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Edison International's CEO Discusses Q1 2012 Results - Earnings Call Transcript

During this call, we will make forward-looking statements about the financial outlook for Edison International and its subsidiaries and about other future events. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. We encourage you to read these carefully. Presentation includes certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure.

[Operator Instructions]

With that, I'll turn the call over to Ted Craver.

Theodore F. Craver

Thanks, Scott, and good morning -- or good afternoon, everyone. Today, we reported GAAP earnings of $0.28 per share. As expected, a decline from the $0.61 per share last year. Core earnings were $0.35 per share compared to $0.65 per share a year ago. There are 2 high-level points I would like to make about our first quarter earnings. Southern California Edison's first quarter results reflect a mismatch of costs and revenues, given the delay in receiving our General Rate Case decision. Once the California Public Utilities Commission issues a final decision, revenues will be recognized retroactively to the beginning of the year. Second, in anticipation of transferring EMG's Homer City plant to the owner-lessors, we reclassified Homer City's $0.03 per share loss last year and this year's $0.07 per share loss into noncore earnings.

I would like to update you on a few important matters since our year-end earnings call. Let me start with the cost of capital applications Southern California Edison filed with the CPUC on April 20. SCE's application recommended continuing its current capital structure of 48% equity, 43% long-term debt and 9% preferred stock with a recommended ROE of 11.1%, down from the current 11.5%.

SCE also recommended continuation of the same automatic trigger mechanism, which has been in place for several years, that uses the Moody's Baa utility bond index. We recommended this mechanism be continued for a 3-year cycle and adjusting the baseline to reflect the 12-month average of the index at September 30 of this year. SCE's proposal would result in a 2013 reduction in customer rates of $128 million, about half associated with the lower ROE and the other half related to the true-up of our embedded cost of debt and preferred stock. Hearings are anticipated in late summer or early fall with a final CPUC decision by year end and effective January 1 of next year. There are summaries of the filing and an illustrative example of the index mechanism in the presentation appendix.

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