Good afternoon, and welcome to the Edison International Fourth Quarter 2020 Financial Teleconference. My name is Missy, and I will 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. Mr. Ramraj, you may begin your conference.

Thank you, Missy, 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 on the call are other members of the management team. I would like to mention that we are doing this call with our executives in different locations, so please bear with us if you experience any technical difficulty. Materials supporting today’s call are available at www.edisoninvestor.com. These include our Form 10-K, 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.

Well, thank you, Sam. Let me start the call with our sentiments of support for the residents of Texas and all the other states that were impacted physically and financially by last week’s frigid weather. Climate change is a major part of the story there, and our industry just has to continue our collective efforts on climate mitigation and adaptation. Today, Edison International reported core earnings per share of $4.52 for 2020. This exceeded the midpoint of our initial guidance range, and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to $0.44 of equity share dilution. On an operational basis, excluding dilution, core EPS was $0.26 higher, driven by strong performance at SCE. Maria will discuss our financial performance in detail in her remarks. In 2020, SCE made substantial progress on its comprehensive wildfire mitigation strategy. This continues to advance one of SCE’s top priorities, increasing grid resiliency to adapt to the changing climate and to protect public safety. SCE accomplished the vast majority of its 2020 program targets and in many cases exceeded those goals, despite the challenges we all faced during the COVID-19 pandemic. We have highlighted several measures of SCE’s progress and execution on page 2 of the slide deck that we issued with our earnings release. Since the end of 2018, SCE’s execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure, despite a record-setting California wildfire season last year. For the second consecutive year, we do not believe damages from any wildfire alleged to be caused by SCE equipment will exceed insurance. SCE is further accelerating its wildfire mitigation efforts. Earlier this month, the utility filed its 2021 wildfire…

Thanks, Pedro. Good afternoon, everyone. My comments today will cover fourth quarter 2020 results, our capital expenditure and rate base forecasts, and an update on our financing plans for 2021. Edison International reported core earnings of $1.19 per share for the fourth quarter 2020, an increase of $0.20 per share from the same period last year. Full year 2020 core EPS was $4.52, which exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago, and the decline was due to $0.44 of equity share dilution. On an operational basis excluding dilution, core EPS was $0.26 higher, driven by strong performance at SCE. On page 3, you can see SCE’s key fourth quarter EPS drivers on the right hand side. I would like to highlight four items that accounted for much of the variance. First, EPS increased by $0.16 related to higher revenue. CPUC-related revenue contributed $0.22 of this increase due to the escalation mechanism from the 2018 GRC decision. There was also a negative variance of $0.11, primarily related to benefits captured in our tax balancing account. This is offset in the income tax line, with no effect on earnings. FERC and other operating revenue had a positive variance of $0.05, largely due to higher rate base. Second, O&M had a positive variance of $0.11, primarily due to higher regulatory deferrals related to wildfire mitigation activities and customer uncollectibles, and from approval of the GRC track 2 settlement. Third, depreciation had a negative variance of $0.07 due to higher rate base. Lastly, SCE’s EPS in the quarter was lower by $0.07 because of dilution from the increase in shares outstanding, primarily associated with the equity offering in May…

Missy, 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 the opportunity to ask questions.

Yes, sir. [Operator Instructions] First question comes from Julien Dumoulin-Smith from Bank of America.

Perhaps if I can start with the balance sheet here. I’m just curious to get a little bit of an update, I appreciate your remarks, but curious on how you would characterize the conversations with the rating agencies, and where you stand with cushion? I know GRC is outstanding. But ,if you can provide any context as to how you think about your metrics relative to what the agencies are thinking about, would really appreciate any commentary here. And again, I appreciate perhaps commenting around perhaps the proposed GRC your filing for instance.

