Why did core EPS decline year over year in Q2 2025?

SCE's core EPS fell to $1.23 from $1.45 (on a per-share basis for SCE) primarily due to higher operations and maintenance expense and the net impact of regulatory decisions in each period. Parent and Other core loss widened to $0.26 per share from $0.22, driven by higher interest expense. Management noted that the comparison is not especially meaningful because SCE has not yet received a final 2025 GRC decision and is recording revenue at 2024 authorized levels adjusted for the new ROE.

What does the GRC proposed decision mean for SCE's earnings outlook?

The proposed decision generally aligns with SCE's range case rate base forecast, with base revenue of $9.8 billion in 2025 rising to $11 billion in 2028. Management said that holding all else constant, the total company rate base would be broadly in line with the current range case. However, the PD shifts about 400 miles from targeted undergrounding to covered conductor and scales back infrastructure replacement, which SCE will contest. Management reaffirmed 2025 guidance but will refresh long-term projections after the final decision, expected no earlier than August 28.

What is the financial exposure from the Eaton Fire, and how will SCE pay claims?

The company did not disclose new information on the ignition or estimated cost. Management said SCE equipment could have been associated with the ignition absent other evidence, and that numerous lawsuits have been filed. For the Wildfire Recovery Compensation Program, management expects costs to be offset by SCE's customer-funded self-insurance for the first $1 billion, then by Wildfire Fund receivables or regulatory assets under AB 1054. Because the Wildfire Fund reimbursement process is expected to be efficient, SCE would not need to issue long-term debt to fund payments. Investors should note that these costs are not yet quantified in this filing.

What is the status of California's AB 1054 wildfire framework and why does it matter?

Management said it is encouraged by discussions with legislative leaders and the Governor's office and expects policymakers to strengthen the AB 1054 framework during the current legislative session. Management also warned that securitizing capital, as some proposals contemplate, could raise customer costs by weakening credit quality. The outcome matters because AB 1054 governs utility liability for catastrophic wildfires and the Wildfire Insurance Fund. Management has said a fuller solution could be addressed next year if not completed this session.

Is the 2025-2028 earnings growth target still achievable?

Management reaffirmed the 5-7% core EPS CAGR for 2025-2028 and the 2025 core EPS range of $5.94-$6.34. The 2028 target is based on the midpoint of the original 2025 guidance ($5.50-$5.90) plus a 14-cent run-rate interest expense reduction from the TKM settlement. Key sensitivities include the CPUC ROE (about 7 cents per 10 bps), the GRC outcome (15-35 cents if the requested depreciation increase is not authorized), and financing costs. Management indicated that the financing plan requires minimal equity, apart from roughly $0.4 billion of equity excluding the one-time TKM true-up.

EIX 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 31, 2025. Cited figures are marked; the original filing is the authoritative source.

Edison International (EIX) reported second-quarter 2025 GAAP EPS of $0.89^a and core EPS of $0.97, down from $1.23 core EPS a year earlier.

Management attributes the year-over-year decline mainly to higher operations and maintenance expense at Southern California Edison (SCE) and higher interest expense at the parent. The comparison is distorted because SCE is recognizing revenue at 2024 authorized levels, adjusted for the 2025 ROE, until it receives a final 2025 General Rate Case (GRC) decision. EIX reaffirmed its 2025 core EPS guidance of $5.94^b-$6.34 and its 5-7% core EPS CAGR target for 2025-2028 ($6.74-$7.14 for 2028).

The most important developments for investors are regulatory and legal. The CPUC issued a GRC proposed decision on July 28, 2025, authorizing base revenue of $9.8 billion^c (about 93% of SCE's request) and a 2025 revenue requirement increase of $1.2 billion versus $1.9 billion requested. SCE will seek revisions in its opening comments, which are due August 18.

The Eaton Fire investigation is ongoing, and management said SCE equipment could have been associated with the ignition. SCE plans to launch a Wildfire Recovery Compensation Program this fall. Management also expects legislative action to strengthen California's AB 1054 wildfire framework during the current session, though this is not assured.

