Edison International Aktie

Good afternoon, and welcome to the Edison International Second Quarter 2026 Financial Teleconference. My name is Michelle, and I will be your operator today. [Operator Instructions] This call is being recorded. I would now like to turn the call over to Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.

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, Aaron Moss. Also on the call call 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 Aaron 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. [Operator Instructions] I will now turn the call over to Pedro.

Thank you, Sam, and good afternoon, everyone. My comments today focus on three areas: A legislation update, our continued work to make communities safer and more resilient, including wildfire mitigation and recovery efforts and our broader progress is supporting a reliable, affordable and clean energy future.

Starting with a brief comment on earnings. Edison International's second quarter 2026 core EPS was $1.54, bringing the year-to-date core EPS to $2.97. With this strong start to the first half of the year, we are confident in reaffirming our 2026 core EPS guidance and other financial targets, including our 5% to 7% core EPS growth over the long term. Aaron will discuss our financial performance in his remarks.

On the legislative front, we're actively engaged with the Governor's office, legislators and key stakeholders on both wildfire reform and affordability. There is continued recognition that the current framework is placing increasing pressure on customers, communities and the cost of financing the investment utilities are making to support California's climate goals. Consistent with the themes that we have highlighted, discussion center on aligning risk supporting affordability and maintaining access to capital at a reasonable cost. But this is about more than utility finance.

Moody's recently highlighted that the implications extend beyond utilities. They note that wildfire-related costs can affect electricity rates, affordability and California's broader economic competitiveness. S&P has also observed that wildfire-related financial risks increasingly extend beyond investor and utilities to public utilities, local governments, insurers and the communities they serve. That is why establishing a durable long-term solution matters not only for utilities but for customers, businesses and the state's economy as a whole. While we are encouraged by Sacramento leadership's focus on this important topic, we also recognize that the outcome remains uncertain. So we will be thoughtful about the implications of what the legislature ultimately enacted.

SCE's current GRC authorization supports the utilities plan for 2028, and future investments will continue to be evaluated through a disciplined benefit cost less. SCE will continue to safely serve customers and maintain its unwavering focus on safety. At the same time, the clarity and quality of the legislative outcome will influence the cost of capital available to support future investment. A durable and financeable framework will help maintain access to lower cost capital, supporting affordability for customers and continued infrastructure investment.

Conversely, our framework without sufficient predictability will increase Edison's financing costs, making SCE's investments for customers' benefit more expensive. It will also influence how we prioritize and deploy future capital.

Turning to operations. SCE took the first step in the next GRC process and filed its risk assessment mitigation phase or RAMP application in May. This outlines the risk mitigations that guide proposed investments across wildfire risk, transmission and distribution reliability, cybersecurity, climate adaptation and other safety-related measures. For context, the investments identified in past ramp filings accounted for about 1/3 of the total capital requested in the GRC. 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.

A key topic in ramp is wildfire mitigation. SCE strategy continues to be comprehensive as noted on Page 3. What is increasingly important is execution and prioritization. SCE is using more advanced wildfire modeling, improved data and climate informed analysis to better identify where while for consequences could be greatest. SCE has developed an enhanced wildfire risk model that combines multiple data sources to improve how it identifies prioritizes and planned safety measures, while accounting for high-impact wildfire events that may not be reflected in historical data. The utility is also broadening the range of risks and failure scenarios it evaluates reflecting both lessons learned and a more comprehensive understanding of how wildfire risk can develop. That includes looking beyond individual equipment incidents and assessing how multiple conditions and events can combine to influence safety consequences. All this will inform SCE's mitigation investments in the next GRC, which will include continued grid hardening with additional covered conductor and targeted under grounding during the 2029 to 2032 period. SCE's preliminary estimates in the ramp application for continued hardening are about 450 miles of covered conductor and approximately 190 miles of targeted underground.

To summarize, SCE's approach is increasingly location-specific, consequence informed and adaptive. This builds on the substantial progress SCE has already made pardoning its system including the deployment of about 800 miles of covered conductor and about 90 miles of undergrounding including all rebuild areas since January 2025. Importantly, SCE has not experienced a covered conductor failure associated with the risks that that technology is designed to mitigate. Combined with millions of inspections and vegetation management activities as well as expanded situational awareness capabilities, these efforts have materially strengthened the grid and reduced wildfire risk. As a result, SCE is continuing to sharpen how it prioritizes mitigation, not only by looking at where the likelihood of ignition is highest, but also by identifying where the potential consequences to communities could be greatest. The utility is directing mitigation to areas where it can provide the greatest safety benefit, using better data and ongoing learning to adjust as conditions change, all while focusing on affordability for customers.

I'd now like to highlight an initiative I'm personally really excited about as we think about Edison's future. We are increasingly combining operating experience with richer data, advanced analytics and AI-enabled capabilities to improve how risks are identified, prioritized and managed. Advances in AI will be among the most important tools available to utilities over the next decade. For SCE, the opportunity extends well beyond individual use cases. AI is an important enabler of the utility's long-term transformation, helping accelerate our operational excellence, improve how the greatest plant operated and strengthen wildfire mitigation efforts. The focus is on delivering tangible outcomes, better decisions, faster execution, lower costs and improved customer value. As these capabilities continue to mature, SCE expects them to become an increasingly important driver of safety, reliability, affordability and overall business performance. Aaron will provide some examples of in-flight activity shortly.

Moving on to the wildfire recovery compensation program, or WRCP. There's continued community interest in the voluntary program. SCE has now extended more than 2,200 offers, totaling over $775 million to over 12,300 community members impacted by the Eaton fire. SCE remains committed to providing information to community members to make informed decisions about what is best for their situation. Taking a broader view on sustainability, we remain committed to supporting the clean energy transition while maintaining the safety, reliability and affordability that our customers expect. Our 2025 sustainability report has details about our accomplishments, goals and long-term commitments. Here's a couple of examples. SCE delivered at least 60% carbon-free power to customers, over 70% cleaner than the national average. SCE contracted approximately 900 megawatts of energy storage bringing the total at year-end to about 9,200 megawatts owned or under contract, one of the largest storage portfolios in the nation.

I'm proud of our team, and I'm proud of the progress that we continue to make toward a clean energy future that benefits everyone. We have, and we will always put customers first by strengthening the grid, mitigating wildfire risk and advancing clean energy to support affordability and community resilience for generations to come.

With that, I'm very excited to turn it over to Aaron for his first financial report as certain CFO. All right, Aaron?

Thanks, Pedro. Good afternoon, everyone. It's great to be with you today. During my prior roles at Edison, I've had the chance to get to know many of you over the years. As I step into this role, I'm looking forward to continuing those conversations and discussing how we are executing on our strategy, investing in the business and creating long-term value for all of our stakeholders. My comments today will cover our second quarter 2026 results, capital plans, and reaffirmed earnings guidance. EIX reported second quarter earnings per share of $1.54 compared to $0.97 last year.

Page 6 provides the year-over-year quarterly variance analysis. The quarter reflects continued stability in our core operations. Results benefited from regulatory decisions last year, including the GRC decision as well as the ongoing reduction in interest expense associated with the Woolsey cost recovery.

Let me reinforce what Pedro said. With this strong start to the first half of the year, we are confident in reaffirming our 2026 core EPS guidance. We are also reaffirming our long-term core EPS growth rate of 5% to 7%. This outlook is supported by our capital investment plan, constructive regulatory framework and continued focus on operational excellence. At SCE, results for the quarter were primarily driven by the timing of the DRC decision last year, along with continued focus on strong performance across our core operations. We continue to optimize how we approach O&M spending over the course of the year. This allowed us to prioritize our work to address operational needs as they arise while maintaining overall cost control. This approach supports both near-term performance and long-term value creation for customers and capital providers. The parent and other core loss was favorable by $0.06, primarily driven by the net financing benefits of the preferred stock redemptions initiated at the end of 2025 and completed in the first quarter of this year.

Turning to SCE's capital plan. We continue to see strong investment opportunities across the business, driven by infrastructure replacement, wildfire mitigation and growing demand for electrification. Our plan is centered around these priorities and supports long-term rebased growth of about 7%. We remain focused on optimizing these investments in a way that balances system needs with customer affordability. As part of that execution, we are pleased with SCE's progress on its wildfire mitigation investments. Of SCE's roughly 16,800 distribution lines, distribution line items in high fire risk areas, SCE has successfully hardened about 90%, including nearly 7,200 miles of covered conductor. These investments remain a central part of our capital plan and are key to reducing wildfire risk and improving system resilience over time.

Moving to financing activities. SCE successfully completed the Woolsey Fire cost recovery securitization earlier this week, generating approximately $2 billion in proceeds. We were pleased with the outcome and the strong demand we saw from capital providers. The proceeds will be used to recover claims and other costs, including retiring related debt, further strengthening our balance sheet.

Now let me transition to operational excellence, which benefits customer affordability and long-term performance. This is an area where I spent significant time in my prior roles within the utility and will remain an ongoing focus as we look to enhance both efficiency and execution across the business. As part of that effort, we are continuing to simplify processes and expand the use of emerging technologies, including targeted AI applications in areas where they can improve productivity and quality. Our efforts are focused on high-volume, repeatable work where we see meaningful opportunities to drive productivity and quality. For example, our planning organizations produce on the order of 100,000 project designs each year. And we are deploying tools to help automate initial design generation and the validation of final designs against our standards.

We expect these improvements to accelerate design cycles by 20% to 30%. Similarly, we processed approximately 40,000 permits annually across multiple agencies and systems. We see opportunities to streamline this process, reduce cycle times by approximately 20% and improve throughput. Efforts like these are intended to create additional capacity in the system, support timely execution of our capital program and improved cost performance over time. Our focus on operational excellence is one of the important ways we deliver consistent financial results.

Looking at our year-to-date performance reinforces our confidence in the outlook for the business. We see continued momentum in our capital program, strong regulatory visibility and stable operational performance, all of which position us well for the rest of the year. Consequently, we are reaffirming our 2026 core EPS guidance range of $5.90 to $6.20. Our priorities remain consistent, delivering on our operational commitments, advancing our capital plan and maintaining a strong cost framework, all while supporting a safe and reliable system for customers.

Let me conclude by saying that we are pleased with our results. The business is performing as expected. Our capital plan remains on track, and we are well positioned to deliver on our financial commitments for 2026 and beyond. That concludes my remarks. Back to Sam.

Michelle, please open the call for questions. [Operator Instructions]

[Operator Instructions] Nick Campanella with Barclays.

So I know that everyone's working it to a financeable solution for the fund and you acknowledge in your comment that it's a broader state issue, obviously, with a range of stakeholders being impacted. And at the same time, you're kind of saying that future investments will be evaluated and there's some uncertainty. So can you just maybe kind of talk about what's on the table from the utility side? And how are you thinking about weighing things like future securitization of capital or upfront contributions like in last year's legislation and I know that you're in the early stage of the GRC with visibility, but is there a scenario where we could expect a new plan come third quarter?

