Title

Presentation

Edison International beats earnings expectations. Reported EPS is $1.42, expectations were $1.32.

Operator: Good afternoon, and welcome to the Edison First Quarter 2026 Financial Teleconference. My name is Michelle, 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.

Sam Ramraj: 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 on the call are other members of the management team. Materials supporting today’s call are available at www.edisoninvestor.com. These include a 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 the 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.

Pedro Pizarro: Thanks a lot, Sam, and good afternoon, everyone. Let me start by acknowledging that last week, we announced Maria’s retirement plans. So this is our last earnings call that we’re partnering on together. I’ll come back to this at the end of my remarks because if I start now, I may not make it to my comments. But before moving on, I’d like to welcome Susan Hardwick to our Board. She brings over 35 years of leadership experience in the electric and water utilities, including as CEO of American Water, with deep strength in operations, finance and regulatory oversight. We are pleased with our start to the year and the momentum across our business. Edison International’s first quarter 2026 core earnings per share was $1.42.

Our continued performance reflects disciplined execution, steady operational progress and a clear focus on the priorities that matter most to our customers, communities and capital providers. Importantly, we are reaffirming our 2026 core EPS guidance and other financial targets, including our 5% to 7% core EPS growth over the long term. Our targets are supported by strong visibility into the capital plan, SCE’s regulatory outlook and a sustained focus on safety and risk management. Today, I will focus on 3 areas: first, our continued work to make communities safer and more resilient, including wildfire mitigation and rebuilding efforts; second, key legislative developments; and finally, our confidence in the financial outlook, which Maria will expand on in her remarks.

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Beginning with wildfire mitigation and grid reliability, safety and community protection continue to guide SCE decisions and investments. Over the past several years, the utility has made substantial progress, strengthening the grid, improving situational awareness and reducing wildfire risk across its service area. The planned physical hardening work on the distribution system in high fire risk areas is now about 93% complete, reflecting years of sustained investment in covered conductor and targeted undergrounding. SCE continues to evolve its Public Safety Power Shutoff, or PSPS, protocols, which include enhancing its analysis of on-the-ground conditions, enabled by its vast network of weather stations and overall system visibility. These measures plus the grid hardening work I mentioned earlier, are keeping SCE customers and communities safe.

Importantly, in March, the Office of Energy & Infrastructure Safety approved SCE’s annual safety certification after its independent assessment of the utility’s WMP and SCE’s continued progress implementing its plan. SCE’s wildfire mitigation plan includes new and expanded tools to improve safety, reliability and efficiency across its network. Let me share some tangible examples. SCE is using AI models to improve grid inspections and identify maintenance needs with faster and more accurate diagnostics and enhance quality control. Since 2023, SCE has developed and deployed AI and machine learning models that are collectively capable of detecting nearly 100 unique object classes and dozens of defect conditions. SCE is also using LiDAR and satellite imagery to support precise proactive vegetation management to help prevent ignitions.

The utility is also expanding its deployment of early fault detection tools that identify abnormal grid conditions, enabling earlier awareness and faster response to potential equipment issues or ignition risk. Capabilities like these are increasingly integrated into how SCE monitors conditions, anticipates risk and deploys resources in real time. Turning to the Wildfire Recovery Compensation Program, or WRCP, SCE continues to make progress. SCE has now extended over 1,500 offers totaling over $500 million to community members impacted by the Eaton fire, helping families and individuals move forward more quickly without the delays and uncertainty of traditional litigation. SCE remains committed to administering the program in a transparent way that is responsive to community needs with fast and fair payments.

On the legislative front, earlier this month, the California Earthquake Authority released its study. It reinforces that addressing California’s growing wildfire risk requires a whole-of-society approach and that the status quo is not working for customers, policyholders or wildfire-impacted communities, who ultimately bear the real and increasing costs of inaction. It presents options for policymaker consideration, including 3 nonexclusive pathways, a defined set of strategies, and more than 2 dozen specific policy choices for reforming California’s wildfire, insurance and utility systems. We have provided a summary on Page 3. There is urgency for legislative action, and we remain actively engaged with policymakers and key stakeholders to help shape solutions that support safety, affordability and long-term resilience for California communities.

