Skip to content

EIX · Edison International

35 filings

10-K

EIX 10-K Annual Reports

Edison International - 35 annual reports

Filing record · 2016–202610-K1110-Q348-K186

2025
Edison International Annual Report, Year Ended Dec 31, 2025
Edison International (EIX) reported a sharply higher 2025 result driven by non-core items rather than operations alone. Net income available to Edison International common shareholders rose to $4,459 million ($11.58 basic EPS) from $1,284 million in 2024. Core earnings, the company's non-GAAP measure, rose to $2,520 million from $1,900 million, with SCE core earnings up to $2,911 million. The GAAP jump is largely the result of $1.9 billion of after-tax non-core benefits, principally recoveries authorized under the TKM and Woolsey settlement agreements, offset in part by a $1.1 billion Eaton Fire loss accrual and related settlements. The most important investor issue is the Eaton Fire. SCE has recorded $1.1 billion of settlement losses, management says it is probable that additional material losses will be incurred, and it cannot yet estimate a range. Eaton Fire litigation involves roughly 20,000 individual plaintiffs and a bellwether trial is set for January 2027. SCE expects Wildfire Fund reimbursement above $1.0 billion, with the Liability Cap at approximately $4.3 billion, but CPUC prudency review remains unresolved. Credit ratings are under pressure: S&P downgraded SCE to BBB- with a negative outlook, while Moody's (Baa1) and Fitch (BBB) are stable. Forward-looking, SCE forecasts total 2026-2030 capital expenditures of $40.6 billion, with rate base growing from $48.2 billion at year-end 2025 to $67.9 billion by 2030. The 2025 GRC raised authorized revenue requirement to $9.7 billion. The 2026 cost of capital decision set ROE at 10.03%, and the company's common dividend was raised 6% to $3.51 annualized. Leverage is elevated (SCE debt-to-capitalization 0.57, EIX 0.64 against covenant limits of 0.65 and 0.70), and both entities face significant near-term financing needs.
Feb 18, 2026
2024
Edison International Annual Report, Year Ended Dec 31, 2024
Edison International (EIX) reported 2024 GAAP net income attributable to common shareholders of $1,284 million (up from $1,197 million) and core earnings of $1,900 million (up from $1,825 million), driven by higher SCE revenue authorized in the 2024 Track 4 decision and a cost-of-capital adjustment that raised SCE's ROE to 10.75%. SCE's rate base grew to $45.7 billion, and total capital expenditures reached $5.7 billion in 2024, with a 2025-2028 forecast of $26.6 to $31.5 billion. Operating income rose and balance sheet metrics remained within covenant limits, though interest expense climbed sharply. The dominant investor concern is wildfire liability. The filing reports $9.9 billion of cumulative estimated losses for the 2017/2018 events (against $9.5 billion paid), a $490 million charge in 2024, and a $340 million remaining estimate. The January 2025 Eaton Fire, which destroyed about 6,000 single-residence structures and killed 17 people, is not yet attributed to SCE equipment, but SCE's transmission facilities lie in the preliminary area of origin and management cannot estimate a loss range. SCE has $1.0 billion of customer-funded self-insurance for 2025 wildfires, and recovery beyond that depends on the Wildfire Insurance Fund and the AB 1054 prudency standard, which the CPUC has not yet tested in a cost-recovery proceeding. Credit and regulatory signals are mixed. S&P has SCE and the parent on Negative outlook, while Moody's and Fitch are Stable. The 2025 GRC decision is pending, and SCE's request implies a 23% revenue increase. The company is also issuing debt to refinance maturities and plans a $75 million buyback. Investors should weigh solid core earnings and a large capital plan against an unresolved Eaton Fire exposure that could be material.
Feb 27, 2025
2023
Edison International Annual Report, Year Ended Dec 31, 2023
Edison International (EIX) reported a net income of $1.197 billion for the year ended December 31, 2023, a significant increase from $612 million in 2022. This improvement was primarily driven by Southern California Edison's (SCE) core earnings, which rose due to higher revenues from escalation mechanisms and increased interest income, partially offset by higher interest expenses. Key financial highlights include a substantial decrease in non-core items, largely due to lower wildfire-related claims and expenses compared to the prior year. SCE's capital program remains robust, with a forecast of $37.5 billion for 2024-2028 to invest in grid modernization, wildfire mitigation, and electrification efforts. The company also implemented a customer-funded wildfire self-insurance program starting July 1, 2023, aiming to mitigate the financial impact of future wildfire claims. Despite ongoing regulatory proceedings and wildfire liabilities, Edison International's financial position appears stable, supported by SCE's operational performance and capital investment plans.
Feb 22, 2024
2022
Edison International Annual Report, Year Ended Dec 31, 2022
Edison International (EIX) reported a net income of $612 million for the fiscal year ended December 31, 2022, a decrease from $759 million in the prior year. This decline was primarily driven by increased losses from its parent company operations, partially offset by improved earnings at its subsidiary, Southern California Edison (SCE). SCE's core earnings saw a modest increase due to higher revenues from regulatory mechanisms and capital balancing accounts, but this was dampened by rising operating and maintenance expenses. Significant non-core items impacted consolidated results, including substantial charges related to wildfire claims and expenses, as well as a charge for the Upstream Lighting Program. The company continues to navigate a complex regulatory environment and invest heavily in its capital program, particularly in wildfire mitigation and grid modernization.
Feb 23, 2023
2021
Edison International Annual Report, Year Ended Dec 31, 2021
Edison International (EIX) reported 2021 net income of $759 million, an increase of $20 million compared to 2020, primarily driven by improved core earnings at its subsidiary Southern California Edison (SCE). SCE's core earnings rose due to higher authorized revenues from the 2021 General Rate Case decision and increased FERC revenue, partially offset by lower insurance benefits. The company faced significant non-core charges, most notably $919 million (after-tax) related to 2017/2018 wildfire and mudslide events claims and expenses, net of recoveries. SCE also recorded an impairment charge of $47 million for disallowed capital expenditures and a $155 million expense for its contribution to the Wildfire Insurance Fund. SCE's capital expenditures totaled $5.4 billion in 2021, with a projected $6.2 billion for 2022, focused on transmission, distribution, and wildfire mitigation. The company's capital structure and dividend payments are subject to CPUC regulation. Looking ahead, Edison International faces ongoing risks related to wildfire liabilities, regulatory decisions, and the energy transition, while also pursuing opportunities in clean energy and grid modernization.
