Good afternoon, and welcome to the Edison International Third Quarter 2023 Financial Teleconference. My name is Sue, and I will be your operator today. [Operator Instructions] Today's call is being recorded. 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.

Thank you, Sue 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. Materials supporting today's call are available at www.edisoninvestor.com. These include Form 10-K, 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. During the question-and-answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.

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 confident 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 through 2025, which does not factor in several potential upsides. We also reaffirm our EPS growth guidance of 5 to 7% for 2025 through 2028. My comments today cover four key topics: 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 finally, Edison’s updated projections on the dramatic grid expansion required to enable economywide 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 toward 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 presented 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…

Thanks, Pedro, and good afternoon, everyone. In my comments today, I will cover third quarter results, discuss our 2023 EPS guidance and provide additional insight into our long-term core EPS growth expectations. Starting with third quarter of 2023, EIX reported core EPS of $1.38. As you can see from the year-over-year quarterly variance analysis shown on Page 5, SCE's third quarter earnings saw a $0.03 decrease. Recall that during this period last year, SCE received a CPUC final decision on its customer service replatform project and recorded a $0.09 true-up. This results in an unfavorable year-over-year comparison for this quarter. I will highlight two additional key variances. SCE's earnings were driven by an increase in revenue due to the GRC escalation mechanism partially offset higher interest expense. At EIX Parent and Other, there was a negative variance of $0.07, primarily due to higher holding company interest expense. Overall, we are pleased with our performance in the first nine months of the year, and combined with our outlook for the fourth quarter, we are confident in reaffirming our full year core EPS guidance of $4.55 to $4.85. I'll cover this in more detail in a few minutes. On Page 6, we've updated the capital forecast to incorporate the GRC Track 4 settlement agreement and assumptions about the timing for certain projects. The key message here is that we continue to see $38 million to $43 billion of capital investment opportunities from 2023 through 2028. Turning to Page 7. Our capital plan supports approximately 6% to 8% rate base growth from 2023 to 2028. Let me emphasize that SCE is an electric-only transmission and distribution focused utility, which benefits from several strong regulatory mechanisms and competitive ROEs. So we see this rate base growth is high quality and lower risk since it…

Sue, can you please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow up, so everyone in line have the opportunity to ask questions.

Thank you. [Operator Instructions] Our first question is from Anthony Crowdell with Mizuho. You may go ahead.

Good afternoon, Pedro. Good afternoon, Maria.

Good afternoon. How are you?

Good. Follow up on the last slide, Maria, Slide 10, or Pedro wants to take it, on the cost of capital. Just first, I mean, you gave some insight into the use of proceeds on the reset. Just curious if the Senate Bill 410 plays into where you would deploy the proceeds. And then also if you go through the procedurally, what happens at November 2? And then I have one follow-up.

Sure. So maybe let's think a little bit about the $0.39 and the ROE shift. And I think about it in two different. And basically, if you think about the cost of capital mechanism, it's really driven by interest rates. And it's a mechanism that has been embedded in the cost of capital proceeding for more than a decade now. And it's part of the reason is part -- and the reason for that is because we have this three-year cost of capital cycle. And when I think about that driver, and I think about the cost of capital mechanism, I have to think about interest rates. And I think about interest rates in two different components. There is the '21 through '25 period and then the '25 to '28 period. And I just want to highlight that the assumption that we've given you around the '21 through '25 period, we've said that we're going to finance SCE finance at a 5.3% interest rate and that EIX will finance at a 6.1% interest rate. And if you look at the plan that we've had for this year and the information that's in the slide, we've actually executed our plan in 2023 right at those levels. In fact, EIX slightly below those levels. Then I look forward to the rest of the period between now and 2025. And basically, I think about the cost of capital mechanism as providing a hedge against future increases in interest rates, as one of those really good regulatory constructs that we have here in California that really protects against the kind of very recent volatility that we've seen in rates. And then if I think about the longer term, if I think about '25 through '28, we've also given you some assumptions around interest rates.…

Great. And then post November 2 intervenors file, I guess, tomorrow, and then post November 2, I guess, do we wait for comments on the Energy division or just -- if you just took us through the year-end?

