Q1 2025 Earnings Summary
- Regulatory Clarity and Upside in Rate Case: Executives expect a proposed decision on the 2025 General Rate Case in the first half of the year, which should support an enhanced revenue trajectory and provide long‐term EPS growth of 5% to 7% CAGR through 2028.
- Mitigated Wildfire Financial Risk: SCE has structured access to a wildfire fund and leverages $1 billion of customer-funded self-insurance to offset potential wildfire losses, limiting cash flow impacts and balancing future losses with receivables.
- Robust Capital Plan and Financing Discipline: The company’s financing strategy—evidenced by recent $550 million senior notes and $1.5 billion long‐term debt issuances—demonstrates strong investor support and a disciplined capital structure that is well positioned to fund grid hardening and growth initiatives.
- Material Loss Exposure from the Eaton Fire: The executives acknowledged that, given the ongoing investigation and absence of conclusive evidence, there is a high probability that Edison International could incur material losses if its equipment is linked to the Eaton fire, which introduces significant litigation and financial uncertainty.
- Regulatory and Rate Case Uncertainty: Uncertainties remain around the resolution of the 2025 General Rate Case and other regulatory proceedings. Delays or unfavorable outcomes could negatively impact revenue recovery and capital expenditure plans, thereby putting pressure on margins and investor confidence.
- Reliance on Wildfire Fund Processes: Although Edison International intends to partially offset losses by accessing its wildfire fund and customer-funded self-insurance, uncertainties in the process, timing, and potential limitations of the fund's coverage add another layer of risk to the company’s financial outlook.
| Metric | YoY Change | Reason |
|---|---|---|
Edison International revenue (Q1 2025) | Decrease of approximately $267 million | Edison International’s operating revenue fell from $4,078 million in Q1 2024 to $3,811 million in Q1 2025, a decline of about $267 million. Although the documents do not pinpoint specific drivers for this drop, they suggest that changes in authorized revenue requirements and regulatory decisions—as well as variations in cost recoveries related to wildfire events—may have contributed to the decline compared to prior periods. |
Southern California Edison revenue (Q1 2025) | Decrease from $4,064 million to $3,802 million | SCE’s operating revenue declined by roughly $262 million YoY, largely due to a sharp drop in alternative revenue and other revenue categories (falling from $294 million in Q1 2024 to $33 million in Q1 2025). However, this revenue compression was partly offset by a net wildfire-related recovery improvement (from a $614 million charge to a $1,355 million recovery) and lower O&M expenses, indicating that while revenue dropped, cost pressures eased relative to the previous period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Core EPS Guidance | FY 2025 | $5.50 to $5.90 | $5.94 to $6.34 | raised |
Core EPS Growth Target | FY 2025 | 5% to 7% core EPS CAGR | 5% to 7% core EPS CAGR | no change |
Capital Expenditure and Rate Base Forecasts | FY 2025 | “2025 GRC outlook – focus on replacing aging infrastructure, grid hardening, and grid expansion” | “Executing a capital plan targeting key programs with additional opportunities including >$2B of FERC transmission spending” | no direct comparison |
2026 Cost of Capital Application | FY 2025 | no prior guidance | ROE target of 11.75% with proposed updates to embedded cost of debt and preferred equity; plus recommendation to continue the cost of capital mechanism | no prior guidance |
Next-Gen ERP Application | FY 2025 | no prior guidance | Filed an application seeking total capital investment of about $1.1 billion | no prior guidance |
Wildfire Mitigation and Restoration Settlement | FY 2025 | no prior guidance | Settlement reached (pending CPUC approval) authorizing 100% capital expenditures and 96% O&M, contributing ~$0.10 per share true‐up and ~$700 million of rate base | no prior guidance |
Securitized Bonds | FY 2025 | no prior guidance | Plans to file an application to issue securitized bonds following a $1.6B TKM settlement | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
General Rate Case Resolution | In Q4 2024, executives detailed an advanced process with partial settlements, a push for a proposed decision in the first half, and a focus on rate base growth. | In Q1 2025, the ALJ extended the deadline; guidance will be refreshed post final decision; the capital plan remains on track even with the delay. | **Consistent progress with slight delays and updated guidance refresh plans. ** |
Regulatory Uncertainty | Q4 2024 discussions noted revenue recognition adjustments via memorandum accounts and a constructive regulatory framework (e.g. TKM settlement) ; Q2 2024 emphasized favorable settlements that reinforced regulatory confidence. | Q1 2025 continues to see uncertainty with the ongoing Eaton fire investigation and evolving cost of capital applications while maintaining optimism in regulatory proceedings. | **Persistent challenge with evolving resolution measures; sentiment remains cautiously optimistic. ** |