Our team is also fully engaged on the various pieces of proposed legislation pertaining to utilities, with affordability a critical focus. A common goal across wildfire reform and affordability is to build the right whole-of-society approach, allocating wildfire risk equitably across the economy and attracting capital at a reasonable cost on customer bills. This will benefit both customers and capital providers. Operational excellence is a core Edison value as SCE aims to maintain its cost leadership position with the lowest system average rate among the large IOUs in the state. I have shared on prior earnings calls examples of operational excellence in practice, including SCE’s use of AI in areas like grid inspections, vegetation management and wildfire situational awareness, including the award-winning AWARE grid monitoring platform.

The team continues to explore new AI-enabled process improvements across the entire value chain. Let me share another recent example. All utilities have instances where electricity usage can occur at a location before it is fully linked to an active customer billing record. In the past, identifying those situations required periodic manual checks and often occurred after the fact. Through SCE’s internal innovation program and in only a handful of development hours, frontline teams developed an initial proof of concept of an AI-driven approach that continuously monitors for these situations and brings them to the surface earlier with clearer and more actionable insights. Once implemented, we anticipate this approach could yield roughly $25 million in potential unbilled revenue savings over a 3- to 6-month period.

It’s a good illustration of how smarter systems and disciplined execution translate directly into stronger financial controls and support long-term affordability. Let me now turn briefly to the financial outlook. We remain confident in the company’s financial position and long-term trajectory. Major SCE regulatory decisions like the 2025 GRC, cost of capital and legacy wildfire cost recoveries are successfully resolved, providing clear visibility to 2028 earnings. Combined with our operational progress and disciplined capital execution, this all supports our confidence in our long-term targets, including 5% to 7% core EPS growth with no new equity needs. Before I turn it over to Maria, we announced that she will retire on September 1 after transitioning the Edison International CFO role on July 3 to Aaron Moss, who is here in the room with us today.

Maria will focus her final months on critical policy priorities, including the SB 254 process and supporting Aaron’s transition. This is really bittersweet because Maria and I have partnered continuously for over 15 years across our Edison Mission Energy, SCE and EIX gigs. Our Board, our team and I are grateful for the outstanding leadership she has provided across multiple challenges that many of our investors will remember well, including the EME restructuring, helping our communities recover after tragic wildfires, a global pandemic, 4 SCE GRCs, and shepherding the investment and operational improvement opportunities created by the clean energy transition, historic load growth and the rapid ascendance of AI. Throughout it all, she has shown great financial skill, unflappable balance, a deep commitment to engaging with our investors, some might say a lot of patience dealing with me and a real passion for developing our people, including Aaron.

Aaron, Maria and I worked closely together through the EME restructuring, and we kept on going as Aaron took on the EIX and SCE controller roles and most recently as SCE’s Chief Financial Officer. He has been a key leader of SCE’s operational excellence efforts over the past several years, and many of you know him well already from his extensive investor interactions. I’m excited about and confident in our new chapter together. So Aaron, welcome to this role. Maria, thank you for your partnership. Thank you for your friendship. And now it’s time for your 39th and final earnings call remarks. So waiting for you to drop the mic here.

Maria Rigatti: I appreciate that, Pedro, and would like to extend my thanks as well. Over the years, I’ve spent with Edison, I have had the privilege to work with dedicated people who are focused on delivering on the commitments we have made to our customers, communities and investors. I thank the team for their focus and innovation. I also want to thank all our investors for your engagement and feedback through the opportunities and challenges that Edison has managed. And I know that Pedro, Aaron and the entire team will continue to benefit from your support. Now let’s move on to the quarter and the financial outlook. I’ll cover first quarter 2026 results, our capital and rate base outlook, regulatory updates and our earnings guidance.

EIX reported first quarter core EPS of $1.42. Page 4 provides the year-over-year quarterly variance analysis. Core earnings increased by $0.05, primarily due to the adoption of the GRC decision last year, partially offset by the absence of about $0.30 recorded in Q1 2025 related to the TKM cost recovery approval. Parent and other core loss was $0.01 lower, driven primarily by lower financing costs following the redemption of preferred stock. Overall, the quarter reflects benefits from solid execution and SCE having strong regulatory visibility with no major proceedings driving this year’s results. Importantly, it also reflects the quality and durability of our earnings profile, while keeping our focus squarely on delivering safe, reliable and affordable service for customers.

Our first quarter results reinforce our confidence in the underlying business and our ability to deliver consistent performance through the year. Building on first quarter performance, I’ll turn to SCE’s capital and rate base outlook shown on Pages 5 and 6, which is unchanged from last quarter. Our capital plan of $38 billion to $41 billion from 2026 through 2030 is driven by essential investments in the grid to meet customer needs and support California’s clean energy objectives. We are executing this plan with an unwavering focus on affordability and cost discipline. I want to reinforce Pedro’s earlier comments on execution and line of sight into our financial projections. With an approved GRC covering the bulk of SCE’s capital plan through 2028, we have a high degree of confidence in our ability to execute and deliver on this plan in a way that meets customer needs and regulatory expectations.