Sure. So the comments are due tomorrow or the deadline from interveners. Once that deadline is passed, the energy division would still consider whether or not they would just -- the decision or if they would pass it on to the commission. So we will know relatively shortly. Remember, though, that the cost of capital mechanism is very formulaic, is there's not a lot of -- it's only math in terms of how it would get implemented. So I do think that's an important element of the mechanism.

Great. And then just lastly, if I went to Slide 3. I appreciate the clarity. Is my understanding correct, if I think about the additional increase, I think, two thirds related to Woolsey? And by February, I think where the deadline is due for claims, again, it may be you may change that 6.4, but by February, we should be -- have much more certainty on the total amount of claims here?

That's right, Anthony. Because that gives a deadline there for filing claims, so that provides a certainty around the scope here. So looking forward to reaching at the time line.

Great. Thanks for all the clarity.

Hey, you bet. Thanks, Anthony.

Thank you. The next question is from Shar Pourreza with Guggenheim Partners. You may go ahead.

Hey, Shar.

Hey, guys. Hey, Pedro. Just on the monetization of the telecom infrastructure leases, $20 million in revenue and obviously potentially coupling that with the wildfire claims recovery. What time frame are you embedding in plan to start seeing EPS and credit metric benefits? And do the increased claims figures present a drag versus some of the benefits from the equity content of the sale?

Hey, Shar, it's Maria. So I'm going to take that in 2 pieces, so maybe a little bit on our credit metrics. So you know our framework is 15% to 17% FFO to debt. We've laid out our capital plan and our financing plan, including the $100 million or approximately through the DRIP and through the internal programs. And we are comfortable that we can hit our targets for the 15% to 17% FFO to debt. Obviously, with additional amounts related to the increase in the reserve and is a little bit of fluctuation in the metrics, but we are comfortable that we will be able to still meet our objectives when it comes to our credit metrics. That, of course, is related to the recovery -- the cost recovery applications that we filed. So we've already filed the TKM application we will file the Woolsey application. And we provided some metrics in the slides this time around where for every $1 billion of cost recovered, that's about a 40 to 50 basis point improvement in our credit metrics. So it's a very material number. And so we're focused on demonstrating our prudency. We're focused on the long-term customer benefits that having a good decision will create. And we're also focused on the financial benefits and the balance sheet strength that we'll ensue. So I think that, that's all important element. When it comes to the tower attachment sale in terms of sort of timing of what you look at. So we're filing our application tomorrow. The reason we're filing it tomorrow is so that we can get a little bit more clarity on precisely what the regulatory process will be. We think we qualify for a somewhat streamlined regulatory approval process. But in the alternative, we just want to get ahead of the time frame. So we are going to align our marketing schedule with the regulatory approval. So we'd like to have the regulatory approval just before we signed any purchase and sale agreements because that will, of course, reduce uncertainty for everyone. And depending on which path the commission goes down, we would expect potentially middle of next year until sometime into 2025 to see transaction close. So that's the sort of time frame we're looking at for that.

Got it. And the increasing value of the claims, does that present any challenges to the timing of the claims recoveries with the CPUC?

No.

I'll say no, remember, Shar, that in our TKM filing, the cost recovery application filing, we proposed a procedure for introducing amounts that have been settled after the filing date. And so it's been contemplated. There will be some number of settlements coming in that we'll be doing it beyond the numbers that we had initially filed. So the increase in claims will just fit into that final two procedure that we proposed.

Okay. Perfect. That was good. And then just lastly, you obviously noted $0.39 of upside from the cost of capital mechanisms and the opportunity to sort of deploy it into customer-focused CapEx. I guess how long would it take you to deploy the incremental CapEx that the $0.39 of earnings would support? And I guess what mechanisms would you utilize to minimize that lag? Thanks, guys.

