8-KRegulation FDExhibits & Filings

EDISON INTERNATIONAL 8-K Report, Regulation FD Disclosure (Nov 25, 2014)

Filed November 25, 2014For Securities:EIX

Summary

Edison International, through its subsidiary Southern California Edison (SCE), along with other major California utilities, has formally requested a one-year extension for the existing Cost of Capital Adjustment Mechanism (CCAM) from the California Public Utilities Commission (CPUC). This joint filing, which includes Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Gas Company, indicates a collaborative effort to maintain the current cost of capital framework for an additional year. The request has the support of key consumer advocacy groups, the Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN), suggesting a consensus among stakeholders on this matter. This extension is significant for investors as it provides a period of regulatory stability regarding the allowed rate of return for these utilities. By seeking to prolong the current CCAM, the utilities aim to avoid potential adjustments to their cost of capital that could impact future earnings and cash flows. The support from ORA and TURN implies that the proposed extension is viewed favorably from a ratepayer perspective, potentially reducing contentious regulatory proceedings related to capital structure and cost of debt/equity.

Key Highlights

  • 1Southern California Edison (SCE), a subsidiary of Edison International, jointly requested a one-year extension of the Cost of Capital Adjustment Mechanism (CCAM).
  • 2The request was submitted to the Executive Director of the California Public Utilities Commission (CPUC).
  • 3Other major California utilities, including Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Gas Company, are co-signatories on the letter.
  • 4The existing CCAM framework is proposed to be extended for an additional year.
  • 5Consumer advocacy groups, the Office of Ratepayer Advocates (ORA) and The Utility Reform Network (TURN), have expressed support for the extension request.
  • 6The filing is made under Regulation FD Disclosure (Item 7.01) and is attached as Exhibit 99.1.

Frequently Asked Questions

The Cost of Capital Adjustment Mechanism (CCAM) is a regulatory process that allows electric and gas utilities in California to adjust their authorized cost of capital periodically. This mechanism is designed to reflect changes in market conditions, interest rates, and other factors that influence the cost of debt and equity for regulated utilities, ultimately impacting the rates charged to customers.

The utilities are requesting a one-year extension of the existing CCAM to maintain regulatory stability regarding their authorized rate of return. This likely aims to avoid potential disruptions or unfavorable adjustments to their cost of capital that could arise from a new rate-setting process, providing a predictable environment for financial planning and investment.

While the support from ORA and TURN is a significant positive factor, it does not guarantee the CPUC will approve the extension. The CPUC will consider the request, along with any other input, in its regulatory decision-making process.

An extension of the CCAM provides a period of certainty regarding the utilities' authorized rate of return. This predictability can be viewed favorably by investors as it reduces regulatory risk and helps to ensure a stable earnings and cash flow environment, assuming the current cost of capital remains favorable.