Feb 24, 2022
2020
Edison International Annual Report, Year Ended Dec 31, 2020
Edison International (EIX) reported a net income attributable to common shareholders of $739 million for the fiscal year ended December 31, 2020, a decrease from $1.28 billion in 2019. This decline was primarily driven by significant wildfire-related claims and expenses, which amounted to $1.2 billion net of recoveries in 2020, compared to $157 million in 2019. Despite these wildfire impacts, Southern California Edison (SCE), a subsidiary of EIX, reported core earnings of $1.8 billion in 2020, an increase from $1.7 billion in 2019, benefiting from higher CPUC-related revenue and operational efficiencies. The company's capital program remained substantial, with total capital expenditures of $5.5 billion in 2020, focused on grid modernization, wildfire mitigation, and supporting California's clean energy goals, including investments in electric vehicle charging infrastructure. Looking ahead, EIX anticipates continued capital investment and is managing its liquidity through operating cash flows and capital market financings. The company also highlighted its commitment to safety and diversity within its workforce, with ongoing efforts to enhance employee safety culture and promote diversity and inclusion across its operations.
Feb 25, 2021
2019
Edison International Annual Report, Year Ended Dec 31, 2019
Edison International (EIX) reported a net income of $1.284 billion for the year ended December 31, 2019, a significant improvement from a net loss of $316 million in the prior year. This turnaround was largely driven by Southern California Edison's (SCE) improved operating results, particularly a substantial reduction in wildfire-related claims and expenses. SCE's earnings were positively impacted by the adoption of the 2018 General Rate Case (GRC) decision, higher FERC revenue, and rate base growth. The company also made a significant $2.4 billion contribution to the Wildfire Insurance Fund established under California Assembly Bill 1054, which aims to mitigate wildfire risks and liabilities. While the company faces ongoing challenges related to wildfire mitigation and recovery of costs, the passage of AB 1054 has provided some regulatory clarity, leading credit rating agencies to change SCE's outlook from negative to stable. Despite the improved net income, investors should note that SCE's financial performance is heavily influenced by regulatory decisions, particularly concerning wildfire cost recovery. The company has recorded substantial regulatory assets related to wildfire mitigation and insurance expenses, with recovery subject to CPUC approval. Furthermore, ongoing capital expenditures, particularly for wildfire mitigation and grid modernization, are significant, with forecasts for 2020-2023 totaling between $19.4 billion and $21.2 billion. The company's ability to manage these capital needs and regulatory challenges will be key to its future financial health.
Feb 27, 2020
2018
Edison International Annual Report, Year Ended Dec 31, 2018
Edison International's (EIX) 2018 10-K highlights a challenging year, primarily driven by significant wildfire-related claims which led to a net loss attributable to common shareholders of $423 million, a stark contrast to the $565 million net income in 2017. Southern California Edison (SCE) recorded a substantial $2.5 billion pre-tax charge for wildfire claims, partially offset by expected insurance and FERC recoveries. Despite these challenges, SCE's core operations remained resilient, though impacted by higher operation and maintenance expenses related to wildfire insurance and vegetation management. The company is focused on modernizing its grid and investing in safety and resiliency measures, with a capital expenditure plan of $4.4 billion in 2018 and planned investments in grid modernization. Regulatory proceedings, including the pending 2018 General Rate Case for SCE, will be crucial for future revenue recovery. The company also faced operational hurdles with the suspension of spent nuclear fuel transfer at San Onofre and the ongoing impacts of Tax Reform on deferred taxes.
Feb 28, 2019
2017
Edison International Annual Report, Year Ended Dec 31, 2017
Edison International (EIX) reported a decrease in net income attributable to common shareholders for the fiscal year ended December 31, 2017, primarily due to significant non-core items, including charges related to the San Onofre settlement and the impact of Tax Reform. Southern California Edison (SCE), the primary subsidiary, experienced lower earnings driven by these non-core items, although core earnings for SCE saw an increase. The company faces substantial risks and uncertainties, notably from the December 2017 wildfires and the Montecito mudslides, which could lead to material liabilities and impact future financial performance. The company is actively pursuing legislative and regulatory solutions to address wildfire cost recovery and is also navigating significant capital investment plans for grid modernization and regulatory proceedings for its 2018 General Rate Case. Despite these challenges, Edison International maintained a solid liquidity position and continued to pay dividends. Investors should closely monitor the outcomes of the wildfire litigation, the CPUC's decision on the Revised San Onofre Settlement Agreement, and the company's ability to manage regulatory and operational risks. The company's future outlook depends significantly on its success in navigating these complex issues and managing its capital program effectively.
Feb 22, 2018
2016
Edison International Annual Report, Year Ended Dec 31, 2016
Edison International (EIX) reported its fiscal year results on February 21, 2017. The company's primary subsidiary, Southern California Edison (SCE), a major utility, experienced a significant increase in net income attributable to common shareholders, largely driven by an $378 million increase in SCE's earnings. This improvement was partially offset by increased costs at Edison International Parent and Other and lower income from discontinued operations. The company is investing heavily in its capital program, forecasting $19.3 billion in capital expenditures for 2017-2020, primarily focused on modernizing the electric grid and supporting the integration of distributed energy resources (DERs). This includes significant investments in distribution and transmission infrastructure, as well as grid modernization initiatives. Edison International also announced a 13% increase in its annual dividend rate, reflecting confidence in its financial outlook and a commitment to returning value to shareholders.
Feb 21, 2017
2015
Edison International Annual Report, Year Ended Dec 31, 2015
Edison International (EIX) reported consolidated net income attributable to common shareholders of $1,020 million for the fiscal year ended December 31, 2015, a decrease from $1,612 million in 2014. This decline was primarily driven by a significant write-down of regulatory assets related to tax repair deductions and lower CPUC-related revenue for its primary subsidiary, Southern California Edison (SCE). SCE's core earnings were impacted by a $382 million write-down of regulatory assets, alongside a $157 million decrease in core earnings due to lower CPUC-authorized revenue reflecting the implementation of the 2015 General Rate Case (GRC) decision. Despite the earnings dip, the company maintained a strong capital expenditure program, with SCE forecasting $8.0-$8.3 billion for 2016-2017 to support infrastructure upgrades and new technologies. Edison International also demonstrated a commitment to shareholder returns by increasing its annual dividend by 15% to $1.92 per share. The company is navigating a changing electricity industry landscape, characterized by technological advancements like distributed energy resources and evolving public policy, while managing significant regulatory and operational risks, including ongoing proceedings related to the San Onofre nuclear facility.
