Earnings Call: Q4 2020

Feb 25, 2021

Good afternoon, and welcome to the Edison International 4th Quarter 2020 Financial Teleconference. My name is Missy, 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. Thank you, Missy, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro and Executive Vice President and Chief Financial Officer, Oria Riccardi. Also on the call are other members of the management team. I would like to mention that we are doing this call with our executives in different locations, so please bear with us if you experience any technical difficulties. Materials supporting today's call are available at www.edisoninvestor.com. These include a Form 10 ks, prepared remarks from Pedro and Maria, and the teleconference presentation. Tomorrow, we will distribute our regular business update presentation. During this call, we will make forward looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non GAAP measures to the nearest GAAP measure. During the question and answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro. Well, thank you, Sam. Let me start the call with our sentiments of support for the residents Texas and all the other states that were impacted physically and financially by last week's frigid weather. Climate change is a major part of the story there and our industry just has to continue our collective efforts on climate mitigation and adaptation. Today, Edison International reported core earnings per share of $4.52 for 2020. This exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago and the decline was due to $0.44 of equity share dilution. On an operational basis, excluding dilution, core EPS was $0.26 higher, driven by strong performance at SCE. Maria will discuss our financial performance in detail in her remarks. In 2020, SCE made substantial progress on its comprehensive wildfire mitigation strategy. This continues to advance one of SCE's top priorities, increasing grid resiliency to adapt to the changing climate and to protect public safety. SCE accomplished the vast majority of its 2020 program targets and in many cases exceeded those goals despite the challenges we all faced during the COVID-nineteen pandemic. We have highlighted several measures of SCE's progress and execution on Page 2 of the slide deck that we issued with our earnings release. Since the end of 2018, SCE's execution of its wildfire mitigation strategy has reduced the risk of wildfires associated with utility infrastructure despite a record setting California wildfire season last year. For the 2nd consecutive year, we do not believe damages from any wildfire alleged to be caused by SCE equipment will exceed insurance. SCE is further accelerating its wildfire mitigation efforts. Earlier this month, the utility filed its 2021 wildfire mitigation plan update, which describes how it has matured its wildfire mitigation capabilities and outlines the long term plan to further advance risk informed decision making, data management, grid hardening and community engagement. A prime example is the Covered Conductor program, which will increase the percentage of distribution overhead circuit miles covered within SCE's high fire risk areas from approximately 15% today to over 60% by the end of 2023, subject to CPUC approval. The utility continues to innovate and implement technology based solutions and options such as early fault detection for reducing ignition risks. As described in its 2021 WMP, SCE estimates a 25% reduction in ignitions in high fire risk areas by 2022 as compared to 2020, assuming the same conditions as experienced in 2020. SCE continues to improve its public safety power shutoff, or PSPS operations, with public safety being the paramount consideration. SCE uses PSPS only when conditions warrant. Let me underscore the need for PSPS despite the hardships it creates by noting that in 2019 2020, post PSPS patrols found at least 60 incidents of wind related damage that could have potentially caused ignitions. In 2020, the installation of more weather stations and sectionalization devices, paired with the automation of existing devices, all enabled SCE to limit PSPS footprints wherever possible based on risk assessments, achieving a 22% reduction in customer minutes of interruption. All that said, SCE recognizes there are opportunities to further improve the execution of PSPS and better support its customers. That was loud and clear in the January 2019 letter from President Badger and in the CPUC and community input that FCE leaders received during the 4.5 hour PSPS hearing on January 26. All this especially underscored the need to improve SCE's communications with customers. And the PSPS action plan filed on February 12 includes important near term commitments to use this essential tool of last resort in a way that shows better care for our customers. Beyond SCE, the state has been building on significant investments in its firefighting capabilities. In his 2021, 2022 budget, the governor proposed an additional $1,000,000,000 to support a coordinated forest health and fire prevention strategy