Yeah. So we would be looking at a whole range of things in terms of deploying that $0.39 and that could range everywhere from further pushing forward on our initiatives in the field to improve the processes there. And so that would allow us to get capital efficiencies as well as O&M efficiencies. We're going to keep looking at other opportunities in customer service and enhancing or improving the customer experience. We also have things that we want to do with support services and places in finance and regulatory affairs as examples. So we're looking at that. And as I said earlier, for us, operational excellence, cost efficiencies really driving effectiveness in the business. It's not a single year effort, like we are doing this on a multiyear basis. And so we're going to be building on successes that we have next year into 2025. So I think this plan is still developing, but we would expect to see that '25-'26-'27.

Okay, perfect. Thank you, guys. Appreciate it.

Thank you. And our next question is from Angie Storozynski with Seaport. You may go ahead.

Hi, Angie.

Hello. Thanks for letting me ask the question. So the first, again, I mean, those wildfire loss increases are very substantial. It just almost feels like it's a moving target, right? We're almost in the ninth inning. And every other quarter, we have these very big increases. It's somewhat surprising, at least from our vantage point to see it this late into the process. And again, I'm clearly hopeful that by February, we will have a full picture, but it just feels like there is more of those increases to come. Would you disagree?

So listen, Angie, and you heard it in my comments. We know this is something that our shareholders are certainly taking notice of, and we are too as management and as shareholders. The reality is that every quarter, we test again, we reevaluate. And this quarter, a number of factors change. As I mentioned in my comments, it all adds down or boils down to, we're seeing settlements coming in higher than expected. And so that now becomes the new best estimate. I think you're right. We're certainly looking forward to February and at least knowing what the claims finally are going to be for Woolsey. I do want to caution that that's the deadline for claims filing might still take some time beyond the deadline to get all the details behind specific claims and really big into dose, that is a process, as you've seen over the last several years. So we'll continue to work at it. And our team is very focused on having a fair outcome as we go through all of this litigation, it's going to be fair to people who were impacted by the fires, but it all has to be fair to our customers. And so we want to make sure that we do it as quickly as we can but taking the time needed to have a good thoughtful process and be able to demonstrate the prudency of our actions to the PUC.

And maybe if I could just offer up one more thing, and I think Pedro kind of touched on in his last comment. It is a process that we have to go through, and we have to do an evaluation. The most important part of this process is getting through it and creating the certainty that comes with completion. Because that's when we will be able to fully -- we have a true-up mechanism in the TKM application. But when we're done with all these processes, we will be able to go and get a final resolution also with the commission. So from our perspective, it's getting through the claims and getting to the claims as quickly as we possibly can because that completion will create the certainty.

Okay. But in the meantime, the total number of claims -- or financing of claims grows in the cost of capital mechanism doesn't really help me here, right, because those are not currently eligible for recovery. So the rising interest expense on those isn't trued up? Is that --?

Yeah. So we will -- in our cost recovery application, we are going to file for recovery of the interest expense associated with claims -- financing the claims payments. And the other aspect as well is that we are -- and just to highlight another couple of numbers for you. We are about 85% complete with all of our individual plaintiffs clean to resolutions. So we are moving through the pile, if you will, expeditiously.

Okay. And then changing topics. So you lowered your rate base projections -- well, '23-'24 or '25. And you're pointing out, obviously, upside to the CapEx on that rate base, mostly beyond '25. So maybe some more details behind that? And then secondly, in your guidance, I've noticed some changes in the components, one of which is the $0.10 increase in the AFUDC the last quarter? And if you could just provide more color.