That confidence is further bolstered by long-term fundamentals as we ensure the grid is ready for the economy-wide electrification ahead. Customer demand for an increasingly reliable and resilient grid continues to grow, making the need for sustained grid investment clear. As shown on Page 6, we expect SCE rate base compound annual growth of approximately 7% from 2025 to 2030, reflecting both near-term visibility and the long-term case for grid investment. SCE is focused on executing the work authorized under its current GRC, which provides clarity for most of its operations through 2028. In addition to the approved GRC, SCE has 2 significant stand-alone applications underway. The first is the NextGen ERP program, which we’ve discussed in prior quarters.

The second is SCE’s AMI 2.0 application, which was filed in March and requests approximately $3.1 billion of capital investment through 2033. As we have previously disclosed, the capital associated with both programs is already incorporated in our capital plan. AMI 2.0 represents a comprehensive modernization effort with benefits across the system. It supports grid resilience and operational efficiency, enables more advanced customer services and provides the data foundation needed to support electrification, distributed energy resources and more dynamic system management. Looking ahead to the next GRC cycle, SCE will take the first step next month by filing its Risk Assessment and Mitigation Phase, or RAMP application. This filing informs the next GRC and outlines the risk mitigations that guide proposed investments across wildfire risk, transmission and distribution reliability, cybersecurity, climate adaptation and other safety-related measures.

As in prior cycles, this process provides a clear safety and risk-driven framework for evaluating capital needs and supports consistent engagement with regulators and stakeholders on safety and risk priorities. I will highlight that following the resolution of several major proceedings last year, 2026 represents a cleaner regulatory slate, meaning fewer open proceedings and greater visibility into capital recovery, which further supports our confidence in the utility’s ability to execute the long-term plan reflected in our capital and rate base outlook. I want to underscore an important differentiator in our financial strategy. We plan to deliver this growth without issuing new common equity for at least the next 5 years through 2030. This builds on our track record of cost-effectively managing our credit metrics, and having issued only about $400 million of common equity over the last 5 years.

We will continue to finance the business efficiently and remain committed to our 15% to 17% FFO-to-debt framework. We expect to be within this range in the forecast window, and EIX has one of the strongest consolidated FFO-to-debt ratios projected by S&P. These data points demonstrate the strength of our balance sheet and cash flow profile. This diligence allows us to fund critical infrastructure investment, maintain financial flexibility and create value for both customers and shareholders. Moving to earnings guidance. We are affirming our 2026 core EPS range of $5.90 to $6.20. We are also affirming our previously provided core EPS targets for 2027, 2028 and 2030 as well as our long-term EPS growth rate. With a strong start to the year, we remain confident in our ability to deliver on these commitments for customers and capital providers.

That confidence is grounded in disciplined execution. We continue to maintain a strong focus on capital prioritization, operating efficiency and cost management. Investments are evaluated through a risk-based framework with a clear line of sight to recovery. This rigor reinforces our ability to deliver on our long-term financial targets, while continuing to advance safety, reliability and resilience for the customers and communities we serve. That concludes my remarks. Back over to Sam.

Sam Ramraj: 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 the opportunity to ask questions.

Operator: [Operator Instructions] Nick Campanella with Barclays.

Nicholas Campanella: Congrats to Maria and Aaron here. Always a pleasure, both of you. So you brought up in your prepared remarks the wildfire legislation and the SB 254 study. And I guess a lot was thrown out there in terms of the recommendations. But ultimately, I guess, what is Edison kind of advocating for in the 3 paths? Where is the threshold in your mind for shareholder contribution just kind of keeping in mind what played out last year? And then I guess, as we move forward here, when do you expect the actual CEA report to go in front of the legislature, if there’s any timing that you can kind of talk to? I know that’s a few questions of one.

Pedro Pizarro: Yes. That’s pretty good, Nick. Appreciate it. All right. So first on what we think is important here. Look, broad strokes, right? We appreciate that the CEA report really touches on all of these. It’s important that we, as the broad California economy, not just utilities, but the whole society, see broad risk reduction incentives and programs, right, to reduce the physical risk across our entire state. It’s important that when — in spite of everybody’s best efforts, the catastrophe strikes that there’ll be process for recovering quickly and having a fair process for that, one that’s predictable, where there’s good accountability, where there’s transparent enforcement and tying that to conduct with the various parties involved.