that maximizes technology and science based approaches to protect state lands. This includes prioritizing firebreaks around high risk communities and grants for individual homeowners to harden their properties. Recognizing the need to move quickly, the governor also proposed that $323,000,000 out of that $1,000,000,000 would be for early action to start these prevention projects before the next fire season. For fire suppression, the budget adds funding to support 30 additional statewide fire crews and 7 large air tankers. The state will continue phasing in Black Hawk helicopters, with 7 expected to be in operation this fire season and another 5 in 2022. These new suppression resources will help the state move more quickly to combat wildfires before they become catastrophic. The governor and the California Insurance Commission also announced a plan to establish statewide standards for home and community hardening that will reduce wildfire risk and help make insurance available and affordable to residents and businesses. Shifting to past wildfires, SCE has made significant progress toward resolving pending litigation. Last month, SCE resolved all insurance subrogation claims in the pending 2018 Woolsey Fire litigation. The utility continues to make solid progress settling remaining individual plaintiff claims across the 2017 and 2018 wildfire and mudslide events. In total, SCE has resolved approximately 2 thirds of the best estimate of total losses established last September. Maria will provide an update on the equity financing needs related to these events later on the call. Turning to regulatory actions, we welcome the reappointment of CPUC President Batcher for a 6 year term subject to confirmation by the Senate. President Batcher's leadership has energized the Commission's implementation of the state's greenhouse gas emission reduction goals. Yesterday, the CPUC hosted an en banc to share ideas about affordability across many stakeholders. Given the economic impacts of COVID-nineteen, this is a timely discussion and it follows on many years of SCE leadership to manage system average rate growth well below the other California utilities, which we were proud to see acknowledged by the commission staff report and others. The discussion reinforced many of the issues we have raised in our Pathway 2,045 analysis, including that the grid investments needed to decarbonize the economy and improve local air quality through clean energy and electrification may increase electric costs, but will actually result in greater affordability and equity with the average customer spending 30% less across all forms of energy in 2,045 than they do today, thanks to the greater efficiency of electric technologies. Looking ahead, SCE is planning for the critical role it plays in sustainability, particularly from the unique vantage point of a wires focused business. This will include significant capital investment opportunities to support the electrification of transportation and buildings as outlined in SCE's Pathway 2,040 5 and Reimagining the Grid white papers. The Governor's budget proposal also underscores this with its proposed $1,500,000,000 comprehensive strategy to achieve 0 emission vehicle goals by 2,035 and 2,045. This includes infrastructure investments for and improved access to new end use zero emission vehicles. SCE has received CPUC approval for over $800,000,000 to support electric vehicles, including investing in electric charging infrastructure for light, medium and heavy duty vehicles. The utility launched its Charge Ready 2 program, the largest light duty EV charging program by an investor owned utility in the United States, which will support approximately 38,000 light duty charging ports. Charge Ready Transport, SCE's program to build charging for medium and heavy duty vehicles, will grow through 2024, eventually building charging infrastructure to power 8,500 electric medium and heavy duty vehicles. SCE has also committed to a long term goal to electrify its own vehicle fleet, including 100% of all light duty vehicles by 2,030. In the area of building electrification, SCE launched new programs in 2020 to incentivize heat pump installations and expects to continue to expand these offerings going forward. Before I conclude, I would like to say that I am just very, very proud of what our employees accomplished over the last year in spite of the COVID-nineteen pandemic. COVID-nineteen has reshaped the way that all of us do business and how we interact with our customers and communities, and we adapted to continue delivering an essential service. We cared for each other, whether working in the field or teleworking. We cared for our customers, providing relief for those facing economic challenges, and we cared for our communities and their safety. Looking forward, I am excited about our near and long term business opportunities. SCE is well positioned as an electric only utility with investments highly aligned with the state's and now the federal government's long term decarbonization goals. We will continue to accelerate