Good afternoon, and welcome to the Edison International Second Quarter 2020 Financial Teleconference. My name is Ted, and I will be your Operator today. When we get to the question- and- answer session, if you have a question, press star one on your phone. 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, Ted, and welcome everyone. Our speakers today are President and Chief Executive Officer, Pedro Pizarro, and Executive Vice President and Chief Financial Officer, Maria Rigatti. Also on the call are other members of the management team. I would like to mention that we are doing this call with our executives in different locations, so please bear with us if you experience any technical difficulties. Materials supporting today's call are available at www.edisoninvestor.com. These include a 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, thank you, Sam. Let me start by hoping that all of you listening today and your loved ones are staying safe and healthy as our world continues to work its way through COVID-19. Today, Edison International reported core earnings per share of $1 for the second quarter 2020, down $0.58 compared to the same period last year. The decline in year-over-year EPS was primarily due to higher O&M expenses, equity share dilution, and the true-up for the final 2018 GRC decision that we recorded in the second quarter of last year. Consistent with recent quarters, results for this period were impacted by the timing of O&M spend and deferrals of certain wildfire-related expenses. However, the year-over-year EPS impact of wildfire-related expenses should improve in the second half, and we remain confident in our outlook for the full year.
Therefore, we are narrowing our 2020 EPS guidance range to $4.37- $4.62 by raising our low end by $0.05. Maria will discuss our financial performance in more detail in her report. On the legislative front, we are pleased that the governor and legislature prioritized wildfire funding in the recently adopted budget, despite its projected $54 billion deficit due to the pandemic. The budget provides over $200 million in one-time and ongoing funding for community resiliency preparedness, additional firefighting personnel and equipment, and enhancement of the state's emergency preparedness response and coordination with state agencies, local governments, and utilities. We are also encouraged by the state's enhanced wildfire mitigation capabilities as we prepare for this year's wildfire season.
For instance, CAL FIRE reported that it completed all of the planned 35 emergency fuels management projects in May, making 90,000 acres safer ahead of wildfire season and protecting 200 vulnerable communities. Some of these projects were located in or adjacent to SCE service territory. CAL FIRE has also made substantial investments to support its firefighting capabilities, including the addition of C-130 airplanes and new helicopters with better night firefighting capabilities. Turning to operations during this COVID-19 pandemic, SCE remains steadfast in focusing on practices aimed at the safety and health of employees and customers. Two-thirds of our 13,000 employees continue to telework, and we recently moved our earliest reentry date for them from after Labor Day to the beginning of next year. Importantly, SCE also has a sharp focus on maintaining critical operations for customers' benefit, including those laid out in SCE's 2020 through 2022 Wildfire Mitigation Plan.
This plan calls for SCE to continue to harden infrastructure, bolster situational awareness capabilities, and improve operational practices while implementing enhanced data analytics and technology. Since the beginning of the year, SCE has completed more than 330 mi of covered conductor, installed nearly 400 additional weather stations, and completed over 125,000 ground-based inspections of our infrastructure in high fire risk areas. SCE is also making good progress in acquiring more high-definition imagery through a combination of helicopters and drones to facilitate additional assessments that are not possible from the ground. The CPUC approved the 2020 through 2022 Wildfire Mitigation Plan on June 11, paving the way for the renewal of SCE's annual safety certification as the prerequisite for access to the wildfire fund. Looking ahead, we anticipate another active fire season, mainly driven by lower than expected precipitation and very dry conditions across California.
However, SCE is entering the more active fire period better prepared than ever. In addition to advancing wildfire mitigation measures, the company has made improvements to Public Safety Power Shutoff, or PSPS protocols, since last year's. While the use of PSPS is largely dependent on temperature, wind, and fuel conditions. With the improvements that SCE has made since last year, we would expect to see a 30% reduction in the number of customers affected by PSPS events under the same conditions as last year. Our preparedness includes pre-established switching playbooks for each of our approximately 1,100 circuits that traverse high fire risk areas, enabling a more surgical approach to isolate the smallest portion of the circuit possible for a given weather condition.
