8-K: Edison International Reports Strong Q3, Narrows 2025 EPS Guidance

Edison International reported robust third-quarter 2025 financial results, narrowed its full-year core EPS guidance, and reaffirmed long-term growth targets, bolstered by significant regulatory and legislative progress.

Summary

• Edison International reported third-quarter 2025 GAAP net income of $832 million, or $2.16 per share, compared to $516 million, or $1.33 per share, in Q3 2024.
• Third-quarter 2025 core earnings were $901 million, or $2.34 per share, up from $582 million, or $1.51 per share, in Q3 2024.
• Southern California Edison's (SCE) Q3 2025 core EPS increased year-over-year, primarily due to higher revenue from the 2025 General Rate Case (GRC) final decision, which was retroactive to January 1st.
• Edison International Parent and Others' Q3 2025 core loss per share increased year-over-year, primarily due to higher interest expense.
• The company narrowed its 2025 core EPS guidance range to $5.95-$6.20, from the previous $5.94-$6.34.
• The 2025 guidance includes a potential $0.10 per share of costs associated with early refinancing activities for preferred equity.
• The California Legislature passed Senate Bill 254 (SB 254), creating an up to $18 billion Continuation Account for wildfires ignited after September 19, 2025, jointly funded by IOUs and customers.
• The California Public Utilities Commission (CPUC) approved SCE's 2025 GRC final decision, authorizing $9.7 billion in 2025 base revenue and 91% of SCE's proposed capital investments.
• SCE reached a settlement agreement with intervenors in the Woolsey Fire proceeding, which would authorize recovery of approximately $2.0 billion of the $5.6 billion requested, subject to CPUC approval.
• The Eaton Fire has been confirmed as a 'covered wildfire' by the Wildfire Fund administrator, and SCE believes its equipment is likely associated with the ignition.
• SCE is launching a voluntary Wildfire Recovery Compensation Program for the Eaton Fire to provide direct payments to eligible individuals and businesses.
• The 2025-2028 capital plan is refreshed to $28-$29 billion, and the company projects 7-8% rate base growth over the 2024-2028 period.
• SCE expects its system average rate to grow at an inflation-like level, averaging 2-3% CAGR through 2028.
• The company expects near-term load growth (2025-2028) of up to 3% CAGR, with electricity sales projected to nearly double over the next two decades (by 2045).

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to strong Q3 financial performance, a narrowed and improved 2025 EPS guidance, and the reaffirmation of robust long-term growth targets. Significant legislative and regulatory achievements (SB 254, GRC, TKM, Woolsey settlements) substantially de-risk the company's financial outlook and provide clarity on cost recovery and capital investment. The commitment to no equity issuance through 2028 is a strong positive for investors. While the Eaton Fire investigation and an S&P downgrade are minor negatives, the overall strategic and financial positioning is very strong.

Positives

• Third-quarter 2025 GAAP EPS of $2.16 and core EPS of $2.34 significantly increased from $1.33 and $1.51, respectively, in Q3 2024.
• The 2025 core EPS guidance range was narrowed to $5.95-$6.20, with the lower end of the range increasing from the prior guidance.
• Reaffirmed 5-7% core EPS growth target from 2025-2028, with a 2028 core EPS target of $6.74-$7.14.
• Passage of SB 254 is a constructive step supporting IOU financial stability, creating an $18 billion Continuation Account and enhancing the liability cap framework.
• The CPUC's 2025 GRC final decision approved 91% of SCE's proposed capital investments and $9.7 billion in 2025 base revenue, providing a strong foundation for growth.
• The TKM settlement, approved earlier this year, authorized recovery of approximately $1.6 billion in wildfire-related costs, with securitized bonds expected by year-end 2025.
• The Woolsey Fire settlement agreement, if approved, would authorize recovery of approximately $2.0 billion, improving credit metrics (up to 90bps FFO-to-Debt benefit) and reducing interest expense by ~$0.18 per share annually.
• No equity issuance is required for the 2025-2028 financing plan, supported by TKM and Woolsey recoveries, strengthening credit metrics and financing flexibility.
• Wildfire mitigation efforts are strong, with nearly 90% (over 14,000 miles) of distribution lines in high fire risk areas hardened by year-end, and GRC authorizing additional covered conductor and targeted undergrounding.
• SCE's system average rate remains the lowest among major California IOUs and is expected to grow at an inflation-like level.
• Load growth is driven by diverse and durable trends, including transportation electrification, new housing, and commercial/industrial consumption, supporting future investments.