Sure. And actually, it turns out that your two questions are very much related. So the capital that you're seeing moving around is particularly in the very near term. It's just a shift in the utility-owned storage project and the timing of those payments. So what you're seeing related to your second question, shifts between rate base earnings and AFUDC on the slide that has modeling consideration. It's really a shift between those two buckets. Utility on storage was in rate base before. Now it's in construction work in progress longer. So you just see the two numbers, if you add them back together, they'll be the same as they were last quarter. So that's one piece of it. The other piece that's going on in our capital program is we have shifted one of the transmission projects that we are still going through the permitting process on but that's just shifted out each year, it shifted out just one year. And so you're seeing a little bit of that impact. But that's why, overall, for the period '23 through '28, the capital program is still the same as it was last quarter.

Okay. Thank you.

Thanks, Angie.

The next question is from Gregg Orrill with UBS. You may go ahead.

Hey, Gregg.

Hi. Sorry for a detailed oriented question. Is there a temporary financing for the preferred tender before you get to the potential sub-note financing?

Gregg, this is Maria. We can address it in different ways. I think in the opening documents, we note how we will finance the tender, and we can do that either by JSN or some other equity content security right after the offering, we could have some sort of bridge using some other securities temporarily. But I think our objective overall is -- and then we've made it clear in the offering documents is that we will replace the equity content of preferred stock.

Okay. Thank you.

Thank you. The next question is from Ryan Levine with Citi. You may go ahead.

Hi, everybody. Just to clarify one question more for Maria. In terms of clarification of why now for the telecom asset sale? And can you walk through the mechanics of how I think in your remarks, you tested and offsetting to the equity content. How does that work? And given the benefits of customers?

Sure. So a couple of things. So why now. I think we have been discussions before about are we looking at different things in our portfolio that might -- we might consider selling. And so we have been doing that. And so the why now is that we've completed our analysis and we think that these are attractive assets that folks who are in this business day in and day out will also find attractive. And so that's why -- that's the why now. I think that when you look at the overall portfolio that we have, the other thing that helps to drive this is that these are good assets. Customers do share and the benefit of this, whether we sell them or not, you'll see in our filing tomorrow that round numbers, you can think about this as 15% of the value is for customers and about 85% of the value is for the company or shareholders. By taking this action now, we actually, during a time of affordability concerns and constraints for customers, we'll be able to accelerate those benefits into the near term. So another element of the why now. And I think the comment I just made probably answered the question about what part is for customers and what parts for shareholders. Was there something else in the Ryan?

In terms of the -- I think in your prepared remarks, you suggested kind of offsetting equity, maybe that [indiscernible]?

Yeah. So when you think about our equity program, you've said that about $100 million a year or so because we're going to be using our internal programs. Obviously, as I mentioned earlier, this depending on the regulatory path if the commission goes down, we could see something middle of '24, maybe into 2025, at which point we can look at the proceeds and determine what that there's an opportunity there to offset some of the equity that we would otherwise issue under our internal program.

Hey, great. Thanks.

Thank you. The next question is from Michael Lonegan with Evercore. You may go ahead.

Hi, thanks for taking my question. So there's been some concerns about electric vehicle demand slowing. We recently saw Panasonic cut its battery production. Obviously, there's a high EV adoption rate in your service territory. You have an investment program that supports the load growth associated with EVs. I was wondering if you could share your thoughts on the risks within your planning period, whether there would be a slowdown or any color you could provide on that.

Yeah. I'll start. Steve Powell, you might have some additional thoughts on this too. First, you're right, we've seen, I think, really significant pickup of EVs in our territory and really across California. That's continued through the latest reporting period that I saw. I know I've seen some broader articles in the press, you're probably referring to as well in terms of could there be a slowdown at a national level. There are a number of things that come together here. And I think one of the important elements is the strong support that there is in the IRA, right, for continuing not only the $7,500 tax credit for new electric vehicles, but also the introduction of the $4,000 used electric vehicle tax credit, which is something that, by the way, Edison really helped advance in Washington since it's pattern after something we had here already in California. So look, I think like with any market, you're going to see ups and downs. And you have to guess that things like a higher interest rate environment, making vehicle loans a little more expensive, probably puts a bit of a temporary damper on that. But the long-term trend, I think it's pretty clear here in terms of the value of electric vehicles to consumers and the role that EV deployment will play in reducing greenhouse gases. And certainly our Countdown to 2045 white paper makes clear how valuable that is for GHG reduction. But also just say that when you think a look at the total cost of ownership for electric vehicles today, it's already -- certainly for the lower-cost EV models, the total cost of ownership is lower than it is for similar combustion engine vehicles. You asked also about the impact it could have on our infrastructure buildout and our planning. And I think right now, we're seeing significant growth that's been baked into our rate case. So -- but we can -- we're following the customer on this, Steve, let me turn it over to you and thoughts around impacts on the distribution system or for that growth.