It also includes many facets of our customer care program, such as providing generator rebates for customers in a high fire risk area and battery backup systems for qualified critical care customers. We continue to focus on minimizing customer impacts, but PSPS will remain a tool to mitigate the risk of a catastrophic wildfire. Among key wildfire-related proceedings of the CPUC, SCE submitted its 2020 safety certification request on June 19, outlining how the company meets safety culture and conduct requirements, including implementing our approved Wildfire Mitigation Plan and linking executive compensation to safety. The CPUC has 90 days to act on SCE's request. Until then, the initial safety certification we received last July will remain in effect. On the legal front, I would like to give you an update on the 2017 and 2018 wildfire and mudslide events.
SCE announced an agreement last November to settle claims with 23 public entities. Since that time, the utility has continued to explore settlement opportunities with numerous individual plaintiffs. During the quarter, SCE reached confidential settlement agreements with some of these plaintiffs, and they represent the first individual claims that the company has settled in the 2017 and 2018 wildfire and mudslide cases. There are thousands of similar individual claims against SCE, and the utility is committed to exploring settlements with all reasonable parties who wish to do so. The court has set January 12, 2021, as the start of the Thomas Fire bellwether trial, but this may be further impacted by COVID-19. The court vacated the July 2020 bellwether trial date for the Woolsey Fire and has yet to set a new date.
I would now like to briefly discuss how sustainability is central to our vision for leading the transformation of the electric power industry. Our vision aligns with California's COVID-19 recovery efforts as the state is working to help Californians recover as fast as safely possible from the COVID-19 induced recession and to shape an equitable, green, and prosperous future. Our recently published 2019 sustainability report highlights Edison International's progress towards meeting our long-term goals. They include delivering 100% carbon-free power to SCE customers by 2045, expanding infrastructure in SCE service area to support increased vehicle electrification, and electrifying SCE's own fleet, including 100% of light-duty vehicles by 2030. I would note that at the end of 2019, 51% of the electricity that SCE delivered came from carbon-free resources. We also remain focused on advancing our clean energy and electrification strategy.
In May, SCE announced 770 MW of energy storage procurement, one of the largest in the nation, which will help enhance electric system local reliability needs. Last month, SCE, in partnership with other utilities, published the West Coast Clean Transit Corridor Initiative Study. This looks at infrastructure needs to serve medium and heavy-duty electric trucks. We were pleased that the California Air Resources Board furthered the state's commitment to electrification by adopting the nation's first zero-emission electric truck rule. Maria will comment on the initial proposed decision issued just yesterday in SCE's Charge Ready 2 proceeding. Let me conclude by saying that California's commitment to the 2030 and 2045 climate change goals can play a critical role in a just and equitable economic recovery. Investments in clean energy and electrification can address climate change and also lower greenhouse gases affordably for all California communities.
At Edison International, we are committed to enabling the state's efforts to achieve its objective of a clean energy economy. With that, let me turn it over to Maria to provide her financial report.
Thank you, Pedro. Edison International reported core earnings of $1 per share for the second quarter 2020, a decrease of $0.58 per share from the same period last year. This decline was primarily due to higher O&M expenses, equity share dilution, and the true-up for the final 2018 GRC decision we recorded in the second quarter of last year. As Pedro had mentioned, we expect the year-over-year EPS impact of wildfire-related expenses to improve in the second half, and we are narrowing our full year 2020 EPS guidance by raising the low end of the range. On page two, you can see SCE's key EPS drivers on the right-hand side. I would like to highlight four items that negatively impacted the variance. First, EPS declined by $0.20 due to the 2018 true-up recorded in the second quarter of 2019 upon receipt of the final GRC decision.
Second, O&M had a negative variance of $0.24, including from increased expenses that are offset by revenue to the balancing account treatment, as well as the timing of deferrals related to both wildfire mitigation expenses and COVID-19 related costs. The variance related to wildfire mitigation expenses is due to the timing of regulatory deferrals for vegetation management and inspection and preventative maintenance costs. For the quarter, the negative variance from wildfire mitigation expenses was $0.06 per share. During the quarter, certain wildfire-related expenses reached the total amount authorized in the GRC, and we began to defer incremental costs through approved memorandum accounts. We will begin to defer other categories of costs in the third quarter when these exceed the GRC authorized levels. Wildfire-related expenses will be less of a driver of year-over-year variances in the second half.