Sure, Julien. As you can probably imagine, we are talking to rating agencies all the time. We are talking to them about our operational risk mitigation as well as just what’s going on more generally in California, and providing them with updates as we have with all of you on where the settlements landed back last year and all of that. So, we’ve been having those sorts of conversations. As we’ve mentioned before, we think that the equity plan that we have in place, or the financing plan that we have had in place and announced last year, is very supportive of the FFO-to-debt range that we’re targeting and supportive of investment-grade ratings. I’m sure you’ve read all the recent reports that the agencies have put out. The metrics on a look back basis are skinny, but that’s why the plan to issue equity and to move forward with that, so that we can support the balance sheet appropriately.

Got it. I appreciate it. And then, if I can pivot over to the PSPS commentary, I appreciate what you guys provided in the remarks. Can you elaborate a little bit on the action plan and the expectations for response from CPUC around their inquiry with respect to the PSPS events from the last year here? So, what should we expect in terms of process at a minimum, if anything?

Yes. Hey. I’ll start with this, and Maria may have more. Kevin Payne is also on the line, so he can add as he sees fit. So, just a process, you saw the letter that President Batjer sent, he monitored the hearing that the PUC had for Kevin and Steve Powell and other members of the team participated. That provided a lot of, frankly, good helpful input from commissioners and communities and other state agencies. Based on that, SCE developed the action plan that has a series of steps and commitments. You saw there are some things in there around or, frankly, continuing work on trying to minimize just the impact and scope of PSPS. I would put that in the category of work that’s been going on and continues, right? Areas like continue to be poised for sectionalization and tend to work on continuous improvement of weather modeling and the like to -- just really to help to narrow the gap between the approach we have, which is frankly the right approach for SCE to have of notifying customers, based on forecast conditions, but then the energizing on real-time conditions. But the more that we can narrow the gap between a number of customers that get notified versus those to get the energized by having better and better forecasting and modeling, that helps. So, you saw some actions around those lines. But, say, a lot of the focus was really on how do we help the SCE team better improve the communications process, communications with the emergency agencies, with government, with community leaders, with end use customers. And so, you saw a number of actions around that. In terms of process, there’s going to be a series of meetings every couple of weeks for the next while with commission staff, just to continue to keep them updated. SCE has taken the step of now dedicating a vice president to PSPS, who’s frankly a pretty strong leader, and he’s moving from the T&D business to over the next few months, spend all of this time, along with the dedicated team, on the PSPS improvement approach. So, that’s -- I’d say, it’s somewhat in formal process. And then there’s the action plan, more formality to rate and formal discussions with the commission on how it’s going along and check-ins with them. But frankly, wanting to make sure that the SCE team can move on all the elements and meet its commitments. Kevin, anything you would add there?

I think, you covered it really well, Pedro, the pieces of the action plan and also the process with the commission. So, good.

Next question comes from Jonathan Arnold from Vertical Research.

Just if I could ask one on the success you’ve had with settling the legacy wildfire claims and appreciate the quantification in simple terms around the two-third. But are you seeing any change in the pace of being able to move these things along, now that you reached the subrogation settlement with Woolsey, if anything you can report sort of latest update, Pedro?

I’ll give you a quick answer. Maria may have more. The remaining plaintiffs are largely the individual plaintiffs, it’s just by the nature of that you’re not talking about thousands of individual cases. In many cases, multiple individual plaintiffs might be represented by a common legal counsel, and so you might see all packages of settlements that can be done. But, it’s just a more time-intensive, laborious process to work to that. There is a more formal process that’s been established on the Thomas, Koenigstein, Mudslides cases. We’re working through that. We’re working with individual plaintiffs in the Woolsey cases. And so, it’s just harder to pin down a timeframe for that, Jonathan. But, the team is going at it and frankly has a good steady pace of progress. And so, I think, from an investor perspective, you’ll see the outcome of that every quarter as we update the kinds of numbers that we shared with you today. What did I miss in there, Maria?

No. I think that’s it, Pedro. I mean, we have a process on Thomas, Koenigstein and Mudslides. We are trying to move with various plaintiffs. It’s not going to be sort of an endpoint that we can pinpoint for you exactly, Jonathan. But as Pedro pointed out, we’ll be updating that every quarter. So, you’ll see the progress as it occurs.