And you saw that the joint submissions that the utilities made talked about some examples from other jurisdictions on the mechanisms for how you think about addressing safety insurance components and the like. So broad strokes, you asked about shareholder piece here. We said before, we think it’s really important that the state return to an investor-owned utility cost of service model, right? The model that we’ve had across the country where investors can know that there’s a good opportunity to recover their capital investment, both return of and on that if the utility has been prudent and where further shareholder contributions would take place if utilities management had — was not demonstrated to have been prudent. So to me, that’s the base piece here.

Now we also recognize that there could be a lot of different ins and outs and ideas that folks throw out. So we will continue to engage with all the stakeholders and evaluate any and all packages on their merits at the time. And then finally, you asked about timing. And I think the one solid piece of timing guidance I can give you is that the legislative session ends August 31 and that bills have to be in print by August 28, 72 hours prior. I know I’ve seen some chatter about, well, is it sooner? Is it later? This is complex legislation in a year that’s full of complex topics. There’s a discussion about wildfire, but it, in itself, really touches on affordability for the state broadly, right? Because as you saw in the CEA report, doing the right thing in terms of the wildfire framework will indeed help affordability for the state.

And so I wouldn’t expect that, that gets solved in the first week of the legislators being back, really can’t predict when it happens. And if it takes the whole session, it takes a whole session. Most important is to make sure that we do our part to help them do the right thing for our economy. I think I covered all 3 parts, and then some.

Operator: Our next question comes from Richard Sunderland with Truist Securities.

Richard Sunderland: Congratulations as well to both Maria and Aaron. Picking up on the sort of legislative discussion from earlier, I realize, Pedro, it looked like you didn’t want to speak to timing much, and I get that. But I guess just procedurally, this go around versus last year or a few years back, how do you think that will differ in terms of the engagement given we have the CEA report out? Do you see more of a public bent to all of this given the high-profile public nature of the report? I guess any other thoughts there would be helpful.

Pedro Pizarro: Yes. Sure. I mean it’s a good question. And I think part of the answer is the CEA process itself, right? We had — prior to the legislative session reopening, you had, frankly, a group that was a very professional group at the CEA, go through a methodical process, engage a broad range of stakeholders. So a lot of different voices are appropriately represented in the options that the CEA laid out in their report. So I — it is me speculating a little bit here, but I think it’s probably fair to say that this gives the legislature a much more robust platform from which to enter their debate and one that already reflects stakeholder voices. Given that so many stakeholders contributed to the development of the CEA report, I would expect to see a broad group of folks also engage in the legislature, and that’s a good thing.

This can’t be just about utilities. This can’t be just about insurance. It can’t just be about building codes and standards. You really need all of these things to come together to make the system work for the world’s fifth largest economy. In terms of procedure, maybe the other thing I would offer is that, I’d say, typically, when you see these kind of complex topics, it’s probably not surprising to expect some continued engagement from the governor’s office, their leadership. You saw the governor say early on in his initial press release after SB 254 that the state would benefit from the continued engagement of, for example, Ann Patterson, now at Stanford, right? So good brains being applied to this. In the legislature, I would imagine and expect that the leaders of some of the relevant committees are being personally engaged.

In the past, sometimes you’ve seen working groups get assembled, designated by leadership. I haven’t heard that’s going to happen, but I wouldn’t be shocked if we saw something similar because you really need a core group of policymakers to be able to dive into the details as they craft potential legislation. So some thoughts. Maria, I don’t know if you have anything to add there?

Richard Sunderland: That’s helpful context. And then I guess sticking with this theme, I think if I followed the script correctly, you’ve talked about some broader legislative engagement and mentioned affordability is a critical focus. Could you just expand on that a little bit more? Are you talking kind of outside of the wildfire reform efforts? And any other context for what you’re, I guess, focused on and promoting there would be helpful.

Pedro Pizarro: Yes. Look, just acknowledging, you’ve seen a number of bills introduced already that hit in some way on affordability for the [indiscernible]. And I think going into that, it’s really important that Southern California Edison is proud of the affordability trajectory that it’s been on. And I think we mentioned it briefly in my remarks, but the hard work that Steve and Aaron and the whole team have been doing over multiple years to manage costs, be as affordable as possible, that will continue. But that’s an important fact that we go into all this. But I was just acknowledging that you’ve seen a number of bill introductions that hit on affordability. It’s clearly a theme in the gubernatorial primary. And so I know that’s on people’s minds and the wildfire piece will be an important part of managing affordability for the state.

