Pedro J. Pizarro
President and Chief Executive Officer at Edison International
Well, thanks, Sam, and good afternoon, everyone.
Edison International's core earnings per share for third quarter 2024 was $1.51, bringing year-to-date core EPS to $3.88. With this strong year-to-date performance, we are confident in narrowing our 2024 core EPS guidance to $4.80 to $5.00. Additionally, we remain confident in our ability to meet our 2025 EPS guidance and delivering a 5% to 7% EPS CAGR through 2028.
My remarks today include three important takeaways. First, SCE continues to demonstrate its ability to navigate the regulatory landscape and is in the final stages of two key regulatory proceedings, reaching a settlement agreement in the TKM cost recovery application and awaiting a proposed decision in the 2025 GRC, which will solidify our financial outlook through 2028. Second, our team has achieved remarkable success over the last several years managing unprecedented external risks, making our operations more resilient and positioning us strongly for the growth ahead. Third, we recently reaffirmed our net-zero commitment in our latest white paper. Reaching net-zero GHG emissions by 2045 is a core pillar of our climate-related risk management.
Starting with a couple of constructive updates on the regulatory front, SCE is in the final stages of resolving the legacy wildfires. We have provided an update on Page 3. You saw that in August the utility reached an agreement with Cal Advocates to settle the TKM application. Once approved by the CPUC, the settlement would authorize recovery of 60% of the costs or $1.6 billion. This settlement marks a significant milestone and is a good compromise all around. Customers and the state benefit from the demonstration of a strong regulatory framework and constructive negotiations with intervenors, as do you, our owners. It is also another clear indication of the utility's ability to navigate the complex regulatory landscape.
SCE recently filed the Woolsey cost recovery application, which we expect to take about 18 months to complete. SCE made a strong case supporting the prudency of its operations and the claims settlement process, but with the proceeding just underway, it is premature to speculate about the ultimate outcome. As a reminder, we have not factored cost recovery for these legacy events into our earnings targets, thus the TKM settlement and the eventual outcome in Woolsey will be additive to our core operational growth.
SCE's rapid response to mitigate wildfire risk also resulted in numerous regulatory applications. These included 2021 GRC tracks 2 and 3, a couple of WEMA applications, several CEMAs, three AB 1054 securitizations, and several others. SCE has achieved strong regulatory outcomes, recovering substantial amounts of prior spending in rates and expecting another
$3 billion of incremental cash flow over the coming years.
Upcoming on the regulatory calendar are decisions on the TKM settlement and the 2025 GRC, both of which we believe could happen in the first half of next year. The decisions will solidify our financial outlook through 2028. Capital investment enabled by the GRC is the driver for the growth and customer benefits necessary to ensure the grid is reliable, resilient, and ready to achieve the clean energy transition. We are confident in getting a strong outcome for SCE's customers that will also enable us to deliver on our commitment of a 5% to 7% EPS CAGR through 2028 with minimal equity needs.
Staying with the California regulatory environment, a couple of weeks ago, the Commission changed the cost of capital mechanism and the investor-owned utilities' 2025 ROEs. While it only applies to 2025, we believe the decision is unfortunate and the process was disappointing. That said, this is just one of numerous business and regulatory outcomes that we manage in delivering on our commitments. I reiterate our confidence in delivering on our 2025 EPS and long-term EPS growth commitments.
Moving on to SCE's core operations, I am proud of our team's ability to manage unprecedented climate challenges and navigate the numerous associated regulatory applications over the last several years. As you can see on Page 5, we have made remarkable strides in reinforcing our operational resilience and financial stability. Our robust performance is a testament to our strategic initiatives and the dedication of our workforce, my teammates. To address the climate challenges, you have seen the results of SCE's industry-leading wildfire mitigation plan for several years now. Wildfires will always be a part of California, exacerbated by climate change, and the number of acres burned so far this year is roughly in line with the five-year average. What is important though is that SCE has adapted its operations and managed the risk.
To drive this point home, Page 6 shows the significant reduction in acres burned from SCE's ignitions in high fire risk areas since 2017, and that this has happened while ignitions have been relatively flat, despite several of these years having been extremely high fire risk periods. This is due to SCE's strong wildfire mitigation plan execution and increased state fire suppression. Importantly, none of the ignitions are from the failure of covered conductor, the cornerstone of SCE's grid hardening strategy. Now, with more than 6,100 miles of covered conductor deployed, SCE has physically hardened 85% of its distribution grid in high fire risk areas. Consequently, SCE's grid is more resilient, reliable, and well-positioned to focus on the growth ahead as we lead the clean energy transition. California will also continue to benefit from improved state fire suppression support and as other utilities in the state increase their grid hardening action.
Moving to the bigger picture, wildfires are just one way that climate change is impacting California's health, economy, and quality of life. Edison International is acting to create a safer, more affordable future with cleaner air and reduced risk of climate disasters. Reaching net-zero greenhouse gas emissions by 2045 is a core pillar of our climate-related risk management. We recently unveiled our latest white paper, Reaching Net Zero, which builds on our previous analysis of what is needed for California to reach carbon neutrality. The publication focuses on Edison International's net-zero plan and reaffirms our net-zero commitment.
As you see on Page 7, this plan is centered around delivering 100% carbon-free power to SCE's customers, as 85% of enterprise-wide emissions are associated with power delivery. In addition, we will reduce operational emissions, primarily by reducing those from the supply chain. Lastly, we project about 2 million tons of emissions will remain across all scopes in 2045. To fully decarbonize, we will need to neutralize those emissions, preferably through high- quality carbon removal solutions or offsets.
As always, we take a pragmatic approach to our analysis and findings. A key point of emphasis is that the state will need substantial deployment of clean firm generation to safely, reliably, and affordably supply power 24/7 in any weather. So, one of the big and maybe surprising conclusions is that California must retain its existing natural gas generation fleet as insurance against delays in new technology development and deployment, though the generators will run significantly less often.
The bottom line is that to reach net-zero, nearly every sector of the economy will need to incorporate clean electricity. It will take much investment and cooperation between industry and government. The effort will be worth it for customers, who will see a projected 40% reduction in their total energy costs by 2045.
With that, let me turn it over to Maria for her financial reports.