our wildfire mitigation efforts while building toward an equitable clean energy future. With that, Maria will provide her financial report. Thanks, Tejal, and good afternoon, everyone. My comments today will cover Q4 2020 results, our capital expenditure and rate base forecasts and an update on our financing plans for 2021. Edison International reported core earnings of $1.19 per share for the Q4 2020, an increase of $0.20 per share from the same period last year. Full year 2020 core EPS was $4.52 which exceeded the midpoint of our initial guidance range and is within the narrowed range we updated on our last earnings call. Core EPS of $4.52 was lower than $4.70 a year ago and the decline was due to $0.44 of equity share dilution. On an operational basis, excluding dilution, core EPS was $0.26 higher, driven by strong performance at SCE. On Page 3, you can see SCE's key 4th quarter EPS drivers on the right hand side. I would like to highlight 4 items accounted for much of the variance. First, EPS increased by $0.16 related to higher revenue. CPUC related revenue contributed $0.22 of this increase due to the escalation mechanism from the 2018 GRC decision. There was also a negative variance of $0.11 primarily related to benefits captured in our tax balancing account. This is offset in the income tax line with no effect on earnings. FERC and other operating revenue had a positive variance of $0.05 largely due to higher rate base. 2nd, O and M had a positive variance of 0 point 11 dollars primarily due to higher regulatory deferrals related to wildfire mitigation activities and customer uncollectibles and from approval of the GRC Track 2 settlement. 3rd, depreciation had a negative variance of $0.07 due to higher rate base. Lastly, SCE's EPS in the quarter was lower by 0.07 dollars because of dilution from the increase in shares outstanding, primarily associated with the equity offering in May 2020. I would now like to comment on SCE's capital expenditure and rate base growth forecast, which are shown on Page 4. We continue to see opportunities to significantly grow SCE's rate base, driven by investments in electric infrastructure. The capital program reflects expenditures of $15,000,000,000 to $16,000,000,000 between 2021 2023. This represents compound annual rate base growth of 7.6% over 2 rate case periods at the request level. Our total CapEx forecast during this period is unchanged as we are awaiting a proposed decision in SCE's 2021 GRC Track 1. In 2020, SCE's capital spending was $5,500,000,000 approximately $400,000,000 higher than forecast, primarily as a result of higher fire restoration costs. For 2021, SCE has developed and will execute against a robust capital plan that targets key programs, while maintaining flexibility in later years to adapt to levels authorized in the final GRC decision. Please turn to Page 5. While the commission schedule calls for a proposed decision this quarter on track 1 of SCE's 2021 GRC, based on the level of inquiry to date from the CPUC compared to our past experience, we believe it is unlikely that SCE will receive a PD by the end of the final decision no sooner than 30 days after it issues a proposed decision. Consistent with our prior practice, we will issue earnings guidance after we receive a final decision on the GRC. Page 6 shows a summary of the substantial progress on receiving approvals for recovery of incremental wildfire mitigation costs. SCE expects to receive over $1,000,000,000 of cash flow through September 2022 as the utility implements CPUC approval. This is in addition to ongoing securitization of AB1054 capital. You may recall that last quarter, the CPUC issued a financing order authorizing SCE to securitize the first tranche of AB1054 capital expenditures approved in the grid safety and resiliency plan settlement. Yesterday, SCE successfully closed that securitization, issuing $338,000,000 of AAA rated recovery bonds. The proceeds will be used to repay short term borrowings issued for In January, the CPUC approved SCE's GRC Track II settlement, which allows SCE to request another financing order to securitize the approved AB-ten fifty four capital expenditures and recover the O and M expense. Additionally, SCE filed a WEMA application for wildfire insurance premiums for the second half of twenty twenty. If approved, SCE will recover $215,000,000 beginning January 2022. I would now like to provide an update the approximately $1,000,000,000 equity issuance that we had discussed previously. As Pedro noted, SCE has been making significant progress resolving pending wildfire related litigation and thus far has settled claims that represent approximately 2 thirds of the best estimate that we established. We continue to ground our financing plan in a framework that supports investment grade ratings by targeting consolidated FFO to debt in the 15% to 17% range. To support this outcome, EIX will issue securities with up to $1,000,000,000 of equity content in 2021, consistent with the previously identified need. We will consider a range of options to achieve