Feb 23, 2016
2014
Edison International Annual Report, Year Ended Dec 31, 2014
Edison International (EIX) reported strong financial performance for the fiscal year ended December 31, 2014, driven primarily by Southern California Edison (SCE), its main subsidiary. SCE's utility earning activities saw significant growth in operating revenue, largely due to rate base expansion and increased authorized revenues, although this was partially offset by lower San Onofre and Four Corners related revenues. The company also managed to reduce operation and maintenance expenses through various initiatives, including workforce reductions. A key development during the year was the resolution of the San Onofre Nuclear Generating Station issues through a settlement agreement with the CPUC, which will result in customer refunds. The company continued to navigate a changing electricity industry landscape, investing in grid development to accommodate new technologies like electric vehicles and distributed energy resources. Edison International also declared a substantial increase in its quarterly dividend, signaling confidence in its financial stability and future outlook. The company maintains a strong liquidity position and is focused on its capital investment plan to upgrade its infrastructure.
Feb 24, 2015
2013
Edison International Annual Report, Year Ended Dec 31, 2013
Edison International (EIX) reported its 2013 fiscal year results, highlighting the permanent retirement of its San Onofre nuclear units and the ongoing restructuring related to its subsidiary, Edison Mission Energy (EME). The company's financial performance was significantly impacted by a $575 million impairment charge related to the San Onofre retirement. Southern California Edison (SCE), the primary utility subsidiary, navigated a complex regulatory environment, including proceedings on cost recovery for San Onofre and its 2015 General Rate Case. Operationally, SCE faced challenges and opportunities related to grid modernization, renewable energy integration, and evolving regulatory frameworks. The company's capital expenditures for infrastructure upgrades remain substantial. The EME bankruptcy settlement, expected to be approved in March 2014, aims to resolve significant claims against Edison International, though the full financial impact is still subject to definitive legal and regulatory outcomes. Investors should monitor the outcomes of the San Onofre cost recovery proceedings and the broader regulatory landscape impacting SCE's future rate adjustments and capital recovery.
Feb 25, 2014
2012
Edison International Annual Report, Year Ended Dec 31, 2012
Edison International (EIX) reported a net loss of $0.56 per share for the fiscal year ended December 31, 2012. This loss was primarily driven by a significant charge related to the bankruptcy filing of its subsidiary, Edison Mission Energy (EME), which resulted in a $1.3 billion after-tax impairment charge. Despite the net loss, Southern California Edison (SCE), the primary operating subsidiary, demonstrated resilience with income from continuing operations of $1.569 billion. SCE's performance was bolstered by a rate base growth and lower income taxes following the 2012 CPUC General Rate Case decision. However, SCE also faced operational challenges, notably the ongoing outage and inspection issues at its San Onofre nuclear facility, which incurred significant inspection and repair costs and resulted in lost revenue from purchased power. The company is actively managing these situations, including contract disputes with the steam generator manufacturer and regulatory reviews regarding cost recovery. Financially, Edison International's liquidity depends on SCE's ability to pay dividends, and SCE remains subject to CPUC dividend policy regulations. The company's capital program is focused on transmission and distribution system upgrades. Investors should note the significant impact of EME's bankruptcy on Edison International's consolidated results, the ongoing regulatory scrutiny of SCE's San Onofre nuclear operations, and the company's substantial capital expenditure plans.
Feb 26, 2013
2011
Edison International Annual Report, Year Ended Dec 31, 2011
Edison International's 2011 Form 10-K details a complex operating landscape with its primary subsidiary, Southern California Edison (SCE), a regulated electric utility, and Edison Mission Group (EMG), a competitive power generation business. SCE continues to be a stable contributor, focusing on infrastructure upgrades and regulatory compliance, including a significant capital investment program for transmission and distribution. EMG, however, faced significant challenges in 2011, marked by substantial asset impairments at its coal-fired plants (Homer City, Fisk, Crawford, and Waukegan) due to declining power prices, increasing operating costs, and stricter environmental regulations. These impairments, totaling over $1 billion, significantly impacted Edison International's overall net income, leading to a net loss attributable to common shareholders. Investors should note the contrasting performance of the two segments. SCE's regulated nature provides a degree of revenue stability, supported by CPUC and FERC rate adjustments. In contrast, EMG's merchant power generation business is highly susceptible to market volatility, fuel costs, and environmental compliance expenses. The company's liquidity for EMG is strained, with upcoming debt maturities and the ongoing need for significant capital expenditures for environmental retrofits, prompting considerations of asset sales or restructurings. The company's ongoing capital expenditure plans are substantial for both segments, particularly for SCE's grid modernization and EMG's environmental compliance efforts, which will require significant funding from operations, debt, and potentially equity markets.
Feb 29, 2012
2010
Edison International Annual Report, Year Ended Dec 31, 2010
Edison International's 2010 10-K filing highlights a year of significant capital investment, particularly by its utility subsidiary, Southern California Edison (SCE). SCE's capital expenditures focused on upgrading its transmission and distribution systems, smart meter deployment, and generation asset improvements, with a forecast of $15.6 billion to $17.5 billion in capital expenditures for 2011-2014. The company navigated a complex regulatory environment, including ongoing proceedings for its 2012 General Rate Case and addressing environmental compliance costs associated with its competitive generation segment, Edison Mission Group (EMG). EMG faced profitability challenges due to lower realized energy prices and higher fuel costs, particularly impacting its merchant power plants. The company also disclosed significant financial events, including the ongoing impact of the Global Settlement with the IRS and the effects of federal healthcare legislation on tax benefits.
Feb 28, 2011
2009
Edison International Annual Report, Year Ended Dec 31, 2009
Edison International, in its 2010 10-K filing, reported a net income attributable to common shareholders of $849 million for the fiscal year ended December 31, 2009, a decrease from $1.215 billion in 2008. This decline was primarily driven by a significant loss of $614 million after tax in 2009 related to the Global Settlement with the IRS and the termination of Edison Capital's cross-border leases. The company's core utility operations, represented by Southern California Edison (SCE), showed improved performance with a core earnings increase to $874 million from $732 million in 2008, largely due to favorable rate case decisions from the CPUC and FERC. However, Edison Mission Group (EMG), the competitive power generation segment, experienced a decline in core earnings to $222 million in 2009 from $561 million in 2008, impacted by lower wholesale energy prices, decreased electrical demand, and higher compliance costs for environmental regulations at its Midwest Generation and Homer City plants. Despite the net income decline, SCE maintained a solid capital investment plan for infrastructure upgrades and renewable energy development, projecting $18 billion to $21.5 billion in capital expenditures from 2010 to 2014. The company also highlighted ongoing efforts to address environmental regulations, particularly those concerning greenhouse gas emissions and water quality standards, which may require significant future capital outlays. The filing also disclosed risks associated with regulatory decisions, market volatility, and the ability to recover costs and maintain liquidity, particularly at the parent company level.