O&M expenses were also negatively impacted by the timing of customer uncollectibles, labor, and other expenses resulting from the COVID-19 pandemic and SCE's response to it. As we have noted previously, there are tracking accounts for COVID-related expenses. Since some of these expenses are similar to costs authorized in the GRC, for example, uncollectibles, we must reach full-year GRC authorized levels before we begin to defer them. The EPS impact in the quarter for these items until they reach the authorized levels was $0.06. However, for the full year, we do not expect an earnings impact due to COVID-related expenses. As for deferrals, through June 30, we have recorded $49 million in two COVID-related memo accounts. Third, depreciation and amortization negatively impacted EPS by $0.13.
This was primarily due to changes in Q1 2019 depreciation rates that were recorded in the second quarter last year following the GRC decision, as well as higher plans. Finally, EPS in the quarter was lower by $0.17 because of dilution from the increase in shares outstanding. On page three, you will find SCE's capital expenditure and rate base forecast. We have a robust capital program of $19.4 billion-$21.2 billion, which includes SCE's revised capital request reflected in the 2021 GRC rebuttal. Based on the capital expenditure levels requested in the 2021 GRC, total weighted average CPUC and FERC jurisdictional rate base will increase to $41 billion by 2023. This request level represents a compound annual growth rate of 7.5% over two rate case periods.
Applying a 10% reduction to the total capital forecast to reflect our experience of previously authorized amounts and other operational considerations results in a compound annual rate base growth of 6.6%. As we have done in the past, projects and programs that have not yet been approved by the CPUC, such as Charge Ready 2, are not included in the rate base forecast. Yesterday evening, we received a proposed decision in the Charge Ready 2 proceeding. The PD would authorize a total program budget of $442 million, including a capital budget of $314 million. It is expected to be voted on at the commission's August 27 business meeting. Please turn to page four for an update on the 2021 GRC. During the quarter, SCE filed its rebuttal testimony, focusing on a number of the interveners' recommendations, including their positions on reductions to the covered conductor program and depreciation.
While the magnitude of the revenue increase is higher than prior GRCs, we continue to underscore that our request is necessary to make the longer-term investments required to deliver safe, reliable, affordable, and increasingly clean electricity for more than 15 million Californians. As for next steps in the GRC, evidentiary hearings were completed on July 22, briefs and oral arguments are scheduled for the fall. We are encouraged that the CPUC has kept this proceeding on schedule, even while working remotely during the COVID-19 pandemic. The CPUC is expected to issue a final decision for track one in Q1 2021. I would now like to update you on other key financial topics. Please turn to page five. First, we completed our 2020 EIX financing plan in May with the direct placement of $800 million of equity with several existing long-term investors.
We have minimal equity needs to fund our ongoing capital expenditures program beyond 2020. As noted previously, this is also predicated on timely cost recovery of the requested memorandum accounts and the current level of liabilities on our balance sheet for the 2017 and 2018 wildfire and mudslide events. Turning to wildfire insurance coverage, we have secured $1 billion of gross insurance coverage from July 2020 to June 2021, which is $870 million net of self- and coinsurance. You will recall that we had net coverage of about $1 billion for the previous policy year. The insurance market continues to be tight, and based on the cost of insurance premiums, the $1 billion gross coverage optimizes risk mitigation and cost to customers. We believe that this insurance coverage meets the requirements of AB 1054.
Based on policies currently in effect, the wildfire insurance expense in 2020 is approximately $450 million. Moving to our 2019 FERC Formula Rate Case, SCE filed a settlement on its formula rates in June. If approved by FERC, this settlement will provide SCE with an all-in ROE of 10.3% and an equity layer that is the higher of actual and 47.5%. SCE can file a new rate case beginning in January 2022. Last week earlier this month, we filed an application with the CPUC to allow SCE to securitize $337 million of wildfire-related capital expenditures.
AB 1054 allows us to securitize wildfire-related costs, including $1.6 billion of CPUC-approved wildfire mitigation capital spending, which can't be included in the equity portion of SCE's rate base. This application requests authority to securitize a portion of the recently approved Grid Safety and Resiliency Program spending. The bonds will be repaid from a dedicated rate component.
Pages six and seven show our 2020 guidance and key assumptions for modeling purposes. I'll start by highlighting that we are narrowing the EPS guidance range to $4.37-$4.62 per share by raising the low end of the range. This also increases the midpoint of the EPS range to $4.50. There are several variables driving this positive revision. Let's begin with SCE's rate base earnings. We now expect the rate base EPS outlook to be $0.03 higher as a result of our 2019 FERC Formula Rate Case settlement and the resolution of a tax-related regulatory proceeding. Building on this, we are also now forecasting a net contribution of $0.27 from SCE operating and financial variances. This is $0.07 higher than our previous estimate. This increase is influenced by the timing of SCE's financing activities, as well as a number of other operational items.