Negatives

• Edison International Parent and Other's core loss per share increased year-over-year due to higher interest expense.
• The narrowed 2025 core EPS guidance includes a potential $0.10 per share of one-time costs associated with expected early refinancing of preferred equity.
• S&P downgraded EIX and SCE by one notch, indicating a less favorable view compared to Moody's (stable outlook) and Fitch (removed Rating Watch Negative).
• SCE believes its equipment is likely associated with the ignition of the Eaton Fire, and investigations are ongoing, posing potential future liabilities.
• The GRC final decision authorized rate base aligned with the low end of prior guidance, and included ~$1.7 billion of reduced targeted undergrounding and ~$1 billion lower non-capital-related component of rate base by 2028.

Risks

• Ability of SCE to recover its costs through regulated rates, including uninsured wildfire-related and debris flow-related costs, and costs for wildfire restoration and mitigation.
• Cybersecurity of Edison International's and SCE's critical information technology systems and physical security of critical assets and personnel.
• Risks associated with the operation and maintenance of electrical facilities, including worker, contractor, and public safety issues, and the risk of utility assets causing or contributing to wildfires.
• Impact of affordability of customer rates on SCE's ability to execute its strategy, obtain regulatory approval, or recover costs for operations, maintenance, and capital projects.
• Ability of SCE to update its grid infrastructure to maintain system integrity and reliability and meet electrification needs.
• Risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to mitigate wildfire risk, such as Public Safety Power Shutoffs (PSPS) and fast curve settings.
• Ability of SCE to obtain safety certifications from the Office of Energy Infrastructure Safety (OEIS).
• Risk that California Assembly Bill 1054 (AB 1054), California Senate Bill 254 (SB 254), or other new California legislation does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages from catastrophic wildfires.
• Ability of Edison International and SCE to effectively attract, manage, develop, and retain a skilled workforce.
• Decisions and other actions by the CPUC, FERC, NRC, the California legislature, and other governmental authorities, including those related to authorized rates of return, cost recoverability, and wildfire safety certification.
• Potential for penalties or disallowances for non-compliance with applicable laws and regulations, including fines related to wildfires where SCE's equipment is alleged to be associated with ignition.
• Extreme weather-related incidents (e.g., wildfires, debris flows, flooding, droughts, high wind events, extreme heat events, earthquakes) causing safety issues, property damage, outages, and unanticipated costs.
• Risks associated with the decommissioning of San Onofre, including worker and public safety, public opposition, permitting, governmental approvals, and cost overruns.
• Risks associated with cost allocation resulting in higher rates for utility bundled service customers due to customer bypass or departure for other electricity providers (Community Choice Aggregators and Electric Service Providers).
• Actions by credit rating agencies to downgrade Edison International or SCE's credit ratings or to place those ratings on negative watch or negative outlook.

Future Outlook

Edison International reaffirmed its 5-7% core EPS growth target from 2025-2028, projecting 2028 core EPS of $6.74-$7.14. The company narrowed its 2025 core EPS guidance to $5.95-$6.20, including potential costs for early refinancing. A refreshed $28-$29 billion capital plan for 2025-2028 is expected to drive 7-8% rate base growth. SCE anticipates 2-3% system average rate CAGR and up to 3% near-term load growth, with electricity sales nearly doubling by 2045. The company expects no equity issuance through 2028, supported by wildfire cost recoveries.

Management Comments

• Pedro J. Pizarro, President and CEO of Edison International: "We have made significant progress on the regulatory front this year, further de-risking our financial outlook and bolstering our ability to deliver for customers and investors."
• Pedro J. Pizarro: "The CPUCs decision on SCEs 2025 General Rate Case approved 91% of SCEs proposed capital investments and highlighted the important investments in the grid that provide long-lasting value to customers."
• Pedro J. Pizarro: "We are encouraged by the recent passage of Senate Bill 254 and the next phase, which will evaluate reforms to equitably socialize the risks and costs of climate-driven natural disasters. We look forward to continuing to work with legislators and stakeholders and are confident that we will see meaningful legislative action next year."
• Pedro J. Pizarro: "Based on the information we have reviewed thus far, we remain confident that SCE would make a good faith showing that its conduct with respect to its transmission facilities in the Eaton Canyon area was consistent with actions of a reasonable utility."
• Maria Rigatti, Executive Vice President and CFO of Edison International: "We have made significant progress across multiple proceedings this year, further de-risking our financial outlook and bolstering our ability to deliver for customers and investors."
• Maria Rigatti: "Our confidence in delivering on our commitments is underpinned by the clarity we have from the GRC and our ability to manage our operations for the benefit of all stakeholders."
• Maria Rigatti: "The constructive California liquidity and prudency framework means neither equity nor debt would need to be issued in connection with that event [Eaton Fire]."