Maria Rigatti: And maybe just, Rich, Pedro is right, the wildfire legislation itself is about affordability. It is inherently an affordability bill. The other affordability bills, they really do cover a wide range of things, everything ranging from looking at rates and rate structures and how to manage those down potentially to things that are just around the reporting and how the utilities would disclose the work that they do, how things are audited. So it really covers a pretty wide spectrum of things that fall into that affordability category.

Pedro Pizarro: And Maria, I think it’s fair to say you’re also seeing affordability discussions around the insurance market. And I’m sure as folks think about risk reduction in physical space, you’ll see affordability considerations there. So yes, it’s an important theme for the state. And by the way, one thing that the CEA report pointed out is that wildfire, well, that’s the main focus here in this discussion and then what you were asking about, it is one of a range of other natural impacts that California needs to deal with. And I thought there was a table in the CEA report that was instructive where you look at the — what is needed in the state in terms of earthquake hardening, for example, probably has an extra 0 compared to the wildfire. So I think lawmakers will be thinking about affordability writ large, putting everything in that context.

Operator: Our next caller is Gregg Orrill with UBS.

Gregg Orrill: What’s your anticipation? Or is it too early to know what the scale will be of the Wildfire Recovery Compensation Program?

Pedro Pizarro: You mean the SCE’s WRCP?

Gregg Orrill: Yes.

Pedro Pizarro: So yes, we don’t know ultimately what the participation rate will be. What I can tell you is that I mentioned we’ve had around 1,500 offers that have been made already. There’s over 3,100 claims that have been filed. But to put that in scale, we’ve also seen claims brought forth by something like 30,000 plaintiffs so far. We know that in the program itself, there are around 18,000 properties that qualify for the program in the zones that — for eligibility. And any given property could have multiple claimants. And so that says to us that the 3,100-plus claims so far, the 1,500 or so offers so far are very early stage here, but we really can’t forecast what that ultimate number might be.

Operator: Our next caller is Anthony Crowdell with Mizuho.

Anthony Crowdell: Congrats to Maria and Aaron. Just — I think it’s off of Gregg’s question, and maybe you just answered it. Obviously, the claimants grew about 3x from the update you provided in February over $500 million now. At what point or clarity on maybe the pace of settlements give you enough visibility to provide a loss estimate?

Pedro Pizarro: Yes. And we still — sorry, Anthony, I know this is going to sound familiar from prior quarters, but it’s really hard to estimate even when we will be able to provide an estimate. I think we will need to see not only a large enough volume of claims go through the program, but also, I’m not sure this is the right word, some stability or lack of volatility in terms of the types of claims that we’re seeing where we could then somehow extrapolate that we have a really good beat on what the rest of the exposure might look like. You might remember, frankly, I think we all learned lessons together as we went through the exposures and the other heartbreaking instances, TKM and Woolsey, where we saw that there were new facts that came out and such a variety of different types of claims that I think we learned from that.

It is very difficult to come up with the best estimate or even at this stage, a low end of the estimable range. So that was a long-winded way of saying not sure when we would be in a position to do that, Anthony.

Anthony Crowdell: Great. And just a quick follow-up. I believe in the first quarter, you stated you filed the AMI 2.0 application. Just any timing of a decision there or expected time line of the CPUC decision?

Pedro Pizarro: Let me turn it over to Aaron for that.

Aaron D. Moss: Yes. So we just filed in March. We’ll have — that’s a $3 billion, a little bit more than $3 billion capital program that we filed for, replacing the smart meters that we deployed nearly 20 years ago. About half of that capital is in our current capital forecast, about half of it extends beyond the 2030 time frame. So we’re at the front stages of our process with the application just being filed. I believe, somebody could correct me, that intervenors would provide comments later in the summertime of July and then the decision follows along after that, Anthony.

Operator: Our next caller is Carly Davenport with Goldman Sachs.

Carly Davenport: Maybe just to follow up on some of the SB 254 questions. There’s still, I think, robust debate around if there will, in fact, be legislation passed this session or if you maybe see this pushed into 2027. So I guess, could you just provide some thoughts on kind of the course of action in the event that legislation has not passed this session or maybe isn’t as comprehensive as you might have hoped? I guess, should we expect any changes to the strategic focus areas or the current plan on the back of that?

