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    EIX
    Earnings call· Mar 2025(Q1 FY25)

    EDISON INTERNATIONAL Q1 FY25 earnings call EIX

    Apr 29, 2025 Source

    Executive summary

    Edison International Q1 FY25 — Eaton Fire Disclosure and Regulatory Progress

    Edison International reported Q1 FY25 core EPS of $1.37, supported by the TKM settlement, but noted the year-over-year comparison is not meaningful due to pending 2025 GRC decision. The company disclosed the probability of material losses from the Eaton Fire, though liability is unestimable, while reaffirming its 2025 EPS guidance and long-term growth targets. Management is actively engaged in regulatory proceedings and legislative discussions to strengthen California's wildfire framework.

    Highlights

    5

    • Core EPS of $1.37 in Q1 FY25, compared to $1.13 a year ago.

    • TKM settlement approval contributed $0.30 per share to Q1 FY25 EPS.

    • WMCE settlement, awaiting CPUC approval, would authorize 100% of capital expenditures and 96% of O&M, contributing $0.10 per share of true-up earnings and $700 million of rate base.

    • EIX issued $550 million of senior notes, addressing parent debt needs for FY25, and SCE issued $1.5 billion of long-term debt, both oversubscribed.

    • SCE's initial comprehensive plan for wildfire-impacted areas includes undergrounding over 150 circuit miles in high fire risk areas.

    Concerns

    3

    • Edison International and SCE believe it is probable they will incur material losses in connection with the Eaton Fire, though the liability is not estimable.

    • The ALJ extended the statutory deadline for SCE's 2025 General Rate Case, delaying a final decision.

    • The year-over-year EPS comparison is not meaningful due to SCE booking revenues based on 2024 authorized levels adjusted for lower ROE, pending the 2025 GRC decision.

    Guidance & targets

    5
    CategoryTargetConfidence
    2025 EPS guidance
    $5.94 to $6.34
    high materiality
    High
    Core EPS CAGR
    5% to 7%
    high materiality
    High
    2028 EPS
    $6.74 to $7.14
    high materiality
    High
    WMCE settlement true-up earnings
    about $0.10 per share
    medium materiality
    High
    WMCE settlement rate base contribution
    about $700 million
    medium materiality
    High

    Operational metrics

    12
    Core EPS
    $1.37vs. $1.13 in Q1 FY24
    Q1 FY25

    Year-over-year comparison not particularly meaningful due to SCE not having received a decision in its 2025 General Rate Case.

    TKM settlement impact on EPS
    $0.30
    Q1 FY25

    Included in Q1 FY25 EPS, partially offset by higher interest expense at EIX Parent and Other.

    WMCE settlement true-up earnings
    $0.10
    FY25

    Embedded in 2025 guidance, awaiting CPUC approval.

    WMCE settlement rate base contribution
    $700
    FY25

    Embedded in 2025 guidance, awaiting CPUC approval.

    Requested Return on Equity (ROE)
    11.75
    2026

    Requested in SCE's 2026 cost of capital application.

    Foreign materials as % of total purchases
    5
    current

    Relatively small number, translating to about $125 million annually.

    Foreign materials annual cost
    $125
    annualized

    Estimated annual cost of foreign materials, subject to tariff risk.

    EIX senior notes issuance
    $550
    March

    Successfully addresses parent debt needs for 2025.

    SCE long-term debt issuance
    $1.5
    March

    Part of SCE's planned financings for the year.

    Customer-funded self-insurance layer
    $1
    current

    First layer of funds to be accessed for claims before the wildfire fund.

    Probability of catastrophic wildfire reduction
    88
    current

    Achieved through grid hardening and other mitigations, according to Moody's RMS model.

    Interest expense driver (TKM true-up)
    $0.30
    Q1 FY25

    Related to prior period true-up for TKM, offset by higher interest expense at EIX Parent and Other.

    Deals & partnerships

    2
    IntervenersSettlement agreement for TKM cost recovery.$1.6 billion

    CPUC unanimously approved the settlement. SCE will file an application for securitized bonds within weeks.

    IntervenersSettlement agreement for wildfire mitigation and restoration costs.

    SCE recently reached this settlement agreement.

    Capital programs

    4
    SCE 2025 GRC Wildfire Mitigation Capital Spendingrequested
    Period spend: $1.4 billion
    Start: 2025

    Benefit: hardening an additional 1,800 miles of overhead distribution infrastructure

    Annual capital spending included in SCE's full GRC request.

    SCE Next-Gen ERP Applicationfiled$1.1 billion

    Benefit: provide substantial benefits to customers and enable business improvements

    Filed with the CPUC, not currently embedded in capital and rate base projections.

