Edison (EIX) Q3 2026 Earnings Call Transcript

DATE

Oct. 29, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Pedro J. Pizarro
• Executive Vice President and Chief Financial Officer - Aaron D. Moss
• Vice President of Investor Relations - Sam Ramraj

TAKEAWAYS

• Core EPS -- $1.92 per share, compared to $2.34 in the prior-year quarter, reflecting a regulatory true-up from the SCE general rate case.
• GAAP EPS -- $1.88 per share, compared to $2.16 in the third quarter of 2025.
• 2026 Core EPS Guidance -- $5.90 to $6.20 per share, with management indicating a bias toward the middle of the range.
• Total Operating Revenue -- $4.89 billion, representing a decrease from $5.75 billion in the third quarter of 2025.
• Net Income -- $724 million, compared to $832 million in the prior-year period.
• Five-Year Capital Plan -- $38 billion to $41 billion through 2030, focused on improving grid safety and reliability.
• Rate Base Growth -- 7% projected through 2030, serving as the primary driver of earnings growth.
• Wildfire System Hardening -- 90% of distribution infrastructure in high-risk zones has been hardened to mitigate potential ignitions.
• Covered Conductor Completion -- 7,200 miles of protected wiring installed to prevent sparks and improve system resilience.
• WRCP Settlements -- 3,200 offers totaling $1.1 billion extended to community members through the recovery compensation program.
• Long-Term Growth Target -- 5% to 7% core EPS growth annually through 2030, reaffirmed by management.
• Long-Term Debt Maturities -- $2 billion to $4 billion maturing annually between 2027 and 2030.
• Estimated Financing Costs -- $300 million in potential incremental costs for customers in 2027 due to elevated credit spreads from legislative uncertainty.
• FFO-to-Debt Ratio Target -- 15% to 17% for the multiyear period through 2030.
• Dividend Payout Ratio -- 45% to 55% of SCE core earnings, supporting 22 consecutive years of dividend growth.
• Transmission Asset Inspections -- 77% of transmission assets in high-risk areas are inspected annually via ground or aerial reviews.
• Load Growth Allocation -- 22% of total capital expenditures through 2030 are dedicated to interconnection and customer-driven load growth.
• Eaton Fire Subrogation Settlements -- 55% settlement rate on the dollar for insurance preclaims processed as of the end of the quarter.

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RISKS

• Pizarro stated, "If Edison's credit rating were to fall below investment grade, that would add further costs at a time when affordability is paramount for customers," highlighting the potential negative impact of legislative inaction.
• Pizarro indicated that delay into 2027 for wildfire liability reform will have significant and costly consequences for customers and the state economy.
• Management warned that without durable reform, the utility would request less capital for electrification and clean energy transition projects in its 2029 general rate case.

SUMMARY

Edison International (NYSE:EIX) reported a decline in third-quarter core earnings while reaffirming its full-year 2026 guidance and multiyear growth objectives. Management reported that the company is actively advocating for a special legislative session in California to secure durable wildfire liability reform, including a shareholder liability cap and a durable liquidity source. The company indicated that a lack of legislative action contributes to elevated credit spreads and higher financing costs, which could ultimately lead to reduced capital investment in projects supporting the clean energy transition. SCE continues to implement its wildfire mitigation program, having hardened the majority of its distribution system in high-risk zones and maintaining rigorous aerial and ground inspections of transmission infrastructure. Management stated that investigations into the Eaton Fire continue, though the company remains confident that its operations were consistent with those of a reasonable utility operator.

• Management indicated that if legislative reform is not achieved by the Nov. 15 constitutional deadline, the effort will continue with the new governor and legislature in 2027.
• Pizarro stated, "If Edison's credit rating were to fall below investment grade, that would add further costs at a time when affordability is paramount for customers."
• The company reported that approximately 22% of its projected capital expenditures through 2030 are driven by customer load growth and interconnection requirements.
• SCE noted that it holds a safety certificate, which establishes a legal assumption of prudency in California unless another party creates serious doubt.
• Management stated that AI-enhanced inspections and AI-enabled cameras are being utilized to detect potential equipment failures earlier and reduce wildfire risk.
• The company indicated that the statute of limitations for personal injury claims related to the Eaton Fire expires in January 2027, while property damage claims extend to January 2028.
• Moss noted that the company expects to maintain its long-term FFO-to-debt ratio of 15% to 17% while forecasting no common equity issuances through 2030.