this equity content, including preferred equity, internal programs, and if needed, our existing ATM program. We will be flexible regarding the specific timing and monitor market conditions to efficiently finance the need. Beyond this year, we expect to have minimal equity needs associated with our ongoing capital program and we'll quantify these after receiving a final decision in the 2021 GRC. Overall, the company is well positioned to achieve the growth associated with the safety and resiliency investments being made in the grid the longer term opportunity associated with our clean energy objectives. That concludes my remarks. Missy, please open the call for questions. As a reminder, we recognize you to limit yourself to one question and one follow-up, so everyone in line has the opportunity to ask questions. First question comes from Julien Dumoulin Smith from Bank of America. Your line is open, sir. Hey, good afternoon, everyone. Thanks for the time and the opportunity. Hi, Julien. How are you? Good. Thank you very much. Appreciate it. Perhaps if I can start with the balance sheet here, I'm just curious to get a little bit of an update. Appreciate your remarks. But curious on how you would characterize the conversations with the rating agencies and where you stand with Cushion. I know that GRC is outstanding, but if you can provide any context as to how you think about your metrics relative to what the agencies are thinking about, would really appreciate any commentary here. And again, I appreciate perhaps commenting around perhaps the proposed GRC, you're filing for instance. Sure, Julian. As you can probably imagine, we are talking to rating agencies all the time. We are talking to them about our operational risk mitigation as well as just what's going on more generally in California and providing them with updates as we have with all of you on where the settlements landed back last year and all of that. So we've been having those sorts of conversations. As we've mentioned before, we think that the equity plan that we have in place or the financing plan that we have had in place and announced last year is very supportive of the FFO to debt range that we're targeting and supportive of investment grade rating. I'm sure you've read all the on a look back basis are skinny, but that's why the plan to issue equity and to move forward with that so that we can support the balance sheet appropriately. Got it. Appreciate it. And then if I can pivot over to the PSPS commentary, I appreciate what you guys provided in the remarks. Can you elaborate a little bit on the action plan and the expectations for response from CPC around their inquiry with respect to the TSPS events from the last year here? Just what should we expect in terms of process at a minimum, if anything? Yes. I'll start with this and Maria and I have more. Kevin Payne is also on the line, so he can add as he said. So just a process, you saw the letter that President Batcher sent, you monitored the hearing that the PUC had where Kevin and Steve Powell and other members of the team participated. That provided a lot of frankly good helpful input from commissioners and communities and other state agencies. Based on that, SCE developed the action plan that has a series of steps and commitments. You saw there's are some things in there around our frankly continuing work on trying to minimize just the impact and scope of PSPS. In fact, I would put that in the category of work that's been going on and continues, right? Areas like continuing to deploy sectionalization and to work on continuous improvement of weather modeling and the like to just really to help to narrow the gap between the approach we have, which is frankly the right approach for SCE to have of notifying customers based on forecast conditions, but then de energizing on real time conditions. But the more that we can narrow the gap between the number of customers that get notified, versus those who get de energized by having better and better forecasting and modeling, that helps. So you saw some actions around those lines. But I'd say a lot of the focus was really on how do we help the SEA team better improve the communications process, communications with the emergency agencies, with government, with community leaders, with end use customers. And so you saw a number of actions around that. In terms of process, there's going to be a series of meetings every couple of weeks for the next while with commission staff just to continue to keep them updated. SCE has taken the step of now dedicating a Vice President to PSPS, who's frankly a strong leader at Takiya Su and he's moving from the T and D business to over the next few months spend all of this time along with the dedicated team on the PSPS improvement approach. So that's a somewhat informal process and then there's the action plan, more formality to it and formal discussions with the commission on how it's coming along and check ins with them. But frankly, wanting to make sure that the SAE team can move on all the elements and meet its