01—Abstract
Summary
Summary of the 10-K filed February 18, 2026. Cited figures are marked; the original filing is the authoritative source.
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 milliona ($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 billionb 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 billionc, 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 billiond. 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.
02—Key points
Key Highlights
- Reported EPS of $11.58 basic (2025) versus $3.33 in 2024, but core earnings of $2,520 million ($1,900 million in 2024) better reflect operating performance; the GAAP jump is driven by $1.9 billion of after-tax non-core items, mainly TKM and Woolsey settlement recoveries.
- Eaton Fire: $1.1 billion of settlement losses recorded; management says further material losses are probable but cannot estimate a range; bellwether trial January 2027; Initial Account reimbursement expected above $1.0 billion, subject to CPUC prudency review and a Liability Cap of about $4.3 billion.
- Capital plan of $40.6 billion for 2026-2030 (vs. $6.7 billion of capex in 2025), with rate base projected to grow from $48.2 billion to $67.9 billion by 2030.
- Credit ratings diverged after SB 254: S&P downgraded SCE to BBB- (Negative outlook), while Moody's (Baa1) and Fitch (BBB) are Stable.
- CPUC approved a 10.03% ROE and a 52% common equity structure for 2026-2028; the 2025 GRC set 2025 revenue requirement at $9.7 billion, with a 2026 revenue requirement decrease of approximately $51 million from the cost of capital decision.
- Leverage close to covenant limits: SCE debt-to-capitalization 0.57x (limit 0.65x) and EIX 0.64x (limit 0.70x); EIX also has $2.4 billion of short-term debt and $1.9 billion of current long-term debt at year-end.
- Common dividend raised 6% to $3.51 annualized; $0.8775 quarterly dividend declared Feb 18, 2026, with a target payout ratio of 45%-55% of SCE core earnings; $1.2 billion tender for preferred stock completed in December 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2025filed February 18, 2026Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $19.32B$17.60B | +9.8% |
| Operating Expenses | $12.22B$14.67B | −16.7% |
| Operating Income | $7.09B$2.93B | +142.1% |
| Net Income | $4.70B$1.55B | +204.1% |
| EPS (Basic) | $11.58$3.33 | +247.7% |
| EPS (Diluted) | $11.55$3.31 | +248.9% |
| Shares Outstanding (Basic) | 385.00M386.00M | −0.3% |
| Shares Outstanding (Diluted) | 386.00M388.00M | −0.5% |
05—Questions
Frequently Asked Questions
Why did reported net income rise so much in 2025?
Most of the increase came from non-core items. SCE recorded about $1.9 billion of after-tax non-core gains, primarily $1.3 billion of pre-tax recoveries under the TKM Settlement Agreement and $1.6 billion under the Woolsey Settlement Agreement, which reversed prior claim charges. Core earnings, which strip these items out, grew more modestly to $2.52 billion from $1.90 billion, driven by the 2025 GRC revenue increase and interest expense benefits from the settlement recoveries.
How much could the Eaton Fire cost SCE, and how is it being funded?
SCE has recorded $1.1 billion of settlement losses to date, and management says additional material losses are probable but cannot yet be estimated. Expected offsets include $917 million of customer-funded self-insurance, $134 million of Wildfire Fund recoveries, and $70 million of FERC recoveries. SCE will seek reimbursement for losses above $1.0 billion from the Initial Account, subject to a prudency review. Any CPUC-disallowed amounts would be reimbursed to the fund up to a Liability Cap of about $4.3 billion, unless a willful disregard finding applies.
Why did S&P downgrade SCE, and what does it mean for financing costs?
S&P cut SCE's long-term issuer rating to BBB- with a Negative outlook. The filing ties rating risk to wildfire liability exposure, the sufficiency of the Wildfire Fund, and whether SB 254's April 1, 2026 recommendations produce durable legislative relief. A downgrade below investment grade would require additional collateral under some power contracts and environmental obligations, with about $50 million potentially due for remediation and $115 million for workers' compensation in discretionary cases. Lower ratings also raise borrowing costs for commercial paper, credit facilities, and bonds.
What is the growth outlook, and what is the main risk to funding it?
The company projects $40.6 billion of capital expenditures for 2026-2030 and rate base growing to $67.9 billion by 2030, roughly 40% above year-end 2025 levels. Growth depends on regulatory approval and cost recovery, and it adds to financing needs at a time when leverage is near covenant limits. Management also notes that rising customer rates create affordability pressure that could limit future rate increases, and it has planned the SB 254 securitization and other financing to support the program.
Is the common dividend secure given wildfire exposure?
The board declared a $0.8775 quarterly dividend on February 18, 2026, and management targets a 45%-55% payout of SCE core earnings. However, the filing states that dividend declarations depend on California law tests for retained earnings and solvency, which the board reviews with wildfire information in mind. SCE's ability to upstream dividends to Edison International also depends on its own capital requirements, preference stock obligations, and wildfire cost outcomes. Large uninsured wildfire costs could restrict those payments.
06—Continue