INDUSTRY GLOSSARY

• Covered Conductor: Specialized overhead wiring designed to reduce wildfire ignition risks by preventing sparks upon contact with debris or vegetation.
• General Rate Case (GRC): A regulatory proceeding where a utility requests a change in its rates to cover its cost of providing service.
• Wildfire Recovery Compensation Program (WRCP): A mechanism established by the utility to provide expedited financial settlements to individuals and entities impacted by certain fire events.
• Office of Energy Infrastructure Safety (OEIS): A California state agency responsible for overseeing wildfire mitigation plans and safety certifications for electrical utilities.
• Subrogation: The legal process by which an insurer seeks reimbursement from a third party responsible for a loss paid to a policyholder.
• FFO-to-Debt Ratio: A financial leverage metric measuring a company's ability to pay off its debt from its operating cash flow.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to the Edison International Third Quarter 26 Financial Teleconference. My name is Ted, and I will be your operator today. Today's call is being recorded. I would now like to turn the call over to Mr. Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.

Sam Ramraj: Thank you, Ted, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro J. Pizarro and Executive Vice President and Chief Financial Officer, Aaron D. Moss. Also on the call are other members of the management team. Materials supporting today's call are available at www.edisoninvestor.com. These include a Form 10 Q, prepared remarks from Pedro and 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. 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.

Pedro J. Pizarro: Thanks a lot, Sam, and good afternoon, everyone. My comments today will focus on 4 areas. Our strong performance, the need for durable wildfire reform, SCE's continued progress making the grid safer and more reliable, and the utilities work to support communities impacted by the Eaton Fire. Starting with earnings, Edison International's third quarter core earnings per share was $1.92 bringing year to date core EPS to $4.89. Based on strong year to date performance and our outlook for the remainder of the year, we are reaffirming our 2026 core EPS guidance range of $5.90 to $6.20. Aaron will discuss our financial performance in his remarks. We know that durable wildfire liability reform is a key focus for investors.

And moreover, it is essential to manage customer costs and support the world's fourth largest economy. We were disappointed when California's legislative session concluded without action on a durable long term solution. It was evident that capital providers also felt that way given the market reaction. Since the legislative session ended, we and the other California IOUs have been engaging with a broad group of stakeholders to improve understanding of the consequences of inaction and advocate for a special legislative session with a sense of urgency.

The objective is to achieve a long term solution that includes a clear and durable liquidity source for funding claims resolution, and a true shareholder liability cap that is not connected to the wildfire fund. While we are focused on these key items, we recognize that other pieces may be needed to develop a package that gains support from stakeholders and ultimately the Senate, the assembly, and the governor. In time to send a bill to the governor by the constitutional deadline of November 15. If we do not succeed in 2026, we must continue the effort with the new governor and legislature in 2027.

While we remain confident that California policymakers will ultimately take action, given the dire and escalating impacts on customers and the economy. Delay into 2027 will have significant and costly consequences. We evaluate our investments through a disciplined benefit cost lens balancing the needs of the system with affordability for customers. The uncertainty in the present environment is increasing the cost of financing these investments. If Edison's credit rating were to fall below investment grade, that would add further costs at a time when affordability is paramount for customers. SCE will file its 2029 general rate case in about 6 months. Increased financing costs would influence the investments requested, with priority given to core work and safety, reliability and compliance.

Without durable wildfire reform in place, SCE would request less capital than it otherwise would for projects that enable electrification, the clean energy transition, and economic growth. Higher financing costs could similarly affect decisions over the next couple of years about incremental capital investment in areas such as grid readiness for load growth, and supply resources in SCE service area. Turning to SCE's progress in making the grid safer and more reliable, the utility has reached substantial wildfire mitigation and grid hardening milestones, including hardening approximately 90% of its distribution system in high fire risk areas. SCE continues to focus on driving out risk through targeted infrastructure investment, comprehensive inspections and remediation, and vegetation management.

We continue to enhance our data driven and risk informed approach integrating insights from multiple wildfire risk and climate models, to give us a more complete view of risk and help target where it can provide the greatest safety benefit and risk reduction. The capital investments approved in SCE's 2025 GRC including covered conductor, targeted undergrounding and asset replacement, will make the grid safer and more resilient. Conditions on the ground for the rest of 2026 currently appear consistent with the normal year and there is potential for El Nino to contribute to earlier rainfall. Looking over the much longer term, Edison International unveiled its most recent white paper at Climate Week New York City last month.

Titled Adapting Today Energizing a More Resilient Tomorrow. It highlights expected 2,050 weather impacts across floods, droughts, sea level rise, extreme heat and wildfires. It illustrates the long term planning and investments needed. And it emphasizes the need for partnership across communities, government, and the private sector to prepare California's economy. Regardless of the weather outlook, SCE maintains flexibility in its work plan so it can conduct additional inspections and remediation where changing conditions indicate those activities will provide the greatest safety benefit. To support those decisions, the utility has expanded the information available from weather stations, high definition cameras, fuel sampling, inspections, and advanced modeling capabilities.