commitments. Kevin, anything you would add there? I think you covered it really well, Pedro, the pieces of the action plan and also the process with the commission. So good. Thanks, Kevin, and thanks, Julian. Excellent team. Cheers. Take care. Thank you. Next question comes from Jonathan Arnold from Vertical Research. Your line is open. Good afternoon, guys. Thank you. Hey, Jonathan. Just if I could ask one on the success you've had with settling the legacy wildfire claims and appreciate the quantification in simple terms around the 2 thirds. But have you seen any change in the pace of being able to move these things along now that you've reached the subrogation settlement with Woolsey? Is there anything you can report sort of latest update, Pedro? I'll give you a quick answer. Maria may have more. The remaining plaintiffs are largely the individual plaintiffs. It's just by the nature of that, you're now talking about thousands of individual cases. In many cases, multiple individual plaintiffs might be represented by a common legal counsel. And so you might see packages of settlements that can be done. But it's just a more time intensive laborious process to work through that. There is a more formal process that's been established on the Thomas Koenigstein, much like cases. We're working through that. We're working with individual claims, but we'll see cases. And so it's just harder to pin down a timeframe for that, Jonathan. But the team is well at it and frankly has a good steady pace of progress. And I think from an investor perspective, you'll see the outcome of that every quarter as we update the content numbers that we shared with you today. I don't want to miss you there, Maria. Yes, I think that's it, Paige. I mean, we have a process on Tom's comments on much lives where we are trying to move through with various plaintiffs. It's not going to be sort of an endpoint that we can pinpoint for you exactly, Jonathan. But as Pedro points out, we'll be updating that every quarter. So you'll see the progress as it occurs. Okay. So that slide 9 is going to be a live thing effectively? Yes, very much so. And it's maybe just to put a fine point on it, don't expect a big bang when it comes to individual plaintiff cases. You should expect just continued measured progress because it's case by case. And those cases are all very individualized, different stories of facts and circumstances for a homeowner in this kind of area versus a business owner in that kind of area. Yes, but I think this is a good way of helping people track it, though. So I appreciate that. Well, thanks for the feedback. That's helpful. May I just ask one other thing? You've obviously said that the GRC PD might not come until the Q2. What sort of point does delay start to affect your decision making about spending capital and sort of throwing you off a bit as it has happened in the past? I mean, how long a delay could you sort of work with? Well, obviously, we like to know sooner rather than later. But from an operational perspective, what we've done this year, which is what we've done in the past in the 1st year of the GR season cycle as well, is we've just planned the work. We're going to do the work. We're going to progress against it. You can see that the capital plan is very robust in 2021. But we have the flexibility in the back end to adjust based on what the final decision comes out with. So I think we have degrees of freedom there. Again, we still like to get the decision sooner rather than later. But from an operational perspective, I think we have it well in hand. Great. Thanks a lot. Thanks, Jonathan. Thank you. Next question comes from Steve Fleishman from Wolfe Research. Your line is Just on the comments on the GRC timing, you mentioned that based on the CPUC questioning later, Is it just a lot more questions than normal or just the timing of things? Just any more color on that comment, please? Yes. Just it's really more about timing. We have experience with these cases every 3 years. I guess now it will be every 4 years after this one. And so as the PD is getting put together and as the commission staff go through the analysis they need to do, you typically see different pace and nature of questions as you get closer to the PD. And we haven't really seen a lot of that yet at this point. So that's what suggests to us that PD is not likely imminent within the quarter. So it's really about there's just a different set of questions, kinds of questions that you get as you're getting them to that final evaluation and writing of the PD and staff don't seem to be quite at that point yet. Okay. Great. That's helpful. Thank you. And then with respect to the equity commentary, I think you said $1,000,000,000 of equity content. So that's, I guess, if you did preferreds or some things that are not full equity content, you're kind of saying focus on equity content, not total dollars. Is that the way to think about that? That's right. Yes, as we've said in the past, we are trying to think about this very holistically, monitor market conditions. So when we talk