8-K: Edison International Reaffirms 2025 EPS Guidance Amidst Regulatory Progress and Wildfire Recovery Efforts

Edison International reported a decrease in second-quarter core earnings but reaffirmed its full-year 2025 core EPS guidance, citing ongoing regulatory advancements and plans for a wildfire recovery compensation program.

Summary

• Edison International reported second-quarter 2025 GAAP EPS of $0.89, down from $1.14 in Q2 2024.
• Second-quarter 2025 Core EPS was $0.97, a decrease from $1.23 in Q2 2024.
• Net income for Q2 2025 was $343 million, compared to $439 million in Q2 2024.
• Southern California Edison's (SCE) core EPS decreased primarily due to higher operations and maintenance expense and the net impact of regulatory decisions.
• Edison International Parent and Other's core loss per share increased due to higher interest expense.
• The company reaffirmed its 2025 Core EPS guidance range of $5.94 to $6.34.
• Edison International maintains confidence in delivering 5-7% Core EPS growth from 2025 to 2028, targeting $6.74-$7.14.
• Investigations into the Eaton Fire are ongoing, with SCE believing its equipment could have been associated with the ignition, and a Wildfire Recovery Compensation Program is planned.
• The 2025 General Rate Case (GRC) proposed decision was issued, authorizing base revenue of $9.8 billion (93% of SCE's request) for 2025 and supporting significant capital investments.
• The GRC proposed decision shifts approximately 400 miles of grid hardening scope from targeted undergrounding to the covered conductor program.
• SCE's 2026-2028 Wildfire Mitigation Plan anticipates a $6.2 billion investment, focusing on distribution and transmission hardening, new technology, PSPS updates, and aerial suppression.
• The CPUC approved the WMCE settlement, authorizing recovery of over $300 million in O&M and $700 million in capital for historical wildfire mitigation and restoration.
• A final decision was issued in the WM/VM proceeding, authorizing recovery of approximately $290 million in O&M and $99 million in capital, while disallowing $65 million in O&M.
• A proposed decision was issued to approve the securitization of $1.6 billion related to the TKM proceeding, with a final decision expected in August.
• SCE filed its rebuttal testimony for the Woolsey cost recovery application, seeking recovery of $5.4 billion in claims and $84 million in restoration costs.
• The company expects its system average rate to grow at an inflation-like level through 2028, enabled by cost management and operational excellence.
• EIX and SCE received the EEI Edison Award for their Advanced Waveform Anomaly Recognition Engine (AWARE), an AI/ML-driven solution for grid safety and reliability.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While Q2 earnings were down year-over-year, the company reaffirmed its full-year EPS guidance and expressed strong confidence in achieving long-term growth targets. Significant regulatory progress, including GRC proposed decision and securitization approvals, de-risks the financial outlook. Ongoing wildfire liabilities and the need for GRC revisions present challenges, but management's proactive approach and legislative engagement are positive indicators.

Positives

• Reaffirmed 2025 Core EPS guidance of $5.94-$6.34, indicating stability in financial outlook.
• Continued confidence in delivering 5-7% Core EPS growth from 2025 to 2028, projecting $6.74-$7.14.
• Strong regulatory progress with the WMCE settlement approved, providing certainty on cost recovery for historical wildfire mitigation and restoration (over $300 million O&M, $700 million capital).
• Final decision issued in the WM/VM proceeding, authorizing significant cost recovery ($290 million O&M, $99 million capital).
• Proposed decision issued to approve the securitization of $1.6 billion related to the TKM proceeding, which is expected to reduce financing costs for customers.
• The 2025 GRC proposed decision generally aligns with the company's rate base forecast and supports substantial capital investments in wildfire mitigation, grid modernization, and infrastructure replacement.
• The GRC PD notes the effectiveness of covered conductor as a wildfire mitigation strategy and supports significant grid hardening (over 1,800 miles).
• Management is encouraged by ongoing legislative discussions to enhance California's AB 1054 regulatory framework, expressing confidence in policymakers' action.
• SCE plans to launch a Wildfire Recovery Compensation Program for the Eaton Fire, aiming for quick claim resolution to minimize overall costs and support impacted communities.
• EIX and SCE won the prestigious EEI Edison Award for their Advanced Waveform Anomaly Recognition Engine (AWARE), highlighting innovation in grid safety and reliability.
• SCE has a more than 15-year track record with the lowest system average rate among California's major investor-owned utilities, demonstrating strong cost management.