As you look at the next three bars in the chart, you will note that some of the EPS increases I just described are offset by higher costs at EIX Parent and Other, primarily from increased interest expense, and dilution from outstanding share count. We now forecast the combined EPS drag from these two items to be $0.07 higher than our previous estimate, and this is primarily related to the completion of the EIX financing plan earlier in the year than originally anticipated. Taking all of these variables into consideration, the net impact of these changes, combined with the outlook for our business with another quarter behind us in this COVID-19 environment, gives us confidence in our narrowed 2020 EPS guidance range of $4.37-$4.62 per share. That concludes my remarks.
Ted, 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.
Thank you. If you would like to ask a question, please press star one on your phone. One moment for the first question, please. First question is from Jonathan Arnold with Vertical Research, y our line is now open.
Good afternoon guys?
Hey. Hi there, Jonathan.
Pedro, may I just ask, obviously, you've mentioned that you've reached some initial settlements with, I think you described it as some of the plaintiffs in the 2017-2018 fires, and obviously there are thousands of others. Should we read the fact that you didn't change your accrual despite reaching some of these settlements as a sign that you feel still good about your estimate? Is it just that you don't have enough experience in settling additional claims to really have an update at this point?
Yeah. Hey, Jonathan, that's a really good question. I think just the simple answer is that, as she alluded to, we did a handful of settlements, a few dozen settlements here, compared to the thousands of plaintiffs. That is simply just not enough evidence to have any sort of material impact in our assessment of the low end of the estimable range. We did look at that range again, and at the low end. As we mentioned before, we reassess that as we go into every quarter. Just based on the very small number of cases that we settled, that's just not sufficient to provide any sort of material input that would lead to a change.
Okay. Thank you. If I could just follow up on one sort of similar topic. I see you booked a charge related to 2017-2018, a small one, in the quarter that's below the core line, the $9 million. What was that, and what sort of caused that to get booked this quarter?
Sure. Jonathan, you can imagine as we move through this process, we're accumulating legal and expert costs. Those are legal and expert costs that are associated with a non-core charge, we're booking those as non-core as well. Prior to this quarter, the number was really not significant.
Okay. That's sort of a sign of maybe your settlement activity sort of ramping up. Is that a fair?
I would just say it's a sign of our continuing litigation activities, Jonathan.
All right, I'll let it go. Thank you very much.
Hey, thanks. You take care.
Our next question is from Julien Dumoulin-Smith from Bank of America, y our line is now open.
Hello, Julien?
Hey, Julien?
Hey, good afternoon. Thanks, guys, for the time. Perhaps just to follow up on Jonathan's question, this is my follow-up, if I will. Can you clarify a little bit on how you're thinking about the various groups of potential parties that you'd be seeking to settle with? Just as you set expectations, and I know it's difficult to talk about it, obviously, the Woolsey timeline is a little shifted out. Can you talk about potential expectations on what kinds of parties you might expect to settle with? Obviously, I think you said this is just a handful, basically, of individuals here. Just how do you think about the timeline and cadence given that the bellwether trial, for one, is established still in January versus vacated for the other one?
Yeah, let me start, Julien, by saying that I do think of the timelines as in some sense being almost two separate timelines, although obviously they're related. There's a timeline for the normal litigation course, and that's where the bellwether trial dates are relevant. As you noted, and I think we mentioned earlier, there's a new date set on the Thomas side. The Woolsey date has been postponed. We did note that that Thomas date could still move again just because of the COVID-19 impacts and the uncertainty around that. That's a track. A separate track is the really multiple tracks of discussions with multiple classes of plaintiffs.
The reality is that that track has a life of its own, and it really depends on parties on both sides and whether, on the plaintiff side, are there parties that are interested in being reasonable and achieving reasonable settlements. We're certainly open for business to parties that want to have reasonable discussions, and we're less open for business for folks who may not have a reasonable point of view. How that relates to the trial timeline, frankly, it's hard to say. I really can't get into the head of specific parties and whether they view a linkage to a trial date or not. In terms of the other part of your question around how do we think about the various classes here. On one large class were the public entities, and as you recall, we settled with the vast majority of those last fall.