about equity content, it's the equity content that we're targeting. So absolutely right, Steve. Yes. One last question along those lines. I'm sure you saw that PG and E did this transmission tower sale of access to SBA. Is that something that you could potentially look at as well? Yes. So we did see the transaction and interesting. So the team has been learning about it. There may be somewhat different circumstances for SCE in that we do have obviously transmission towers with attachments on them already today like PG and E did. In our case, they're part of a bit more comprehensive telecom business, Edison Care Solutions, which is essentially a competitive telco inside the utility that not only does sell antenna attachments, but also has managed fiber services, dark fiber as well as lit fiber providing bandwidth to carriers. And so in SCE's case, there's that broader telecom business that also operates under a little different framework. I noticed that simple, there's some revenue sharing that the PG and E deal contemplates, that the SGA business operates under a different revenue share mechanism. So there's just a number of different bells and whistles that are make for just different maturity of the business and different scope and scale today. So the PG and E transaction might not be fully transferable or applicable. Okay, great. Thanks for that. Thank you. You might be surprised I said so much about the telecom business, but it's because I used to run it like 20 years ago. Thank you. Next question comes from Jeremy Tonet from JPMorgan. Your line is open, sir. Hi, good afternoon. Hi, Jeremy. Hi. Just want to go back to Slide 9 for a minute there. And you discussed that after the Woolsey recoveries, you expect to exhaust insurance. Can you file for CPUC recovery of settlements or are there other kind of gating items that we should be thinking about here? Yes. So, if you look to the past as sort of an indicator, our experience has been that the commission generally wants to understand sort of the quantum of the ask before they make decisions around recovery. So I think we have a little ways to go still to get a total size of the ask that we would make ultimately to the CPC. Obviously, we said before that for prudently incurred costs, we will be asking for recovery. At this point, based on history and prior precedent, we can't say that that was probable of recovery, which is why we took the charge a couple of years ago. But that's generally the framework that the commission has. Got it. That's very helpful. Thanks. And just thinking about PSPS discussions and just the environment in the state right now, just wondering if you might be able to comment on how you see overall kind of relationships, political risks currently in the state. Any thoughts you could provide would be helpful. Yes. I'm happy to chip in on that. Look, I think the headline is that we continue to view California as one of the most constructive states in the country when it comes to legal regulation, right? And it's both because of the backward looking and current mechanisms like the fact that we have our forward looking rate cases. We have the balancing accounts for elements like procurement purchases, energy procurement, I should say. We have decoupling, right? So you have a number of elements that have been here for quite a while that make for a constructive environment. You also have, frankly, looking more towards the future at a state that's been fairly aggressive in terms of wanting to push the edge of technology and have wanted utilities to play a significant role in advancing the ball for the sector, right, for the benefit of California customers. That's meant that utilities have to take on some added operational risks in managing more distributed resources than our peers in other states or and having deeper penetration of renewables or being earlier in the curve around storage and the like. And that has lent itself to providing an opportunity for ROEs that have reflected a premium based on those risks that we are being asked to manage. And then finally, looking solidly well out in the future, it's a state that is really committed to decarbonizing the economy. And so you've seen through our papers like the Pathway 2,045 and Remanaging the Grid Papers that we see that, that decarbonization getting to net 0 for this date will require a significant ramp up in renewable and other carbon free resources along with storage. This will lead to a dramatic increase in load across the state, 60% or so increase in order to then electrify a lot of the economy. And that all requires a really robust grid with significant more investment than what we have in place today to make that all happen. So that all adds up to a good opportunity for utilities. Now, by the way, it's also a good opportunity the customer because as I said in my prepared remarks, we see all of that been leading ultimately to a 30% decline in the total energy costs the average customer has out in 2,045. It may put some pressure on utility bills, but it will help bring down overall cost