Mar 1, 2010
2008
Edison International Annual Report, Year Ended Dec 31, 2008
Edison International (EIX) reported 2008 consolidated net income of $1,215 million, up from $1,098 million in 2007, with earnings from continuing operations of $1,215 million (diluted EPS $3.68 versus $3.31 in 2007). The increase was driven mainly by EMG (Edison Mission Group), whose continuing earnings rose to $561 million from $412 million, helped by the absence of the 2007 $148 million after-tax loss on early debt extinguishment and higher Midwest Generation and trading income. SCE (Southern California Edison) earnings declined modestly to $683 million from $707 million, mainly due to a $49 million after-tax charge tied to a CPUC performance-based ratemaking decision. Liquidity appeared solid at year-end, with $5.57 billion of available liquidity, including $3.92 billion of cash and short-term investments, though the company drew heavily on credit lines as a precaution during the financial crisis. The key risk for investors is the unresolved IRS dispute over cross-border leveraged leases at Edison Capital. The company estimates maximum after-tax earnings exposure of about $1.3 billion and has negotiated a Global Settlement that awaits Joint Committee on Taxation review. Terminating the leases before settlement could trigger an after-tax charge of at least $650 million. Other pressures include a 2009 General Rate Case in which the CPUC's proposed decisions could reduce SCE's capital plan by roughly $2 billion, large pension and nuclear decommissioning trust losses, weak forward power prices affecting merchant generation, and multi-billion-dollar environmental compliance costs at the Illinois coal plants.
Mar 2, 2009
2007
Edison International Annual Report, Year Ended Dec 31, 2007
Edison International (EIX) reported 2007 consolidated net income of $1.098 billion, or $3.31 diluted EPS, down slightly from $1.181 billion ($3.57) in 2006, largely because 2006 included a number of one-time tax and regulatory benefits. Operating revenue rose about 4% to $13.1 billion. The company's earnings are concentrated in its regulated utility, Southern California Edison (SCE), which contributed $707 million, and its nonutility power generator, Edison Mission Group (EMG), which contributed $412 million from continuing operations. Edison Capital, the financial services arm, contributed a further $69 million of net income. Parent-level results were a $19 million loss. The main investor concerns are the size of SCE's capital program, which management plans at up to $19 billion for 2008 through 2012, and a large unresolved federal tax dispute. The IRS is challenging Edison Capital's leveraged lease transactions. The filing estimates the deferred taxes at stake at about $1.6 billion, with interest of roughly $525 million and a 20% penalty asserted. Management also notes that the IRS position could be partly resolved within 12 months. Other exposures include EMG's need for substantial environmental capital spending on its coal plants, notably Midwest Generation, a potential EPA Clean Air Act enforcement proceeding, and a CPUC proceeding over SCE's performance-incentive rewards, where potential refunds and penalties range from $52 million to $388 million. EMG's earnings are sensitive to wholesale power prices in PJM, where it sells most of its output. Its PJM capacity auctions produced materially higher capacity prices for the period through May 2011. The company also has a large wind development program, with roughly 566 MW in service and about 5,000 MW in its development pipeline. Those projects depend partly on production tax credits that expire for projects placed in service after December 31, 2008 unless extended. The company's 2007 total assets were $37.6 billion, and its common equity was $8.4 billion.
Feb 27, 2008
2006
Edison International Annual Report, Year Ended Dec 31, 2006
Edison International's FY2006 10-K shows a holding company whose earnings are dominated by its regulated utility, Southern California Edison (SCE), which earned $776 million from continuing operations in 2006, up from $725 million in 2005. Consolidated earnings from continuing operations were $1.083 billion ($3.28 per basic share), roughly flat versus $1.108 billion in 2005, while net income rose to $1.181 billion ($3.58 per share) helped by $97 million from discontinued operations. Revenue grew about 6.5% to $12.6 billion, driven by rate increases tied to the 2006 General Rate Case and ERRA fuel and procurement recovery. The key investor issues are capital intensity and the non-utility generation business. SCE's 2007–2011 capital plan calls for up to $17.3 billion of spending, with 2007 capex of about $2.4 billion, and this will require heavy external financing. Edison Mission Energy (EME) carries about $3.2 billion of consolidated debt plus $4.3 billion of long-term lease obligations, and it faces an estimated $2.7–3.4 billion of environmental capex at its Illinois coal plants through 2018, along with merchant price exposure in PJM. The parent's MEHC holding company has 13.5% senior secured notes due 2008 that depend on dividends from EME. Edison Capital's leveraged leases (about $2.5 billion) are under IRS challenge, and the company estimates a possible cumulative-effect adjustment of $250–300 million on FIN 48 adoption in 2007. Other open items include the CPUC performance-incentive refund proceeding (range $52–388 million) and the Mohave plant shutdown. Overall, the filing shows a stable core utility with improving cash flow, offset by significant leverage, large capital needs, tax contingencies, and merchant generation risk concentrated at EME.
Feb 28, 2007
2005
Edison International Annual Report, Year Ended Dec 31, 2005
Edison International (EIX) reported a strong 2005 with net income of $1.137 billion, or $3.47 per basic share, up from $916 million ($2.81) in 2004. Earnings from continuing operations rose to $1.108 billion ($3.38 per share) from $226 million, though 2004 was depressed by large charges, including a roughly $960 million loss on the Collins Station lease termination. Results were driven by three segments: Southern California Edison (SCE) earned $725 million, the nonutility power generation business (MEHC/EME) earned $322 million on higher wholesale power prices and trading income, and Edison Capital earned $91 million. Management highlighted a strengthened balance sheet, including debt reduction at MEHC and Edison Capital, a rebalanced SCE capital structure, and an 8% dividend increase to $1.02 per share. The main risks are regulatory and environmental. SCE's Mohave coal plant ceased operations on December 31, 2005, with no definite return-to-service date, and SCE's share of required pollution-control and related costs is estimated at about $605 million. SCE's 2006 capital budget is roughly $2.2 billion, and the proposed 2006 General Rate Case decision may reduce the requested revenue increase. The CPUC is also investigating performance-incentive reporting issues that could lead to refunds or penalties. At the parent level, Edison Capital's leveraged leases face IRS challenges; the company estimates about $1.48 billion of deferred taxes are at issue, with interest of about $323 million, which could hurt earnings if the IRS prevails. MEHC's position is more leveraged. Its $800 million 13.5% senior secured notes depend on dividends from EME, and EME carries $3.4 billion of consolidated debt plus $4.6 billion of long-term lease obligations. Credit ratings for MEHC (B2/CCC+) and EME (B1/B+) remain below investment grade, and the Homer City insurance and rating-related consent issues add further uncertainty. Overall, the filing shows a financially stronger company whose earnings remain concentrated in merchant power prices and whose key exposures are the Mohave outage, tax disputes, and below-investment-grade subsidiary financing.