Sure. So obviously, we've seen significant growth in EV adoption in California over the last number of years. In 2019, about 6% of new vehicle sales were electric. Right now, we're hitting about 25% of new vehicle sales in the state being electric. And so that's -- we've seen the ramp up and we see that continuing. We've been planning for this for quite some time. So in our distribution, long-term planning forecast, this has been baked into our load forecast, which then feeds our plans around the distribution grid. And that's what informed the plans in our 2025 to 2028 general rate case, where a big portion of our load growth program in there is driven from electrification load growth. And so that's what our teams are focused on. Both not just planning it out, but then starting to build the circuits and the infrastructure to support it. Aside from the light-duty side, we see the growth in our territory from medium- and heavy-duty vehicle charging. Particularly in pockets that range from the transportation segments down by the ports all the way out to the warehouses further inland. And that's where our teams are really looking at different solutions so that we can meet the demands because those demands come in large chunks and they come quickly. So we're looking at everything from how do we accelerate the infrastructure development ahead of that demand to temporary bridge solutions in places like mobile batteries and mobile substations that can help us get through while we have to build out more circuits and substations to enable it. So we're certainly able to meet the growth that we're seeing right now, and we've planned and are planning for the growth that's coming ahead.

And I think the last point that Steve made is really critical that innovation in the general rate case to include the request for mobile equipment, to temporary equipment, it's a great step because, particularly when we think about medium and heavy-duty fleet deployment, that's a technical term here, chunkier, right? Then when you're looking at passenger vehicles being spread out over neighborhoods. And so that's where Steve and the team have been working and how to make sure we can meet that load. So Michael, maybe more than you want it, but it's a topic near and dear to us.

Yeah, yeah. Of course. No, thank you. Thank you very much. I'll see you at ER.

Terrific. Next.

Thank you. The next question is from David Arcaro with Morgan Stanley. You may go ahead.

Hi, David.

Hey, how are you doing? Thanks so much for taking my questions.

Sure.

I was just curious to get your perspective on PG&E's rate case, they've had just some challenges getting CapEx and rate base approved in its rate case. It's not done yet, but just wondering if there's anything you would take away or read across to your GRC as you go forward. Any changes in your thinking or strategy there? Or any perspectives that might come into play as you go through the process?

Yeah. David, thanks for the question. And I give you maybe a quick answer here. I think it starts with acknowledging that each of these rate cases is very situation-specific and company-specific. So I know that our colleagues at PG&E, for example, have had a big emphasis in the rate case on the amount of undergrounding based on their territory and the fact that they have so much more forest land in our high-fire risk areas, as compared to SCE, which has more graft lands and the additions have been in the past more from elements that can be addressed through covered conductor. So you've seen us in the '25 to '28 rate case application, continue completing the build-out of covered conductor with another 1,250 miles per post, complemented by around 600 miles of undergrounding. Very different needs in our territory than MTGE territory. So hard to abstract out strong payrolls from the PG&E case for hours, given that difference. At the same time, there are some elements that are common. And in fact, you saw that Southern California is filed comments in the PG&E rate case. Particularly focused on the topic of the escalation mechanism in there. The fact that the alternative proposed decision relied on essentially a 25% -- provided only 25% of the escalation requested, that -- it's something that we thought needed to be called out as we provided a comment saying that in order to be fully compensatory rates have to include, right, the full allowable costs and escalation is an important part of the cost structure. So that's certainly one that we've watched more closely. And like I said, our team intervened in the rate case because it's a topic that will be of common interest across all utilities. But beyond that, though, we're just watching the case and recognize that there's some significant differences in the situations for the two companies. Maria, anything you want to add?