Pedro Pizarro: Yes. Thanks, Carly. Look, let me be very clear, our singular focus today is on 2026. And as you heard in my prepared remarks, one of the real strengths or the strongest messages in the CEA report was the deep cost of inaction. And so that was a real call for action. It was a sense of urgency that the CEA communicated and that I think you’re already starting to see reflected in maybe some of the early comments on the legislature. That said, we can’t guarantee that we’d see action in 2026. We think that the table is very much set for that and that there is a need for the economy to see that. I would also add that frankly, as a resident of California, put aside my CEO of Edison hat, I worry about this from a broad state perspective, the world’s fifth largest economy, we’re going to see — we don’t see legislation this year.

I think it’s quite likely we would see, for example, credit rating impacts not only for utilities or for insurance companies, but you could see it in other sectors in the state, you could see it for the state’s own financing authority. And so part of our job will be to make sure that we and others are telling — providing the message, providing that fact-based to legislators and policymakers that this really requires action this year. And without action this year, I think we’re going to see some real dire financial consequences across multiple sectors of the economy, not just the utility. If, in spite of all that, there isn’t sufficient action in 2026, then we will plan for what we would do in future cycles. We would also need to take a look and see what happens with, for example, our cost of capital.

And does that lead to then us having to think differently about our capital allocation. But we’re not there today, and our, again, singular focus is on 2026.

Carly Davenport: Got it. I appreciate the thought…

Pedro Pizarro: Maria, do you want to add anything to that?

Maria Rigatti: Yes. Carly, maybe I’ll just underscore, Pedro is right that the process is progressing right now as it was intended to and as it was outlined under the legislation. We have a lot of visibility into our capital plan because we have knocked out a lot of the regulatory proceedings in 2025. So there’s a lot of certainty as to the plan, how we execute the plan and what the plan costs. We have no need for new equity for the next 5 years. And as you know, we have a commitment to the dividend that we — that the Board has been declaring and increased, in fact, by 5%, 6% in December. So we have a lot of the groundwork laid and a lot of the visibility laid. And when we look at the future, we have a lot of confidence in the scenarios and the conservatism that we’ve built in.

I think as Pedro said, as we continue to think about the cost and benefits if the cost of capital goes up, our customers would pay more if the cost of capital goes up, and we would have to consider that in the future when we develop new capital plans. And that’s why a predictable framework under legislation that supports reasonably priced capital is really most helpful to our customers.

Carly Davenport: Got it. Okay. That’s really helpful. And I guess just picking up maybe on that last piece in terms of what’s in the best interest of your customers. There’s obviously been a lot of focus on affordability, in particular, in kind of some of the rhetoric around the upcoming gubernatorial election and there’s been some recent changes in kind of the polling there. So I guess maybe just if you could talk a little bit about how you’re positioning some of the rate decreases that you’ve seen this year and Edison’s overall strategy on affordability with policymakers in response to some of the noise on affordability related to the election.

Pedro Pizarro: Yes. And Carly, I think your — the last word you used there, you noise is appropriate because it is an election and there’s a lot of stuff flying around. Obviously, we — ultimately, we will work with and work well with whomever the people of the state elect. But we are very focused on making sure that we are clear in what the facts really are around the affordability trajectory. The fact that Southern California Edison has had up until the 2019 to ’24 period had rate increases that on average were at or below inflation. We had a period there, 5 years, where we went beyond inflation for reasons we’ve explained, external impacts from weather and power market costs because of the wildfire, about 1/3 of it was kind of normal load growth sort of impacts.

But importantly, the commitment we’ve been able to make that Steve and Aaron and the team are steering SCE to be delivering rate increases that are once again at or below inflation through 2030, that’s an important message that needs to be out there, and we’re making sure we’re communicating. So we’ll continue to engage with candidates and their campaigns, continue to educate our policymakers and our customers. And most importantly, we’ll continue the hard — the real work on operational excellence and continuous operational improvement.

Operator: Our next caller is Aidan Kelly with JPMorgan.

Aidan Kelly: Just one question on my end. I want to hone in on the Eaton fire process, if I could. It seems there’s been some recent media headlines pushing back on the information flow in court proceedings. I guess just curious if you could share some thoughts on Edison’s dissemination of information to the state. And do you kind of see this pushback as normal give-and-take or maybe like a touch higher than what you’d expect typically?