    SCE Advanced Metering Infrastructure (AMI) Programplanned application filing

    Benefit: replace smart meter fleet, address technology obsolescence, incorporate future capabilities, enhance grid efficiency

    Application to be filed, not currently embedded in capital and rate base projections.

    FERC Transmission Spendingadditional opportunity$2 billion

    Substantial additional capital opportunity, incremental to the current plan.

    Risks & headwinds

    4
    Probable material losses in connection with the Eaton FireOngoing

    Not estimable today.

    Mitigation: SCE believes it was a reasonable operator and would make a good faith showing of prudence; access to the wildfire fund for claims.

    2025 GRC Statutory Deadline ExtensionProposed decision expected in H1 FY25, final decision 30 days later.

    Delay in final decision.

    Mitigation: Typical and expected; SCE continues to execute against its capital plan with flexibility to adjust later.

    Wildfire Framework Legislative UncertaintyCurrent legislative session (ending September).

    No specific solutions or timelines yet.

    Mitigation: Active engagement with legislators and governor's office to educate on implications and need for action.

    Tariff Risk on Foreign MaterialsOngoing

    5% of total purchases are foreign materials, approximately $125 million annually.

    Mitigation: Monitoring for secondary impacts; customer impact mitigated as capital enters rates over long useful life.

    What to watch in Q2 FY25

    5

    2025 GRC Final Decision

    Next quarter (within 30 days of proposed decision).
    CurrentStatutory deadline extended; proposed decision expected H1 FY25.
    TargetFinal decision received.

    Why it matters

    Will trigger updated capital and rate base projections, 2025 core EPS range, long-term EPS growth, and financing plans.

    As you can see on Page 6, we will refresh our guidance following a GRC final decision. We wanted to be proactive in sharing with you that 6 weeks after a final decision, we will provide our updated capital and rate base projections, 2025 core EPS range, long-term core EPS growth and financing plans.

    Q&A highlights

    7

    Why was the material loss disclosure made now, and how does potential liability compare to the $21 billion wildfire fund?

    The disclosure was made due to the ongoing investigation not finding other likely ignition sources, making material losses probable. Liability is not estimable, but third-party estimates suggest the fire could be in the range of the fund. The wildfire fund will be accessed for claims, avoiding the need for debt issuance for this purpose.

    “it felt appropriate to in this quarter, make the disclosure about this being a probable event. In terms of liability, again, it's still very early days here. The liability is simply not estimable today.”

    asked by Nicholas Campanella · answered by Pedro Pizarro

    2 min read6 chapters

    Detailed Narrative

    01

    Eaton Fire Investigation and Disclosure

    Edison International disclosed that it is probable that EIX and SCE will incur material losses in connection with the Eaton Fire, though the liability is not estimable. The utility's investigation continues, and while SCE has not conclusively determined its equipment caused the fire, it is not aware of evidence pointing to another source. Management believes SCE was a reasonable operator and would make a good faith showing of prudence if its equipment is linked to the ignition.

    02

    Wildfire Mitigation and Grid Hardening

    SCE has provided Governor Newsom with initial plans to rebuild wildfire-impacted areas, including undergrounding over 150 circuit miles in high fire risk areas. The 2025 GRC request includes $1.4 billion in annual capital spending for wildfire mitigation, hardening an additional 1,800 miles of overhead distribution. SCE will submit its 2026 Wildfire Mitigation Plan in May, focusing on grid hardening, asset inspections, and vegetation management.

    03

    Regulatory Proceedings Update

    The CPUC unanimously approved the TKM settlement agreement. The Woolsey cost recovery ALJ issued a scoping memo, with intervenor testimony due in June and rebuttal in July, and a potential settlement discussion in August. The 2025 General Rate Case (GRC) statutory deadline was extended, but a proposed decision is still expected in the first half of the year, with a final decision 30 days later.

    04

    Cost of Capital and ERP/AMI Applications

    SCE filed its 2026 cost of capital application, requesting an 11.75% ROE and proposing updates to embedded debt/equity costs, with a proposed decision in November. SCE also filed its next-gen ERP application seeking $1.1 billion in capital investment and plans to file an AMI program application to replace its smart meter fleet, neither of which are currently embedded in capital projections.

    05

    Legislative Engagement

    Edison International is engaged in discussions with California legislators and the governor's office to support community safety and enhance the AB 1054 regulatory framework. Management is confident policymakers understand the criticality of addressing wildfire issues and the role of investor-owned utilities, aiming to strengthen the wildfire framework.

    06

    Financing Activities

    In March, EIX issued $550 million of senior notes, covering its parent debt needs for 2025. SCE also issued $1.5 billion of long-term debt as part of its planned financings for the year. Both offerings were well-received and oversubscribed, demonstrating strong investor support.

    AI-generated summary of the company’s earnings call. Not investment advice.