Mar 7, 2006
2004
Edison International Annual Report, Year Ended Dec 31, 2004
Edison International (EIX) reported 2004 consolidated net income of $916 million, or $2.81 per basic share, versus $821 million ($2.52) in 2003. That headline figure is misleading as a measure of ongoing performance: earnings from continuing operations fell sharply to $226 million ($0.69 per share) from $655 million ($2.01), while discontinued operations contributed $690 million, driven largely by gains on the sale of EME's international portfolio (Contact Energy, MEC International B.V./IPM). The continuing-operations decline reflects a $956 million pre-tax loss from terminating the Collins Station lease, $304 million... more precisely, $989 million in total asset impairment and lease termination charges, a $56 million asbestos indemnity charge at the Illinois plants, and the expiration of San Onofre performance incentives, partly offset by a $180 million regulatory gain at SCE from the 2003 General Rate Case and other regulatory resolutions. The balance sheet and liquidity picture improved meaningfully. EME used sale proceeds to retire much of its debt and held roughly $1.8 to $2.3 billion of corporate cash at year-end and in February 2005. Edison International eliminated its parent-level debt, closed a new $750 million unsecured revolver, and raised its 2005 dividend to $1.00 per share from $0.80. However, MEHC's interest coverage ratio fell to 1.18x, below the 2.0x threshold required for MEHC dividends, which constrains upstream cash flow. EME's merchant exposure is rising in 2005 as Illinois plant contracts with Exelon expired, and Mohave's post-2005 operation remains unresolved. SCE, the largest contributor to earnings, faces heavy capital spending of about $9.4 billion over 2005 to 2009, with rate base projected to grow from $9.4 billion to $14.2 billion. Key regulatory items include the 2006 GRC request of $370 million, the San Onofre steam generator replacement decision (with a possible ORA disallowance of up to about $260 million), and continuing federal and state environmental rulemakings (mercury, NSR, climate). The IRS is also challenging Edison Capital's SILO and LILO leases, with a potential cash-flow impact that could be significant even though it would not affect accounting earnings under current standards.
Mar 16, 2005
2003
Edison International Annual Report, Year Ended Dec 31, 2003
Edison International (EIX) reported 2003 consolidated net income of $821 million, or $2.52 per basic share, down from $1.1 billion ($3.31) in 2002, which had included a one-time $480 million regulatory gain. Earnings from continuing operations were $779 million ($2.39 per share) versus $1.1 billion in 2002. Core earnings, excluding the 2002 one-time item, rose to $779 million from $655 million, driven mainly by resolution of regulatory proceedings at Southern California Edison (SCE), which contributed $872 million, and higher U.S. wholesale power prices at Edison Mission Energy (EME). Offsetting these gains were $304 million in asset impairment charges at EME, mostly for Midwest Generation's small peaking plants in Illinois, and weak results at EME's Illinois plants as Exelon contracts roll off. The balance sheet remains under strain at the holding-company and nonutility level. MEHC's auditors and EME's auditors both included going-concern explanatory paragraphs, tied to $693 million of debt at Edison Mission Midwest Holdings due December 2004. EME also disclosed a planned Collins Station lease termination that could produce an approximately $1 billion pre-tax (about $620 million after-tax) loss, which would cut EME's net worth from $1.9 billion to about $1.3 billion. The parent's 2004 cash needs include $572 million of 6-7/8% notes due September 2004. Management is focused on a four-step EME restructuring plan, including asset sales of international operations. At SCE, the utility, capital spending is ramping to a planned $1.9 billion in 2004, with a 2004 general rate case request of $251 million pending. The proposed decision would grant only $15 million, a key regulatory risk. SCE's credit ratings were raised to investment grade in Q4 2003, and the company resumed common dividends of $0.20 per quarter, with the first $65 million payment made in January 2004. Investors should weigh the improving utility earnings against the substantial going-concern and refinancing risk at EME.
Mar 15, 2004
2002
Edison International Annual Report, Year Ended Dec 31, 2002
Edison International's 2002 10-K reveals a holding company whose financial health is sharply divided between a stable, regulated utility and a distressed nonutility power business. Consolidated 2002 net income was $1.077 billion ($3.31 basic EPS), but this was driven largely by a $480 million after-tax credit from the CPUC's URG decision at SCE. Core earnings were $655 million, with SCE contributing $748 million, while EME, Edison Capital, and MEHC were weak. SCE's core earnings rose 83% on higher PBR-related revenue and a larger rate base, and the utility is working through the $3.6 billion PROACT regulatory asset, now $574 million at year-end and expected to be recovered by mid-2003. The central risk is at MEHC and EME. Credit ratings were downgraded to below investment grade, and the company's auditors included a going-concern paragraph for MEHC tied to $911 million of Edison Mission Midwest Holdings debt maturing in December 2003. Cash-trap provisions now block distributions from the Illinois plants to EME, and EME's Exelon contract reductions expose it to much greater merchant price risk starting in 2003. A failure to refinance could trigger cross-defaults and potentially Chapter 11 filings at the subsidiary level. Parent-level liquidity also depends on subsidiary dividends, and dividend payments on common stock are restricted while SCE's PROACT balance remains outstanding. Investors therefore face a bifurcated credit picture. SCE's regulated cash flows and pending CPUC decisions (2003 GRC, line-maintenance penalty, holding-company proceeding) are the main source of value support, while the outcome of EME and MEHC refinancing efforts and the pending California Supreme Court ruling on the PROACT settlement will determine much of the remaining equity risk.
