Gregg Orrill

Gregg Orrill requested an update on the Eaton fire investigation, including the parties involved and expected timeline, and asked about the company's stance on issuing equity to fund potential wildfire fund contributions.

Answer

President and CEO Pedro Pizarro detailed two separate investigations: one by LA County Fire, which typically takes 12-18 months, and SCE's own collaborative investigation. EVP & CFO Maria Riccardi addressed the equity question, stating that a large upfront payment would be inefficient as the fund does not need immediate cash and would negatively impact the company's cost of capital, ultimately harming customers.

Gregg Orrill requested an update on the Eaton fire investigation, including the parties involved and the expected timeline. He also asked about the company's position on issuing equity to fund potential contributions to the proposed $18 billion wildfire fund replenishment.

Answer

President and CEO Pedro Pizarro explained that there are two separate investigations: an official one led by LA County Fire, and SCE's own investigation, which is more collaborative with stakeholders and thus takes longer. He noted official investigations in such cases typically take 12-18 months. Executive VP & CFO Maria Riccardi addressed the equity question, stating that a large upfront payment would be inefficient, raise the cost of capital, and is not needed given the fund's current liquidity. She reiterated they will evaluate any complete legislative package.

Gregg Orrill of UBS asked if any aspect of the Eaton fire lawsuits could make damages unrecoverable from the wildfire fund and requested a breakdown of the quarterly interest expense driver.

Answer

CFO Maria Rigatti confirmed the wildfire fund is available to pay all damage claims and that nothing about the situation would preclude access. Regarding interest expense, she pointed to disclosures showing a $0.30 per share impact from the TKM prior-period true-up, with an ongoing annualized benefit of $0.14 per share expected to begin in the second quarter.

Gregg Orrill requested details on the upcoming filing for the next-generation Enterprise Resource Planning (ERP) system and asked for the company's view on the long-term role of natural gas in California.

Answer

Executive Steven Powell detailed that the NextGen ERP program is in its solution analysis phase, focused on technology and process changes, with a filing expected in Q1 as the current system nears its end of life. President and CEO Pedro Pizarro explained that natural gas generation will serve as a critical 'insurance policy' to ensure reliability as California transitions to clean energy, especially given the development and permitting timelines for new clean firm technologies.

Gregg Orrill from UBS Group AG asked about Talen Energy's strategy regarding Small Modular Reactors (SMRs) and where the company is considering implementing this technology.

Answer

CEO Mac McFarland and CFO Terry Nutt characterized their SMR strategy as very early stage. McFarland stated that while they have an agreement with Amazon to explore SMRs across their sites, it is a long-term project for the 2030s. They are spending minimal early-stage development dollars to explore concepts and work with stakeholders, but emphasized that SMR-backed deals are highly complex and not a near-term focus for announcements.

Gregg Orrill from UBS Group AG asked about Talen Energy's strategy regarding Small Modular Reactors (SMRs) and where the company is considering their implementation.

Answer

CEO Mac McFarland explained that the exploration of SMRs, part of an agreement with Amazon, is a very long-term initiative, viewing it as a 'years 10 through 15' opportunity. CFO Terry Nutt added that it is a complex, 'early stage development' effort and should not be considered a near-term focus for announcements.

Gregg Orrill of UBS Group questioned whether PG&E would consider modifying its cost of capital request based on legislative outcomes and if the proceeding's schedule allowed for such a change.

Answer

EVP & CFO Carolyn Burke confirmed that their current filing for an 11.3% ROE already assumes a constructive legislative resolution on AB 1054. She noted that while an off-cycle application is possible, they are confident in a legislative fix. The current schedule anticipates a final decision before year-end.

Gregg Orrill of UBS Group questioned whether PG&E would consider modifying its cost of capital request based on legislative outcomes and if the proceeding's schedule would allow for such a change.

Answer

EVP & CFO Carolyn Burke clarified that their current filing for an 11.3% ROE already assumes a constructive legislative resolution on AB 1054. She noted that while an off-cycle application is possible, they are confident in a legislative fix this session. The current schedule allows for a final decision by year-end.

