SOUTHERN CALIFORNIA EDISON Co (SCE-PG)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 was dominated by regulatory progress and legislative de‑risking: EIX reported GAAP EPS $2.16 and core EPS $2.34, up sharply YoY, with the step‑up driven largely by the 2025 GRC final decision (retroactive true‑up) and continued wildfire cost recovery actions; SCE’s core EPS contribution rose to $2.58 from $1.74 YoY .
• Management narrowed 2025 core EPS guidance to $5.95–$6.20 (from $5.94–$6.34), reduced 2025 Basic EPS, and reiterated 5–7% core EPS CAGR to 2028 ($6.74–$7.14); refreshed capex plan is $28–$29B (2025–2028) with 7–8% rate base CAGR and no equity issuance required, supported by TKM and pending Woolsey securitizations .
• California SB 254 passed, creating an up to $18B Continuation Account and improving the wildfire recovery/liability framework; the Eaton Fire was confirmed as a “covered wildfire” for Wildfire Fund access—both viewed by management as constructive for liquidity and prudency protections .
• The 2025 GRC final decision authorized ~$9.7B 2025 base revenue and ~91% of requested capex, including 1,653 miles of covered conductor and 212 miles of targeted undergrounding; SCE expects SAR CAGR of ~2–3% through 2028, aiding affordability messaging .

What Went Well and What Went Wrong

• What Went Well

  • Regulatory tailwinds: CPUC’s 2025 GRC final decision approved ~91% of SCE’s capital request and set ~$9.7B base revenue for 2025; Commissioners highlighted investments deliver long‑lasting value and safety benefits .
  • Legislative de‑risking: SB 254 enacted; management called it “a constructive and important step” that enhances the framework (liability cap based on year of ignition, securitization path if the initial fund is exhausted) and supports IOU stability .
  • Progress on legacy wildfire liabilities: TKM settlement approved; Woolsey settlement filed (authorizes ~35% WEMA and ~85% CEMA recovery if approved), expected to improve FFO/debt by up to 90 bps and reduce interest expense by ~18¢/share annually post‑decision .

• What Went Wrong

  • Non‑core headwinds: Q3 non‑core included a $76M pre‑tax impairment tied to disallowed historical capital in the GRC; ongoing WIF amortization ($36M) persisted; wildfire claims costs also recorded .
  • Parent-level pressure: EIX Parent & Other core loss per share worsened marginally YoY on higher interest expense (Q3: -$0.24 vs -$0.23), tempering consolidated upside .
  • Ratings mixed: Following SB 254, Moody’s affirmed stable and Fitch removed Rating Watch Negative, but S&P downgraded EIX and SCE one notch; management maintained metrics are within the 15–17% FFO/debt target and sees upside if Woolsey is constructive .

Financial Results

EIX consolidated results by quarter (2025)

YoY comparatives (same quarter prior year)

SCE vs Parent & Other core EPS contribution

Commentary:

• Q3 step-up primarily reflects the retroactive 2025 GRC true‑up (approx. $0.55 per share at SCE) and higher authorized revenues; management cautioned YoY comparisons are not “meaningful” due to the true‑up effect .
• Non‑GAAP adjustments: Q3 non‑core included wildfire items (WIF amortization $36M), other wildfire claims/legal net effects, and a $76M impairment related to GRC disallowances; SCE’s Q3 non‑core totaled $(69)M pre‑tax .

Estimates vs actuals:

• S&P Global consensus for EPS and revenue at the SCE‑PG instrument level was unavailable; only reported actuals are shown. Values retrieved from S&P Global.

KPIs and operational/regulatory metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Pedro Pizarro: “We have made significant progress on the regulatory front this year, further de‑risking our financial outlook… The CPUC’s decision on SCE’s 2025 General Rate Case approved 91% of SCE’s proposed capital investments…” .
• On SB 254: “a constructive and important step… creates an up to $18 billion Continuation Account… enhances the framework by basing the liability cap on the year of ignition…” .
• On Woolsey and TKM: settlement structure “supports long‑term affordability… improving credit metrics—specifically, up to a 90‑basis point benefit to FFO‑to‑debt and an annualized interest expense benefit of approximately 18 cents per share” .
• CFO Maria Rigatti: Narrowed 2025 core EPS to $5.95–$6.20 (includes ~10¢ potential preferred equity early refi costs); 4‑year capex plan set at $28–$29B; rate base CAGR 7–8%; financing plan shows no equity needs .

Q&A Highlights

• Full Q&A transcript was not available in our source set; prepared remarks emphasized:
  • The GRC true‑up ($0.55 at SCE in Q3), narrowed 2025 guidance and inclusion of potential preferred equity refi costs ($0.10) .
  • SB 254’s mechanics (Continuation Account, ignition‑year liability cap, interim securitization path) and Wildfire Fund access for the Eaton Fire .
  • Woolsey settlement expected effects on credit and interest expense; TKM securitization timing .

Estimates Context

• S&P Global consensus for EPS and revenue at the SCE‑PG instrument level was unavailable at the time of analysis; only reported actuals are shown. Values retrieved from S&P Global.
• Directionally, management’s narrowed FY25 core EPS range ($5.95–$6.20) and reiterated 2028 target ($6.74–$7.14) provide updated anchor points for any estimate recalibration .

Key Takeaways for Investors

• Core earnings power is increasingly underpinned by regulatory clarity: 2025 GRC final decision (~91% capex approval; ~$9.7B base revenue) and refreshed $28–$29B capex plan support 7–8% rate base CAGR through 2028 .
• Legislative tailwinds reduce tail‑risk: SB 254 materially strengthens the wildfire framework (Continuation Account, ignition‑year liability cap, securitization mechanisms) and should improve liquidity/visibility for potential events like Eaton .
• Balance sheet de‑risking continues: TKM securitization expected by YE 2025, Woolsey settlement (if approved) by mid‑2026; management plans no equity issuance through 2028, supporting shareholder economics .
• Affordability narrative intact: SAR CAGR ~2–3% (2025–2028), lowest SAR among major CA IOUs, and capex focused on safety/reliability and load growth (EV, housing, C&I) .
• Watch catalysts: CPUC decision on Woolsey settlement; execution/timing of TKM/Woolsey securitizations; 2026 cost of capital proceeding outcome; ongoing Eaton Fire process under the updated framework .
• Risk checks: Non‑core wildfire items (WIF amortization, claims), potential macro/interest‑rate drift, and any further scope/disallowance in proceedings remain monitoring points despite the improving framework .

Appendix: Additional Q3‑Relevant Press Releases/Updates

• Woolsey settlement Business Update Supplement (Sept. 19, 2025): proposed recovery of ~$2.0B (35% WEMA, 85% CEMA), expected to improve credit metrics and reduce interest expense; securitization application to follow CPUC approval .

Notes on prior quarters (for trend):

• Q1 2025: GAAP EPS $3.73, core $1.37; TKM settlement approved (≈$0.30 one‑time core EPS true‑up; 14¢ run‑rate interest benefit); awaiting GRC PD .
• Q2 2025: GAAP EPS $0.89, core $0.97; GRC PD aligned with range case, >1,800 miles hardening; reaffirmed FY25 core EPS $5.94–$6.34 ahead of final decision .

All citations reference source documents:

• Q3 2025 8‑K, press release (Ex‑99.1), prepared remarks (Ex‑99.2), and presentation (Ex‑99.3) .
• Q2 2025 8‑K, press release/remarks/presentation .
• Q1 2025 8‑K, press release/remarks/presentation .
• Sept. 19, 2025 Woolsey settlement business update (8‑K + supplement) .