for the customer and make the state more affordable. Now that said, there are always bumps in the road. There are things that can give folks pause. The wildfire experience has been a challenging one or less several years. We've had a lot of encouragement in getting items like the AB1054 to help create a restored framework. We're still going through implementation of that. I know that there is some discount that the utilities are carrying today relative to our peers in other states. And hopefully over time as investors see that the framework is working, that the physical risks are being mitigated and that the structure is there to help mitigate the financial side of the risk too, that will help to get investors sort of fully comfortable with that and better align the value of California opportunities with the long term opportunity that we have. One final item is there is a lot going on and it's all going on in the middle of COVID. So I feel for the CPUC staff. The 800 or so of them have a lot on their plates. I think President Batcher, as I mentioned in the comments, has done a quite great leadership in focusing the Commission on that clean energy future. I think generally, she's also helped the Commission to, in general, be timely in its decisions and you saw that in elements like the track to success we have recently, but there's a lot on their plate. So while I'm a little disappointed that we may not end up seeing a GRC track 1 PD this quarter. I know that they're on the case and they recognize the importance of overall timely decisions. And then when it comes to something like PSPS, there's been some tough feedback we got. A lot of it, frankly, was merited. And it's a good learning opportunity. And I commend Kevin Payne and the team at SCE for having sat there for 4.5 hours and listened and taken note and reflected the feedback in the PSPS action plan that SCE filed. So there will be bumps in the road in any relationship. But I think overall, if you look at maybe a couple of trees to get in the way now and then, but if you look at the forest, it's a really interesting forest for the long term. Got it. That's very helpful there. And maybe picking up with electrifying, specific to the transportation sector there. You spoke about this in the past. You spoke about it in your prepared remarks. Just wondering if you could provide some perspective, I guess, for the EV outlook, it looks today versus maybe it looked a couple of years ago and kind of down the future, how big do you think this opportunity is for EIX? So we started talking about this a few years ago. We had our Charge Ready application. I think our Pathway 2,045 paper at the time was forecasting something like a need for 7,000,000 electric vehicles in California by 2,030. At the time or shortly after, I think the state was talking about a $5,000,000 mark. Since then, you've seen the state really look at doubling down on the electric vehicles and progress like Governor Newsom's executive order for 0 emission vehicles, 100 percent 0 emission vehicle sales by 2,035, that says something right there about the growing commitment by the state. And frankly, given my growing realization that, that is a key tool and one of the most affordable tools to get to decarbonization at the end of the day. The other angle I share on this is then there's the market, right? And so when we started talking about this, there was the vote. Remember when I got my first vote in 2011 and that new model year, and my colleagues were driving some of their first Teslas, there weren't a whole lot of EVs out. Now you're looking at a rollout, just reading one of the latest articles where I think over the next year, there's going to be, what, something like 20 or 30 new model offerings across auto OEMs. And it's an area where U. S. Automakers are realizing that if they don't run fast, they could lose leadership to Chinese automakers or European automakers. So seeing things like Ford's commitment of $20 some $1,000,000,000 in investment towards EVs over the next several years, seeing GM's aspiration to not having current combustion engines anymore in a decade or so, That is a very different landscape from where we started 4, 5 years ago. And it tells you that this is happening. It's real. And I suspect like other technology innovations like the deployment of cell phones, folks may be surprised by how quickly that S curve takes off. Got it. That's very helpful. Thank you for that. Thanks, Jeremy. Thank you. Next question comes from Michael Lapides from Goldman Sachs. Your line is open, sir. Hi, Michael. Hey, Pedro. Hi, Michael. A little bit of housekeeping question. So capital spend for 2020 came in about $500,000,000 higher than what you all had put out when you reported 3rd quarter earnings or just after 3rd quarter earnings. First of all, what drove that $400,000,000 to $500,000,000 being done just so quickly? And then second of what you think about long haul transmission related spend? Or do you think you're still in a 5 or 7 year cycle where there's more maintenance work on the transmission