Gregg Orrill from UBS asked if the potential for additional CapEx from SB 410 and new load growth could lead to raising the company's industry-leading EPS growth rate, rather than just extending the growth runway.

Answer

CEO Patti Poppe responded that the company believes its current industry-leading growth rate is the right one. She explained that additional CapEx would more likely be used to extend the duration of that growth rate, making it more durable. Poppe emphasized the importance of balancing growth with customer affordability and regulatory alignment, which will be demonstrated in the upcoming GRC filing.

Gregg Orrill requested an update on PG&E's Funds From Operations (FFO) to debt metric and its current standing with the credit rating agencies.

Answer

CFO Carolyn Burke reaffirmed the company's outlook to achieve a mid-teens FFO to debt ratio by year-end. She highlighted that operating cash flow is on track to increase by over $3 billion for the full year, which supports this metric and strengthens their position with rating agencies.

Gregg Orrill from UBS Group inquired about the key drivers for the balance-of-year earnings bridge, specifically focusing on variable power margin compared to the previous year.

Answer

CFO Joe Trpik clarified that 2024's earnings were front-loaded due to favorable market conditions, whereas 2025 is expected to have a more evenly distributed performance. He expressed confidence in achieving their plan for the year, supported by cost management and assuming normal market conditions.

Gregg Orrill asked for the specific timing of the company's proposal to form a holding company.

Answer

President and CEO Maria Pope provided a direct response, stating that the company will be filing its proposal in the latter part of the second quarter.

Gregg Orrill of UBS requested more details on the discussions with potential data center customers, specifically asking about the expected timeline for reaching agreements and what kind of updates investors should anticipate as the year progresses.

Answer

President of Gas Business Michael Huwar explained that it is difficult to provide a specific timeline for data center agreements due to the high number of projects and variables like state economic development packages. He noted that speed-to-market is critical for developers and that the company would announce any signed deals promptly. CEO Christopher Franklin added that the state government's role in site readiness is also a significant contributing factor.

Gregg Orrill asked for details on the process and expected timeline regarding the appeal of the Peoples Gas rate case filed by the Office of the Consumer Advocate (OCA).

Answer

CEO Christopher Franklin explained that the appeal to the Commonwealth Court is unusual but not a 'paramount concern.' He estimated it would likely play out over a year, noting that a change in the state's Attorney General post-election could also be a factor. Franklin emphasized the PUC's unanimous 5-0 approval of the rate case, suggesting that even if remanded, the PUC would likely just provide more documentation to support its original strong decision.

Gregg Orrill of UBS asked for an update on the California desalination project and inquired if its costs would be included in the general rate case.

Answer

President John Griffith provided an update, stating that after receiving the final major permit in late 2022, the company expects to break ground on the desalination project this year. He clarified that the project is handled under a separate regulatory docket and is not part of the general rate case.

Gregg Orrill asked about potential procurement disruptions for large capital projects, trends in water usage per customer, and for the results of the non-utility business segment.

Answer

EVP and COO Cheryl Norton stated that the company's robust supply chain organization has not experienced disruptions and has secured necessary supplies, including a long-term contract with Calgon Carbon for PFAS-related materials. She also noted that declining water usage is beginning to plateau. Regarding the non-utility business, EVP and CFO David Bowler said the company does not disclose that level of detail, but Ms. Norton added that the Military Services Group remains an exciting part of the business with future privatization opportunities.

Gregg Orrill requested clarification on the $0.04 per share negative variance projected for the rest of the year, which is related to the recent storm.

Answer

EVP and CFO Rejji Hayes clarified that the $0.04 negative variance reflects a portion of the estimated $100 million (~$0.25/share) total storm impact. This figure already incorporates significant offsetting cost-saving countermeasures, including the CE Way and other productivity initiatives, which are baked into the financial bridge and allow the company to reaffirm its full-year guidance.

Gregg Orrill asked for an update on the expected timing of general rate cases across PPL's various jurisdictions.

Answer

CFO Joe Bergstein provided the earliest potential timing for rate cases: Kentucky in the first half of 2025, Rhode Island in the fourth quarter of 2025, and Pennsylvania in 2026. He noted that the final timing for all jurisdictions will be confirmed as part of the next business plan update.