Yes. So Nick, thanks for the question and be reiterating a little bit of what I was sharing earlier. We are in a unique position in that we have a GRC in hand that SCE's been approved. We have full visibility -- line of sight visibility to 2028. Our capital spending, you know from what we've shared with you all over the past while that we can execute on the capital plan without any equity needs. And we've gone further, right, and extend the guidance beyond that rate case to provide some insights on where we think '29 and '30 are headed and committed to guidance that continues the need for growth, capital investment for our customers and still don't see a need for equity through that 2030 time period. So particularly as we talk about the 2028, it's just from line of sight, and that's already approved by the PUC. Now we don't know what's going to happen in Sacramento. I appreciate all the efforts of everybody who's engaged there. By the way, I appreciate efforts of investors who are weighing in and providing your perspective is really important that our policymakers understand what to take here and the fact that they have a lot of opportunities to invest capital. And so California, those are Southern California are competing with other states and really with other global locations. So the quick segue tangent. Say thank you for those efforts. But we don't know what's going to happen ultimately. Ideally, we would see a comprehensive solution. There's four weeks left. We I haven't seen language yet. We know people are working hard. But this is not just a utility issue. It's a big cross economy is and sell -- there's certainly a possibility that we might not see a complete answer. You might see a partial answer. We might see some more debt in 2026 and then some work left for 2027 in the legislature with new governor and a number of new legislators. So it's really hard to sit here and say, well, without understanding what the answer might be, here's what some of our reaction to that might be. Clearly, if we saw that whatever the answer in '26 is, it was not favorably by the market and that dramatically changed the inherent cost of our equity then we would want to be thoughtful about making sure we're not making negative NPV decisions on the investors. At the same time, upholding our obligations to safety and reliability that are set in PSC regulation. So that's going to be the balancing at. There's a lot of words. I don't think I gave you the sort of specific answer you want it, Nick, but that's where we are today. And when we see what happens as of August 31, then September 1, probably later that night on August 31, we'll start working on what the implications are and whether there's any near-term actions that are needed or more impacts in the longer term, and we'll keep doing posted.

I appreciate you running through that. And then just my second question is just a slight change in the 10-Q in around EN and that you believe the equipment was associated versus could have been? And I understand that you've previously been saying you're not aware of any other evidence. But can you frame how that disclosure fits into the context of the wildfire compensation program in getting greater visibility eventually on what the low end of Eaton could be from a liability standpoint?

Thanks, Nick, for the question. Just briefly, look, we always look at our language and want to make sure that it's just streamlined and straightforward as possible, both for investors and for the community. And so this is a little bit of just streamlining the language, but also recognizing that there's been the passage of time. And as the forward disclosure acknowledges, our view on this is based on the information we have in hand today and absent additional information, the reality since last quarter, three more months past, there are no other -- no viable alternatives have appeared. And so we thought that the slight streamline that we did there was appropriate in terms of just saying that as these equipment likely was associated with the events. But we also recognize that there are a number of other factors that have impacted ultimately the extension to the Eaton fire and not only the weather, but some of the factors that you saw show up in the cross claims that SCE filed against a number of entities. So that's all that the language is about. Going to your question about how does this all WRCP and ability to estimate potential liability again, we've said for a long time now that the liability is probable given everything here. We have taken accountability. They want to help the community by launching a WRCP, but the numbers I shared with you earlier, over 2,200 offers provided. Even the claims numbers themselves. So you think about over 12,300 individuals we presented in those claims. That is still a small number relative to, for example, in litigation, we now have -- and I'm looking at Shandor D.C., I believe we have a 30,000 claims that have been filed. And so we just don't have the volume to go WRCP yet to use that to provide an estimate of the low end of the mobile range under GAAP principles. Similarly, if you look at subrogation claims, you saw in our disclosures that if we repeated this from prior quarters. We -- SCE has now entered settlements with two insurers at around $0.55 on the dollar. That's two subrogation claims that were settled out of what may likely be many. And so there again, we just don't have sufficient volume to yield an estimate. Hopefully, I covered all the parts of your question there.

And the next question comes from Carly Davenport with Goldman.

Sachs.

Maybe just a follow-up on the wildfire side. you continue to work through the claims on the wildfire recovery compensation program. Just curious if you have any view on timing to sort of crossing that $1 billion threshold and when you might envision sort of making first filing to happen to the wildfire fund for reimbursement.

Yes, Carly, between the subrogation settlements that we've made and the WRC settlements that we're making, we are crossing that $1 billion threshold. So we've worked out with the PEA, who is the administrator of the wildfire fund prefunding mechanism so that we don't come out of pocket for any of those dollars there, and we're working through with them that process to fund the claims now. SP1

,Got it. Okay. Really helpful. And then maybe just as we think about the potential outcomes in the legislative session and potential action plan on the back of that. Could you maybe just talk a little bit about potential options on the table in the event that reform does not move forward this session? And maybe specifically, you referenced, obviously, the ramp filing for the next GRC any potential changes that you might expect to see on the next GRC filing in the event that we don't see reform move forward this session.

Just to maybe reemphasize a point I made in my prepared remarks, right -- and unless I was responding to Nick's too. Questions here, -- we don't know what we're going to see. So it's really difficult to say what the reactions might be. I did acknowledge though that if whatever comes out ends up significantly impacting the underlying cost of equity, then that will have some influence on future investments. Again, there's things that are sacrosanct, right, around safety, reliability. We have obligations under the PUC code, but where there are places where there might be some more flexibility, a lot of this could be candidates for rethinking or factoring that into future capital programs. Aaron, anything you'd add or Steve?

Yes. Sorry, Carly, I know you all want more specifics, but we're just not there yet. We want to be very thoughtful when we see what we see and work from there.

And the next question comes from Richard Sunderland with Truth Securities.

I just wanted to go back to some of your comments in the script, and you talked about a number of different issues and focus around the legislature, but affordability was certainly part of that. And given there's been attention broadly on affordability, call it the political backdrop in light of that and then more specific to this legislation. How do you think the affordability conversation stands right now, whether in the context of that legislation or more broadly? And how has that tone changed over the past few months?

Yes. That's a great question, Rich. And I would start by saying this, it's a topic that just colors everything. That's just in California, but really across the country, right? We're in a period that has followed, frankly, some of the purchases you saw on COVID and moving on. You see now maybe even more so in other parts of the country, significant pressures as you see dramatic growth in energy consumption and that's driving infrastructure needs. I think the industry as a whole is ready to meet those needs, but we recognize region by region, there are pressures that are specific to this here in California, when you take a look at affordability, the reality is that energy in many ways, is not the main driver. One of the points that we continue to make is that for the average SCE customer, their total cost of energy is in the lowest cost quartile relative to the rest of the country. The challenge here, those that housing costs are really dominate affordability impacts for the average consumer, along with other costs, right? And so in that environment, I think there's a tendency to go look for any levers that can be pulled. When you then have a discussion going on in Sacramento around an important and very visible topic like wildfire, where there's utility cost recovery involved where this connection to insurance rates and availability, right? There's just a lot around affordability that gets wrapped into all this. One of the important points that we then make to legislators is that this is really about customer affordability because the reality is if there is insufficient action in 2026, there's a strong likelihood that the day after or a few days after, we could see credit rating downgrades for the investor utilities in California and potentially for other sectors. The rent the various in Moody's and S&P reports recently that talk about multiple sectors. And so that could be a significant cost impact through the cost of debt that gets passed due to SCE customers. If we don't have a framework in the next four weeks that is credit supportive for our utility. And if you look at just the S&P ratings, it's BBB for the utility. So there's nowhere to go and invest in grade, right? The next step is non-investment grade, which adds a lot of cost. So the affordability is really framed around the impact of the absence of legislation on customer costs and hence, I think the great point that the CEA report made around the sense of urgency here. Aaron, anything you would add there?

I just would say, I think there's a little bit. Rich, about affordability measures. And I'd just say, as part of the legislative package, we're going to evaluate the totality of the package that comes to us and figure out a response that goes along with it.

And the next question comes from Greg Orrill with UBS.

Congratulations on the results. I was just wondering if there was a way to get a sense of how much of the impact was timing? And how much of the upside is in your view, sort of normalized?

Yes, Greg, I'd say 2 quarters doesn't make a year, and we're focused on delivering on our guidance for the year. The quarter is a data point, and it's important. And having a strong start to the year does give us the opportunity to invest in the business to derisk future periods and drive efficiency. So we're very happy about that, but we reaffirmed our guidance at $590 million to $620 million.

And the next question comes from Paul Zimbardo with Jefferies.

First, I was guess -- just following up on page response to the prior question around the rating agencies, and the potential downgrades. I saw you tweaked that language also. Is that something that agencies have directly communicated like something new? Or are you just referencing some of their reports where they talk about the scenarios without legislation?

So a couple of things there, Paul. One, on our ratings or the utility -- California IOU ratings just referencing prior reports. But Pedro's prepared remarks did reference separate reports that both Moody's and S&P have issued over, I think, the past months about California, which I use are an important part of California, but it talks more broadly about the ramifications of wildfire across the California economy. So not quite sure what you're asking about. But neither one of those was intended to be kind of a breaking news of something that hasn't been published by the rating agencies.

Okay. No, that's what I thought it was. I just wanted to clarify on that. That's helpful. And the other was -- again, I know I don't want to talk about California and everything else. But I saw that you sold trio. I think that's all as an energy, just kind of why make that decision now.

Yes. Thanks, Paul. Trio, we still believe in the underlying business. But given where we are today, we thought that with the focus that we have from our leisure focus on Edison. And with some of the ongoing needs that we only have, there's a different partner who's a better fit as an owner for them. And so the transaction maintenance for us. As you know, it's not material -- has not been material to EIX throughout. And so you did notice it in our disclosures. We wish the team very well. It's a great team there, and I think they can continue to be successful.

And the next question comes from Aidan Kelly with JPMorgan.

Just wanted to come back to the ramp application. Could you speak to the pace of mitigation spend required across SCE service territories and how this might compare relative to last cycle? I know in the prepared remarks, you mentioned about 450 miles of covered conductor, 190 miles of undergrounding. But if you were just to tee it up from a capital perspective, how would you frame the size relative to past applications?

Yes. So I'd say in the past, about 1/3 of our GRC request has shown up in the ramp application. So this time, around, it's about $2.5 billion, I'd say maybe slightly more than 1/3 would be the translation. So it ties in the level of spending that we have here ties in with the $8 billion to $9 billion of CapEx that we have in our 2029 capital forecast that we shared with you in the investor deck.

Got it. Appreciate the color there. And then for the Eaton fire, just wondering if there's any update on the L.A. District Attorneys investigation, you be willing to share any sense on time line or key milestones to be on the lookout for?

Yes. No, we don't really have an update there. So you might imagine, we're not privy to what their timing might be or the like. Of course, we're ready to cooperate and have cooperated but they've asked for anything from our team. We have said in the past that typically for complex fires, you might see a report out in 12 to 18 months. Clearly, it's been more than 18 months now. So -- but we don't really have an insight on when the report might come out.

And our next question comes from Ryan Levine with Citi.