Together, these tools help SCE target resources and take additional action where conditions warrant. They complement the substantial physical hardening SCE has already completed. Including more than 7.2 thousand miles of covered conductor. That work provides a stronger foundation. More precise data and more advanced technologies including AI enhanced inspections and AI enabled cameras, are helping SCE address the risk that remains by identifying maintenance needs, threats, and potential equipment failures earlier. In parallel, the Office of Energy Infrastructure Safety continues to evolve its wildfire mitigation plan guidelines and put in place more structured and in-depth requirements in select areas.

That scrutiny is an important part of continuously strengthening California investor owned utilities wildfire mitigation programs and reducing risk for customers and communities. I am pleased to note that in approving SCE's 2026 to 2028 wildfire mitigation plan, OEIS highlighted SCE's transmission high fire risk informed inspection program and described it as the most comprehensive among the large IOUs. The agency noted that SCE conducts both detailed ground and aerial inspections annually on approximately 77% of its transmission asset in high fire risk areas. With inspection frequency tailored to the consequence and risk profile of each location. SCE is committed to building on both its successes and opportunities for improvement.

To maintain a rigorous layered approach to reducing risk and enhancing execution of its wildfire programs. Turning to the Aaron fire, we have said that absent additional evidence, SCE believes that it is likely that its equipment was associated with the ignition. During the quarter, the Los Angeles County Fire Department published redacted reports from its investigation. Those reports concluded that the Eaton Fire ignition was caused by SCE equipment. SCE is continuing to analyze these reports. Importantly, the county's determination regarding the cause of ignition is separate from the processes for determining legal liability prudence, and wildfire fund reimbursement. Each of which has its own standard.

Based on the information reviewed to date, I want to make 3 points very clear. First, we remain confident that SCE will be able to make a good faith showing that its conduct with respect to the Eaton Fire was consistent with the actions of a reasonable utility. Second, SCE believes there is no basis for a finding of felony liability. And third, SCE believes there is no basis for a finding of conscious or willful disregard, of the rights and safety of others. Now the prudency standard established under California law evaluates whether the utility's actions were consistent with those of a reasonable operator across a spectrum of possible practices.

The CPUC can also consider factors within and beyond the utility's control that may have exacerbated the cause of the fire. It is important to distinguish the prudency standard from the substantially different standards associated with felony liability or willful disregard. Those standards require intentionality, and recklessness. They involve a fundamentally different level of conduct and intent that we are fully confident our company did not exhibit. Moving to the full wildfire recovery compensation program. Community interest remains strong. October with days still remaining, already has the most claims submitted of any month this year. SCE has extended more than 3.2 thousand offers totaling $1.1 billion.

The pace of submissions indicates that community members continue to consider the WRCP as a potential path to compensation ahead of the November 30 deadline. Let me close by thanking our team members for their continued dedication and execution. SCE continues to advance the capital investments authorized in the 2025 GRC with a clear focus on safety, reliability, and customer value. At the same time, we continue to underscore the need to achieve a long-term wildfire reform solution that includes a clear and durable liquidity source and a true shareholder liability cap that is not connected to the wildfire fund. We will continue working toward an outcome that serves customers, communities, and capital providers.

Our team and I look forward to seeing many of you at the EEI Financial Conference in a couple of weeks. With that, Aaron can go ahead and provide your financial report.

Aaron D. Moss: Thanks, Pedro. Good afternoon, everyone. In my comments today, I will cover third quarter 2026 results, our capital and financing plans, and our financial position in the current legislative and interest rate environment. Starting with the third quarter, EIX reported core earnings per share of $1.92 compared to $2.34 last year. Page 6 provides the year over year quarterly variance analysis. The 2025 results reflect a $0.55 true up resulting from the receipt of SCE's general rate case final decision. Looking through that item, the quarter reflected continued stability in our core operations.

We are pleased with how 2026 has progressed and given our strong year to date performance and outlook for the remainder of the year, we are taking the opportunity to invest in the business to derisk future periods and drive ongoing efficiency. As a result, we are reaffirming our 2026 core earnings per share guidance range of $5.90 to $6.20 with a bias towards the middle of the range. We are also reaffirming our 2027 and 2028 core EPS guidance ranges and our long term core EPS growth target of 5% to 7% through 2030. Turning to the capital plan, SCE continues to see substantial investment needs driven by safety, reliability, and readiness for customer driven load growth.