Negatives

• Second-quarter 2025 GAAP EPS of $0.89 and Core EPS of $0.97 represent a year-over-year decrease compared to $1.14 GAAP EPS and $1.23 Core EPS in Q2 2024.
• SCE's core EPS decreased primarily due to higher operations and maintenance expense.
• Edison International Parent and Other's core loss per share increased due to higher interest expense.
• The 2025 GRC proposed decision, while largely positive, falls short of SCE's requested targeted undergrounding miles (by ~400 miles), which limits wildfire risk mitigation in vulnerable areas.
• The GRC PD's gradual ramp-up for infrastructure replacement does not fully reflect the urgency of today's reliability and electrification needs.
• SCE has filed an application for rehearing regarding certain legal and factual errors that resulted in incorrect disallowances of $65 million in O&M costs in the WM/VM proceeding.
• The Eaton Fire investigations are ongoing, and SCE believes its equipment could have been associated with the ignition, leading to numerous lawsuits.

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 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, including obtaining regulatory approval or cost recovery for expenses and projects, and increased costs due to supply chain, tariffs, inflation, and rising interest rates.
• Ability of SCE to update its grid infrastructure to maintain system integrity and reliability, and meet electrification needs.
• Ability of SCE to implement its operational and strategic plans, including its Wildfire Mitigation Plan and capital investment program, facing challenges like project site identification, public opposition, environmental mitigation, construction, permitting, and governmental approvals.
• 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 Shutoff (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) 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 regulatory bodies (CPUC, FERC, NRC) and governmental authorities, including those related to authorized rates of return, cost recovery, wildfire safety certification, and electrification programs.
• Governmental, statutory, regulatory, or administrative changes affecting the electricity industry, including market structure rules and environmental priorities.
• Potential for penalties or disallowances for non-compliance with applicable laws and regulations, including fines related to wildfires.
• Extreme weather-related incidents and other natural disasters (wildfires, debris flows, flooding, droughts, high wind, heat, earthquakes) causing safety issues, property damage, outages, PSPS activations, and unanticipated costs.
• Risks associated with the decommissioning of San Onofre, including safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel, delays, contractual disputes, and cost overruns.
• Risks associated with cost allocation resulting in higher rates for utility bundled service customers due to 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 2025 Core EPS guidance of $5.94-$6.34 and expects to deliver 5-7% Core EPS growth from 2025 to 2028, targeting $6.74-$7.14. The company anticipates its system average rate to grow at an inflation-like level through 2028. Management is confident that legislative action will enhance California's AB 1054 regulatory framework, and SCE is well-positioned from a regulatory standpoint to deliver for customers and investors, with significant capital investments planned for grid safety, reliability, and electrification needs.

Management Comments

• "We are encouraged by the continuing discussions with legislative leaders to enhance California's industry-leading AB 1054 regulatory framework. We remain confident that policymakers will act to strengthen and restore confidence in California's wildfire framework during the current legislative session." Pedro J. Pizarro, President and CEO of Edison International.
• "The January wildfires underscore the importance of mitigation plans and the need for continuous and evolving tools to maintain infrastructure resiliency. SCE continues to invest in new and innovative solutions to reduce wildfire risk." Pedro J. Pizarro.
• "Resolving claims quickly allows the community to focus on recovery and minimizes the overall cost by mitigating the impacts of interest expense and inflation. This will also help use the wildfire fund efficiently and have more of the cash support impacted community members instead of being spent on higher legal costs." Pedro J. Pizarro on the Wildfire Recovery Compensation Program.
• "The PD overall generally aligns with our range case rate base forecast. We share the ALJs view that critical investments are needed to maintain a safe, reliable, and increasingly clean electric grid." Pedro J. Pizarro on the 2025 GRC proposed decision.
• "The reductions from SCE's request primarily relate to scope, pacing, or cost not to the underlying need or effectiveness of the programs." Pedro J. Pizarro on the 2025 GRC proposed decision.
• "Based on where things stand today, that is still the expectation, which is further enabled by SCE's enduring focus on operational excellence and efficiently managing costs for customers." Pedro J. Pizarro on the system average rate growth.
• "SCE continues to book revenues at 2024 authorized levels, adjusted for the change in ROE, and will record a true-up when it receives a final decision." Maria Rigatti, Executive Vice President and CFO of Edison International.
• "As SCE resolves claims, we would not expect to see actual or estimated costs run through the income statement, aside from the small shareholder contribution associated with self-insurance. The costs would be offset by SCE's customer-funded self-insurance for the first $1 billion and then by receivables or regulatory assets associated with the Wildfire Fund and regulation put in place by AB 1054." Maria Rigatti on Eaton Fire costs.
• "An efficient reimbursement process from the Wildfire Fund also means SCE would not have to issue long-term debt to fund payments." Maria Rigatti.
• "While the PD reflects a significant increase to the historical level of targeted undergrounding, it falls short of SCE's well-supported request. This reduction limits SCE's ability to appropriately mitigate wildfire risk in the most vulnerable areas." Maria Rigatti on the GRC PD's targeted undergrounding.