Two questions. One, to the extent you're able to comment, how is the ramp of education efforts in Sacramento compared to the last year on the wildfire bill this much broader in terms of -- given the complexity of the bill? Or any color you could share more broadly around the process?

Typical question, Ryan. I would say this, certainly, we're very focused on that education effort. When you say about -- when you talk about the last time, I'm kind of tempted just a little tiny cheek to ask which last time. So you mean 254, you mean 1054, give me the effort that led to 901. And so if you don't mind me, actually taking a little broader aperture. I mean I go back to '17 and '18, right, we ended up with SB-901 was in 2018. That was a real ramp-up, right? Because it was a new topic in many ways for all of us, the legislation, for the utilities, and we were really focused on helping the state develop a brand-new framework from whole clock. I would say 254 was different because last year, it was different in the sense that we had 1054. And so the question was what needs improvement, how do you build from that. And you saw that with 254, were all very engaged. And the answer from the legislature was that they themselves needed more education which they then taste to the CEA to produce a report, which I think you've heard me say before, I thought it was an excellent report, right? So the report in April I'd say this year, what's different is that we all are benefiting from having the basis of that report as the platform for the discussions. And so that's -- I think that's helpful. That's it, a lot of legislators while they were there for the 254 cycle, they may not have been for 1054, 901, right? So you have -- you still have a range of starting points for individual policymakers. I feel for them. I think they have some of the hardest jobs in the state because listen, I think my job is hard, and I could focus on one sector. They're focusing on every sector across the world's fourth largest economy. So I think having the CEA report as a platform to start has been helpful to all of them and to us.

And then one more specific question around the RAM process. How does the ongoing undergrounding cost benefit analysis impact the decision around how much cover conductors are undergrounding you're planning to doing. And to the extent that there is any upside to the 190-mile undergrounding plan that you filed in your ramp?

Steve Powell, chip in on this one.

Hi, Ryan. So every time we go through the ramp, we're looking at the latest, I'll say, approved as well as our own risk frameworks, and how that translates into the benefit cost ratios. A lot of points, we're looking at finding the right portfolio that is above the 1.0 benefit costs, but we're looking project by project as well. So the risk models have been refined to bring in the latest intel that we have on the level of risk, given everything we've learned in the past, we've combined a number of models to better assess the actual risk there. When it comes to undergrounding, we're looking at certainly the cost of that undergrounding and it varies segment by segment, and we use those estimates combined with the level of risk. And so there we'll calculate the benefit costs. We're going to do projects that are above 1. We'll then compare them on cover conductor versus just undergrounding. We'll look at other factors like the egress, the terrain and other pieces to decide if we're undergrounding is going to be the right solution. It has to be feasible as well. That's one of the constraints around it that also plays into cost. So based on what was in the ramp, we put in about 190 miles of undergrounding as sort of a base scenario. But we'll continue to evaluate if there's other places that we need to do it, frankly, to reduce things like public safety power shutoffs and other factors. So the ramp is a good starting point. We put in our BCR analysis. We'll get feedback in the process before we actually file our general rate case. So we'll decide what actually goes into our general rate case as we get closer next year.

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

Thanks, everyone, for joining us. This concludes the conference call. Have a good rest of the day. You may now disconnect.

Thank you. This concludes today's conference call. You may go ahead and disconnect at this time, and have a great rest of your day. Thank you.

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.

Thank you, Michelle, and welcome, everyone. Our speakers today, our 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 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 the non-GAAP measures to the nearest GAAP measure. During the question-and-answser session, please limit yourself to one question and one follow-up.

I will now turn the call over to Pedro.

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.

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 as planned.

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 enhanced 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.

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 an action. 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 service 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 bitter sweet 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 for SCE GRCs, and separating the investment and operational improvement opportunities created by the clean energy transition, historic load growth and the rapid ascent 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 patients dealing with me and a real passion for developing our people, including Aaron. Aaron, Maria and I worked closely together for the EME restructuring, and we kept on going, as Aaron took on the EIX and SCE controller roles and most recently, 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. And 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.

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 and 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 improved 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 next-gen 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 ratio is 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.

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 Instructions] Our first question comes from Nick Campanella of Barclays.

Good afternoon, and thanks for the time. 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 FD-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.

Yes. That's pretty good, Nick. Appreciate it. All right. So first on what we think is important here look, broad strokes, right? We -- and we appreciate that the CEA report really touches on all of these. It's important that we have 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'd be a process for recovering quickly and having a fair process for that, one that's predictable, where there's good accountability, 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 of other jurisdictions, 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 industrial and 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 with return off and on that. If the utility has been prudent, and where further shareholder contributions would take place if utility's 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 for folks to 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, 2 hours prior. I know I've seen some chatter about [indiscernible] sooner or later. This is complex legislation in a year, that's full of complex topics. There's a discussion about wildfire, but in itself really touches on affordability for the state broadly, right? Because as you said 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.

Our next question comes from Richard Sunderland with Truist Securities.

And congratulations as well to both Maria and Aaron. Picking up on the sort of legislative discussion from earlier, I realized [indiscernible] 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 dense, all of this given the high-profile public nature of the report. I guess that you other thoughts there would be helpful.

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 a group that was a very professional group and 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 speculating a little bit here. But I think it's probably fair to say that this gives the legislature much more robust platform from which to enter their debate and one that already reflects stakeholder voices, given that [indiscernible] 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, [indiscernible] 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 were 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 a craft potential legislation.

So some thoughts. Maria, I don't know if you have anything to add there?

That's helpful context. And then I guess sticking with Steve, 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.

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 it was just acknowledging that you've seen a number of bill introductions that hit on affordability. It's clearly a theme and gubernatorial primary. And so I know that some people's minds and the wildfire phase will be an important part of managing affordability for the state.

May just -- Rich, it is right, the wildfire legislation itself is about affordability. It is inherently an affordability bill. The other affordability bill, 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.

And Maria, I think it's fair to say you've also seen affordability discussions around the insurance market. And I'm sure folks think about risk reduction and physical space, you'll see affordability considerations there. So that's just 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 to California needs to deal with them. 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, as an extra 0 compared to the wildfire. So I think law makers are thinking about affordability with large, putting everything in that context.

Our next caller is Gregg Orrill with UBS.

What's your anticipation? Or is it too early to know what scale will be of the wildfire recovery compensation program?

You mean in SCE WRCP?

Yes.

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. 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 offer so far are very early stage here, but we really can't forecast what that ultimate number might be.

Okay. Congratulations, Maria and Aaron.

Our next caller is Anthony Crowdell with Mizuho.

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 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?

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 not sure this is the right word, some stability or lack of volatility in terms of the types of claims that we're seeing what 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, DKM and [indiscernible], 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 so when we would be in a position to do that, Anthony.

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?

Let me turn it over to Aaron for that.

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 meter 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 of our process with the application just being filed, I believe somebody could correct me that intervenors would provide comments later in the summertime with July and then the decision follows along after that, Anthony.

Our next caller is Carly Davenport with Goldman Sachs.

Maybe just to follow up on some of the SB 254 questions. There's still, I think, robust data around if there will, in fact, be legislation past 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?

Yes. Thanks, Carly. Look, we'd 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 action. 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 utility or for insurance companies, but you can 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 legislators some policy of ACRE -- 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. 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 I was having to think differently about our capital allocation. But we're not there today, and our, again, singular focus is on 2026.

Got it. I appreciate the thought...

Maria, do you want to...

Yes, Carly, may I just underscore here is right 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 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.

Got it. Okay. That's really helpful. And I guess just picking up maybe on that last piece in terms of in 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 recent changes in kind of the pulling 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.

Yes. And Carly, I think your -- the last word you used there, 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, it 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.

Our next caller is Aidan Kelly with JPMorgan.

Just one question on my end. I want to hone in on the even fire process, if I could. It seems there's been some recent media headlines pushing back on the information flow in core proceedings. I guess just curious if you can 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.

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 actually sat down with the reporter and make sure that -- tried my best to make sure that the reporter understood the facts here. I think the article had a slant to it that lack appropriate balance. The core of that, that she was describing in the article, so she was making the argument that because some of the information in the case is privileged to some other mantis 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 got quite captured us strongly in the article. There's a balancing act here. In 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, actually, not only is you 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, 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 [indiscernible] asking for information about the network or about [indiscernible] 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've been harmed to the system.

Similarly, some of the information might include specific customer information that we need to protect, keep confidential. The other side, planes 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 you're referring to. It was trying to support a thesis as 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.

Our next caller is Ryan Levine with Citi.

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?

I'll turn it over to Steve and Aaron here. Steve, you want to take it?

So I think it's still really early to get it a full size of what the potential with AI is. Pedro listed out in his opening remarks, a number of areas that were leveraging AI to expand 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 change as to how you dispatch your resources, changes to how you optimize our 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.

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 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 on or end ability 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.

All of this is supportive of the 5% to 7% EPS growth rate.

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?

Ryan, it's Steve. I'll follow up on that 1 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 car conductor, near 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 were 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 we 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 dryer 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 wins 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.

I mean, Steve, 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 realty 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.

Our next caller is Shar Perez with Wells Fargo.

It's actually Constantine here for Shar. I appreciate the time today. And first of all, the 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 could get to a point of visibility?

Yes, Constantine, think about it this way. The statute of limitations is actually still running. So there will be a lot more time, so it's a 3-year statute of limitations on property damage. So not doubt 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 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.

That's [indiscernible] clear. And maybe just touching on the election rhetoric that we kind of touch on. with the utilities. Is there anything that you see that's actionable or practical and the suggested distributed solution kind of work for driving down costs? Or is that a potential cost shift?

Could you repeat actionable in what specifically way, Constantine?

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

So Constantine, 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 cost than not. So the question sort of the mathematical foundation for some of those comments.

Well, I'll just be very pointed here. I think specifically, one of the candidates, [ Tom Steyer ], has make the claims around a couple of clients 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 again, 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 rate among our investor utility peers.

But also when you take a look at our national level, actually, the lowest rates tend to be in vertically integrated utilities. And so -- and I think much to [indiscernible] in 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.

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

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

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

Good afternoon, and welcome to the Edison International Fourth Quarter 2025 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.

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 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'll 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, thanks a lot, Sam, and good afternoon, everyone. Edison International's 2025 core earnings per share of $6.55 was above our guidance range, that extends our 2-decade track record of meeting or exceeding annual EPS guidance. Importantly, this also marks the successful delivery of the long-term core EPS growth target that we established in 2021. Our performance reflects disciplined execution across the enterprise and continued focus on cost management, operational performance and capital efficiency. Maria will provide more details in her remarks.

Today, I'll focus on three themes: Our commitments to customers, communities and investors, our strength in regulatory visibility and our confidence in our multiyear plan. Starting with the first theme. We are committed to the customers and communities who count on safe, reliable and increasingly clean energy. Safety remains our top value. And SCE continues to carry out extensive work to strengthen the electric system and reduce wildfire risk. We are proud that in the Q4 2025 residential customer engagement survey by Escalent, SCE had the highest absolute brand trust score among the large California investor-owned Utilities. Customers and public trust remain the core of SCE's mission.