Our 5 year plan calls for approximately $38 billion to $41 billion of capital expenditures from 2026 through 2030. The plan supports projected rate based growth of approximately 7% from 2025 through 2030, which is the primary driver of our long term earnings growth. Pedro discussed the need for comprehensive and durable wildfire reform From a financial perspective, today's volatility and uncertainty increase the cost of financing the infrastructure required for a safe and reliable grid. Those higher costs are ultimately borne by our customers.

For instance, we estimate that the currently elevated credit spreads could cost customers an incremental $300 million over the life of the bonds we expect SCE will issue in 2027 alone. that is why a durable framework that improves predictability and supports reasonable access to capital is important to affordability. Next, I will address the interest rate environment in our debt portfolio. As you can see on page 9, our direct exposure to variable rates is limited. We have no long term debt with variable interest rates. Also, our debt maturities are distributed across the forecast period, Overall, this limits our exposure to near term movement in market rates.

As of September 30, roughly $2 billion to $4 billion of long term debt matures annually between 2027 and 2030. We approach each refinancing based on market conditions, the needs of the business, and the objective of maintaining an efficient capital structure. Interest rates are 1 of several operating regulatory, and financing variables we regularly manage. We have managed through multiple interest rate environments and remain confident in our ability to successfully navigate this period and deliver on our commitments. From a balance sheet standpoint, we have no common equity issuance forecast through 2030, and we continue to target a long term FFO-to-debt ratio of 15% to 17%.

To add to this, our long standing dividend policy continues to target a payout ratio of 45% to 55% of SCE core earnings subject to customary board approval. This policy has enabled 22 consecutive years of dividend growth. Let me conclude by saying that we remain confident in our multiyear financial outlook and the Edison team is focused on delivering on our commitments to customers communities, and capital providers. That concludes my remarks. Ted, 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. Thank you.

Operator: If you would like to ask a question, Our first question is from Richard Sunderland with Truist Securities. Your line is open. Richard? [Operator Instructions] The next question in the queue is from Nicholas Campanella with Barclays. Your line is open.

Nicholas Campanella: Hey, good afternoon. Thanks for the time. I just wanted to ask. I mean, first, the November 15 deadline date for the constitutional deadline, I think some were thinking that maybe it was more November 30 that the session could go till. Can you just kind of clarify the timeline? Thank you.

Pedro J. Pizarro: Yeah, sure, Nick. If you look in the constitution, it specifies that any bills need to be sent to the governor prior to November 15. I think it is because it is the end of the 2-year session. Now once the bill goes to the governor, I believe he has 12 days to either approve or veto. If he takes no action, then the bill would become law. But he does have a 12-day active period after that bill is submitted. But November 15 is actually a constitutional deadline. Thank you very much.

Nicholas Campanella: And then also, my understanding is that the Eaton Fire deadline for recovery compensation is November 30. Does that mean in the fourth quarter call, we would have kind of a true sense or you would have a better sense of what the potential charge could be and get that disclosure. And then secondly, how are you kind of thinking of booking that? Can you talk about how PG&E's prudence determination that is coming up here in November. Under the AB 1.05 thousand framework. Could that change or inform how you are booking the Aaron liability going forward? Thanks.

Pedro J. Pizarro: Thanks, Nick. A lot there. Let me start out and then Aaron can fill in. First, yes, we have a deadline of November 30 for the WRCP. And, as I mentioned, we are seeing the of applications increasing, which is, you know, good to see. We have to see what the ultimate volume is, you know, in terms of applications we get relative to the total claims outstanding. You know, as of today, while we are pleased that we are, you know, seeing the number of applications we have, it is still a small fraction of the total claims that have been entered to the legal process.

So unless something dramatically changed and we saw a very high volume of claims that approximated a very, very large percentage of the total claims that have been filed through litigation. You know, I do not think today we would expect to have enough information just from the WRCP to be able to extrapolate sufficiently for individual claims. That said, we will continue to monitor this every quarter. And 1 other factor I will throw in, you did not ask about it, but just for clarity for everybody, the statute of limitations for personal, damages, personal injury is coming up in January 2027. We may see a number of claims coming into the legal process for that.

The statute of limitations for property damage, however, goes through January 2028. And so I think a question mark is do we end up seeing combined claims coming in for the 2027 deadline, or do you see a number of property claims that actually go all the way up to 2028? So I share that to illustrate that there is a lot of moving pieces and parts just on the individual plaintiff's side alone. And then furthermore, we have, as you know, other classes of claims including subrogation claims from insurance companies and, you know, governmental claims.

