8-KOther EventsExhibits & Filings

EDISON INTERNATIONAL 8-K Report, Corporate Update (Sep 1, 2016)

Filed September 1, 2016For Securities:EIX

Summary

On September 1, 2016, Edison International's subsidiary, Southern California Edison (SCE), filed its 2018 General Rate Case (GRC) application with the California Public Utilities Commission (CPUC) for the three-year period 2018-2020. SCE is requesting an increase in its authorized revenue requirement, starting with $5.885 billion for Test Year 2018, representing a 2.7% increase over 2017 authorized rates. The application also proposes revenue requirement increases of 4.2% in 2019 and 5.2% in 2020, totaling significant requested increases over the three-year period. The primary drivers for this request are substantial investments needed in electric infrastructure to replace aging equipment, enhance capacity for customer and load growth, improve safety and reliability, and integrate increasing amounts of distributed energy resources (DER). SCE projects a total capital program of $23.3 billion from 2016 through 2020, with a forecast weighted-average rate base increasing to $35.1 billion by 2020, reflecting an 8.5% compound annual growth rate. Notably, a significant portion of the capital expenditure request, approximately $2.1 billion, is dedicated to grid modernization.

Key Highlights

  • 1Southern California Edison (SCE) filed its 2018 General Rate Case (GRC) application seeking a 2.7% increase in revenue for 2018, amounting to $5.885 billion, with further increases proposed for 2019 and 2020.
  • 2The GRC request is driven by significant investments needed in electric infrastructure modernization, capacity expansion, safety, reliability, and integration of distributed energy resources (DER).
  • 3SCE forecasts a total capital program of $23.3 billion for the 2016-2020 period.
  • 4The estimated weighted-average rate base is projected to grow to $35.1 billion by 2020, indicating an 8.5% compound annual growth rate.
  • 5Approximately $2.1 billion is requested for grid modernization, which includes enhancing automation, communications, and analytics for grid operations and DER integration.
  • 6SCE has historical success in receiving a high percentage of its requested capital spending in previous GRCs (81%-92%).
  • 7The approval of a memorandum account for grid modernization expenditures by the end of 2016 is critical to avoid delays or reductions in these capital programs.

Frequently Asked Questions

The main purpose of the 2018 General Rate Case (GRC) filing by Southern California Edison (SCE) is to request authorization from the California Public Utilities Commission (CPUC) for necessary revenue to fund significant investments in its electric infrastructure over the three-year period of 2018-2020. These investments are crucial for replacing aging equipment, meeting customer and load growth, enhancing safety and reliability, and integrating new distributed energy resources (DER).

SCE is requesting a Test Year 2018 revenue requirement of $5.885 billion, which represents a 2.7% increase over the 2017 authorized revenue. The application also includes proposed revenue requirement increases of 4.2% for 2019 and 5.2% for 2020, indicating a gradual increase in authorized total rates over the three-year period.

SCE forecasts a total capital program of $23.3 billion for the years 2016 through 2020. Key areas of focus include traditional infrastructure replacements and maintenance, expansions due to load growth, and a significant $2.1 billion dedicated to grid modernization. Grid modernization efforts will aim to improve safety, reliability, facilitate DER adoption, and enable DERs to provide grid services through automation and analytics.

While SCE has historically received a high percentage of its requested capital spending in prior GRCs (81%-92% for traditional programs), the company notes that results from prior cases may not be predictive for grid modernization capital expenditures, as SCE has no prior experience obtaining regulatory approval for programs involving DER adoption and integration as a significant component. Additionally, the approval of a memorandum account by the end of 2016 is critical for the grid modernization capital expenditures.