The utility has now installed more than 7,000 miles of covered conductor in high fire risk areas, representing over 90% of its planned grid hardening effort. This work continues to play a critical role in reducing ignition risk and strengthening reliability for the communities we serve. SCE now has fast-curve settings on 93% of its distribution circuits in high fire risk areas, a prime example of how it is using technology to reduce risk by detecting and addressing faults even more quickly. All of this work demonstrates SCE's ongoing wildfire risk reduction leadership. This progress benefits not just the utility's own customers and communities who fund this critical work, but also many peers across the nation.

Safety and affordability remain at the core of our commitment to customers. Earlier this year, SCE announced a 2.3% rate decrease for residential customers and a 5.3% decrease for small- and medium-sized business customers. This is starting from a place of having the lowest system average rate by a margin of 20% among California's major investor-owned utilities. SCE has invested more than $12 billion for customer safety and reliability over the last 2 years. Currently, a typical non-CARE residential customer pays about $188 per month, which is modestly higher than the $180 paid 2 years ago. This reflects the utility's disciplined cost management to support customer affordability. We will continue to work to keep rates affordable for customers.

We are also committed to the investors whose capital makes it possible to build the infrastructure that is essential to deliver safe, reliable, affordable electricity. Our commitment begins with a regulatory framework that enables SCE to consistently earn its authorized returns, which supports a strong investment-grade balance sheet and lower financing costs for customers. Our capital contributors, including pension funds, mutual funds and insurers, depend on stable, transparent long-term performance. Credit rating agencies continue to evaluate California specific risk factors, underscoring the importance of maintaining a durable and predictable regulatory environment that provides confidence for long-term investment and protects customers from higher costs.

To that end, we are actively engaging with policymakers and state leaders to reinforce the value of a stable framework and the SB 254 process will be a central venue in 2026 for strengthening the regulatory durability that supports both capital contributors and customers.

SCE remains committed to resolving wildfire-related claims fairly prudently and responsibly. To date, more than 2,300 claims have been submitted under the wildfire recovery compensation program with associated payments underway. As always, we are guided by our commitment to transparency, accountability and customer trust. Building upon this, today, SCE announced enhancements to the program, providing stronger support for displaced renters and increasing coverage for legal expenses.

Regarding the Eaton fire, as you see on Page 4, the investigations remain ongoing. To recap our prior statements, while SCE has not conclusively determined that its equipment caused the ignition of the Eaton fire, a viable explanation is that the energized idle SCE transmission facility in the preliminary area of origin was associated with the ignition of the fire, and SCE is not aware of evidence pointing to another possible source of ignition. Absent additional evidence, SCE believes that it is likely that its equipment could have been associated with the ignition of Eaton Fire.

Given the complexities associated with estimating damages, we currently are unable to reasonably estimate a range of potential losses. Nonetheless, based on the information we have reviewed thus far, we remain confident that SCE will be able to make a good faith showing that its conduct with respect to its transmission facilities in the Eaton Canyon area was consistent with actions of a reasonable utility. The company continues to prioritize a recovery of impacted community members. Edison International is donating $2 million to the Pasadena Community Foundation to help meet the needs of community members in the AltaVita area recovering from the Eaton fire.

My second theme today is our strength in regulatory visibility given 2025 was a significant regulatory year for SCE, which you see on Page 5. With the GRC cost of capital proceeding, TKM and Woolsey settlement agreements and other wildfire proceedings concluded, SCE enters 2026 with substantially greater clarity into capital plans, revenue requirement and operational priorities, not only for the GRC period but into the next decade. Our team members across Edison International and SCE continue to demonstrate their ability to execute, through complexity, respond to the evolving conditions and stay focused on long-term goals.

Turning to the legislative front. The upcoming session will be pivotal for shaping the next phase of California's energy and resiliency policy. A central focus this year is the SB 254 natural catastrophe resiliency study being authored by the California Earthquake Authority and subsequent legislation. Our focus remains on a whole-of-society solution to mitigate and respond to catastrophic wildfires that enhances public safety, improves affordability and supports predictable long-term investment in a clean, reliable energy system for California.

In December, SCE and the other IOUs jointly submitted white papers along with dozens of other stakeholders, providing input into the CEA's process. We continue to be actively engaged with relevant stakeholders, the governor's office and legislative leaders about the potential for enhancements to the policy framework.

Moving on to my third theme today. Our confidence in our multiyear financial outlook. We are introducing core EPS guidance for 2026 and 2027, reaffirming our 2028 outlook and extending our expected core EPS growth rate target through 2030. Maintaining the 2028 target while extending the horizon underscores the growing clarity and stability in our multiyear plan, supported by a constructive regulatory foundation and a robust pipeline of necessary investments of the utility.

With an attractive dividend yield of approximately 5%, and a long-term core EPS growth target of 5% to 7%, EIX shares offer a compelling case for total shareholder returns of 10% to 12%. This combination of income and growth reflects the strength of our regulated business model and our commitment to delivering sustainable value for customers and capital providers.

Let me close where I began with commitment. Our commitment to communities and customers and to the capital contributors whose support makes our work possible. Our commitment to strengthening the grid enhancing safety, improving reliability and supporting affordability. Our commitment to clarity and transparency as we move into a period of greater regulatory stability and our commitment to deliver on the objectives we have shared with you today. We have the right strategy, the right plan and the right team in place, and we are confident in our ability to execute that plan for 2030.

With that, Maria, let me turn it over to you.

Thanks, Pedro. In my comments today, I will discuss fourth quarter and full year financial results, our focused areas for 2026, provide an update on our refreshed capital rate base and EPS growth guidance and discuss other financial topics.

For the fourth quarter, EIX reported core EPS of $1.86. Full year 2025 core EPS of $6.55 exceeded the high end of our EPS guidance range. Pages 6 and 7 provide the year-over-year variance analysis. I would like to note 2 items embedded in our results. First, fourth quarter core EPS includes $0.06 of costs attributed to the preferred stock tender offers and redemption at EIX and SCE completed in December. Second, we recorded a $0.46 true-up following the final decision in the Woolsey cost recovery proceeding. Excluding the Woolsey true-up, EIX's full year 2025 core EPS still exceeded the midpoint of our guidance.

I will echo Pedro's comments that this marks the successful delivery of the long-term core EPS target we established for 2021 through 2025. Over that period, we successfully managed a number of unforeseen headwinds. Record inflation, the first rising interest rate environment in over 15 years, growing wildfire claims related debt. Several changes to SCE's authorized cost of capital and additional cost pressures, yet we delivered on our commitment. Today, we are reaffirming our 2028 guidance and extending our 5% to 7% EPS growth target to 2030.

You should share this leadership team's confidence that we will continue to deliver on these commitments and build on your trust. You can see on Page 8 that delivering strong financial results was just one accomplishment and another year of strong execution in 2025. Page 9 summarizes the key management focus areas for 2026. SCE continues to execute its wildfire mitigation plan and its focus on operational excellence to reduce costs for customers. Utility also plans to execute on its $7 billion capital plan for the year to meet customers' needs.

As Pedro mentioned, the legislative process will be a major focus for the year. In the regulatory area, the utility will be driving toward a final decision on its next-gen ERP program and filing an application for its advanced metering infrastructure or AMI 2.0 program. Both of these are large programs that provide significant long-term customer benefits. Lastly, we look forward to another year of delivering on our annual core EPS guidance and executing efficient financings across the enterprise.

Let's turn to SCE's updated capital and rate base forecast shown on Pages 10 and 11. The extended capital plan of $38 billion to $41 billion from 2026 through 2030, continues the company's essential work in load growth-driven programs, infrastructure replacement and wildfire mitigation. Additionally, our updated forecast now includes nearly $1.5 billion of capital expenditures through 2030 from SCE's upcoming AMI 2.0 application. The total request will exceed $3 billion with spending expected to continue through 2033.

We forecast a step up in our capital deployment opportunities to as high as $9 billion per year in the next GRC cycle. This is driven by the essential investments in the grid to meet customer needs and support California's clean energy objectives. The resulting projected rate base growth is approximately 7% from 2025 to 2030.

Page 12 shows our 2026 and 2027 core EPS guidance. We have also provided modeling considerations on Page 15. Our core EPS guidance for 2026 is $5.90 to $6.20, and for 2027, it is $6.25 to $6.65. As you're aware, Edison's core EPS over the years has not been linear. Let me provide some additional insight into our outlook and trajectory towards achieving our longer-term targets.

You will see that 2026 core EPS represents growth of about 3.5% at the midpoint compared to the $5.84 baseline. We have provided a bridge on Page 13 to help you understand the puts and takes. This muted growth is driven by 3 items, which amount to $0.25. First, SCE has fewer regulatory decisions in 2026 than last year. Therefore, the associated earnings contribution from recognizing prior year earnings is about $0.11 lower.

Second, asset mix differences versus the original GRC forecast creates depreciation and property tax related variances of about $0.07. Third, financing-related variances, tax law changes and other items reduced core EPS by approximately $0.07. The drivers behind the $0.25 impact are baked into 2026 and thus are not expected to result in negative variances in later periods. Consequently, we expect EPS growth in 2027 to be at the high end of our 5% to 7% range. This is supported by SCE's 7% rate base growth, and we do not expect any large discrete variances from the rest of SCE's operations.

Turning to Page 16. We are extending our 5% to 7% EPS growth target to 2030. We are also reaffirming our 2028 guidance and both of these are measured from the $5.84 baseline for 2025.

On the financing front, I want to emphasize that we project no equity needs for the next 5 years through 2030. Our balance sheet remains strong, and we continue to finance the business efficiently within our 15% to 17% FFO to debt framework. Last month, the utility filed its wholly securitization application with the CPUC. Once approved, the utility will securitize about $2 billion in costs associated with the approved Woolsey settlement agreement. SCE's proposed schedule would allow for this transaction to close in mid-2026. As we have shared before, proceeds from this transaction would be used to offset normal course debt issuances at SCE rather than paying down specific issuances.

I will conclude by echoing Pedro's earlier comments about commitment and trust. Deploying capital for the resilience, reliability and readiness of the grid helps deliver on our commitments to customers and maintain their trust. We are committed to collaborating with stakeholders to advance a clear, durable and predictable framework. And to our capital contributors, you have seen us deliver consistently on our annual and long-term commitments to earn your trust. This leadership team remains committed and confident in continuing to do just that going forward.

That concludes my remarks. Back to you, Sam.

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 Instructions] Our first caller is Nick Campanella with Barclays.

So I guess just -- on the Eaton losses, I think you disclosed that you recorded about $1.1 billion of losses so far, just from the settlements under the wildfire recovery compensation program. And I guess just as you're continuing to get more visibility on the total liability. Like when do you think you would potentially have the low end of losses for the total event? And what is kind of the complicating factor at this point? If you could kind of maybe expand on that at all?

