Edison Intl Exec Insights: EMG Capacity Factors

On Wednesday, Edison International (NYSE:EIX) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what the executives shared.

EMG

Daniel Eggers – Credit Suisse: I guess on EMG at this point, with a – your continuing deterioration in fundamentals. Can you just – if you want to share any more thoughts on how you’re evaluating that project and maybe how you could advance the conversation with the bondholders if the capital restructuring is a viable option for the timetable you guys have discussed for coming to a solution?

A Closer Look: Edison International Earnings Cheat Sheet>>

Theodore F. Craver Jr. – Chairman, President and CEO: Dan, this is Ted. I think we are getting to that spot on EMG, particularly as it relates potential discussions with bondholders, and just frankly it’s not going to be helpful or wise for us to kind of wait in and speculate on how those things might go. I am afraid you are going to more likely to not get responses from us on those types of questions, we are just going to have to see how it develops. I think we’ve tried to lay out, I tried to lay it out in my comments that the fundamental approach is, we believe that there needs to be some sort of a – some element of work with the bonds, looking at the capital structure, restructuring the capital and that’s going to most likely lead to a conversation with the bondholders, and that’s probably just where we need to leave it at this point.

Daniel Eggers – Credit Suisse: I guess just on the outlook for SCE (that you’ve pulled) guidance, but if we thought about how it will work once the GRC gets done, is it fair to assume this year you’d still expect to yield or earn a lot of ROE at SCE less the $55 million or $60 million for the SONGS costs which would presumably get recovered maybe next year once the warranty work gets resolved?

Jim Scilacci – EVP, CFO and Treasurer: This is Jim, Dan. I think the key we are going to need to get before us is a general rate case decision, and you have all the metrics that we’ve been using for year-after-year, but the key piece that’s missing here is the proposed decision is the first step and ultimately a final decision, and once we have that in hand, then we’ll be able to give you a good assessment of where we think 2012 is going to come out.

Capacity Factors

Jay Dobson – Wunderlich Securities: I wanted to follow up a little bit, maybe if you can just talk EMG and just what capacity factors we sort of saw in the quarter? I’m not sure if a lot of that information was in the handout Jim, but just talking about what – given coal to gas switching and these sort of things what we saw?

Jim Scilacci – EVP, CFO and Treasurer: The information is included in the deck. I’m just going to through flip through it and probably tell you what page it’s on. I’ll stop for a second. There was some limited coal to gas switching that we saw. In fact, in my comments, we talked about three areas where we saw reduced generation and we think it had to do with coal to gas switching for a piece of it. Higher plant maintenance quarter-over-quarter and some thermal limits that we encountered because of the unseasonably we warm weather in March so that dropped the generation and some the capacity factors for the Midwest Gen units. So I’ll pause there. Page 33, Jay.

Jay Dobson – Wunderlich Securities: Then going back to San Onofre, just wanted to share comments. The 55 to 65 you’re talking about pre-tax cost return. That’s the total cost you’re including in that what you spent in the first quarter?

Jim Scilacci – EVP, CFO and Treasurer: Yes, (when that) you exclude pre-tax.

Jay Dobson – Wunderlich Securities: How would that rollover the year? I mean, obviously, when it comes back as an important element in that. But if we were to assume, it wasn’t coming back for summertime is what we’ve seen in the first quarter a reasonable run rate or just how should we think about those flowing I know it’s a difficult question because we don’t know or you don’t know when it’s coming back.

Theodore F. Craver Jr. – Chairman, President and CEO: I’m going to turn this over to Ron. He will give you some more detail in it.

Ronald L. Litzinger – President, Southern California Edison: The $55 million to $65 million is what we are projecting for repair costs and I want to keep those distinct firm replacement fuel cost and staying with the repair costs us will projecting so long ways to go to finalize that, but it’s where we think we’ll end up and then we can seek recovery under the warranty. The replacement power which we had in the disclosures for the first quarter which is around $30 million. We also disclosed that those costs would be substantially higher in the summertime.

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