grid, there's not a lot of new sizable scale development there? Well, I'll go take the first piece at least a little bit of the second, and I'll let Pedro also chime in on his thoughts on long haul transmission. But so that delta in the capital spending between last quarter and this quarter was largely driven by wildfire restoration costs. So you will recall that late last year, there were a number of large fires in our service territory, particularly up in the northern part of our service territory around Big Creek. And so a lot of the spend that's been going on since then has been to really get all of those facilities back into service and to repair them, etcetera. So that's really the driver there, Michael. We have to go through an analysis and see sort of what in there was otherwise going to have been replaced or upgraded, etcetera, what's incremental, but that's largely the capital change from last quarter. In terms of transmission and we're still in a cycle, I think obviously the state's planning for the future, the future that Pedro just described in his earlier remarks, we have to look to the CAISO to do that planning. There's obviously a lot of work going on around the need as well, both in integrated resource plans as well as at the CAISO. But I'll let Pedro share his thoughts as well. Just maybe a quick sound bite, Maria, is that, again, you may have heard me share this before, Michael, from our PATH 3,245 analysis, but that analysis estimated that California will need to add 80 gigawatts of bulk power kind of wholesale level renewables and 30 gigawatts of wholesale bulk power level storage by 2,045. That's in addition to 30 gigawatts of distributed generation and 10 gigawatts of distributed behind the meter storage. But all that would require something like $175,000,000,000 investment for the resource side for the renewables and storage side. And the counterpart to that is that you need something like $70,000,000,000 in wire side investment with most of that being for transmission, whether it's new long lines or enhancing of current lines. Now that's statewide, right? So that's not all SCE, but that just gives you a sense of how big the investment need will be in order to accommodate that electrified future to the carbonize the economy. And then as a reminder that under the current Q1 1,000 structure, if the CALISO determines that an existing line needs to be upgraded, then the utility has a right of first refusal to do that upgrade on its line, lines that it already owns and operates. If it's a brand new line that's not an extension of an existing line, then that is bid out competitively and I would expect Utility to seek to compete with third parties for that new build. So hard to quantify what the specific SCE opportunity will be from all of that, but there's clearly a very large pie that will need to be met across the state and I expect that SCE will certainly play a significant role within its territory for that. When do you think we could start seeing that roll into 3 or 4 year or 3 to 5 year forecast views? Like when do you think the southern part of the state might actually start to need Yes, that's a really good question. I'm not sure I'm going to have a sharp answer for you right now, Michael. Partly because the CAL ISO, I don't think has turned the crank yet on the underlying analysis for what lines and in what timing. My guess is that my sense is not guess, my sense from the analysis is that a lot of that spend may be post-two thousand and thirty spend because that's when you really see the load pick up to. In our analysis, load, which has been fairly flat statewide to slightly declining for the last decade, to 2,030, interestingly, continues to be fairly flattish, right, because you have a lot of electrification between now and 2,030 being counterbalanced by continued distributed generation deployment as well as continued energy efficiency. But we see a big elbow turn in the curve upswing post 2030 and that's where the state really picks up the bulk of that 60% load increase that I talked about before. It really happens mostly between 2,030 and 2,045. So that may suggest that a good chunk of that build maybe post that. But in the meantime, you've seen our capital spend so far, obviously, as Maria described, we had a bump up from just that Creek Fire restoration last year. And so I hope we don't have to do fire restoration like that for any future fires. But we continue to say that we see an ongoing opportunity for significant capital spend just for the core capital investment in the utility. And so I think about that long haul transmission that becomes an adder that certainly supports the long term growth for the company. Got it. Thank you, Pedro. Much appreciated. Same, Maria. You bet. Thanks, Michael. That was our last question. I will now turn the call back over to Mr. Sam Ramraj for final remarks. Thank you for joining us today, and please call if you have any follow-up questions. This concludes our conference call. Have a good rest of the day, and stay safe. You may now disconnect.