Pedro Pizarro: Yes. Aidan, I think you’re probably referring to an article that was posted by the LA Times over the weekend that made that argument. As you probably saw in the article, I actually sat down with the reporter and make sure that — I tried my best to make sure that the reporter understood the facts here. I think the article had a slant to it that lacked appropriate balance. The core of that, that she was describing in the article, she was making the argument that because some of the information in the case is privileged that somehow that meant Edison is withholding information. And that is just simply not an appropriate take on the process. It starts with the commitment that I made on behalf of the company, and we continue to make as a company to be as transparent as possible with our public and with you, our investors.

And we’ve continued to do that throughout the process. However, there is information in litigation that is privileged, not just on the Edison side, but there’s privileged information on the plaintiff side. And that’s one of the items that I emphasized, and I’m not sure it got quite captured us strongly in the article. There’s a balancing act here. And both sides develop privileged information. It’s important for their litigation strategies. It is litigation, right? And so it’s appropriate to protect privileged information. By the way, not only did she focus on privilege in logs, but also the fact that there is some information that is protected by confidentiality orders in the case. And so I explained to her, and I think this piece may have made into the article a little bit.

Some of that information may have nothing to do with the Eaton fire case itself. So for example, in sweeping up discovery, et cetera, that might include, if you’re asking for — hypothetical here, asking for information about the network or about meters on the network. Well, they might sweep up information around our network map topology that the federal government wants us to keep under wraps because to put it out there, would provide a road map for agents, terrorists and others who do not mean well, right? They mean harm to the system. Similarly, some of the information might include specific customer information that we need to protect, keep confidential. The other side, plaintiffs’ attorneys can see some of that information under protective orders, but it’s not released to the public.

So those are the categories of information that I think she’s referring to and was trying to support a thesis that somehow we’re not being as transparent as possible. That is simply not true, and we will continue to stress what fact is and what fact is not here.

Operator: Our next caller is Ryan Levine with Citi.

Ryan Levine: Congrats to Maria and Aaron. In terms of the sizing of how much — is there a way you could size how much cost-cutting initiatives AI could enable or unlock and how the AMI 2.0 and ERP systems could impact that opportunity?

Pedro Pizarro: I’ll turn it over to Steve and Aaron here. Steve, do you want to take it?

Steven Powell: So I think it’s still really early to get at a full sizing of what the potential with AI is. Pedro listed out in his opening remarks, a number of areas that we’re leveraging AI. They span from things that we’ve already done in our customer operations. And so helping out our call center agents more quickly respond to customers and shorten the length of those calls. We’re doing things like identifying trends around customer issues and frankly, flagging them before they happen, and we can get ahead with proactive communications to customers to deal with some of their challenges. There’s a lot of emerging opportunity on the grid. It’s developing tools that will automatically do designs of infrastructure. We’re starting with the basics of like-for-like replacement to changes to how you dispatch your resources, changes to how you optimize your capital portfolio.

So it spans kind of the entire business from procurement to grid to the customer side. It’s still early days. We’re getting — we’ve got benefits that we capture and they roll into our forecast. But I think the total opportunity there is something that will continue to evolve, especially as the technology evolves so rapidly.

Aaron D. Moss: Maybe I’d add to that on the question about the advanced metering initiative. The data that we’ll be gathering through AMI will be critically useful for us. Take a look, Ryan, at our application we do go through and quantify a significant amount of value that will come to customers from that program. And in that, we look at what’s the case for a like-for-like replacement, and what’s the case for — what is a more expensive but much more valuable to customers, sort of state-of-the-art or near state-of-the-art metering initiative and how we could use data there to inform demand flexibility to provide customer signals to enable things like allowing customers to avoid the cost of a meter upgrade to charge their electric vehicle by better managing their electric consumption within the panel and within the meter that we have there.

So a lot of benefits that have been quantified in that with a benefit/cost ratio for the incremental costs above the obsolescence case well above 1.

Pedro Pizarro: Exciting stuff. And also all of this is supportive of the 5% to 7% EPS growth rate.

Ryan Levine: Great. And then one follow-up question to some of the prepared comments. How are you assessing wildfire risk going into the summer wildfire season compared to prior years given weather and all the company actions over the last few years?

Steven Powell: Ryan, it’s Steve. I’ll follow up on that one as well. So when we go into every — I’ll say, each year as the weather evolves, we’re really focused on our long-term mitigations and how they’re significantly reducing risk across the whole system. So we’ve now deployed more than 7,100 miles of covered conductor, nearly 100 miles of undergrounding. And that really forms the basis for that risk reduction. We layer on top of it going into each season, looking to see where the parts of our system that may have increased risk relative to the rest of the system. We do additional inspections, both for equipment issues as well as for vegetation management so that we can take care of all of the risky stuff before we’re into the peak fire season.

