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Edison International (NYSE:EIX)
Q2 2020 Earnings Call
Jul 28, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Edison International Second Quarter 2020 Financial Teleconference. My name is Ted, and I will be your operator today. [Operator Instructions]

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 -- Vice President, Investor Relations

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 our Form 10-Q, 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. [Operator Instructions]

I will now turn the call over to Pedro.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Well, thank you, Sam. And 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 to $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 miles of covered conductor, installed nearly 400 additional weather stations and completed over 135,000 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. 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 our 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 at the CPUC, SCE submitted its 2020 safety certification request on June 19th, 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 12th, 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 toward meeting our long-term goals. They include delivering 100% carbon-free power to SCE customers by 2045, expanding infrastructure in SCE's 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 megawatts of energy storage procurement, one of the largest in the nation which will help enhance electric system local reliability needs. Also, 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. Additionally, 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 your financial report.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

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 2, 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 due to 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. Therefore, 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 reached 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 30th, 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 plant. Finally, EPS in the quarter was lower by $0.17 because of dilution from the increase in shares outstanding.

On page 3, you will find SCE's capital expenditure and rate base forecast. We have a robust capital program of $19.4 billion to $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 4 for an update on the 2021 GRC. During the quarter, SCE filed its rebuttal testimony focusing on a number of the intervenors' 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 22nd and 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 1 in Q1 2021.

I would now like to update you on other key financial topics. Please turn to page 5. 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 co-insurance. You will recall that we had net coverage of about $1 billion in the previous policy year. The insurance market continues to be tight and based on the cost of insurance premium, 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.

Lastly, 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 6 and 7 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 to $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 to $4.62 per share.

That concludes our remarks.

Sam Ramraj -- Vice President, Investor Relations

Ted, please open the call for questions. [Operator Instructions]

Questions and Answers:

Operator

Thank you. [Operator Instructions] First question is from Jonathan Arnold with Vertical Research. Your line is now open.

Jonathan Arnold -- Vertical Research -- Analyst

Good afternoon, guys.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Hi there, Jonathan.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hi, Jonathan.

Jonathan Arnold -- Vertical Research -- Analyst

Pedro, could I -- may I just ask you a -- you've mentioned that you've reached some initial settlements with, I think, you said -- you've described it as sort of some of the plaintiffs in 2017, '18 fires and that obviously there are thousands of others, but should we read the fact that you didn't change your accrual despite reaching some of these settlements as a sign that you'll -- you feel still good about your estimate or is it just you don't have enough experience in settling additional claims to really have an update at this point.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Yeah. Hey, Jonathan. That's a really good question. And I think just the simple answer is that as you alluded to we did a handful of settlements, a few dozen settlements here compared to the thousands of plaintiffs. So 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. So, we did look at that range again and/or the low end as we mentioned before, we reassess that as we go into every quarter. But 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.

Jonathan Arnold -- Vertical Research -- Analyst

Okay. Thank you. And if I could just follow up on one -- so similar topic, I see you booked a charge related to 2017, '18, a small one in the quarter. That's below the core line. I'm just curious -- the $9 million, I'm just -- what was that and what sort of caused that to book this quarter?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Sure. So, Jonathan, you can imagine as we move through this process, we are accumulating legal and expert costs. Because of the legal and expert costs that are associated with the non-core charge we're booking at non-core as well. Prior to this quarter, the number was really not significant.

Jonathan Arnold -- Vertical Research -- Analyst

Okay. So, that's sort of a sign of your -- maybe your settlement activity sort of ramping up. Is that a fair or unfair?

Pedro J. Pizarro -- President, Chief Executive Officer and Director

I would just say it's the sign of our continuing litigation activities, Jonathan.

Jonathan Arnold -- Vertical Research -- Analyst

All right. I'll let it go. Thank you very much.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Thanks. You take care.

Operator

Our next question is from Julien Dumoulin-Smith from Bank of America. Your line is now open.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Hello, Julien.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hey, Julien.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good afternoon. Thanks guys for the time. Perhaps just a follow-up on Jonathan's question, if 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'll be seeking to settle with. And just as you set expectations and I know it's difficult to talk about it obviously the Woolsey time lines will shift it out. Can you talk about potential expectations on what kinds of parties you might expect to settle with, I mean, obviously, I think you said this is just the handful basically of individuals here. Just how do you think about the timeline and cadence given the bellwether trial for one is established still in January versus vacated for the other one?

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Yeah. And 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 are related, there is a timeline for the normal litigation course and that's where the bellwether trial dates are relevant. And as you noted, and I think we mentioned earlier, there is a new date set for the -- on the Thomas side, 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. So that's a track.

A separate track is the really multiple tracks in discussions with multiple classes of plaintiffs. And 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. And so we're open for business to parties that want to have reasonable discussions and we're -- was 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? One large class were the public entities, and as you recall, we settled with the vast majority of those last fall. Then the other two big classes are the subrogation parties really representing insurance company interest and the individual plaintiffs.

And so 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. And with the individual plaintiffs, you saw the handful of settlements that we entered. So, again, I -- probably the longest non-answer in the world and that it's really hard to give you any sense of timeline or timing because it really comes down to each of those parties or groups of parties.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Excellent. And a quick clarification, if I can ask my follow-up here, on your '20 guidance, I think, Maria, you commented going back a quarter here in light of COVID, you didn't show a bridge obviously now you have. And there were a number of items introducing uncertainty in light of COVID, etc. Just to make sure any specific items that are still outstanding that could introduce volatility. And I know you are raising guidance here after not showing it earlier, at least the low end is indeed a sign of confidence. But 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.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Sure. Thanks, Julien. And last quarter, while we didn't provide a bridge, we did reaffirm guidance, obviously now we're raising low end of the range little bit as well. But 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 continue to move through the process, we have more clarity on what those piece parts are, obviously we have the memo account that we set up related to COVID expenses, we have decoupling. We have all of those things in California that provide us with confidence. So, I wouldn't point to anything necessarily being different other than now with the passage of time that granularity is more apparent to us.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Okay. [Technical Issues]

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Okay. Thanks, John.