And so those are all moving pieces and parts that would all need to align in order to be able to develop a low end of the estimable range.

Aaron D. Moss: And I think Nick also asked about how the PG&E proceedings So, you know, we will continue to pay we will have a sense of urgency around being able to estimate the reserves as reasonably as we can, and we just cannot predict when that is going to be We are watching closely the PG and E matter on Dixie and Kincaid. In fact, there were oral arguments just recently or early this week, late last week. I cannot remember at this point. But, we watched those very, very closely, and we will take into consideration what comes out of that process and all the other precedents that we can.

You know, 1 of the things that came up in those oral arguments is a comparison between the prudent standard here and the FERC prudence standard. And we will look at FERC recoveries. We will look at what happens to Dixie and Kincaid. Anything else. So we will take the totality of evidence into consideration both when it comes to booking the reserves and also booking any kind of, regulatory asset or reserve against those. Regulatory assets. Thanks.

Nicholas Campanella: Thanks for the thoughts.

Operator: Good question. And the next question is from Richard Sunderland with Truist Securities. Your line is Hey, Richard. Leverage. Our next question is from Carly Davenport with Goldman Sachs. Your line is open.

Carly Davenport: Hey, how are you? Thanks so much for taking the questions. Maybe just to start, would be great to get your latest sense just on the appetite. You think at this point for a special legislative session to be called after? Has there been anything from the recent assembly hearings that kind of has stuck out to you that you think has given any indication of the appetite there? Or, you know, do you think maybe we need to see some more movement from the senate to get a better read?

Pedro J. Pizarro: Yeah, Carly. And I do not want to get into here. I think the assembly hearing, which was still a committee hearing, was still going on when we gathered to prepare for this call. Look, I think my short answer right now is that there are a lot of moving parts and pieces. I think we are hearing that there will be openness to a special session, but it is certainly not guaranteed by any means. And so that is why we continue to be so focused on making sure we are doing our part to educate policymakers and to try and bring stakeholders together, We recognize there are various pieces and parts to this that will be important.

Frankly, I would not expect the special session to be called unless there is some clear sense that there is a framework there that ultimately the senate, the assembly, and the governor's office could all support. So, that is a long winded way of saying stay tuned. But we are working really hard right now because of the sense of urgency we feel. You know, as I said in my prepared remarks, If this does not happen in 2026, while I am confident that ultimately, the state will get there because of the you know, the importance of this state's economy.

Delay into 2027 is going to be costly for customers, and I sure hope that the state can get all the stars aligned to avoid that cost for our economy.

Carly Davenport: Got it. that is really helpful. Thank you. And then you highlighted the potential for perhaps lower investment to be reflected in your 2029 GRC filing in the event that there is not durable wildfire reform in place by the time you do file any sense of relative to maybe what is in the 2029-2030 capital plan today, what the magnitude of potential decreases could look like?

Aaron D. Moss: Yeah, Carly. This is Aaron. When we put together our long term forecast, obviously, it is a very top down forecast. And as we are preparing for the general rate case, we are really working bottoms up, what are the customer needs? And so we are we are taking it from different directions. We are we are in that process now, and we are looking at all those investment needs through the benefit cost lens that Pedro referred to.

So you could imagine as we see material increases in cost of capital, we have already started seeing, you know, spreads widen, our certain debt issuances are, not reflective of our current credit rating in terms of the interest that we are paying. So those costs are being paid by customers, and we need to take that into consideration for those customers. So Pedro kind of alluded to where we need to focus our spending, and we need to prioritize spending in safety, reliability, and compliance related areas.

And that just means, by definition, we would have less for low growth and sort of clean energy policy, the types of investments that are driving the state's economy in terms of housing starts, things like that. But as far as the reconciliation to 2029-2030, that, we will have to get our way through kind of the full testimony development for the general rate case. Oh, better yet. Hopefully, we will get action in 2026 and not have to worry about it.

Pedro J. Pizarro: Got it.

Carly Davenport: Okay. Awesome. Thank you so much for the time. Thanks, Carly.

Operator: And the next question comes from Gregg Orrill with UBS. Your line is open.

Pedro J. Pizarro: Hey, Gregg.

Gregg Orrill: Yeah. Hi. Thanks for taking the question. Just the focus in the hearings has been on subrogation. And I was wondering if you could kind of connect the reform of insurance subrogation to the goals that you are seeking. And you know, if you see if you see that getting addressed without your goals, how would you view that as an outcome? Thank you.