Okay. So, that slide 9 is going to be a live thing effectively?

Yes, very much so. And just to put a fine point on it, don’t expect a big bang when it comes to individual plaintiff cases. You should expect just continued natural progress, because it’s case by case. And those cases are all very individualized, different stories, facts and circumstances for a homeowner in this kind of area versus a business owner in that kind of area.

I think this is a good way of helping people track it. That’s it. I appreciate that.

Well, thanks for the feedback. That’s helpful.

I’ll just ask one other thing. You’ve obviously said that the GRC PD might not come until the second quarter. At what sort of point does the delay start to affect your decision-making about spending capital and sort of throwing you off a bit as has happened in the past? I mean, how long a delay could you sort of work with?

Well, obviously, we like to know sooner rather than later. But, from an operational perspective, what we’ve done this year, which is what we’ve done in the past, in the first year of the GRCs cycle as well, is we just plan the work. We’re going to do the work. We’re going to progress against it. You can see that the capital plan is very robust in 2021. But, we have the flexibility in the back end to adjust, based on what the final decision comes out with. So, I think, we have degrees of freedom there. Again, we’d still like to get the decision sooner rather than later. But, from an operational perspective, I think, we have it well in hand.

Next question comes from Steve Fleishman from Wolfe Research.

Just on the comments on the GRC timing, you mentioned that based on the CPUC questioning later. Is it just a lot more questions than normal or just the timing of things? Just any more color on that comment, please?

Yes. It’s really more about timing by -- we have experienced with these cases every three years, I guess now it will be every four years after this one. And so, as the PD is getting put together, and as the commission staff go through the analysis they need to do, you typically see different pace and nature of questions as you get closer to the PD. And we haven’t really seen a lot of that yet at this point. So, that’s what suggests to us that PD is not likely imminent within the quarter. So, it’s really about -- there’s just a different set of questions, kinds of questions that you get, as you’re getting down to that final evaluation and writing of the PERIOD, and staff don’t seem to be quite at that point yet.

Okay, great. That’s helpful. Thank you. And then, with respect to the equity commentary, I think, you said $1 billion of equity content. So, that’s, I guess, if you did preferreds or some things that are not full equity content, you’re kind of saying focus on equity content, not total dollars. Is that the way to think about that?

That’s right. As we’ve said in the past, we are trying to think about this very holistically, monitor market conditions. So, when we talk about equity content, it’s the equity content that we’re targeting. So, absolutely right, Steve.

Yes. One last question along those lines. I’m sure you saw that PG&E did this transmission tower sale of access to SBA. Is that something that you could potentially look at as well?

Yes. So, we did see the transaction and it’s interesting. So, the team has been learning about it. There maybe be somewhat different circumstances for SCE, and that we do have obviously, transmission towers with attachments on them already today, like [indiscernible]. In our case, they’re part of a bit more comprehensive telecom business. Edison [ph] Care Solutions, which is essentially a competitive telco inside the utility, that not only does sell antenna attachments, but also has managed fiber services, dark fiber as well as lit fiber, providing bandwidth to carriers. And so in SCE’s case, there’s that broader telecom business. It also operates under a little different framework. I noticed that there’s some revenue sharing that the PG&E deal contemplates. The SCE’s business operates under a different revenue sharing mechanism. So there’s just a number of different bolts and whistles that are made for just different maturity of the business and different scope and scale today. So, the PG&E transaction might not be fully transferable or applicable.

Okay, great. Thanks for that. Thank you.

You might be surprised. I said so much about the telecom business, but it’s because I used to run it like 20 years ago, so.

Next question comes from Jeremy Tonet from JP Morgan.

I just want to go back to slide 9 for a minute there. And you discussed that after the Woolsey recoveries, you expect to exhaust the insurance. Can you file for CPUC recovery of settlements, or are there other kind of gating items that we should be thinking about here?

