10-QPeriod: Q3 FY2006

EDISON INTERNATIONAL Quarterly Report for Q3 Ended Sep 30, 2006

Filed November 3, 2006For Securities:EIX

Summary

Edison International (EIX) reported strong performance for the nine months ended September 30, 2006, with consolidated earnings of $893 million, or $2.71 per share, an increase from $864 million, or $2.64 per share, in the prior year. This growth was primarily driven by Southern California Edison Company (SCE), which saw improved earnings due to rate increases authorized by the California Public Utilities Commission (CPUC) and favorable tax settlements. The non-utility power generation segment also contributed positively, although its performance was impacted by a significant loss on early extinguishment of debt and lower energy trading income. Key areas of focus for investors include SCE's rate case decisions, which are favorably impacting its revenue, and EME's ongoing efforts to manage its debt obligations and environmental compliance costs. The company's strong cash flow generation from operations is supporting capital expenditures and dividend payments, providing a stable financial footing. Investors should monitor the progress of new wind projects and the company's continued focus on operational efficiency and regulatory compliance.

Key Highlights

  • 1Edison International reported consolidated earnings of $893 million for the first nine months of 2006, up from $864 million in the prior year, driven by improved performance at SCE.
  • 2Southern California Edison (SCE) benefited from rate increases authorized by the CPUC, contributing to higher revenues and earnings.
  • 3EME experienced a significant loss on early extinguishment of debt totaling $143 million due to debt refinancing activities.
  • 4The company's operational cash flow from continuing operations increased significantly to $2.89 billion for the nine months ended September 30, 2006, up from $1.71 billion in the prior year.
  • 5Edison International continues to invest in renewable energy projects, particularly wind farms, with significant capital expenditures planned.
  • 6The company is managing potential environmental liabilities and expects to comply with new regulations, though costs could be material.
  • 7The FERC notice regarding an investigatory proceeding against EMMT for alleged violations of bidding practices introduces a potential risk that requires ongoing monitoring.

Frequently Asked Questions

The primary driver was the improved performance of Southern California Edison (SCE), benefiting from authorized rate increases by the CPUC and favorable tax settlements. This offset some of the negative impacts from the non-utility power generation segment.

Yes, Edison Mission Energy (EME), a subsidiary, recorded a $143 million loss on early extinguishment of debt in the second quarter of 2006 due to debt refinancing. Additionally, the company faces potential sanctions from a FERC investigatory proceeding against its subsidiary EMMT, which requires ongoing monitoring.

The company is actively investing in new wind projects, with significant capital expenditures planned for wind farm construction and turbine purchases. SCE is also pursuing new utility-owned peaker generation projects to meet reliability needs.

Edison International is navigating regulatory changes, including the implementation of new depreciation rates and the management of balancing accounts for fuel and power costs at SCE. The company is also monitoring and planning for compliance with evolving environmental regulations, particularly those related to emissions, which may involve material capital costs.