Pedro J. Pizarro: Yeah. Gregg, that is a good way to frame the question. I will go back to the California earthquake authority report. That did a good job in portraying this as not just a utility issue, but it is really a whole of the economy issue. And so, you know, clearly, the insurance market is a big part of that. Customer affordability is a big part of that. Are other pieces, of course. And so, you know, I see the connection with subrogation is 1 that is important because, ultimately, you know, clearly, utilities need to be accountable for running our systems prudently.

I think the whole wildfire mitigation plan structure that was set up at AB 1.05 thousand is a great, you know, framing for that. But we are not really equipped as an industry to ensure every hazard, and, certainly, we are not equipped to ensure the added hazard that may come if you have a catastrophic fire that might start from utility admission but might get exacerbated and amplified. A number of other factors like frankly, we saw with Eaton. Right? The high winds, the grounding of aircraft, the lack of water resources, the communities that were at risk.

And so just if I step back from a high-level policy perspective, I understand where our friends in insurance are coming from and wanting to see subrogation rights, But I can also understand the interest that a number of policymakers have in making sure that the risks are allocated properly, appropriately, across multiple stakeholders. And so I think, you know, looking at that subrogation connection is all about saying, well, what portion of cause in a catastrophic event are appropriately borne through what I will call, all hazards kind of insurance versus what portion are appropriately belong to an entity like the wildfire fund on the utility customer and shareholder side. So that. that is the nexus there, Gregg.

Does that make sense? Aaron, anything to add?

Aaron D. Moss: Maybe just add. So when we think about what it is that we as IOUs need, is really a predictable framework that supports access to reasonably priced capital for our investment, and that is 2 things. that is a durable shareholder liability cap that extends beyond the life of the wildfire fund and a liquidity measure. But the other elements that are going to make up a successful sort of reform would include public safety reducing the likelihood and severity of ignitions, timely and fair recovery, and affordability, kind of getting at total system cost. And there is friction. We currently every time we have had a wildfire, we work through with Subro, and we settle claims.

In fact, in Eaton, we have settled pre-claims with Subro for about $0.55 on the dollar. But there is a bunch of friction in getting to those, and there is cost. Associated with that friction. And so part of an element of taking that friction out will save customers' costs. Maybe 1 added element and then saving customer cost also, frankly, helping all the stakeholders here is at least in concept, you had a clear level of subrogation right and you had that stapled with a faster process to resolve that, then there is a time value of money element there that could be helpful to insurance and therefore, helpful to customers.

So, you know, a lot of pieces they have put together here.

Gregg Orrill: Got it. Thank you. Yeah.

Operator: And the next question is from Aidan Kelly with JPMorgan. Your line is open.

Aidan Kelly: Afternoon. Thanks for the time today. Maybe just, you know, first starting with the Eaton Fire. You know, given the latest investigative findings and, you know, some allegations out there, from some, you know, third party reports. Kind of calling into scrutiny on the transmission maintenance. You know, what do you see as the most significant remaining uncertainties in demonstrating prudence? Has anything emerged that materially changes your assessment of the likelihood at this time? I know you kind of put out more slide and more disclosures there to kinda bifurcate between the certain topics. Just curious if you could kinda elaborate on that. In more depth.

Pedro J. Pizarro: Yeah. Yeah. Thanks, Aidan. And look, I will start by repeating what we had in the slide and what I said in my script, which you have heard from us now for multiple quarters. Right? We remain confident that SCE will be able to make a good faith showing of its prudency. You know, the longer version of that is, you know, that there was a reasonable operator with respect to the Eaton Fire. And so that has not changed. Let me also remind you of the process here, and I think we touched on that in 1 of the slides.

But under AB 1.05 thousand because SCE had a safety certificate, now the ingoing assumption essentially is that it is a prudent operator unless you know, another party can create a serious doubt about that. In which case if the CPUC will then, you know, have the ability to go in and decide whether we were prudent or not. That process will likely take many years from now. Many years from now because the PUC typically likes to see the vast majority of settlements resolved so that they know what total dollar amount is before heading into, you know, a public utilities commission proceeding.

And so, you know, it is certainly possible that between now and then, additional facts might come to light or different analysis or what have you. And, you know, we continue to look at facts and evidence But at the core, you know, our view really has not changed that SCE will be able to make that good faith showing. Yeah. And we really have not gotten into these all the, you know, myriad underlying details because that is really for another day.

Moreover, you know, as we pointed out, I wanna repeat myself here because it is important Not only do we have the confidence in prudency, but, you know, you refer to various other third party comments So just to be very crystal clear on this, not only do we not see any basis for felony liability, we certainly do not see any basis. for, you know, allegations of conscious or willful disregard. that is a really high standard. And I think I said this to some of you before, that is not something I lose sleep over. You know, I may think we have all been impacted emotionally by the impact in our community.