Yes. So, if you look to the past as sort of an indicator, our experience has been that the Commission generally wants to understand sort of the quantum of the ask before they make decisions around recovery. So, I think, we have a little ways to go still to get a total size of the ask that we would make ultimately to the CPUC. Obviously, we said before that for prudently incurred cost, we will be asking for recovery. At this point, based on history and prior precedents, we can’t say that that was probable recovery, which is why we took the charge a couple of years ago. But, that’s generally the framework that the Commission has.

Got it. That’s very helpful. Thanks. And just thinking about PSPS discussions and just the environment in the state right now, just wondering if you might be able to comment on how you see overall kind of relationships, political risk currently in the state. Any thoughts you could provide would be helpful.

Yes. I’m happy to chip in on that. Look, I think, the headline is that we continue to view California as one of the most constructive states in the country when it comes to utility, the regulation, right? And it’s both because of the backward-looking and current mechanisms like the fact that we have our forward-looking rate cases, we have the balancing accounts for elements like procurement purchases -- energy procurement, I should say. We have decoupling, right? So, you have a number of elements that have been here for quite a while that make for a constructive environment. You also have, frankly, looking more towards the future, a state that’s been fairly aggressive in terms of wanting to push the edge of technology and have as wanted utilities to play a significant role in advancing the ball for the sector, right? For the benefit of California customers. That’s meant that utilities has to take on some added operational risks in managing more distributed resources than our peers in other states or -- and having deeper penetration renewables or being earlier in the curve around storage and the like. And that has lent itself to providing an opportunity for ROEs that have reflected a premium based on those risks that we are being asked to manage. And then,, finally, looking solidly, well out in the future, it’s a state that is really committed to decarbonizing the economy. And so, you’ve seen through our papers like a Pathway 2045 and remanaging the grid papers that we see that that decarbonization getting to net zero for the state will require a significant ramp-up in renewable and other carbon-free resources along with storage. This will lead to a dramatic increase in load across the state, 60% or so increase in order to then…

Got it. That’s very helpful there. And maybe picking up with electrifying, specific to the transportation sector there, you spoke about this in the past, you spoke about it in your prepared remarks. Just wondering, if you could provide some perspective I guess for the EV outlook. How it looks today versus maybe a couple of years ago, and kind of down the future, how big do you think this opportunity is for EIX?

So, we started talking about this a few years ago. We had our Charge Ready application. I think, our Pathway 2045 paper at the time was forecasting something like a need for 7 million electric vehicles in California by 2030. At the time -- or shortly after, I think the state was talking about a $5 million mark. Since then, you’ve seen the state really look at doubling down on the electric vehicles and progress like Governor Newsom’s executive order for zero-emission vehicles -- 100% zero-emission vehicle sales by 2035. That says something right there about the growing commitment by the state, and frankly driven by growing realization that that is a key tool and one of the most affordable tools to get to decarbonization at the end of the day. The other angle, I’d share on this is, then there’s the market, right? And so, when we start talking about this, there was the vote. Remember, when I got my first vote in 2011 and that new model year, my colleagues were driving some of the first Telas, a whole lot of EVs out. Now, you’re looking at a rollout -- I was reading one of the latest articles where I think over the next year, there’s going to be, what, something like 20 or 30 new model offerings across auto OEMs and it’s an area where U.S. automakers are realizing that if they don’t run fast, they could lose leadership to Chinese automakers or European automakers. So, seeing things like Ford’s commitment of $20-some-billion investment towards EVs over the next several years, seeing GM’s aspiration to not have internal combustion engines anymore in a decade or so, that is a very different landscape from where we started four, five years ago. And it tells you that this is happening, it’s real, and I suspect, like other technology innovations, like the deployment of cell phones, folks maybe surprised by how quickly that escrow takes off.

Next question comes from Michael Lapides from Goldman Sachs.

A little bit of housekeeping question. So, capital spend for 2020 came in about $500 million higher than what you all had put out when you reported third quarter earnings or just after third quarter earnings. First of all, what drove that $400 million to $500 million being done just so quickly? And then, second of all, does that all -- is there any change in the capital spend program potentially in terms of what you think about long-haul transmission related spend, or do you think you’re still in a five or seven-year cycle where there’s more maintenance work on the transmission grid, there’s not a lot of new sizable scale development there?