Yeah. Just to kind of underscore Pedro's comment about everything is very situation-specific and every rate case is different. Even that last example on the escalator, we actually have a different escalation mechanism. So I think it's -- like as I said, as Pedro said, rather, there's really not a read-through across to the different general rate cases in our view.

Got it. Got it. Thanks. I appreciate that perspective. And then I also wanted to -- let's see, check on the CapEx outlook. It was decreased for this year and next year. Was that also related to the store project?

Yeah. So David, it's entirely -- well, not entirely, but one piece of it is related to particularly '23 and '24. That's related to the schedule around the utility owned stores. So more dollars will be spent in '24 versus '23. And then the other piece that I mentioned earlier was that we have some slightly different schedules around one of our transmission -- larger transmission projects that we're supposed to start in the very near future. It's moved out essentially a year as well. So still all captured within the period through 2028, and we're still at that $38 billion to $43 billion of CapEx.

Okay, perfect. Thanks for that. I'll pass it on. Appreciate it.

Thank you. Our next question is from Paul Zimbardo with Bank of America. You may go ahead.

Hey, Paul.

Hi, good afternoon, team. The first one, I just wanted to clarify something in the prepared remarks around the Track 4 GRC benefit. You mentioned $0.12 year-over-year into 2024. Is that correct? That's just a component of kind of what you would expect in terms of like the rate as earnings per share growth.

Yeah, to reflect the rate base math, yeah.

Okay. And then the other, just assuming the cost of capital trigger is in force at $0.39, should we think about it as kind of above the earnings growth range to 2025? Because I think at this point, that would be like 609 versus the 590? Or should we think about within the range with some of those reinvestments that you discussed?

Yeah. So I don't want to sort of recap everything I said earlier, but I'll just take a few points. What I was saying in response, I think it was Anthony, who asked the question, first off, was that we have -- the cost of capital mechanism, it's related to interest rates. We have done a really good job completing our financing plan for 2023, hitting the marks that we have shared with you around our interest rate assumptions. The CCM, again, driven by interest rates and I'll say the more recent volatility underscores the benefit of the CCM. We see that as a hedge against interest rate movements beyond what's embedded in our forecast going forward, that's it. Second part of it is that we do year in and year out look for opportunities to reduce costs for the benefit of the customer, and of course, the benefit of our overall operations. We are managing the business every day. If we see an opportunity to accelerate benefits, we have four years -- four years ahead of us. If we see an opportunity to accelerate lock-in benefits so that we can provide an even sure foundation for customer benefit going forward, we are going to do that. The plan is in work. And as I said during the prepared remarks, we'll certainly share more with you on a go-forward basis.

And Paul, I would add just more broadly on the cost of capital mechanisms, I think I saw a report, there was a, where you had some questions about the mechanism or I think you may have been speculating on potential outcomes. I want to be really clear here. This kind of situation is precisely what this mechanism was built to deal with, right? When you've had the kinds of interest rate movements that have happened here. It's not an extraordinary case in the sense of what the issue we had last year. We think it's very much quarter parcel of what the mechanism will be signed to cover and to provide appropriate cost recovery. So that's why you heard Maria say earlier when she was responding to Anthony's similar question that -- and we would expect this to be a fairly mechanical approach at the CPUC or by the Energy division, given that the mechanism is very strong, very clearly articulated and the condition static is now are precisely the conditions of the mechanism was meant to account for.

Okay, great. Thank you very much, team.

Thanks, Paul.

Thank you. And that was our last question. I will now turn the call back over to Mr. Sam Ramraj.

Well, thank you, everyone, for joining us. This concludes the conference call. Have a good rest of the day. You may now disconnect.