Mar 31, 2003
2001
Edison International Annual Report, Year Ended Dec 31, 2001
Edison International's 2001 Form 10-K reports a year dominated by the California energy crisis. Consolidated 2001 net income was $1.035 billion ($3.18 basic EPS), a sharp swing from a $1.943 billion loss in 2000, but the swing is driven by accounting rather than operations. SCE recorded a $3.6 billion PROACT regulatory asset (about $2.1 billion after tax) in Q4 2001 under the October 2001 CPUC settlement, offset by $1.15 billion after-tax losses on the sale of EME's UK Ferrybridge and Fiddler's Ferry plants and $1.4 billion of total discontinued-operations losses. Excluding the SCE procurement adjustments, core earnings were $1.30 per share versus $1.75 in 2000, reflecting lower SCE earnings, a Mission Energy Holding parent-level loss, and weaker Edison Capital results. The balance sheet and credit profile remain the central investor concern. Edison International and SCE were downgraded to below investment grade in January 2001 and, although raised in March 2002, remain below investment grade. SCE repaid $3.2 billion of past-due obligations and $1.65 billion of near-term maturities on March 1, 2002, using a $1.6 billion secured credit facility and cash. Common dividends are suspended: SCE cannot pay common dividends until the PROACT balance is recovered (targeted by end-2003, with an outside date of 2005), and the parent does not expect to pay dividends until then. Long-term debt maturities are heavy, at $1.5 billion in 2002 and $2.4 billion in 2003. Key uncertainties include a pending appeal of the CPUC settlement, the CPUC's first-priority-capital investigation, the URG and 2003 general rate case outcomes, and EME's concentrated exposure to Exelon contracts. EME's Illinois plants and Homer City are funded largely through off-balance-sheet sale-leasebacks, and EME's recourse debt-to-capital ratio of 64.1% sits close to its 67.5% covenant. EME retains investment-grade ratings under ring-fencing provisions. Investors should weigh the strong 2001 headline earnings against the non-recurring nature of the regulatory accounting gains, the still-restricted dividend capacity, and the dependence on regulators and the courts to validate the recovery mechanisms.
Mar 29, 2002
2000
Edison International Annual Report, Year Ended Dec 31, 2000
Edison International (EIX) reported a 2000 net loss of $1.94 billion, or $5.84 per share, driven by a $2.5 billion after-tax ($4.2 billion pre-tax) write-off at its utility subsidiary Southern California Edison (SCE) of regulatory assets, including the transition cost balancing account (TCBA). The write-off followed the California Public Utilities Commission's March 27, 2001 decisions, which retroactively restated balancing accounts and left SCE unable to conclude that its undercollections were probable of recovery. Excluding the write-off, EIX's 2000 basic EPS was $1.74 versus $1.79 in 1999. Nonutility businesses (Edison Mission Energy, Edison Capital) remained profitable, while the parent and SCE faced a severe liquidity crisis. SCE's liquidity has effectively collapsed. As of March 31, 2001, SCE had $2.7 billion of unpaid, overdue obligations against roughly $2.0 billion of cash reserves, has suspended certain debt and purchased-power payments, and has lost access to the capital markets. Credit ratings were cut to substantially below investment grade in January 2001, SCE's common dividends are barred because retained earnings are in deficit, and the parent has fully drawn its credit lines. Creditors have sued, and some have threatened an involuntary bankruptcy petition. PG&E's April 6, 2001 Chapter 11 filing adds to sector stress. The main path to resolution is a April 9, 2001 Memorandum of Understanding with the California Department of Water Resources and the Governor. Its key terms include the sale of SCE's transmission assets for about $2.76 billion, securitization of roughly $3.5 billion in undercollections, cost-based ratemaking for SCE's retained generation through 2010, and an 11.6% authorized return on equity. Implementation requires new legislation, CPUC and FERC orders, and definitive agreements, with an August 15, 2001 deadline. Management explicitly states that success is not assured and that bankruptcy remains a possibility, so the investment case depends heavily on regulatory and legislative outcomes.
Apr 17, 2001
1999
Edison International Annual Report, Year Ended Dec 31, 1999
Edison International (EIX) reported 1999 basic EPS of $1.79 on net income of $623 million, down from $668 million in 1998 (basic EPS $1.86). The decline reflects a one-time 1998 gain on the sale of SCE's generating plants, lower SCE earnings from accelerated depreciation, and a 24-cent special charge in 1999 (EME and Edison Capital phantom stock option charges, plus Edison Enterprises restructuring). Consolidated operating revenue rose 9% to $9.67 billion, driven by nonutility power generation, which nearly doubled to $1.64 billion on acquisitions including Homer City, Ferrybridge/Fiddler's Ferry, Contact Energy and the ComEd Illinois plants. Total assets nearly doubled to $36.2 billion, and long-term debt rose to $13.4 billion, so the company's risk profile has shifted substantially toward merchant generation. The core utility, Southern California Edison (SCE), remains the earnings anchor, contributing $1.39 per share in 1999 including a one-time 4-cent tax benefit. Its restructuring plan is still in transition: the rate freeze runs through March 2002, and the company carries roughly $2.6 billion of generation-related regulatory assets that would be written off if recovery became improbable. Pending decisions in 2000 include the FERC transmission rate case, the CPUC hydroelectric market valuation (about $1.0 billion, nearly twice book value), the Mohave Station sale, and a proposed rate redesign targeting roughly a 17% reduction in system average rates after the freeze. Key risks for investors include EME's exposure to foreign and merchant markets (Paiton in Indonesia, where PLN payments are uncertain; UK pool price volatility, with forward prices down about 20%), litigation such as the Navajo Nation suit seeking at least $600 million in damages, and potential environmental cleanup costs that could exceed recorded liabilities by up to $284 million. Management also disclosed a $299 million accrual for phantom stock option obligations. Overall, the filing describes a utility whose regulated earnings are being reshaped by restructuring, alongside a rapidly expanding, higher-leverage independent power business.
Mar 29, 2000
1998
Edison International Annual Report, Year Ended Dec 31, 1998
Edison International (EIX), the holding company for Southern California Edison (SCE), Edison Mission Energy (EME), Edison Capital and Edison Enterprises, reported 1998 net income of $668 million, or $1.84 diluted EPS, down from $700 million ($1.73 diluted) in 1997. Consolidated operating revenue rose to $10.2 billion, but the earnings picture is shaped heavily by California's electric restructuring. SCE's own earnings fell to $1.37 per share from $1.44, reflecting lower authorized returns on generation assets and a smaller earning asset base after the sale of its 12 gas- and oil-fired plants for $1.2 billion. The nonutility companies (EME and Edison Capital combined) contributed roughly 66 cents per share, up from 44 cents, and now account for about 35% of total earnings. Share repurchases of roughly $724 million in 1998 (over 25 million shares) helped lift per-share results. The main risks for investors lie in the transition to competition. SCE's transition costs are estimated at $10.6 billion, and about $2.4 billion (after tax) of generation-related regulatory assets would be written off as a non-cash charge if recovery became improbable. Other notable exposures include the pending $1.8 billion Homer City acquisition by EME, the troubled Paiton project in Indonesia whose PLN contract is under renegotiation pressure, pending CPUC decisions on Section 376 cost recovery and rate-of-return issues, and the Coso geothermal litigation seeking punitive damages of $400 million. Management also highlighted that California voters rejected Proposition 9 in November 1998, removing a threat to rate reduction note collections. From a financial perspective, the company had cash flow coverage of dividends of 3.9 times and a dividend payout ratio of 55%, with the dividend declared at $1.04 per share for 1998. Long-term debt declined to $8.0 billion from $8.9 billion, and total assets were $24.7 billion. The Year 2000 remediation was reported as on track, with a total estimated cost of $75 million.