Industry Context

Edison International's strong regulatory progress, particularly with SB 254 and the GRC decision, positions it favorably within the California utility sector, which faces unique challenges from climate-driven wildfires and the need for significant grid modernization. The focus on wildfire mitigation, electrification, and maintaining customer affordability aligns with broader industry trends and regulatory pressures in high-risk regions. The company's projected load growth, driven by EV adoption and new developments, indicates a robust demand environment compared to some other mature utility markets.

Comparison to Industry Standards

• SCE's system average rate continues to be the lowest among the major investor-owned utilities (IOUs) in California, demonstrating strong cost management and customer affordability compared to peers like PG&E and SDG&E.
• The 5-7% core EPS CAGR target for 2025-2028 is competitive within the regulated utility sector, especially given the significant capital investment program of $28-$29 billion.
• The ability to finance growth without equity issuance through 2028, supported by securitization of wildfire costs, places Edison International favorably among utilities that may face capital market pressures or dilution concerns.
• The legislative and regulatory framework established by AB 1054 and SB 254 provides a unique mechanism for California IOUs to manage wildfire liabilities, which is a critical differentiator compared to utilities in other states without similar risk-sharing models.
• The projected load growth, particularly from transportation electrification (California's 29% zero-emission vehicle sales in Q3 2025), positions SCE as a leader in supporting decarbonization efforts, potentially outpacing load growth in regions with less aggressive climate policies.

Stakeholder Impact

• Shareholders: Benefit from strong Q3 earnings, narrowed and improved 2025 guidance, reaffirmed long-term EPS growth, and no expected equity dilution through 2028, enhancing shareholder value.
• Customers: Benefit from affordability considerations in the GRC decision, reduced excess financing costs from wildfire settlements, continued lowest system average rate among major California IOUs, and significant investments in grid safety and reliability.
• Employees: Management acknowledged their continued dedication and resilience, with ongoing investments in grid infrastructure potentially supporting job stability and growth.
• Communities: Those impacted by wildfires will benefit from the Wildfire Recovery Compensation Program for the Eaton Fire and ongoing wildfire mitigation efforts, enhancing safety and resilience.
• Creditors: Improved credit metrics and financing flexibility due to securitization of wildfire costs and no planned equity issuance, supporting the company's financial health and ability to attract capital.

Next Steps

• Launch the Wildfire Recovery Compensation Program for the Eaton Fire.
• Anticipate a final decision from the CPUC on the Woolsey Fire settlement toward the end of 2025 or early 2026.
• Target issuance of securitized bonds from the TKM settlement by the end of 2025.
• Attend the EEI Financial Conference in November to continue dialogue with investors.
• Evaluate cost-efficient options for early refinancing of preferred equity issuances with rate resets in March 2026 and March 2027.
• File the AMI 2.0 application in Q1 2026.
• The California Energy Agency (CEA) will perform a comprehensive assessment on new models for equitably socializing climate-driven natural disaster risks, with a report due by April 1, 2026.
• Following CPUC approval of the Woolsey settlement, SCE plans to request a financing order to securitize an additional $2.0 billion, with proceeds expected mid-2026.
• Continue to work with legislators and stakeholders on the second phase of SB 254 to evaluate long-term reforms for climate-driven natural disasters.
• File the 2029 General Rate Case (GRC) and 2029 Cost of Capital (CoC) applications.

Key Dates

Recommendation

Edison International's Q3 2025 results demonstrate robust financial performance, with significant year-over-year growth in both GAAP and core EPS. The narrowed 2025 core EPS guidance, with an increased lower bound, signals strong confidence in the company's near-term outlook. Crucially, the passage of SB 254 and the constructive outcomes of the GRC, TKM, and Woolsey settlements have substantially de-risked the company's exposure to wildfire liabilities and provided clarity on cost recovery. The reaffirmed 5-7% core EPS growth target through 2028, coupled with a $28-$29 billion capital plan and the commitment to no equity issuance, positions Edison International for sustained, non-dilutive growth. These factors, combined with SCE's industry-leading affordability and significant investments in grid modernization and electrification, make EIX a compelling 'strong buy' for long-term investors seeking stable growth in the utility sector.

Keywords

Edison International, Southern California Edison, EIX, SCE, Q3 2025 Earnings, Financial Results, Core EPS, GAAP EPS, SEC Filing, Utility, Electric Utility, California, Regulatory Affairs, CPUC, General Rate Case, GRC, Wildfire Mitigation, SB 254, Wildfire Fund, TKM Settlement, Woolsey Fire, Eaton Fire, Capital Expenditures, Rate Base Growth, Load Growth, Electrification, Credit Ratings, Securitization, Investor Relations