But when it comes to what was the behavior of this company and the leadership, we certainly are nowhere anywhere close to something that would support any sort of allegation of conscious or willful disregard. So, you know, I am Aware of third party comments out there. Those are without merit, and I think self interested. Understood. Thanks for that, Pedro.

Aidan Kelly: And then just 1 other question. Back on the special session. I think people are just trying to see if you could clarify if a special session could still get sent as a bill to the governor after November 15. And then just, like, a follow-up on that is are the IOUs offering up any concessions to kind of help catalyze a special session in general?

Pedro J. Pizarro: So You might understand, Aidan, I think you are asking a really appropriate question, but you might understand that I really cannot get into the details of the discussions that are underway right now. As you can imagine, we want to make sure that we are being thoughtful about how we bring multiple stakeholders together to solve something that is really a whole of the economy issue. Inherent in any sort of set of discussions like that will be trade offs and you know, different points of view. So certainly, are not going into this with a closed mind.

We wanna have an open mind to listen and figure out if there is a path there that works not only for the stakeholders, but ultimately for the senate and for the assembly and for the governor's office. To your question about, can anything happen post November 15? So let me clarify. This legislature is no longer in place as of November 30. And so under the constitution, if they are going to send a bill to the governor to a special session, that bill would need to go in no later than November 15. And so that is the focus right now. Otherwise, you are looking at working with the next legislature and so that.

Now those folks are sworn in, I believe, in early December and so. But I am sure there is ramp up period for them. So. And I know the governor has. The current governor has said that he is going to be working, you know, hard on all the topics across the economy, all the way until his last day, but, you know, it just kind of gives you a sense of the timing for different parties. Gregg. Thanks for answering my questions. I will leave it there.

Aidan Kelly: Thanks, Aidan.

Operator: And the next question in the queue is from Ryan Levine with Citi. Your line is open.

Ryan Levine: Given the sense of urgency on the legislative session and the $300 million cost highlighted to Edison's customers of inaction. Is there any estimate around the cost that a delay in a solution would be if nothing were to happen between now and August of next year?

Aaron D. Moss: Yeah. You know, Ryan, a great question. it is certainly something as we are talking to folks, we are trying to bring out these data points, $300 million, that we talked about on the call here today is 1 of the data points that we share. But you could imagine that, you know, the elevated spreads that we have been seeing have been in place since January 2025. And they will continue.

So, you know, we talk to folks about what does that look like over a longer period of time and how if you let the cost into the cycle they take a really long time to get out because they are financing long term investments that we are making on behalf of customers. So we use these data points as we are trying to educate all the interested parties on the cost of inaction.

Ryan Levine: Thanks. And then And with the upcoming report coming out in the next few days of the CPUC, is there any key data points that you wanted to highlight that may supplement some of the analysis being done?

Pedro J. Pizarro: No. We are just looking forward to seeing the reports. As you can imagine, our team jointly, you know, along with the teams at the other investor-owned utilities have been answering a number of questions that the PUC staff have been asking, a number of data requests on that. So certainly, you know, cooperating fully with that. And, you know, I just look forward to seeing the report. I think it will be a very important piece of information. And you have seen the PUC staff you know, in our in our view, do a very solid job in previous submissions. For example, there their submissions into the California earthquake authority process were very thought-out, very balanced.

And so looking forward to similar report.

Ryan Levine: Yeah. Thanks, Ryan.

Operator: Our next question is from Anthony Crowdell with Mizuho. Your line is open.

Anthony Crowdell: Good afternoon. How are you doing? Just a quick 1. You know, when you think of rate cases, sometimes when your serial rate filings, it maybe causes some fatigue in the regulatory environment. I am just thinking with regard to the special session and legislation. You know, SB 254 last year, You know, this year, tried to get something done. It did not happen. The thoughts of maybe the utility's thinking is maybe 2027 a better year versus continuing to work at it this session? And that is all I have.

Pedro J. Pizarro: Oh, hey. Thanks, Anthony. Simple answer on that 1 is no. I mean, I cannot emphasize enough. And I think you hear the same from my other colleagues in California. Trying to be crystal clear here. It is in our customer's interest to have action in 2026. Period. Full stop. Again, Aaron's data point around just the depth that you know, as he expects to take on in 2027, just that tranche of 1 year's worth of activity would lead to $300 million in estimated incremental cost over the lifetime of that debt. that is a staggering number. I think you have heard similar numbers from Patty and the team at PG&E. Right?

And so no, we are not in the mode of, well, maybe it is better to wait or maybe folks are tired.