Mar 24, 1999
1997-A
Edison International Annual Report (Amendment), Year Ended Dec 31, 1997
This document is Amendment No. 1 to Edison International's (NYSE/Pacific: EIX) Form 10-K for the fiscal year ended December 31, 1997, filed March 26, 1998. It was filed solely to replace Exhibit 10.18, a board resolution covering a consulting arrangement with former director Howard P. Allen. It contains no financial statements, operating results, or risk disclosures. The company's financial information is incorporated by reference from the 1997 Annual Report to Shareholders, which is not included here, so this filing offers little for assessing the company's performance. The cover page reports an aggregate market value of non-affiliate voting stock of approximately $11.04 billion as of around March 23, 1998, and 368,929,897 shares of common stock outstanding. The company is headquartered in Rosemead, California, and its common stock trades on the New York and Pacific stock exchanges. The registrant's parent-level structure and utility operations are referenced only in passing in the exhibit, which mentions Southern California Edison Company. The substantive content is the Exhibit 10.18 resolution, adopted May 15, 1997. Mr. Allen resigned from the board eleven months early. In exchange for agreeing to remain available for advice and consultation for four years, the company agreed to pay its allocable share of a $40,000 fee credited to his Director Deferred Compensation Plan account. His nonqualified plan benefits are to begin payment as if he had retired from the board on April 16, 1998. For investors, this is a minor governance and compensation item with immaterial dollar amounts.
Mar 26, 1998
1997
Edison International Annual Report, Year Ended Dec 31, 1997
Edison International (EIX), the holding company for Southern California Edison (SCE) and the nonutility businesses, reported 1997 net income of $700 million, or $1.75 basic EPS and $1.73 diluted, down from $717 million ($1.64) in 1996. Share count fell sharply, from 437 million to 400 million weighted-average shares, because of an aggressive buyback: about 49 million shares were repurchased in 1997 for $1.2 billion, and over 72 million shares for $1.6 billion since the 1995 program began. Management attributed the 1997 EPS gain largely to the buyback, which added roughly 15 cents per share. Underlying SCE earnings were flat at $1.44 per share, and the nonutility segments (Edison Mission Energy, Edison Capital, Mission Land) grew to 44 cents per share, with EME posting a record $115 million in net income. The dominant story is California electric industry restructuring. SCE issued about $2.5 billion of rate reduction notes in December 1997 to fund a 10% residential and small-commercial rate cut starting January 1, 1998, and sold 11 of its 12 oil- and gas-fired plants for $1.1 billion, roughly 2.16 times book value. The retail market was scheduled to open March 31, 1998, after the PX and ISO start-up was delayed. SCE estimated transition costs (CTC) recoverable from customers at $13.1 to $13.8 billion in 1998 net present value, though recovery depends on market prices and on regulatory outcomes still pending. Key risks include a proposed voter initiative that could block recovery of nuclear stranded costs and reduce rates further, pending CPUC rulings on Mojave contract disallowances, San Onofre steam generator problems, and the Paiton project in Indonesia, whose debt ratings were cut to speculative grade. For investors, the filing shows strong cash generation (operating cash flow of $2.1 billion), a dividend of $1.00 per share with a 57% payout ratio, and a balance sheet with $1.9 billion of cash after the rate reduction note proceeds. Earnings quality going forward depends heavily on how transition cost recovery, divestiture proceeds, and buybacks play out during the 1998 to 2002 transition period.
Mar 25, 1998
1996-A
Edison International Annual Report (Amendment), Year Ended Dec 31, 1996
Edison International's 1996 filing is a 10-K/A amendment that was filed solely to add two items omitted from Exhibit 13: the Shareholder Information section and the Selected Financial and Operating Data for 1992-1996. The underlying annual report material shows a company in transition. Consolidated 1996 EPS was $1.64 (versus $1.66 in 1995), with net income of $717 million on operating revenue of $8.545 billion. Southern California Edison (SCE) contributed $1.42 per share, while the nonutility businesses (Edison Mission Energy, Edison Capital, Mission Land) contributed roughly 27 cents, helped by the First Hydro acquisition in the UK. Buybacks of $344 million in 1996 offset flat-to-lower earnings and kept per-share results steady. The central investor issue is California electric restructuring. The September 1996 legislation sets a rate freeze through 1997, a rate reduction of at least 10% for residential and small commercial customers from 1998, and a non-bypassable competition transition charge. SCE's potential transition costs are estimated at $13.1 to $13.8 billion. The SEC staff has also questioned whether SCE can keep applying regulatory accounting (SFAS 71) to its generation assets through the 1998-2001 transition period. If it cannot, SCE would have to write off roughly $600 million after tax, which is a material risk to earnings and book value. Other watch items include about $1.7 billion paid in 1996 above market cost for federally mandated qualifying-facility power, a $136.8 million contractor claim against the Brooklyn Navy Yard project, and environmental liabilities of $114 million across 56 sites, with a possible excess of up to $211 million. The company's balance sheet is substantial, with total assets of $24.6 billion, long-term debt of $7.5 billion, and dividend coverage of 5.0 times. The dividend payout ratio was 61%, and the dividend was $1.00 per share.
Oct 17, 1997
1996
Edison International Annual Report, Year Ended Dec 31, 1996
Edison International (EIX), parent holding company of Southern California Edison (SCE) and a set of nonutility businesses, reported 1996 net income of $716.7 million, or $1.64 per share, versus $1.66 in 1995 and $1.52 in 1994. SCE accounted for 87% of net income and the Nonutility Companies for 13%. Earnings were held back by a 4.4% cut in SCE's authorized 1996 revenue ($338 million), a $237 million one-time ECAC bill credit, and about 6 cents per share of special charges, partly offset by a common stock buyback that retired 19.2 million shares ($344 million). Edison Mission Energy (EME), which owns the Asia Pacific, European and Turkish/Italian projects, drove most of the nonutility growth, aided by its First Hydro acquisition. The central investor issue is California electric restructuring. Assembly Bill 1890, enacted September 1996, sets a rate freeze, at least a 10% residential and small commercial rate cut from 1998, and recovery of transition costs through a non-bypassable competition transition charge (CTC) through 2001. SCE estimates its potential transition costs at $13.1 to $13.8 billion. A key risk is that the SEC staff has questioned whether SCE can keep applying regulatory (SFAS 71) accounting to its generation assets. If that accounting is discontinued, SCE would write off about $600 million after tax of regulatory assets. SCE also proposes to divest its oil- and gas-fired plants by auction, with CPUC approval requested for late 1997. The filing also discloses substantial litigation and contingent exposure. These include a $136.8 million contractor claim against the Brooklyn Navy Yard project, a $300 million-plus claim by an oil pipeline company, wind-producer and geothermal qualifying-facility suits, and San Onofre radiation injury cases. Environmental cleanup reserves total $114 million, with a possible excess of up to $211 million. Overall the filing describes a company with stable earnings, a rising nonutility contribution, and a regulatory transition whose accounting and financial outcomes remain uncertain.