Industry Context

Edison International operates within the highly regulated U.S. electric utility sector, specifically in California, a state at the forefront of clean energy transition and wildfire mitigation challenges. The company's focus on grid modernization, wildfire risk reduction, and electrification aligns with broader industry trends towards infrastructure resilience and decarbonization. Its engagement with the California legislature on AB 1054 highlights the ongoing efforts to establish a stable regulatory framework for wildfire liability, a critical issue for California's investor-owned utilities. The company's emphasis on affordability and operational excellence is crucial in a high-cost state like California, where customer rates and energy access are significant policy considerations.

Comparison to Industry Standards

• SCE has a more than 15-year track record with the lowest system average rate among California's major investor-owned utilities, demonstrating superior cost management compared to its in-state peers.
• EIX and SCE were selected as the winner of the prestigious EEI Edison Award for their Advanced Waveform Anomaly Recognition Engine (AWARE), recognizing distinguished leadership, innovation, and contribution to the advancement of the electric industry, indicating industry-leading technological innovation.
• The company highlights its strong electrification profile, with expected 35% load growth by 2035 and 80% by 2045, positioning it as a leader in supporting clean energy transition compared to other utilities.

Legal Proceedings

• Numerous lawsuits have been brought against SCE related to the Eaton Fire.
• SCE has filed an application for rehearing to address certain legal and factual errors that resulted in incorrect disallowances of $65 million in O&M costs in the 2022 WM/VM proceeding.
• The Woolsey cost recovery application (A.24-10-002) is ongoing, seeking recovery of $5.4 billion in claims and $84 million in restoration costs.

Stakeholder Impact

• Shareholders: Reaffirmed EPS guidance and long-term growth targets provide confidence in future returns. Dividend growth history and target payout ratio indicate continued shareholder returns. Potential for share price influence due to positive regulatory news and reaffirmed outlook.
• Customers: The 2025 GRC proposed decision aims to balance critical investments with affordability considerations. The Wildfire Recovery Compensation Program will provide direct payments to eligible individuals and businesses impacted by the Eaton Fire. Securitization of TKM costs is expected to reduce financing costs for customers. SCE's track record of lowest system average rates among California IOUs benefits customers.
• Employees: Continued investment in grid infrastructure and wildfire mitigation programs supports ongoing work and potentially job stability. The company's ability to attract, manage, develop, and retain a skilled workforce is a key risk factor.
• Regulatory Authorities: The filing details ongoing engagement with CPUC, FERC, and the California legislature, demonstrating compliance and collaboration on regulatory frameworks and cost recovery.

Next Steps

• SCE's Wildfire Recovery Compensation Program for the Eaton Fire will launch this fall.
• Oral argument for SCE's 2025 GRC proposed decision is scheduled for August 11, 2025.
• SCE will file its opening comments on the 2025 GRC proposed decision on August 18, 2025.
• Reply comments for the 2025 GRC proposed decision are due August 25, 2025.
• The CPUC can vote on the 2025 GRC proposed decision at its August 28, 2025, voting meeting or September 18, 2025, meeting.
• A final decision on the TKM securitization is expected in August.
• A motion for consideration of a settlement agreement or joint statement of stipulations of issues for the Woolsey Cost Recovery is due by August 12, 2025.
• Rebuttal testimony for the 2026 Cost of Capital proceeding is due August 20, 2025.
• A proposed decision for the 2026 Cost of Capital proceeding is expected in November.
• The company will refresh its financial guidance six weeks after SCE receives a final decision in its 2025 GRC.

Key Dates

Recommendation

Despite a year-over-year decline in Q2 core EPS, Edison International reaffirmed its full-year 2025 core EPS guidance and reiterated its 5-7% long-term core EPS growth target through 2028. This stability, coupled with significant positive regulatory momentum (GRC proposed decision, WMCE settlement approval, TKM securitization approval), de-risks the investment profile. The company's proactive approach to wildfire mitigation, including the new compensation program and legislative engagement on AB 1054, addresses key operational risks. With a projected 6-8% rate base growth and a current dividend yield of approximately 6% with 21 consecutive years of dividend growth, EIX offers a compelling combination of stable growth, income, and improving regulatory clarity for long-term investors.

Keywords

Edison International, Southern California Edison, Utility, Electric Power, SEC Filing, Earnings, Financial Results, EPS, Guidance, Wildfire Mitigation, Regulatory Framework, AB 1054, General Rate Case, GRC, CPUC, Wildfire Fund, Securitization, Capital Expenditures, Rate Base, California, Energy Transition, Grid Modernization, Risk Management, Corporate Governance