Yes. Thanks, Nick, for the question. I'll start on this one. Let me share some -- reinforce some numbers for perspective. I think I mentioned that we've had -- SCE has had over 2,300 claims submitted so far. There are 18,000 properties that are eligible for the program. You might have multiple claimants per property. For example, if you have a multiple tenant kind of property. So we could certainly see a few tens of thousands of claims ultimately if everybody want to participate through the program. And so in that context, 2,300 claim applications, and we're -- now I think I checked this morning, SCE has now crossed the 590 offer mark. That's a really good strong start. Those are good numbers for just 3 months into the program, but it's just a minuscule number compared to the potential pool here. And so in terms of when we would be able to estimate, we really don't have an estimate for that yet because it really depends on the pace of this.

And Nick, maybe just a clarification. You referenced $1 billion or so that we've recorded. That's a combination of what we paid under the WRCP program, which Pedro just described, that is a very minor part of the total. The rest of it is associated with subrogation claim settlements that the company has entered into. So it's both of those things.

Yes. Thanks, really clarification, Maria. We've announced a couple of subrogation settlement so far. So that's what -- on the insurance side, the subrogation side, similarly, there's been 2 settlements are on an average of $0.55 in the dollar, but there's many more insurance companies in that. So we really can't estimate when we might have enough critical volume to be able to have even a low end of the SM range with the confidence required by GAAP.

Okay. And then just maybe expanding on the comments about the 5% to 7% and being at the high end '27. I know your rate base growth is 7%, and you're not issuing any equity, which is great, but I assume you do have some financing drag. Just what are kind of the consideration the nonlinearity to think about for '28 and '29? Do you kind of plan to be at the high end in those years in the 5% to 7% range? Or are there just further considerations there?

Thanks, Nick. So you can see sort of like through the '28 period, again, 2026, some muted growth due to variances that are now in the year and will not create variances on a go-forward basis, which then does mean that we're at the high end of the range for the next couple of years. We don't really see any large discrete activities that are driving things in one direction and the other over the course of the years, it's really rate base growth. Obviously, we still continue to see things like AFUDC come through. We're going to continue to manage the business across all the different elements and areas, similar to what we've done in the past. Then as you get out to '29 and '30, again, right back down to rate base growth. I mean, that is really the driver here, and you can see the potential step-up in '29 and '30 as we file for a new General Rate Case decision. That will be filed actually in May of 2027. So we're closing in on that now.

And the next question comes from Carly Davenport with Goldman Sachs.

Maybe just on some of the updates on the capital plan through 2030. On the AMI 2.0 application, just want to file that what do you anticipate to be the timing on clarity of approvals? And then just how does that interplay with the timing of the capital dollars that are embedded in the plan through 2030?

Sure. So we'll be filing later next few months likely. And we'll ask for a typical schedule, which would get us a decision hopefully in about 18 months or so. The capital that's embedded in the forecast right now, the total request will be in the neighborhood of $3 billion about $1.5 billion is in the period that we have portrayed here through 2030 with another $1.5 billion that would get spent post that by and large through 2033. So that's sort of the pace of what we're anticipating.

Great. Okay. That's super helpful. And then maybe just on the SB 254 processes getting closer to the April 1 CEA report deadline. Any updates that you'd call out in terms of thematics that are coming out of the updates we've gotten so far? And just how you feel we're progressing into that deadline and what that could mean for timing of getting some clarity on legislation?

Yes. Thanks, Carly. I'd say the process is certainly underway. It's good to see robust participation from so many stakeholders across the economy. The legislature set this up, they set it up to be truly across economy sort of exercise. And so that engagement is important. It's been important to see the approach that the CEA is taking in marshaling the process, making sure that -- there's good participation, good engagement, good transparency into the various positions that different parties are bringing in. It is certainly in the process. So really not able to comment on specific solutions or potential solutions yet. But seeing the recognition that this is an economy light issue, that really needs to touch all sectors, everything from upstream, securing of buildings, hardening of buildings, decreasing the risk of ignition, decreasing the risk of spread and a consequence focusing as well on shoring up the insurance market, focusing on having ultimately solutions that if heaven forbid, there's another catastrophic fire in the state that there's a way to equitably socialize that impact across the economy. Those are all constructive or themes that keep coming up.

I would also point to the report that the CPUC issued a couple of weeks ago. We thought that, that was very constructive, and acknowledge that central theme that ultimately utilities, and therefore, their customers and shareholders simply cannot continue to be the insures resort, the bearers of all this risk that even if you have a catastrophe that starts with the utility edition, the catastrophe has so many other components, right? The tragedy can include, weather conditions can include, challenges in mitigating the fire can include issues that led to faster spread. And so recognizing those kind of things is really important, and it was good to see that show up in the CPUC's completions. Maria, anything you had add?

Maybe just one other thing, Carly, and it's really not an ad. It's just -- it's underscoring. Pedro talked about sort of the focus on safety and risk reduction on timely and fair recovery for the people who are impacted by an event. But also, it's very important and part of the conversation that we're having is that you need a predictable framework that supports access to well-priced capital. Because at the end of the day, it's about affordability for customers. And so having that conversation and making sure that we are emphasizing that is a really important part of what the IOUs are doing.

And the next question comes from Paul Zimbard with Jefferies.

The first one I had was just a follow-up on Nick's question a little bit. If I have the math right, and it's late in the day, so I might not. But if I have the math right, it looks like about an 8% rate base growth from that '28 to 2030. So I don't know if there's any other factors we should be considering because kind of your rate base growth is translating into the net income and earnings growth. Should we think about a potential faster trajectory in the back end of that plan from 2028 to 2030?

Paul, I think you know how we approach this. We definitely run a lot of different scenarios. We plan conservatively looking at all various outcomes and how they play together allows us to have confidence in the 5% to 7%. I would focus on that now. I think we're not seeing anything other than rate base growth as we move out in time. We're always going to be doing things to help benefit the growth, but -- and also benefit affordability. So we'll be focusing on efficient financing. We'll be focusing on over time, further operational excellence efforts. But I think that's how I really view the entire 5-year period. It's based on a lot of scenarios, a lot of scenario planning, a lot of scenario analysis and some conservative valuations.

Okay. That is clear. And then I do want to follow up a little bit on the 2026 drivers and the variances you mentioned. I understand on the regulatory true-up. But could you elaborate a little bit on why we shouldn't think about the depreciation and kind of those tax other items that $0.14 is recurring, that would be helpful.

Sure. So while they are variances in this year like relative to '25, but now that they're built in they're just going to -- they continue on a go-forward basis, but they won't actually be affecting or diminishing the growth year-over-year. So maybe that's a clarification that might be helpful. What are they with more specificity as you get into any rate to cycle, and I know we've chatted about this in the past, you can to deploy assets or invest in assets at a slightly different pace or in slightly different buckets than are in the GRC authorized revenue requirement. You get those depreciation and then also property tax-related variances. Again, built in now. So on a go-forward basis, they don't expect the year-over-year trajectory.

Tax and financing. There were some tax law changes last year around charterable contributions. There's a couple of pennies around that. And then because year-over-year, we have more wildfire debt outstanding, you see just a variance in the financing cost, again, because the average amount outstanding changes as you -- as we continue to pay claims back in 2025. Again, now built in. We also have a lot of visibility into that with the settlements behind us, so not a variance going forward, which brings you back to rate base growth as the driver for our earnings growth.

Okay. They're very comprehensive and thank you for giving the 2027 as well.

And the next question comes from Ryan Levine with Citi.

As the compensation program continues to execute, would you look to continue to tweak the program to achieve your objectives? And any color you could share around the rationale for the recently announced changes?

I had a little hard time picking up.

Yes. So Ryan, we did -- Pedro did mention earlier some small changes or some changes we're making in the program. I think all of that ties to the information gathering and the community feedback we continue to get. But I think, Pedro, if you want to...

I'm sorry, Ryan, it was just a little bit of static when you're asking the question, so I had a hard time picking it up. Yes. So we made a couple of modifications to the WRCP program. One is to provide some added support for tenants. The original protocol provided 3 months of compensation at the actual rent level that the tenants were paying prior to the event. But as we dug into this more and got more feedback, it became clear that there was at least some number of tenants in Altadena, who perhaps have been longer-term tenants, and we're continuing to pay rents that were under market levels.

So now we are making an adjustment to use the calcular, or the engine that we have to calculate or estimate fair market value for rent, and allowing tenants to recover 3 months of either the higher of their actual rent payments or that fair market value rent. The second adjustment we made was you might recall that the program provided support for attorney fees voluntary program, you can participate with that attorney, but if claimants choose to use an attorney, then the program provided 10% of damages as an increment to help cover turning fees. We were also hoping that the attorney community would recognize that this program represents a fairly straightforward approach and hopefully, less work for -- less effort for them, and we're about could provide lower fees for clients. But as we got feedback from the clients and claims from the claimants themselves, we decided there was appropriate to increase the what we're providing for legal fees to 20% from the 10% of net damages. Both of these changes will be applied retroactively as well. So we have claimants who have already received their compensation or -- we've already received an offer, we'll be making the adjustment for them automatically and won't require effort on their part.

And Ryan, I think you asked about what we continue to tweak to meet our objectives. The objective here is to have fair timely compensation, which also helps preserve the funds in the wildfire fund, reducing interest costs, reducing escalation, et cetera. The objective -- that is the objective. And then in terms of additional changes, we really are trying to respond to the community, but we think we've gotten a lot of feedback at this point.

I think our advisers on this. Also I've highlighted the importance of having a stable, understandable program. So I don't think it would be helpful to have a constant stream of changes either.

The next question comes from Aidan Kelly with JPMorgan.

After I just wanted -- just wondering if you could elaborate a bit more on the L.A. District Attorney's investigation to determine whether criminal violations occurred. I noticed the new 10-K disclosure here. So I'd appreciate any color on how you think about the scope of this investigation any thoughts on the potential magnitude?

Yes. Thanks for the question. And as you might imagine, investigations, I think are often to be expected when you have events of the scale of the Eaton fire. We don't have a lot of visibility into timing, et cetera. Certainly, our team will be collaborating with the attorney's office as they ask for any steps. But importantly, as we continue our investigation, and I think as I said earlier, as we look at the events here, we continue to be confident that SCE will be able to make a good phrase showing that its actions were those of a reasonable utility operator. And so that gives us a lot of comfort as we look at whether it's that investigation you mentioned or just the broader investigations into the event and looking ahead to ultimately looking for the CPUC to affirm CPUs in the future.

Understood. And just one last one for me. Can you confirm whether the out-of-service transmission tower needs grounded or not?

We have shared before that transmission line, the idle line was grounded at both ends. We have also shared that we had photographic evidence at the far end of the line that showed some anomalies and potential issues with that grounding and we've been transparent about all this from early on. We have also shared that as you take a look at practices across the utility industry, there really is no common practice or standard for grounding of idle lines. In fact, we've identified at least a couple of utilities that choose not to ground idle lines at all. In an abundance of caution and in the spirit of continuous improvement, and it's one of our values as a company, as we continue to learn and or hypothesize too about what may or may not have happened here, you might also recall that probably it was a month or 2 after the event, we also disclosed publicly that we were going -- in fact, we already did this, change SCE's protocols and policies to now require the grounding of idle lines at not only the endpoints, but for longer lines at least every 2 miles. And that could be shorter depending on the particular topography of any line. It's probably more than you wanted on idle lines there, but on sure you have the complete picture.