Mar 28, 1997
1995
Edison International Annual Report, Year Ended Dec 31, 1995
Edison International (formerly SCEcorp), the holding company for Southern California Edison (SCE) and nonutility subsidiaries, reported 1995 net income of $739 million, or $1.66 per share, up from $1.52 in 1994 and $1.43 in 1993. SCE generated 87% of net income and the nonutility companies 13%. Operating revenue was $8.4 billion. The company's central issue is the CPUC's December 20, 1995 electric industry restructuring decision, which would open generation to competition beginning January 1, 1998, with full customer participation by 2003. SCE estimates potential transition costs (CTC) of about $9.3 billion (net present value), and it faces a risk that revisions to the decision could force write-offs of $1.4 billion in generation-related regulatory assets. SCE also filed voluntary divestiture plans proposing auction of 50% of its fossil units. Near-term earnings and cash items include a voluntary early retirement program that will cost about $65 million pretax in Q2 1996, a January 1996 General Rate Case decision that reduces revenue and sets a reduced return (7.34%) on San Onofre Units 2 and 3, and a $237 million ECAC overcollection refund in 1996 that will hit cash flow but not earnings. Edison Mission Energy, the independent power arm, expanded aggressively, including the $1 billion acquisition of First Hydro in the U.K. and a $1 billion Paiton-related financing in Indonesia, but it also flagged the Brooklyn Navy Yard project as likely to earn substantially less than originally estimated. Contingent exposures include QF litigation (up to about $60 million in alleged contract payments), wind-producer suits (about $189 million claimed), environmental cleanup (a recorded liability of $114 million with a possible excess of up to $215 million), and several San Onofre personal injury suits. From an investor standpoint, the company is a dividend-reduced utility in transition. Its 1995 dividend was $1.00 per share, cut 30% in June 1994, with a payout ratio of 60%. Cash flow from operations was about $2.1 billion, and the company repurchased $70 million of stock. Investors should weigh solid reported earnings against significant regulatory uncertainty over stranded costs and the restructuring outcome, the pace of nonutility growth, and potential write-offs if the CPUC revises its decision.
Mar 27, 1996
1994
Edison International Annual Report, Year Ended Dec 31, 1994
This is the fiscal 1994 Form 10-K for SCEcorp, the holding company for Southern California Edison (Edison) and the nonutility Mission Group. The filing predates the 1997 name change to Edison International, so the EIX ticker in the request refers to this same registrant's successor. SCEcorp reported 1994 net income of $681 million, or $1.52 per share, up from $1.43 in 1993, on operating revenue of $8.345 billion. Edison contributed 88% of net income ($599 million, or $1.34 per share), and the Mission companies contributed 12% (about $0.19 per share). Earnings improved despite a 30% cut to the common dividend in June 1994, which reduced dividend payments by about $94 million. The central investor issue is California's proposed electric industry restructuring. Edison has proposed a competition transition charge to recover about $9.3 billion (net present value) of costs through 2025, including $4.9 billion tied to qualifying facility contracts. Roughly $1 billion of regulatory assets would become a non-cash write-off if rate recovery of generation costs becomes uncertain. The CPUC postponed its proposed policy decision on March 21, 1995, so the outcome remains open. Edison's authorized return on equity rose to 12.1% for 1995, and a 1995 general rate case settlement with the Division of Ratepayer Advocates is pending CPUC approval. Other material items include a CPUC-mandated power purchase solicitation (686 MW, estimated at $14 billion over contract lives) that FERC ruled cannot be compelled under PURPA, environmental remediation liabilities of $114 million with a reasonably possible additional exposure of up to $215 million, and roughly $189 million of damages claimed in wind-generation contract lawsuits. Management also authorized a $150 million share repurchase in January 1995.
Mar 29, 1995
1993
Edison International Annual Report, Year Ended Dec 31, 1993
SCEcorp, the parent holding company of Southern California Edison (Edison), reported 1993 net income of $639 million, or $1.43 per share, down from $1.66 in 1992 and $1.61 in 1991. The decline was driven primarily by special charges totaling about 18 cents per share, mainly at the nonutility Mission companies (geothermal project write-downs, the Carbon II termination, and Mission Land real estate charges). Excluding those charges, earnings fell about 13 cents, with Edison contributing $1.42 per share, flat versus 1992. Edison is the economic core of the company, accounting for 99.3% of 1993 net income, while the Mission Group contributed only 0.7%. Edison's Mission Group business continues to be a source of volatility, as Mission Energy will forgo recognizing earnings on certain geothermal contracts through their 10th year, which management said would significantly reduce 1994 and possibly later earnings even though cash flows are not affected. The regulatory backdrop is the central investor issue. The CPUC cut Edison's authorized return on common equity to 11.0% from 11.8% for 1994, a decision management estimated would reduce 1994 earnings by about 6 cents per share. Several pending CPUC matters could weigh on results, including a proposed full disallowance of Mohave steam-pipe rupture costs (about $90 million), a 1995 general rate case that Edison's own filing and the DRA's preliminary review disagree on sharply, and a performance-based ratemaking proposal. Management also noted that CPUC decisions could affect its ability to maintain the current dividend, which was $1.415 per share for 1993 and represented a 98.6% payout ratio. The balance sheet is large, with total assets of $21.4 billion, and the company generated about $2.0 billion of operating cash flow annually. Capital spending is heavy, with about $6.4 billion of construction expenditures planned for 1994 to 1998. The company also recorded a $2.0 billion income tax-related deferred charge following adoption of the balance sheet method for income taxes. Investors should weigh the stable utility franchise and cash generation against the regulatory pressure on returns, the dividend coverage concern, and the earnings drag from the nonutility businesses.
Mar 21, 1994