Operator

Our next question is from Steve Fleishman with Wolfe Research. Your line is now open.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Hello, Steve.

Steve Fleishman -- Wolfe Research -- Analyst

Hi, good afternoon. Hi, everyone. Hi. Pedro. So, two questions related ones. First is just on the -- on cash flow standpoint, I know there's a lot that moves back and forth through trackers and the like. So, just how are you feeling about staying within the targeted rating agency ranges for this year or next year?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hey, Steve. It's Maria. So, 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 north of $1.1 billion. So, it's a fair amount. We have been moving through the process on various of those proceedings. The GS&RP has been improved and the settlements have been improved, the WEMA, we're expecting that decision in September. That's the one about the insurance proceeds from last year.

So, we're moving through that process. We do think that that's moving through timely [Phonetic] on those requested amounts is important to maintaining our cash flow and those are some of the -- 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. So, as sales vary [Phonetic], that we will cover that as well. So, I think that is something that they are very familiar with and think highly of frankly.

On the memo accounts at wildfire mitigation, I think, demonstrating that we can get some of those decisions behind us will be important. And 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. And as we get that cash in the door, obviously our metrics will improve.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. And I'm going to ask a clarification...

Maria Rigatti -- Executive Vice President and Chief Financial Officer

It is a really important element. I agree with you.

Steve Fleishman -- Wolfe Research -- Analyst

Okay. Okay. Thank you. Just a clarification of someone else's questions, just that we keep looking back to the '17, '18 and potential settlements. One of the things that ultimately has to come up is like, did you actually do anything in prudent because again as far as I recall, I don't remember any investigation that is found that you actually did anything wrong in the '17, '18 fire. So, could you just like remind us when and how prudency would be reviewed for the '17, '18 fires?

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Yeah. Happy to take a quick stab at that. And just to remind you that there is 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, I think, pretty standard course in these kind of cases where they can take a look at whether there is any basis for [Technical Issues] liability that 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. And then the final track there would be the track at the CPUC which although the CPUC's Safety and Enforcement Division engages right away and looking at the facts of the fire etc., 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 and litigation or settlements, right. So 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 is still equipment that we have yet to inspect, etc. So, the way this work is that once we had finalized the litigation outcome for the 2017, '18 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's 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, right, as we complete that review on our side or SCE would complete that review. Then SCE will decide to go to the CPUC to seek cost recovery from customers. And that would start that proceeding. So, at this point, we can tell you pretty definitively that we don't see any basis for criminal felony liability and the investigatory criminal part of this led by Attorney General. But 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. But I would expect that we will be likely to be seeking cost recovery of some amount dependent ultimately on the degree of prudency that we concluded we had shown. So, lots of pieces to the answer because it's still a complex process. Does that makes sense to you?

Steve Fleishman -- Wolfe Research -- Analyst

Yeah. No, that was really good review. Thank you, Pedro.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Thanks. You take care.

Operator

Next question is from Michael Lapides from Goldman Sachs. Your line is now open.

Michael Lapides -- Goldman Sachs -- Analyst

Hey, guys. Thank you for taking my questions.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Hi, Michael.

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Hey, Michael.

Michael Lapides -- Goldman Sachs -- Analyst

I actually have a handful in Maria, they're probably more directed at you. Can you talk a little bit about the way 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?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Sure. So you know that in California there are some rules around dividend payments, which some of them are, I'll say, very standard, retained earnings test, etc. And 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. And we've been evaluating this forever before the wildfires as well because that's been part of the code for a long time. But I think I've got a little bit more attention after the '17 and '18 events. We look at a wide range of really potentially negative outcomes to ascertain the answer to that second question. And we've been in a position each quarter to think about that, both at the EIX levels of common shareholders, but then also in between SCE and EIX.

SCE also is looking at cash flows and the like and exact timing of their financing. So, there is a little bit of just I'll say the day-to-day cash management that comes into account as well. But 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. And we've always been able to do that as well. And I anticipate we will continue to be able to do that.

Michael Lapides -- Goldman Sachs -- Analyst

Got you. Thank you for that. Also 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 utility even though interest rates broadly are lower, how you're thinking about kind of short-term, long-term debt, the balance and really the total debt balance you want up top at the holdco versus down at the opco [Phonetic]?

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Sure. So, I mean, obviously we did $400 million of holdco debt a couple of months ago now, more than couple of 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 what happened last year or even prior to AB 1054 being passed.

So we do have to deal with that. I'm hoping that if time passes, that will also change. Obviously, the underlying -- the 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, shorten long-term interest rates and the like. I would see us on a go-forward basis just making that decision to term -- 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, and obviously they are looking at holdco debt relative to total debt. And so we will be staying within those guidelines as well. So, that's kind of the thought process.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you, Maria. Much appreciated.

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Thanks, Michael.

Operator

That was the last question. I will now turn the call back to Mr. Sam Ramraj.

Sam Ramraj -- Vice President, Investor Relations

Well, that concludes the conference call. Thank you for joining us today. And please call us if you have any follow-up questions. You may now disconnect.

Duration: 39 minutes

Call participants:

Sam Ramraj -- Vice President, Investor Relations

Pedro J. Pizarro -- President, Chief Executive Officer and Director

Maria Rigatti -- Executive Vice President and Chief Financial Officer

Jonathan Arnold -- Vertical Research -- Analyst

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Steve Fleishman -- Wolfe Research -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

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