And that was our last question. I will now turn the call back over to Sam Ramraj.

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

Thank you. This concludes today's conference call. You may now disconnect at this time, and have a good rest of your day.

Good afternoon, and welcome to the Edison International Third Quarter 2025 Financial Teleconference. My name is Denise, 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, Denise, 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 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'll 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 1 question and 1 follow-up.

I will now turn the call over to Pedro.

Okay. Thanks a lot, Sam. Good afternoon, everybody. Today, Edison International reported third quarter core earnings per share of $2.34 compared to $1.51 a year ago. This comparison is not meaningful because during the quarter, SCE recorded a true-up for the 2025 General Rate Case final decision which is retroactive to January 1, reflecting the year-to-date performance and our outlook for the remainder of the year, including the costs for potential early refinancing activities later this year, we are narrowing our 2025 core EPS guidance range to $5.95 to $6.20. We have also refreshed our projections through 2028 and are reaffirming our 5% to 7% core EPS growth target. Maria will discuss our guidance and financial performance in more detail.

California's legislative session concluded with the passage of SB 254, a constructive and important step to support IOU customers, address wildfire risk and boost the financial stability of the state's investor-owned utilities. The bill passed with near unanimous support, and that's a clear signal that policymakers understand the urgency of the issue and the need for durable solutions.

SB 254 creates an up to $18 billion continuation account jointly funded by IOUs and customers to provide a backstop for wildfires ignited after September 19, 2025. Importantly, it enhances the existing framework by basing the liability cap on the year of ignition rather than the year of this allowance, providing certainty for stakeholders. It also allows for the securitization of wildfire claims payments for 2025 wildfires, ignited between January 1 and September 19 if the initial wildfire fund is exhausted, which would apply to the Eaton fire if needed. These provisions are constructive for potential cost recovery and help utilities like FCE continue to invest in safety and reliability while maintaining affordability for customers. We have provided a summary of SB 254 on Page 3.

SB 254 calls for an important second phase, a comprehensive report due in April 2026 that will evaluate long-term reforms to equitably socialize the risks and costs of climate-driven natural disasters. The law recognizes that customers and shareholders continuing to the burden of these events is unsustainable. This second phase is important to evaluate the broad scope of potential reforms that are necessary for a sustainable model.

As you will see on Page 4, the 10 points outlined in SB 254 can be grouped into 3 categories: first, reducing the risk of ignitions and harm from wildfires. Second, affording fair compensation for people affected by wildfires, including avoiding disparate treatment of communities; third, allocating the risk and cost of natural catastrophes across stakeholders equitable. We are encouraged by this direction and by the executive order the Governor Newsom signed on September 30 to expedite the state's all-in response. We look forward to continuing to work with legislators and stakeholders to shape a more sustainable and equitable framework. We are confident that we will see a meaningful legislative action next year.

Turning to the Eaton Fire. The investigations remain ongoing. As we have said before, SCE is not aware of evidence pointing to another possible source of ignition. Absent additional evidence, SCE believes that it is likely that its equipment could be found to have been associated with the ignition. During the third quarter, SCE entered into a settlement with an insurance claimant agreeing to pay $0.52 for each dollar paid to its policyholders. Note that this is a single data point and does not provide sufficient information to develop an estimate of the total potential losses associated with the Eton fire.

The wildfire fund administrator has confirmed that Eaton is a covered wildfire for the purposes of accessing the fund. Based on the information we have reviewed thus far, we remain confident that SCE would make a good faith showing that its conduct with respect to its transmission facilities in the Eaton Canyon area was consistent with actions of our reasonable utility.

That said, we continue to take proactive steps to support community members. Shortly, SCE will launch the wildfire recovery compensation program for the Eaton fire. This voluntary program is designed to provide eligible individuals and businesses impacted by the fire, direct payments to result claims quickly. This allows communities to focus on recovery earlier while minimizing the overall cost and outflows from the wildfire fund by reducing escalation, interest expense and legal fees.

Moving to the regulatory front. The key message is that we've made significant progress across multiple proceedings this year, further derisking our financial outlook and bolstering our ability to deliver for customers and investors.

Earlier this year, the CPUC approved the TKM settlement, authorizing recovery of approximately $1.6 billion in wildfire-related costs. More recently, SCE reached a settlement agreement with intervenors in the Woolsey Fire proceeding as highlighted on Page 5. This marks a significant milestone and puts the company 1 step closer towards fully resolving the 2017 and 2018 agency events. The agreement with authorized recovery of approximately $2 billion of the $5.6 billion requested subject to CPUC approval.

This structure supports long-term affordability for customers by reducing excess financing costs and improving credit metrics, specifically up to a 90 basis point benefit to FFO-to-debt and an annualized interest expense benefit of approximately $0.18 per share. Combined with the TKM settlement, this will result in recovery of 43% or about $3.6 billion of the total cost above insurance and FERC recoveries. We anticipate a final decision from the CPUC toward the end of this year or early next year. And assuming CPUC approval we expect to receive proceeds from securitization mid-2026. Details of both proceedings can be found on Page 6.

SCE also received a final decision on its 2025 general rate case in September, as highlighted on Page 7. The decision authorizes 2025 base revenue of $9.7 billion, and support significant investments in wildfire mitigation, safety and reliability and upgrades for increased load growth, while incorporating affordability considerations for customers. It also authorizes average revenue increases of about $500 million per year for 2026 to 2028 subject to adjustment based on inflation.

On capital expenditures, the final decision authorizes 91% of SCE's request. Importantly, the commissioners highlighted that these investments in the grid provide long-lasting value to customers. especially given the need to protect against wildfires, advanced electrification and ensure a ready, reliable grid for the clean energy future.

On wildfire mitigation, SCE has now deployed more than 6,800 miles of covered conductor. I'm pleased to share that by the end of the year, SCE will have had nearly 90% or more than 14,000 miles of its total distribution lines in high fire risk areas. The GRC authorizes installing another 1,650 miles of covered conductor for wildfire mitigation, as well as 212 miles of targeted undergrounding. Similar to covered conductor, which continues to be an important risk mitigation tool SCE believes that its targeted undergrounding program will also provide substantial benefits to further safeguard its customers and communities.

Public Safety Power Shutoffs remain a critical tool in wildfire prevention. This year's updates include revise criteria and wound speed thresholds, expanded circuit coverage and broader boundaries around high fire risk areas. Additionally, SCE has now enabled fast-curve settings on approximately 93% of its 1,100 distribution circuits in high fire risk areas, further reducing the cognition risk and improving system safety.

As we've shared before, SCE's system average rate continues to be the lowest among the major IOUs in the state. Importantly, the utility expects this will grow at an inflation-like level on average through 2028. Incorporating the GRC approval, TKM settlement and pending Wise settlement, we continue to expect that CAGR to be in the range of 2% to 3%.

In closing, I want to thank our team members for their continued dedication and resilience. And I also want to thank our investors for your support and our customers for the opportunity to serve them. This has been a year of meaningful progress on the legislative front, in the regulatory arena and in our operational execution. We've taken important steps to resolve legacy wildfire liabilities, strengthen our financial position, and advance the utilities mission to safely deliver reliable, affordable and clean energy. But we also recognize that this has been a challenging time for so many of the communities we serve particularly those impacted by wildfires.

We remain deeply committed to learning from our experiences in supporting recovery and resilience to rebuild stronger. We are grateful for the opportunity to partner with customers, local leaders and other stakeholders to build a safer and more sustainable energy future. Well, we look forward to continuing our dialogue with many of you at the EEI Financial Conference in November. We'll see you there.

And with that, Maria, let me turn it over to you for your financial report.

Good afternoon, and thanks, Pedro. I will echo your comments that we have made significant progress across multiple proceedings this year, further derisking our financial outlook and bolstering our ability to deliver for customers and investors. With a GRC final decision in hand, we now have increased certainty and visibility into the work SCE will do to meet customers' needs and have refreshed our projections through 2028. Consequently, we are reaffirming our 5% to 7% core EPS growth target which I will discuss in detail.

Starting with third quarter 2025 results, EIX delivered core EPS of $2.34, up from $1.51 a year ago. The year-over-year variance analysis is on Page 8. As Pedro noted, this comparison is not meaningful because SCE recorded a true-up of approximately $0.55 for the 2025 GRC final decision, which is retroactive to January 1.

Based on strong year-to-date performance and our outlook for the rest of the year, we are narrowing our 2025 core EPS guidance to $5.95 to $6.20, as you will see on Page 9. This range now includes the potential for $10 per share cost associated with refinancing tied to the TKM and Willy cost recoveries. As previously mentioned, our 2025 guidance does not include the potential earnings associated with the Woolsey settlement. SCE is awaiting a proposed decision on the settlement and a final decision could be issued later this year or early next. We want to be clear that for measuring our core EPS growth through 2028, the 2025 baseline of $5.84 is unchanged from prior disclosure.

Now I would like to discuss our refreshed projections, which we have summarized on Page 10. Additionally, on Pages 14 through 17, we put together a comprehensive list of frequently asked questions on guidance-related topics for background and easy reference, which we hope you will find helpful.

Please turn to Page 11, which lays out our 4-year capital plan of $28 billion to $29 billion. This compares to our previous forecast for the same period of $27 billion to $32 billion. The plan incorporates substantial investments in infrastructure replacement, electrification and system resiliency approved in SCE's GRC Additionally, the plan now incorporates the utilities next-gen ERP project and other updates across the business, including wildfire mitigation capital that SCE will securitize under SB 254.

We also continue to see the need for substantial grid investments beyond our forecast period. We've highlighted on the right side of the page, 2 examples of this with much of that spending occurring beyond 2028. Driven by the capital plan, we project rate base growth of 7% to 8% as shown on Page 12. This growth is after incorporating the expected wildfire mitigation capital expenditures that will not earn an equity return under SB 254.

Moving on to our long-term core EPS growth target, as shown on Page 13. We continue to expect 2028 core EPS of $6.74 to $7.14. You will find additional information on this topic on Pages 14 and 15. Our confidence in delivering on our commitments is underpinned by the clarity we have from the GRC and our ability to manage our operations for the benefit of all stakeholders.

Let me now turn to our financing strategy and balance sheet strength. Over the last several years, we have executed efficient financing to support our target 15% to 17% FFO-to-debt framework. We have used hybrid securities to generate equity content when needed, avoiding substantial common equity issuance to prefund our capital plans. By year-end, SCE expects to receive approximately $1.6 billion in securitization proceeds from the TKM settlement. Following Woolsey settlement approval, the utility plans to request the financing order to securitize an additional $2 billion. These actions further strengthen our credit metrics and financing flexibility for funding future rate base and dividend growth.

Altogether, this leaves us very well placed among our peers on 2 key credit metrics. EIX has one of the strongest consolidated FFO to debt ratios projected by S&P. Also, we have one of the lowest levels of parent company debt as a percentage of total debt. Page 13 details our 2025 through 2028 financing plan. Let me highlight that this plan does not require any equity issuance. This expectation is supported by the TKM and Woolsey recoveries.