And then each year, it’s about how we continue to improve our PSPS program. And so whether it is changes to our thresholds and triggers, importantly, getting ahead to understand where might we — where might some communities see PSPS that haven’t seen it as much in the past, so we can go and educate and really engage the communities to understand what to be ready for and how they can be prepared. So it’s that suite of mitigations that as we head into each fire season or at least the summer and peak season that we’re fine-tuning to help make the risk lower and lower every single year. The weather, this year, we’ve had a fair amount of rain early in the season. It’s been drier more recently. Trying to predict what the fire risk will look like in a given season is a challenging one.

We certainly can project how dry it may get, but winds are notoriously difficult to be forecasting. And so that’s why we come back to making sure that we are fully deploying all of our mitigations, keeping in line with the activities laid out in our wildfire mitigation plan.

Pedro Pizarro: I mean, Steve, I think you covered it so well and the only thing I would add is while, of course, we track year-to-year conditions and get those questions from investors regularly, the reality is the work that SCE is doing isn’t about this year or next year. It’s about recognizing that the risk posed by extreme weather driven by climate change is going to increase over the next several decades. And so that’s why there’s so much good focus on long-term risk management here.

Operator: Our next caller is Shar Perez with Wells Fargo.

Constantine Lednev: It’s actually Constantine here for Shar, but I appreciate the time today. And first of all, a big congrats to Maria and Aaron on the transition here from the entire team. And I couldn’t agree more with Pedro’s comments on the prepared remarks. So kind of a couple of just cleanup questions maybe around the edge. But without trying to find an estimate today for the Eaton liabilities, how do you feel about the pace of the claim submissions? And is there a way to frame maybe a time line where you can get to a point of visibility?

Maria Rigatti: Yes. So Constantine, think about it this way. The statute of limitations is actually still running. So there will be a lot more time still. It’s a 3-year statute of limitations on property damage. So it’s not out until 2028 that it will close in January. So we will get a lot more information as time passes. I think the other piece, and Pedro touched on this earlier, but maybe to emphasize is that there’s a very complex interdependency between claims, but also insurance and the level of insurance that a claimant might have, whether they’re fully insured, underinsured or uninsured in their entirety. So I think until we can get more information around that, and that will take time, it will be difficult for us to generate an estimate.

The other piece of it is as more claims come in and we get more data from them, that would add to sort of our knowledge base. But even as claims come in, people don’t have to give us a lot of specificity as to what their damages are. So that’s maybe a way to express or to share with you some of the complexities that we’re facing, but really fundamentally, it gets back to Pedro’s point that we have not been able to provide a time line for when we will get to that point.

Constantine Lednev: That’s abundantly clear. And maybe just touching on the election rhetoric that we kind of touched on with the utilities. Is there anything that you see that’s actionable or practical? And does this suggested distributed solution kind of work for driving down costs? Or is that a potential cost shift?

Pedro Pizarro: Could you repeat it’s actionable in what specific way, Constantine?

Constantine Lednev: Actionable or practical from anything that has been kind of out there in the media.

Maria Rigatti: So Constantine, you’re talking about sort of like this concept that we’ve heard from some folks around disaggregating and breaking up the utilities. I think Pedro has made this point a few times that integrated utilities actually have lower costs than not. So we question sort of the mathematical foundation for some of those comments.

Pedro Pizarro: Well, I’ll just be very pointed here. I think specifically, one of the candidates, Tom Steyer, has made the claims around — a couple of claims that stood out 25% rate reduction by breaking up the competitive — breaking up the monopoly utilities and also claim that the lowest rates in the country are in competitive markets. And the reality is that I don’t see any sort of fact basis for the 25% reduction. And we — the way we get rate reduction is the hard work that, again, Steve, Aaron, the whole team at SCE are doing that has led to the lowest system average rates among our investor-owned utility peers. But also when you take a look at a national level, actually, the lowest rates tend to be in vertically integrated utilities.

And so — and I think much to Mr. Steyer’s chagrin, some of those still have quite a bit of coal generation in their systems. So we’ve been very pointed about taking on things that are not connected to fact like those and being outspoken about them.

Operator: And that was our last question. I will now turn the call back over to Mr. Sam Ramraj for any closing remarks.

Sam Ramraj: Thank you for joining us. This concludes the conference call. Have a good rest of the day. You may now disconnect.

Operator: Thank you. This concludes today’s conference call. You may go ahead and disconnect at this time.

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