Aaron D. Moss: Yeah. I appreciate that the legislature has had their hands full for many years. But, you know, it is the world's fourth largest economy. it is a complex state.

Pedro J. Pizarro: there is a lot of different topics. And this is an important 1 where there was excellent process set up by SP 254. It was executed very well by the California earthquake authority. To their credit, both chambers had a number of hearings to help you know, really sort through the information. I will be honest. When I hear some say that, well, maybe the legislature just ran out of time, I do not share that view because I think they had plenty of time. Given the earthquake authority reports timing and given the good diligence that so many committees on both sides of the chamber or in both chambers showed in having all these hearings.

So I think the table has been set. And I hope that for the good of the California economy, our elected leaders who we sent up there to do a good job do a good job and, you know, take care of this year. I would add 2 things to what Pedro said.

Aaron D. Moss: Number 1, you know, rating agencies have not told us that they will wait on something in 2027. So, you know, they make their own decisions in terms of rating actions, but we see that as something that we wanna guard against. And, you know, if there are further downgrades, those things take time to work our way out of even in the event of reform. So that is another reason why we wanna make sure happens in the special session. But let me also say this. There is no fatigue on the behalf of the utilities.

If we do not get something in the special session, we will continue to get after it in 2027 with the same sense of urgency that we have right now. Absolutely.

Pedro J. Pizarro: And by the way, I do wanna say thank you because you do see a number of legislators you know, chairing committees, chairing hearings, working hard even now. We have seen the assembly today do their third committee hearing in a way. And so, you know, there are folks who get it and are working hard for the people of California.

Anthony Crowdell: Thank you so much. Thanks, Anthony.

Operator: And the next question is from Paul Zimbardo with Jefferies. Your line is open. Hello, Paul.

Paul Zimbardo: Hi. Good afternoon. Hi. Thank you. I am glad you are doing well, Pedro. I appreciate the time.

Pedro J. Pizarro: Okay. The first question I had almost -- no. No. Of course. I must ask Carly's question in reverse.

Paul Zimbardo: Is there a little bit of guidance you can give on what percentage of your CapEx is kind of the safety, reliability, compliance? I assume it is a pretty big mix of the capital? And also just to clarify, were you referring to the CPUC capital, or is also the FERC spending within scope?

Aaron D. Moss: Yeah. So good questions, Paul, and thanks for the opportunity to clarify. So we are we are focused on CPC capital and maybe I will take it. In our business update slides, you can see the breakdown of our various categories of CapEx, through 2030. And in that, about 22% of that capital is load growth in interconnection costs. So it focuses you on there as opposed to there is other pieces that could that we would look at as well, but that is the that is the big piece that we would be looking at. Okay. No. That is very helpful.

And then the other small 1, just on the upcoming trial, I saw you mentioned there is new dates added in the spring and summertime beyond the January. Just could you help clarify what are those additional trial dates relate to? Yeah, those are -- we have got a bellwether trials that have been set up, for January right now. there is 8 plaintiffs and then 8 backup plaintiffs to that, and then there is, you know -- So that only deals with 16 plaintiffs out of the tens of thousands that are out there. So you could imagine that there would be subsequent trials. And so there is subsequent trials set up later in the year.

But it also kinda highlights how important it is that the settlement program work because that is the way to get through these in an expeditious manner. Dealing with you know, 8 plaintiffs over the course of several months is not an efficient way to work our way through the litigation.

Pedro J. Pizarro: Well, Aaron, you got it right, but let me just add a little editorial comment here. 1 of the things that is been disconcerting out in the community is that you know, while we have a number of trial attorneys who have been helping their clients work through the 35% of the claims submitted have been submitted with the help of a plaintiff's attorney. So it is great to see that. The collaboration with their clients. You do have some set of other attorneys that are telling their clients do not check out Edison's WRCP program.

Because there is a trial date coming up in January, and so, therefore, you will be able to get through litigation and breeze through and get paid in a matter of months. And it is really sad to see that sort of misinformation out there. Recognizing that these kind of cases with thousands and thousands of claims, tens of thousands of claims will end up taking multiple years to be resolved.

So 1 of the things that really working hard on is to do to provide the right sort of information to our community so that folks understand that the idea that every case will be somehow resolved magically just because 8 cases are going to a bellwether trial in January. it is just such a deep fallacy. And so we want to make sure we set the record straight and encourage everybody who can to check out our program.

Paul Zimbardo: No. Thank you for helping clarify that as well. Thank you very much. Thanks, Paul.

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

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

Operator: You may now disconnect. Thank you for your participation. You may now disconnect at this time.

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