Wildfire Risk Management | Q4 2024 featured extensive mitigation efforts—installing covered conductors, vegetation management, and a detailed Eaton fire investigation ; Q2 2024 highlighted achieving 85%–90% risk reduction via grid hardening. | Q1 2025 highlights the use of Moody’s risk management model showing an 88% reduction and outlines plans to harden additional distribution miles. | **Enhanced focus with quantitative risk reduction models showing continued progress. ** |
Legacy Cost Recovery | Q4 2024 discussions focused on the TKM settlement, Woolsey fire cost recovery, and post‐AB 1054 improvements ; Q2 2024 emphasized resolved claims and structured filings to recover legacy costs. | Q1 2025 outlines a streamlined process using a $1 billion self-insurance balance before accessing the wildfire fund, thus avoiding new debt issuances. | **Consistently positive with improved clarity and a more streamlined approach to fund access. ** |
Capital Structure, Financing Discipline, and Credit Metrics | In Q4 2024, the discussion focused on keeping financing within the authorized structure with an improving FFO-to-debt ratio (15%–17%), while Q2 2024 noted minimal equity requirements and structured debt execution. | Q1 2025 maintained discipline with debt issuance (e.g. $550 million senior notes, $1.5 billion long-term debt) and relied on the wildfire fund to protect the balance sheet, running various financing scenarios for 2028. | **Stable and disciplined financing approach with strong credit metrics and strategic debt issuance. ** |
Accelerated Load Growth and Infrastructure Investment Opportunities | Q4 2024 featured robust discussion about expanding grid capability, including investments like the next-gen ERP project and advanced metering infrastructure, driven by observed load growth trends; Q2 2024 noted accelerated load growth boosting grid upgrade investments. | No mentions of these topics were found in the Q1 2025 earnings discussion. | **Omitted in the current period, indicating a possible shift in focus or reporting emphasis. ** |
Climate Risk Exposure and Credit Rating Concerns | Q4 2024 discussions highlighted increased focus from rating agencies on climate risks (with a negative S&P outlook) and efforts to improve credit metrics; Q2 2024 indirectly addressed credit metrics improvements through wildfire claims recovery. | In Q1 2025, there was no specific mention of climate risk exposure; however, credit rating concerns were addressed via offsetting receivables and proactive policy engagement. | **Reduced emphasis on climate risk exposure while maintaining management of credit rating concerns through balance sheet offsets. ** |
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Eaton Liability
Q: Estimate Eaton loss?
A: Management noted that liability for the Eaton fire is still not estimable, with early investigation stages leaving the potential loss uncertain and within a broad envelope, possibly covered by the wildfire fund (e.g., $21B fund estimates remain unconfirmed). -
Settlement Timing
Q: Settlement timeline update?
A: They explained that settlement discussions are handled case-by-case and expect that the core investigation materials may take 12–18 months to finalize, with no clear timeline for settlement decisions yet. -
CapEx Financing
Q: How finance incremental CapEx?
A: The management affirmed that incremental CapEx is financed primarily with debt under a robust plan through 2028, relying on a minimal equity approach and no anticipated need for capital structure waivers. -
Investigation Timing
Q: Revised investigation timing?
A: It was reiterated that there are no revised timing expectations for the ongoing investigation, keeping the timeline uncertain without any new estimate provided. -
Interest Expense
Q: Interest expense breakdown?
A: They detailed that the interest expense driver includes a one-time $0.30 TKM true-up and an ongoing annualized benefit of $0.14, affecting period comparisons. -
Wildfire Fund Access
Q: When fund accessed?
A: Management described that while details remain premature, claims will initially draw from $1 billion of customer-funded self-insurance before seeking reimbursement from the wildfire fund under established processes. -
Tariff Risk
Q: Tariff risk exposure?
A: They indicated that about 5% of total purchases, roughly $125 million annually, are subject to tariff risk, and customer impacts will be mitigated by rate adjustments over time. -
Third-Party Ignition
Q: Rule out external ignition?
A: The executives confirmed that there is no definitive evidence pointing to a non-Edison source for the fire ignition, and the investigation continues without any confirmed external cause. -
Moody’s Risk Update
Q: Update on Moody’s model?
A: They stated that grid hardening and other mitigation efforts have effectively lowered wildfire risks, so while they continue to monitor models, Moody’s RMS model remains unchanged in its evaluation. -
Legislative Efforts
Q: Legislative adjustments underway?
A: Early discussions are in progress regarding modifications to AB 1054, but no specific legislative solutions have been disclosed at this point. -
Idled Lines Mitigation
Q: Mitigate risks on idle lines?
A: The team mentioned that idle lines are routinely inspected and maintained, with updated mitigation plans including enhanced grounding procedures to manage potential risks.