8-KRegulation FDOther EventsExhibits & Filings

EDISON INTERNATIONAL 8-K Report, Regulation FD Disclosure (Aug 30, 2019)

Filed August 30, 2019For Securities:EIX

Summary

This 8-K filing from Edison International (EIX) on August 30, 2019, primarily details Southern California Edison's (SCE) 2021 General Rate Case (GRC) application filed with the California Public Utilities Commission (CPUC). SCE is seeking a significant increase in its authorized revenue requirement, totaling approximately $7.601 billion for 2021, which represents a 12.7% increase over 2020 authorized rates. This request is driven by substantial investments required for wildfire mitigation, grid modernization, de-carbonization efforts, and integration of new energy resources, aligned with California's public policy objectives. The GRC filing also outlines a projected capital program of $25.6 billion for 2019-2023, with a potential range of $23.8 billion. A key element is the significant capital allocation towards wildfire risk reduction, with approximately $1.6 billion in related capital expenditures being excluded from the equity portion of the rate base per Assembly Bill 1054. The filing also addresses balancing accounts for wildfire mitigation and insurance costs due to anticipated variability in actual expenses compared to forecasts, alongside a separate filing for the 2020 cost of capital.

Key Highlights

  • 1Southern California Edison (SCE) filed its 2021 General Rate Case (GRC) application requesting $7.601 billion in revenue requirement for 2021, a 12.7% increase over 2020.
  • 2The GRC request is primarily driven by necessary investments in wildfire mitigation, de-carbonization, grid modernization, and integration of distributed energy resources.
  • 3SCE forecasts a total capital program of $25.6 billion for 2019-2023, with a potential reduction to $23.8 billion based on a range case scenario.
  • 4Approximately $1.6 billion in wildfire risk mitigation capital expenditures will be excluded from the equity portion of SCE's rate base, as per Assembly Bill 1054.
  • 5To manage anticipated cost volatility, SCE has proposed two-way balancing accounts for wildfire mitigation, vegetation management, and wildfire insurance premiums.
  • 6SCE filed a separate application for its 2020 cost of capital, adjusting its requested return on equity (ROE) to 11.45% for 2020, reflecting reduced wildfire cost recovery risk under AB 1054.
  • 7The company cannot predict the final authorized revenue requirement or the timing of the CPUC's decision.

Frequently Asked Questions

The primary purpose of the 2021 GRC filing by Southern California Edison (SCE) is to seek authorization from the California Public Utilities Commission (CPUC) for its revenue requirement for the three-year period 2021-2023. This revenue requirement funds essential infrastructure upgrades, wildfire mitigation efforts, grid modernization, and the integration of new energy technologies necessary to meet California's public policy goals while ensuring safe, reliable, and affordable service to customers.

The main drivers for the requested revenue increase are the significant investments needed for wildfire mitigation programs, including grid hardening and vegetation management, as well as costs associated with de-carbonization efforts through electrification and the integration of distributed energy resources onto a modernizing grid. Spending on infrastructure previously authorized and placed into service also contributes to the request.

SCE forecasts a total capital program of $25.6 billion from 2019-2023, with a substantial portion dedicated to wildfire mitigation. While these expenditures are included in the total capital forecast, approximately $1.6 billion in wildfire risk mitigation capital expenditures will be excluded from the equity portion of SCE's rate base under Assembly Bill 1054. The company has also proposed balancing accounts to track wildfire mitigation and insurance costs, acknowledging that actual expenses may vary from forecasts, which could affect future rate adjustments.

SCE has filed an application to establish its authorized cost of capital for utility operations for the three-year term beginning January 1, 2020. Initially requesting a 16.60% return on common equity (ROE), SCE updated its request to 11.45% for 2020, reflecting the anticipated impact of Assembly Bill 1054 on its wildfire cost recovery risk. This proposed cost of capital, along with its capital structure, is projected to result in an approximate $204 million increase in the revenue requirement for 2020.