The other two big classes are the subrogation parties, really representing insurance company interests, and the individual plaintiffs. Nothing that we've had to announce at this point on the several parties. Again, we continue to be open to discussions with reasonable parties. With the individual plaintiffs, you saw the handful of settlements that we entered. Again, probably the longest non-answer in the world in that it's really hard to give you any sense of timeline or timing because that really comes down to each of those parties or groups of parties.
Excellent. Quick clarification, if I can, as my follow-up here. On your 2020 guidance, I think, Maria, you'd commented going back a quarter here in light of COVID, you didn't show a bridge. Obviously, now you have. There were a number of items introducing uncertainty in light of COVID, et cetera. Just to make sure, any specific items that are still outstanding that could introduce volatility? I know you all raising guidance here after not showing it earlier, at least the low end is indeed a sign of confidence. I just want to make sure that we're hearing you right about some of the key pieces that you were looking for clarity last quarter.
Sure. Thanks, Julien. Last quarter, while we didn't provide a bridge, we did reaffirm guidance. Obviously, now we're raising the low end of the range a little bit as well. Last quarter, what we were really saying was the piece parts could move around, and that's why we didn't provide the bridge. I think as our team continued to move through the process, we have more clarity on what those piece parts are. Obviously, we have the memo accounts that we've set up related to COVID expenses. We have decoupling. We have all of those things in California that provide us with confidence. I wouldn't point to anything necessarily being different other than now with the passage of time, that granularity is more apparent to us.
Okay. All right. Thanks so much.
Okay. Thanks, Julien.
Our next question is from Steve Fleishman with Wolfe Research, y our line is now open.
Hello, Steve?
Hi, good afternoon. Hi, everyone. Hi, Pedro? Two questions or related ones. First is just on the cash flow standpoint, I know there's a lot that moves back and forth through the trackers and the like. Just how are you feeling about staying within the targeted rating agency ranges for this year, next year?
Thanks, Steve. It's Maria. You're right, we do have a lot of cash tied up, particularly in those wildfire mitigation memo accounts. I think the regulatory asset that we have on the books this quarter is just more than $1.1 billion. It's a fair amount. We have been moving through the process on various of those proceedings. The GS&RP has been approved, and the settlement's been approved. The WEMA, we're expecting that decision in September. That's the one about the insurance proceeds from last year. We're moving through that process. We do think that that moving through timely on those requested amounts is important to maintaining our cash flow, and that's one of the assumptions that our 2020 financing plan was predicated on.
I think that from a rating agency perspective, the COVID-related items, they understand very well the strong supports that we have in California, both the trackers that we have as well as the decoupling. If sales vary, that we will recover that as well. I think that is something that they're very familiar with and think highly of, frankly. On the memo accounts for the wildfire mitigation, I think demonstrating that we can get some of those decisions behind us will be important. I think that really was one of the important assumptions that we made in our financing plan for this year. We'll continue to look at that for next year. As we get that cash in the door, obviously our metrics will improve.
Okay. I'm going to ask a clarification.
It is a really important element. I agree with you.
Okay. Thank you. Just a clarification of someone else's questions of just that we keep looking back to the 2017- 2018 and potential settlements. One of the things that ultimately has to come up is, did you actually do anything imprudent? Because, again, as far as I recall, I don't remember any investigation that has found that you actually did anything wrong in the 2017- 2018 fires. Could you just remind us when and how prudency would be reviewed for the 2017- 2018 fires?
Yeah. Happy to take a quick stab at that. Just to remind you that there's really a whole process around, obviously, the litigation proceeding that just is determining that potential litigation exposure or potential settlement outcomes. There is a separate track around the attorney general's office, which is a pretty standard course in these kind of cases where they can take a look at whether there's any basis for criminal liability. If you've seen, we've discussed in prior calls that it seems to be past that period now for the Koenigstein events. Attorney general is continuing their investigation for the Woolsey Fire. In any case, we don't see any basis for criminal felony liability in any of these events.