I’ll go take the first piece, at least, a little bit of a second, and I’ll let Pedro also chime in on his thoughts in long-haul transmission. But, so that delta in the capital spending between last quarter and this quarter was largely driven by wildfire restoration costs. So, you will recall that late last year, there were a number of large fires in our service territory, particularly up in the northern part of our service territory around Big Creek. And so, a lot of the spend that’s been going on since then has been to really get all of those facilities back into service and to repair them, et cetera. So, that’s really the driver there, Michael. We have to go through an analysis and see sort of what in there was otherwise going to have been replaced or upgraded, et cetera, what’s incremental, but that’s largely the capital change from last quarter. In terms of transmission, and we’re still in the cycle. I think, obviously, the state is planning for the future, the future that Pedro just described in his earlier remarks. And we have to look to the CAISO to do that planning. There’s obviously a lot of work going on around the need as well, both in the integrated resource plan -- integrated resource plans as well as well as CAISO. But, I’ll let Pedro share his thoughts as well.

Just maybe a quick sound, like Maria has said, again, you may have heard me share this before, Michael, from our Pathway 2045 analysis. But, that analysis estimated that California would need to add 80 gigawatts of bulk power kind of wholesale level renewables and 30 gigawatts of wholesale bulk power level storage by 2045. That’s in addition to 30 gigawatts of distributed generation and 10 gigawatts of distributed behind-the-meter storage. But, all that would require something like $175 billion investment for the resource side for the renewables and storage side. And the counterpart to that is that you need something like $70 billion in why your site investment, with most of that being for transmission, whether it’s new lines or enhancing of current lines. Now, that’s state wide, right? So, that’s not all SCE, but that just gives you a sense of how big the investment need will be in order to accommodate that electrified future to decarbonize economy. And then as a reminder that, under the current per quarter 1,000 structure, if the Cal ISO determines that an existing line needs to be upgraded, and the utility has right of first refusal to do that upgrade on its line. Line has been already --owns and operates. If it’s a brand-new line, that’s not an extension of an existing line, then that is bid out competitively. And I would expect the utility to seek to compete with third parties for that new build. So, hard to quantify what the specific SCE opportunity will be from all of that. But, it’s clearly a very large pie that will need to be met across the state. And I expect that SCE will certainly play a significant role within its territory for that.

When do you think we could start seeing that roll into three or four year -- three to five-year forecast piece? Like, when do you think the southern part of the state might actually start to need it?

Yes. That’s a really good question. I’m not sure I’m going to have a sharp answer for you right now, Michael, partly because the Cal ISO, I don’t think, has turned the crank yet on the underlying analysis for what lines and in what timing? My guess is that -- or my sense is, not guess, my sense from the analysis is that a lot of that spend may be post 2030 spend because that’s when you really see the load pick up too. In our analysis, load, which has been fairly flat statewide to slightly declining for the last decade, through 2030, interestingly, continues to be fairly flattish, right? Because you have a lot of electrification between now and 2030 being counterbalanced by continued distributed generation deployment as well as continued energy efficiency. But, we see a big elbow -- turn in the curve, upswing post 2030. And that’s where the state really picks up the bulk of that 60% load increase that I talked about before. It really happens mostly between 2030 and 2045. So, that may suggest that a good chunk of that build maybe post that. But, in the meantime, you’ve seen our capital spend so far. As Maria described, we had a bump up from just that Creek Fire restoration last year. So, I hope we don’t have to do fire restoration for any future fires. But we continue to say that we see an ongoing opportunity for significant capital spend, just for the core capital investment in the utility. And so, I -- to think about the long-haul transmission, that becomes an adder that certainly supports the long-term growth for the Company.

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

Thank you for joining us today. And please call if you have any follow-up questions. This concludes the conference call. Have a good rest of the day and stay safe. You may now disconnect.