Further, as you know, the wildfire fund provides reimbursement for claims paid above an IOU's $1 billion of insurance. Additionally, for fires between January 1 and September 19, 2025, the recently passed SB 254 allows the utility to issue securitized bonds prior to a reasonableness review to fund claims payments should the initial fund be exhausted. While we currently cannot estimate the probable losses associated with the Eaton Fire, the constructive California liquidity and prudency framework means neither equity or debt would need to be issued in connection with that event.

Following the passage of SB 254, the rating agencies issued updates on the company. Moody's affirmed its ratings for both EIX and SCE with a stable outlook. Fitch removed its Rating Watch Negative from both companies, citing SB 254 as a meaningful policy shift. While S&P downgraded EIX and SCE by one notch, we believe this view does not fully recognize the legislative intent or commentary from the Governor's office. Importantly, S&P still expect our credit metrics to remain within our target with upside potential from a constructive Woolsey outcome.

At the parent company, we are working on how to best address the preferred equity issuances that have upcoming rate resets. We are looking at cost-efficient options for early refinancing, which will bring forward both the costs and the benefits of the transaction. The core benefit is the titan clarity of financing costs before the rate reset, which further derisks our financial outlook. We have considered the potential cost of this optimization in our narrow 2025 core EPS guidance and see the long-term benefits outweighing the near-term costs.

I would like to update you on another positive trend we are seeing, load growth. As we have laid out on Page 18, a SCE remains well positioned to meet the diverse and accelerating demand across its service area. Our team continues to anticipate significant investments in infrastructure upgrades to meet this growing demand. many of which were included in SCE's recent GRC approval. Importantly, our demand forecast is not reliant on a single sector.

For one, SCE is at the heart of California's EV adoption, helping the state maintain its national leadership in transportation electrification. In fact, the state recently announced a record 29% of new cars purchased in Q3 2025 were 0 emission vehicles. We're also expecting growth in new housing developments and increases in commercial and industrial consumption. To sum up, we are expecting a near-term load growth CAGR of up to 3%. In the long term, we project electricity sales will nearly double over the next 2 decades.

I will conclude by saying that the company has made significant progress achieving certainty across numerous regulatory proceedings this year. allowing us to confidently reaffirm our long-term guidance. It underscores our ability to execute on our commitments and deliver for the customers and communities SCE serves and for our investors. That concludes my remarks, and I'll turn it back to Sam.

Denise, please open the call for questions. As a reminder, we request you to limit yourself to 1 question and 1 follow-up. So everyone in line has the opportunity to ask questions.

[Operator Instructions] The first question is coming from Nicholas Campanella with Barclays.

I just wanted to ask, you brought up the $0.10 for the equity preferred as it relates to the '25 guide. So can you just kind of confirm, is this -- is the $0.10 just a charge for both the '26 and '27 maturities? Or is that still kind of up for debate? And then maybe just expand on what some of your options are for addressing that? Obviously, there's no equity coming to replace this, if I'm reading it correctly.

Sure. Right. So just to recap what you said, we have 2 preferred equity series with a rate reset in March '26 and then again in March '27. We issued those back in 2021, and that was to address sort of the claims that we were paying related to TKM and Woolsey. And now that we have the TKM settlement approved and the securitization coming later this year as well as the royalty settlement pending approval, which will also be securitized. We're taking a look at all of our options at the holding company. So we are still evaluating the options.

But we think that maybe taking some steps earlier rather than waiting for those March '26, March '27 reset date would be beneficial overall for the company. Any time we do a refinancing, there will be a write-off of deferred transaction costs, et cetera. And so that's what the $0.10 represents. That would happen regardless of whether we do it early or whether we did it at the actual reset date. But the options that we're looking at are pretty broad, and we'll have more to come on that.

Okay. Okay. I appreciate that. And then I guess, as it relates to Eaton, you've launched this kind of recovery compensation program maybe you can kind of just discuss what the participation level has been in that? And does that allow you to have kind of a view on claims in more of an expedited manner? Is that something that we can maybe expect with the 10-K and I understand that there's very clear new protections in place from SB 254, which are helpful. But just when do you think that we'll have a low range estimate for what the liability against the fund would be?

Nick, let me jump in here. So we're not quite where I think we are yet. We haven't launched a program yet. We've announced that it's coming. We went through a process of releasing a draft protocol in September and then opening it up to feedback from the community. And so as I said in my remarks, we expect to be able to finalize the program and launch it shortly. And so regarding though, when that might lead or if it might lead to an estimate on losses. First, as you point out, we'll need to see what the participation rate is. Now I think that there's -- we're doing everything we can, and we've engaged really the world's best outside experts on this, [ Kemp Fineberg ] and [ Camille Biras ] who were, among other things, the architecture of the 9/11 fund so they've been providing great advice on this. We've gotten good input from the community. We're considering a number of potential changes beyond where we had releasing draft form.

But I do want to make sure I temper expectations. This is -- will be a long process, and it's only one of the components of potential losses in a complex event like Eaton. So you saw that I mentioned in my remarks already that we did the [ 1 subro ] settlement. It was meaningful, but it's only one. And so we're not able to estimate even subro losses just from that one data point. And so similarly, we'll have to see what kind of participation rate we get. And at some point, does it become material enough that it maybe allow us to start getting our hands around that portion of losses. But of course, there are other kinds of loss -- so a very long way of saying that we're still kind of where we were last quarter. We don't yet have an estimate of when we'll have an estimate, Nick.

And Nick, maybe just picking up on a couple of the other things you raised. The direct claims program is, of course, a good way to be good stewards of the fund. But you pointed directly to SB 254 protections that were introduced. So building on the protections of AB 1054, there are a couple of things that we think can apply to Eaton and do that in a constructive manner. First, the date at which the liability cap is calculated is the point of ignition. So we'll -- we know with clarity what the cap is for Eaton, which is approximately $4 billion based on our current rate base.

The second piece relates to the securitization that I mentioned earlier. For fires that occur between January 1 and the effective date of the legislation, to the extent there is a need to go above the fund. And again, we don't know what the estimate is for Eaton. The company can securitize those claims before going in for a reasonableness review at the CPUC. That outcome is good for customers because it minimizes costs and interest expense. It's also for the utility because it wouldn't need to issue any debt at that point or equity to fund the claims payments.

The next question comes from Greg Orrill with UBS.

Just a clarification. Is it -- is there a part within the growth rate range that you feel you're trending towards now the upper half or the lower half or whatever or maybe things that -- I know you provided some discretion around what would take you within that range, but any other thoughts on that would be helpful.

So Greg, we are very comfortable and confident in the 5% to 7% EPS growth. Obviously, we run a lot of scenarios when we take a look at that, and there are many variables that can change either because it's a 4-year period or because this is a complex business. I would just say that we did incorporate a lot of new information into our outlook. We have the GRC in hand. We had multiple regulatory proceedings over the past year around recovery of memo accounts. It also contributes to capital. We had the TKM settlement. We have the securitization that's coming up, the Woolsey, settlement that's pending approval.

With all of that, we put that together in the mix. And I think the 3 key ways for me are not just reaffirm the 5% to 7% EPS CAGR but also that we have significantly more clarity around that forecast, and we have a stronger balance sheet. So we're still 5% to 7% is where we are, but I think there's a lot more behind that, that is very positive.

The next question comes from Shar Pourreza with Wells Fargo.

Pete, I know there's -- obviously, there's clearly some improvement in the wildfire constructs from Phase 1, even though they kind of kick the can down the road and some of the key items there. I guess in terms of Phase 2 process, what do you see as viable for limiting EIX's liability? And what will be the data points that you anticipate going into the legislative session? Like is this going to be a public process? Is this going to be a private process? How do we track it?

Yes. Thanks, Shar. Good set of questions. And as I mentioned in my remarks, we are very encouraged by the legislature not only having taken the steps that Maria recapped just now in Phase 1 but setting up the Phase 2 process. Still being shaped, but the California earthquake Authority, as the lead entity here has been pretty articulate already in some key parts of the process given the time line, right, for submission of abstracts across the various topics. That's November 3 is the deadline for those abstracts. And then they have a deadline of December 12 for the full papers that parties can submit. They have said already that they plan to make all of those submissions, both the abstracts and the papers public as they come in.

So I think that's really helpful because it will give really nice transparency to everybody in terms of what various stakeholders are submitting and how they're thinking about things. For our part, we continue to work very closely with our colleagues at the other investor-owned utilities, and we'll also be looking to engage with a broader set of stakeholders as we develop our ideas or compare those with their ideas. We also understand that CEA will have perhaps still being defined a little bit, but some process for open discussions, meetings, et cetera. between the submission of papers and the April 1 deadline for the final report.

It was also encouraging, we had touched on this very briefly in my remarks, but it's very encouraging to see Governor Newsom turn to the various agencies with this executive order and essentially give out homework assignments for the expectations on how each agency would be contributing to specific items when the 10 areas that were outlined by SB 254 that I covered in my remarks as well. So it's really nice, not only the CEA putting out their process, but the governor then turning to the agencies. And for some of the agencies that he can direct actually gave direction for the agencies that are more constitutional where we can only provide advisory suggestions suggested focus areas for each of those.

We'll see what comes out in the report, although we were encouraged, frankly, by this responsibility, leadership of it, having placed by SB 254 in the hands of the California Earthquake Authority, very professional entity. They have a solid understanding of broad natural catastrophes and risks, starting with their original mission around earthquake. But as you know, they've been the wildfire fund administrator since the inception of the fund to [ Abeta 54 ] in 2019. So they also have deep experience now in terms of the wildfire topic that gives us a lot of comfort that there's good professional management and they have the ability, and we understand that they're in the process of engaging outside help as well.

And then I got a little long-winded here. Hopefully, I won't quite go into 18 innings like the Dodgers. Go Dodgers. But maybe I'll give you one more point on this. As we have -- Maria is laughing right now, which we have videos, you can see her. As we turn to the legislation and the outcome of the report itself, we expect that as a potential year for taking action across the economy. This is not just about utility connections to wildfire, right, and sell everything from reducing the exposure that the state it has by -- we would hope to see seeing strengthening building codes and standards and frankly, strengthening of the implementation of building closing standards because today's closing standard is actually rather strong.

But reviewing those and then making sure this already being implemented effectively statewide reduction in the overall exposure to losses, right, by looking at what are potentially some fair caps and specific kinds of claims or fees involved in the process. And then, of course, looking at how does California equitably allocate the ultimate cost of natural catastrophes like wildfires. It was very encouraging to see the legislature acknowledge right upfront in the preamble of SB 254 that the current process of essentially making utility customers and utility shareholders, the insurers of a catastrophe is simply not sustainable.

When you take out a horrible hard-braking fire like Eaton and we still haven't concluded happen here, but you heard me say, it's likely that the equipment could be found and have been associated. But even if the spark did come indeed from our SCE equipment, the catastrophe was about so much more. The extreme weather, the 100 mile an hour winds, the grounding of firefighting aircraft, the homes that unfortunately were beautiful, great neighborhoods, but were not ready for this high fire risk, the lack of evacuation notices in the areas that covered all but 1 of the fatalities.

