8-KOther Events

EDISON INTERNATIONAL 8-K Report, Corporate Update (Jan 7, 2015)

Filed January 7, 2015For Securities:EIX

Summary

Edison International, through its subsidiary Southern California Edison Company (SCE), received notification on December 24, 2014, that their joint request for a one-year extension of the Cost of Capital Adjustment Mechanism (CCAM) was granted by the California Public Utilities Commission (CPUC). This extension effectively maintains SCE's current cost of capital through 2016, providing a period of regulatory stability regarding its capital costs. This development is positive for investors as it reduces near-term uncertainty surrounding SCE's cost of capital. The continuation of the existing mechanism shields the company from potential adverse adjustments that could arise from fluctuating interest rates, allowing for more predictable financial planning and potentially safeguarding profitability. The extension is contingent on interest rates not triggering an adjustment, but the primary impact is the preservation of the status quo for a defined period.

Key Highlights

  • 1Southern California Edison Company (SCE), a subsidiary of Edison International, secured a one-year extension for its Cost of Capital Adjustment Mechanism (CCAM).
  • 2The California Public Utilities Commission (CPUC) granted the extension via a letter dated December 24, 2014.
  • 3This extension means SCE's current cost of capital will be maintained through 2016.
  • 4The extension provides a period of regulatory certainty regarding SCE's capital costs.
  • 5The current cost of capital will remain in effect unless a change in interest rates mandates an adjustment.
  • 6This decision was made in conjunction with other major California utility companies, including Pacific Gas & Electric and San Diego Gas & Electric.

Frequently Asked Questions

The Cost of Capital Adjustment Mechanism (CCAM) is a regulatory mechanism that allows utility companies, like Southern California Edison (SCE), to adjust their cost of capital based on certain market conditions, typically related to interest rates. It provides a framework for how the CPUC determines the appropriate rate of return for the company's investments.

The extension provides a period of stability for SCE's cost of capital through 2016. This reduces near-term financial uncertainty and allows for more predictable earnings, as the company is shielded from potential increases in its borrowing costs due to interest rate fluctuations during this period.

Yes, the extension maintains the current cost of capital through 2016, unless a significant change in interest rates triggers an adjustment according to the terms of the mechanism.

The request for the extension was a joint effort involving Southern California Edison Company, Pacific Gas & Electric Company, San Diego Gas & Electric Company, and Southern California Gas Company.