Pedro J. Pizarro
President and Chief Executive Officer at Edison International
All right. Thanks, Sam, and good afternoon, everybody. Edison International reported core earnings per share of $1.38 for the third quarter and $3.48 for the first nine months of the year. We are pleased with our performance year-to-date. And combined with the outlook for the fourth quarter, we are content in reaffirming our 2023 core EPS guidance range of $4.55 to $4.85. I would also like to reaffirm our ongoing commitment to delivering 5% to 7% core EPS growth for 2025, which does not factor in several potential upsides. We also reaffirm our EPS growth guidance of 5% to 7% for 2025 to 2028. My comments today cover four key thoughts.
First, an update on the legacy wildfires relating to a change in the best estimate. Second, how SCE's industry-leading wildfire mitigation practices differentiate the company as climate change-driven wildfire risk affects utilities across the nation. Third, several SCE regulatory updates, and then finally, Edison's updated projections on the dramatic grid expansion required to enable economy-wide electrification and the clean energy transition.
Starting with SCE's legacy wildfires, as shown on Page 3. The process to resolve claims and estimate the final outcome is complex and challenging. And each quarter, SCE evaluates the estimated cost for resolving the remaining claims. The utility has made substantial progress settling claims and moving towards recovering these costs. However, this quarter's evaluation required SCE to increase the best estimate by $475 million, driven primarily by settlements being resolved at higher levels than originally estimated and assuming that trend will continue. SCE also now has more refined information about the types of claims being precepted as it works through the mediation process.
The majority, about two-thirds of the increase is attributable to Woolsey. The impact of this increase on you, our shareholders, is not lost on us. As shareholders ourselves, we understand the importance of this issue behind us. Resolving all outstanding claims is crucial, and SCE is firmly committed to completing this in a reasonable and prudent manner that will ultimately support cost recovery. A positive step in this process is that recently a deadline was set for Woolsey claimants in the settlement protocol to fight SCE of their complete claims by February 2024. After then, SCE will have increased clarity on the remaining value of claims and the utility's ability to swiftly resolve them.
As always, we will continue to update you each quarter including SCE's expectation for when it will file the cost recovery application for the Woolsey Fire. The Woolsey application will cover more than $4 billion of eligible claims payments plus financing and legal costs. We recognize that utilities across the country are facing new challenges from wildfires, which were initially viewed as specific to California, but have expanded to become an international issue.
Against this backdrop, SCE has made tremendous progress since 2018, reducing its risk of losses from catastrophic wildfires by 85%. SCE has differentiated itself through its multilayered wildfire mitigation strategy. This is anchored by grid hardening and includes enhanced vegetation management, asset inspections and other programs. SCE has replaced 5,200 miles of distribution lines with covered conductor. And in fact, by year-end, SCE will have physically hardened over 75% of its distribution miles in high-fire risk areas.
Growth mitigation, the uncovered conductor includes one of the largest private weather station networks in the country and enhanced protective settings known as fast curve settings. With their deep experience and achievements, my SCE colleagues are sharing mitigation strategies with utilities across the country.
Moving to the regulatory front, I'd like to provide three updates. First, in August, SCE delivered on its commitment to file its TKM cost recovery application requesting recovery of $2.4 billion. SCE provided a compelling case that a prudently designed, managed and operated its equipment and that the associated costs were recently incurred. The evidence provided shows that the damages resulted from extraordinary environmental conditions and other factors beyond SCE's control. Expert testimony estimates that a reasonable decision could save customers as much as $4.9 billion by avoiding excess financing costs for SCE debt issued over the next 10 years, making it more affordable to achieve economy-wide electrification. As for next steps, the commission will issue a scoping memo that will set the procedural schedule.
Second, in September, SCE filed an unopposed motion for the CPUC to approve a settlement on track four of its 2021 GRC, which sets the revenue requirement for 2024. Reaching this agreement with intervenors is a successful outcome for the utility and its customers, and SCE has sought CPUC approval by the end of the year. Maria will provide additional details in her remarks.
Third, at the end of September, the cost of capital mechanism triggered resulting in a 70 basis point increase to SCE's return on equity, effective January 1, 2024. SCE filed a Tier 2 advice letter on October 13 to implement the update to its ROE along with the cost of debt and preferred equity. The response period for intervenors ends tomorrow, after which the CPUC's energy division can approve it or refer to the full CPUC. Consistent with our usual practice, we will provide 2024 earnings guidance on our fourth quarter earnings call.
I would like to reiterate that our EPS growth through 2025 is achievable at SCE's currently authorized ROE and this increase is one of the upsides I mentioned earlier in my remarks. I now want to share a recent achievement and recognition of our company's strong corporate governance. The Center for Political Accountability and Zicklin Center for Business Ethics Research recently published our annual index, which is the marquee measurement of corporate political transparency and accountable.
For the second consecutive year, Edison International received a perfect score, and we were recognized as a corporate leader for the tenth consecutive year. I am very proud of our team for this accomplishment, and our continued commitment to integrity and transparency. And now putting my current Edison Electric Institute Chair hat on, I am also proud to say that 17 other utilities were also identified as trend setters, which are S&P 500 companies with CPA Zicklin Index scores, indicating robust disclosure and oversight.
Edison has been a thought leader on the clean energy transition for many years and has published numerous white papers about how California can achieve it. In September, we published Countdown to 2045, our latest analysis. This updates the earlier Pathway 2045 war, reflecting new laws and policies, technology advances and customer adoption while leveraging the latest modeling in climate science.
We conclude that for California to achieve its net-zero greenhouse gas emission goals in just over 2 decades, the electric grid must expand faster than ever before to levels higher than we previously estimated. Page 4 shows some top line findings on how the state gets to carbon neutrality. We forecast an 80% increase in electrical demand by 2045, due in part to 90% of vehicles and 95% of buildings going electric.
To serve all this load, the grid will need to expand to handle three times the clean energy flowing today. This means new transmission and distribution grid projects will need to be added at four times and ten times their historical rates, respectively. Importantly, though, the average household is going to save about 40% on their overall annual energy expenses by 2045 due to reduced fossil fuel spending and the greater efficiency of electric vehicles and appliances. This unprecedented pace of grid buildout needed to electrify the economy requires bold actions to improve how the state's entire energy infrastructure is planned and operated.
At Edison, we are deeply committed to helping California reach its ambitious goal to mitigate the impacts of climate change and ceased a set of approaches outlining in Countdown to 2045 as a model for other states and nations.
With that, let me turn it over to Maria for her financial report.