So you add all of that up, and we simply can have utility customer shareholders continuing to be the insurers of this catastrophic risk. And we're encouraged that the legislature seems to recognize it and setting up 254. Sorry for the PhD dissertation there, but you hit on such an important topic.

Sure. No, no, it's helpful. And then just Pedro, really last one for me quickly. I mean, obviously, '26 seems to be a pretty big inflection year for the California utilities. And I know one of your peers in the state is talking a little bit more on capital allocation, depending on what could be the outcome of Phase 2, i.e., buybacks, dividends, returning more to shareholders, looking at how they're deploying capital in the state. I guess how do you -- where do you stand around that given how binary '26 could be?

I'll turn it to Maria in a second here, but let me just start by saying above all, this is really an important part of the main for Edison, and I think for our peers as well. This is ultimately much more about customer cost than anything else, right? The weakening of financial health which you mentioned some options are -- one of our peers has mentioned here. But ultimately, this is really about how do we maintain healthy balance sheets, importantly, healthy credit ratings because the cost of debt is borne by customers. And so as we engage with legislators, we are laser-focused on that customer impact as being the recent or one of the key reasons, in addition obviously to public safety, to reforming how this date addresses its catastrophic risk. Maria, do you want to talk...

Sure. So I think, first, I'd say, Shar, we've always taken a very measured and efficient approach to how we capitalize the business. You've seen that over the course of the last 5 or 6 years where we went down the path of using hybrid securities as opposed to issuing common equity at times when it would have been more value destructive perhaps to do the latter.

I think the other thing to say is we find ourselves in a somewhat different position. We have no equity issuances in our forecast at this point. We are looking at cost-efficient opportunities to take care of the holding company hybrid. So we'll be going down that path. And also, frankly, we have been returning capital to shareholders over the past several decades with the increasing dividend. We're still targeting our 45% to 55% payout ratio. We have a lot of confidence in our forecast, and so we have a lot of confidence in that. So I think you'd find our company in a slightly different position.

The next question comes from Anthony Crowdell with Mizuho.

I just wanted to follow up on Nick's question earlier on the $0.10 related to the preferred equity. It seems that it's -- I don't know if you're calling it earlier or expected earlier financing. Was it not contemplated in like the '26 and '27, '28 forecast in -- when you previously issued that financing on their maturity meaning that if they -- if you wait until when they actually matured, it was getting absorbed into the 2026 and '27 guidance, whereas now by pulling it forward, it's hurting '25 but yet '26 and '27 are not going up?

Frankly, Anthony, we were taking a look at a lot of options before as well. The fact is that with the TKM settlement earlier this year and the securitization and the Woolsey settlement pending and a subsequent securitization there as well, we find ourselves maybe with more options. Some of those options introduced potentially having to write off the deferred financing costs. Yes, if we were going to go down the path of refinancing in any event, you would get them in the year in which the event occurred, but if we were just going to continue them on then there wouldn't have been anything there to write off. So it does very much tied to the success we've had around some of the regulatory proceedings this year. certainty that we've gotten from them and the ability to introduce these additional options when we consider the preferred as a holding company.

The next question comes from Paul Zimbardo with Jefferies.

The first one I was going to ask, I know you had one of the comments, and I appreciate the frequently asked questions. How would you describe the linearity beyond 2025 of the EPS trajectory? I know it's been a little bit lumpy in the past, but thinking without rate cases in between to be a little bit more linear. So if you could give some color on that, it would be appreciated.

Sure. So we will be giving our 2026 guidance on the Q4 call. That's our typical practice. But I can share a little bit more with you about the process that we have and really what's underscoring our very strong confidence in the 5% to 7% growth rate. So I think about the GRC as the frame for the entire 4-year process. And now that we have that final decision in hand, we know the total amount of work that we have to accomplish over that 4-year period. But frankly, annually, we always go through a very detailed planning process to develop the work plan and how we will execute on each piece of the process.

And we have to consider a lot of different things. We have to consider resources. We have to consider operational priorities, timing of the work. All of those can introduce some amount of input and structure around our guidance on a go-forward basis. So we are looking at that right now. We have the GRC in hand, but our detailed planning process has not started or it's just recently started underway and now that we have the GRC decision in hand. And so we will be providing more of that detail in response to your question on the Q4 call, but it certainly underscores our confidence in the overall 5% to 7% EPS CAGR.

Okay. Great. And then the other one I had was just on the credit profile. I think the comment was solidly within that FFO-to-debt range. But just with the benefit of the enhanced recovery getting on the legacy fires, is it fair to think you're trending towards the upper half of that range over time?

So we're certainly comfortable in our range and we're looking at our various financing options, and we'll come back to you once we decide on those. And we can -- we will still, though, always be comfortably in our 15% to 17% range.

The next question comes from Carly Davenport with Goldman Sachs.

Pedro, maybe going back to some of your comments earlier on customer costs. Just wanted to ask on the cost of capital filing in that context of customer affordability in the rhetoric in California. Just curious your latest temperature on the outcome there relative to what you have baked into the financial plan that you've laid out here?

Yes. I'll start and Maria may have more there. We're still in that process. You've seen our filings, the range that we provided, which is higher than the current 10.33% 10 and 2 quarters to 11 and 3 quarters. That's based on our outside experts testimony of looking at the overall risk that SCE is encountered with right now and you're not trying to have a fair compensation on that. we'll let the process finish its way through. And hopefully, we'll have a decision by the end of the year, as has been typical with cost of capital proceedings. Maria, anything you would add there though?

Yes. So Carly, I completely agree with Pedro, we made a very strong doing the proposed decision based on the schedule is due in November. So we are watching for it, all of the procedural aspects of the proceeding are completed. In terms of your question about how does it roll into our forecast, like many other variables, we run a range of scenarios around the current ROE. So we have a number of things baked in, and we test a wide range of outcomes. So I think that's how it really fits into the range of 5% to 7% EPS CAGR through 2028.

Got it. Okay. Very clear. And then maybe just one on the updated capital plan here. It looks like the FERC piece come down a little bit on the margin. Just curious what's driving that? And then your current views on the upside opportunities for FERC investment as you manage some of the moving pieces at the state level?

Sure. So the FERC piece came down very slightly over the 4-year period. A lot of that just has to do with timing of when the work will be done. So nothing really to read into that. And then on your second question, could you just please repeat that one more time?

Yes. Just kind of as you think about managing the broader capital plan in the context of maybe the supportiveness of California of some of these investments at a CPUC level, to what degree FERC could sort of be a lever to lean into a little bit more there on the upside?

Carly, maybe one way to think about it is it's a pretty good delineation between which investments or CPUC jurisdictional and which ones are FERC jurisdictional. And so the CPUC jurisdictional are the ones that we just got approval for in the SCE GRC. In addition, we have other proceedings underway like the next-gen proceeding or the next in ERP or the smart meter proceeding, AMI 2.0. But maybe my help us Steve Powell, the CEO of SCE, just touch us a bit on just a broad transmission plan at Cal ISO and how that feeds the potential for FERC level investment over the next few years?

Yes. So the independent system operator, CISO has put out -- or puts out 20-year plans show the long-term opportunities for transmission investment in the state. The most recent one point $45 million to upwards of $55 billion of potential investment in projects over a 20-year period. They then translate that down to 10-year plans that get rolled out each year. And so you've seen over the last number of years, get quite a number of incumbent projects as well as bid and win a competitive project. And so as I look forward, kind of the load growth that we're seeing, especially in the 10- to 20-year period is going to continue to drive the CISO process to create more transmission opportunities.

And so we're going to continue to position ourselves to be the right incumbent provider to build on the existing network, which is oftentimes the most effective way to get the reliability projects as well as the policy projects built, but also continue to position ourselves for those competitive projects where there's new lines that are needed to be established. And we've shown our ability to go in and win projects and expect to continue to participate in competitive opportunities in the CISO portfolio going forward.

The next question comes from David Paz with Wolfe.

Somewhat related regarding the SB 254 CapEx that's ineligible for an equity return, do you anticipate backfilling that roughly, I think it's $2 billion, $2.3 billion of CapEx that's not in your 25 to 20 plan with other programs. Is that what the next gen and what the other things? Or should we anticipate there being something else?

So maybe let's clarify a little bit what's in the CapEx plan that's in the investor materials today as well as what's in the rate base. So if you recall, under SB 254, the CapEx that we're talking about is wildfire mitigation that is approved post 1/1/26, so this next upcoming year. In our capital plan, we have included some of the -- we have included all of the CapEx that we expect to spend through 2028 that is going to be subject to that. And we have about $500 million to $700 million of CapEx on the CapEx slide that are related to the SB 254 capital.

When you move over to our rate base slides, we are not including that when we convert CapEx into rate base. So you can use the rate base slide as sort of the foundation for your modeling in terms of the amount on which we can earn an equity returns. The balance of what is under SB 254, so the rest of that CapEx will be spent then after this rate case cycle. So as we go into the 2029 rate case cycle, we'll be taking a look at how that all factors in. But the numbers that we provided in the materials today should be pretty clean in terms of how you would use them to look at our growth rate.

Okay. That makes sense. Just to understand where modeling purposes that remainder, so not what's in your size today with the rest, should we anticipate that being spread out over the '29 to '32 GRC or upfront is just based on the language or your interpretation of SB 254?

We would expect that CapEx to be spent after 2029. We don't have those that GRC filed yet. So we'll be working on that as we go through it. And whenever we do have that available in terms of that piece of the forecast, certainly, we would make it clear as to what pieces are in rate base and what pieces are not.

The next question comes from Aidan Kelly with JPMorgan.

Just one question on my end. Could you just touch a little bit more on the near-term annual 1% to 3% sales growth a bit more? Just curious to hear any detail around the breakdown between the electrification, residential growth and C&I customers?

I'll turn it over to Steve again from an SCE perspective.

Yes. So in the near term, in terms of the customer demand growth that we're seeing, it really is a mix across those ones that you mentioned. So we certainly point to electrification and primarily around vehicles and the continued kind of strong growth in vehicle -- new vehicle purchases that are 0 emissions is really bolstering that transportation electrification load growth. It's probably about 1/3 of it is the driver in there. We continue to see residential new home starts and new residential development happening across our territory. And so that's another key piece.

And then the commercial industrial load growth, and that's a breadth of different types of industries, whether it's defense, manufacturing down to logistics are all ones that we're seeing at getting a lot of requests. I know there's a lot of conversations around data centers and that load growth. For us, it's not a big driver like many other places, but we see a moderate amount of requests coming through there as well. That kind of just blends in with the rest of our commercial industrial growth. So it's a pretty balanced set of load that we would see over the next 5 years where kind of we project that 1% to 3%.

And we really like the durability of having that kind of diverse profile as opposed to relying just on data centers.

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

Thank you for joining us. This concludes the conference call, and have a good rest of the day. You may now disconnect.