years. And dry powder is a good thing and I think continuing to have that sort of prudent approach at the HoldCo will be part and partial of how we think about this.

So it seems the answer to my two questions is kind of depends on the circumstances at the time and how things evolve.

Like everything in life. Thanks, Jonathan.

Okay. Can I ask one other on a different topic? Is that possible?

I think we -- make it a quick one here, but yes, multiple questions, Jonathan.

When you think about your reg [ph] asset that you did not manage to book on the wildfire charge, is there -- are there certain items that you’re looking forward that might change, that is the stress test proceeding for example critical in that decision.

No. I think Jonathan what we’ve talked about last quarter is objectively verifiable evidence or precedents, if you will. There could be things that come out, we’re just going to evaluate it every quarter. I wouldn’t say there's any one particular thing that’s sort of the go, no go decision on that.

Right. That’s really quick at that. Thank you.

Thanks, Jon.

Our last question will come from Michael Lapides with Goldman Sachs. Your line is now open.

Hey, guys. Thanks for taking my question. Just real quick, when I look at the rate base forecast for 2018, the $700 million versus your prior forecast, can you walk me through just the layers of that? Meaning what are the individual components of that? How much is disallowance of capital you’ve already spend versus other changes?

There were a number of things that the commission decided, in the proposed decision in any case, that they did not want to authorize. A lot of it relates to a few infrastructure programs, overhead conductor program, our 4 KV substation elimination program and corporate real estate. So a lot of that is in here. Separate from that, your question about what prior spending as an example was disallowed. If the PD is authorized as it stands today, we’d have approximately $185 million after tax disallowed from prior periods or prior spend. So I think it ranges across those various things, but those are the major point that are affecting rate case.

Got it. And then when I think about going forward rate base, the deltas the incremental $400 million is simply a delta in CapEx?

Yes, it's a program that we are not authorized as we carry them forward due to the attrition mechanism.

Fine. And one last thing. Just can you all remind me in prior rate cases has the commission ordered differed materially from the proposed decision in terms of the rate base amount? And this is all historical looking.

Yes, we have to give you precise numbers. If somebody has them in the room, but typically you will see its -- typically you will see changes between initial proposed decision and the final. I can tell you this every time, but it's not uncommon to have some level of changes already to the final. And, Michael, we are certainly going to be advocating for that, particularly given some of the core policy things that, I was mentioning earlier in my comments, we will certainly have strong comments about some of the changes we believe are needed.

Got it. Thank you, guys. Much appreciate it.

Thank you, Mike.

That was our last question. I will now turn the call back to Mr. Sam Ramraj.

Well, thank you for joining us today. And please call us if you have any follow-up questions. This concludes the conference call. You may now disconnect.

This concludes today’s conference. All participants may disconnect at this time. Thank you again for your participation in today's call.