The final track there would be the track at the CPUC, which, although the CPUC's Safety and Enforcement Division engages right away in looking at the facts of a fire, et cetera, the real meat and bones of the prudency review would start after a filing by Southern California Edison seeking recovery of amounts related to the fires for outcomes in litigation or settlements. Right? That has not begun yet. We have shared in prior calls as well that at this point, we still don't have full visibility to every piece of evidence out there. There's still equipment that we have yet to inspect, et cetera. The way this would work is that once we had finalized the litigation outcome for the 2017- 2018 Thomas, Koenigstein, and Mudslide events, and separately for the 2018 Woolsey Fire event.
As we end up understanding what the final liability is, whether through court process or through settlement, and we understand what the outstanding amount is beyond our insurance coverage, and at that point, based on our then understanding of our prudency, as we complete that review on our side or SCE would complete that review, then SCE would decide to go to the CPUC to seek cost recovery from customers, and that would start that proceeding. At this point, we can tell you pretty definitively that we don't see any basis for criminal felony liability in the investigatory criminal part of this led by the Attorney General. We don't have all the pieces in place to understand our degree of prudency and what the case would be for cost recovery.
Just final reminder, in our accounting reserve, we have not assumed any recovery from the CPUC, given the precedent in the San Diego case. We have assumed recovery from FERC because they had a different precedent. I would expect that we would be likely to be seeking cost recovery of some amount, dependent ultimately on the degree of prudency that we concluded we had shown. Lots of pieces to the answer.
Right. Okay
It's a complex process. Did that make sense, Steve?
Yeah. No, that was a really good review.
Okay.
Thank you, Pedro.
Thanks. You take care.
Next question is from Michael Lapides from Goldman Sachs, y our line is now open.
Hey, guys?
Hi, Michael.
Thank you for taking my question.
Hey, Michael.
I actually have a handful, and Maria, they're probably more directed at you. Can you talk a little bit about the leeway, the comfort zone you have regarding Southern California Edison dividend payment potential up to the parent relative to what both the CPUC requirement and the California corporate code requirements are?
Sure. You know that in California there are some rules around dividend payments, which some of them are, I'll say, very standard, retained earnings tests, et cetera. Then also around largely an ability following the payment of a dividend, that the entity has an ability to meet obligations as they come due. We've been evaluating this forever before the wildfires as well, because that's been part of the code for a long time. I think it got a little bit more attention after the 2017 and 2018 events. We look at a wide range of really potentially negative outcomes to ascertain the answer to that second question. We've been in a position each quarter to think about that, both at the EIX level to our common shareholders, but then also in between SCE and EIX.
SCE also is looking at cash flows and the like and the exact timing of their financing. There's a little bit of just, I'll say, the day-to-day cash management that comes into account as well. They routinely make dividends up to the parent company. As far as the CPUC goes, obviously CPUC is looking to ascertain that they are living within their authorized capital structure and the like. We've always been able to do that as well, and I anticipate we will continue to be able to do that.
Gotcha. Thank you for that. Can you talk a little bit about parent debt financing and the cost of interest, meaning the coupon rates you're able to realize in the market right now relative to what you're seeing other companies, and if the rate is higher relative to other utilities, even though interest rates broadly are lower, how you're thinking about short-term, long-term debt, the balance, and really the total debt balance you want up top at the holdco versus down at the outfit?
Sure. Obviously, we did $400 million of holdco debt a couple months ago now, more than a couple months ago now, and that completed what we had announced for 2020. Not surprising to anyone on the call, EIX has been trading wide of other entities, and I think that's a reflection of a lot of what happened last year, or even prior to AB 1054 being passed. We do have to deal with that. I'm hoping that as time passes, that will also change. Obviously, the underlying treasuries are pretty low right now, so that's a benefit when you think about the total coupon. I think as we move forward in time, Michael, like any company, we'll be trying to balance timing going to the market, short and long-term interest rates, and the like.
I would see us on a go-forward basis, just making that decision to move from a short-term position to a long-term position based on what's going on in the market and what the needs of the company are. In terms of the overall debt at the holding company versus the complex, obviously, we're going to be thinking about that in terms of also keeping an eye on the rating agencies. Obviously, they're looking at holdco debt relative to total debt, and so we'll be staying within those guidelines as well. That's kind of the thought process.
Got it. Thank you, Maria. Much appreciated.
Thanks, Michael.
That was the last question. I will now turn the call back to Mr. Sam Ramraj.
Well, that concludes the conference call. Thank you for joining us today, and please call us if you have any follow-up questions, y ou may now disconnect.