Year-to-date results are dominated by the TKM settlement, which produced a $1.34 billion^d pre-tax recovery in the first half of 2025 and lifted six-month GAAP EPS to $4.62. Balance sheet items to note include total assets of $88.8 billion, long-term debt of $35.0 billion, and a $1.6 billion securitization of TKM costs expected to close by year-end 2025. Management said the 2025 GRC final decision and the subsequent guidance refresh are the key near-term catalysts.

02—Key points

Key Highlights

Q2 2025 core EPS of $0.97 versus $1.23 a year ago, with GAAP EPS of $0.89 versus $1.14; the decline is driven by higher SCE O&M and parent-level interest expense, and the year-over-year comparison is distorted by the pending GRC decision.
2025 core EPS guidance of $5.94-$6.34 was reaffirmed, and the 5-7% core EPS CAGR for 2025-2028 (implying $6.74-$7.14 in 2028) was reiterated.
The GRC proposed decision would authorize $9.8 billion of base revenue (93% of request) and about $1.2 billion of 2025 revenue requirement increase versus $1.9 billion requested; SCE will seek revisions, with the Commission's earliest vote on August 28.
Eaton Fire investigations remain ongoing with no new disclosures on ignition or cost; SCE will launch a Wildfire Recovery Compensation Program this fall, which management said should be largely offset by self-insurance, the Wildfire Fund, and regulatory assets rather than new long-term debt.
Six-month GAAP results were boosted by $1.34 billion of pre-tax TKM settlement recoveries, producing YTD basic EPS of $4.62 and $877 million of net non-core gains, including the TKM items.
Management reaffirmed plans for a 2026 cost of capital request (ROE of 11.75% sought versus 10.33% authorized for 2025), with a proposed decision expected in November 2025, and a Woolsey cost recovery request of $5.4 billion for resolution in Q1 2026.
Capital plan of $38-43 billion for 2023-2028 and rate base growth of about 6-8% (~8% CAGR) were unchanged pending the final GRC decision, with the company planning to refresh guidance six weeks after that decision.

03—Questions

Frequently Asked Questions

Why did core EPS decline year over year in Q2 2025?
SCE's core EPS fell to $1.23 from $1.45 (on a per-share basis for SCE) primarily due to higher operations and maintenance expense and the net impact of regulatory decisions in each period. Parent and Other core loss widened to $0.26 per share from $0.22, driven by higher interest expense. Management noted that the comparison is not especially meaningful because SCE has not yet received a final 2025 GRC decision and is recording revenue at 2024 authorized levels adjusted for the new ROE.
What does the GRC proposed decision mean for SCE's earnings outlook?
The proposed decision generally aligns with SCE's range case rate base forecast, with base revenue of $9.8 billion in 2025 rising to $11 billion in 2028. Management said that holding all else constant, the total company rate base would be broadly in line with the current range case. However, the PD shifts about 400 miles from targeted undergrounding to covered conductor and scales back infrastructure replacement, which SCE will contest. Management reaffirmed 2025 guidance but will refresh long-term projections after the final decision, expected no earlier than August 28.
What is the financial exposure from the Eaton Fire, and how will SCE pay claims?
The company did not disclose new information on the ignition or estimated cost. Management said SCE equipment could have been associated with the ignition absent other evidence, and that numerous lawsuits have been filed. For the Wildfire Recovery Compensation Program, management expects costs to be offset by SCE's customer-funded self-insurance for the first $1 billion, then by Wildfire Fund receivables or regulatory assets under AB 1054. Because the Wildfire Fund reimbursement process is expected to be efficient, SCE would not need to issue long-term debt to fund payments. Investors should note that these costs are not yet quantified in this filing.
What is the status of California's AB 1054 wildfire framework and why does it matter?
Management said it is encouraged by discussions with legislative leaders and the Governor's office and expects policymakers to strengthen the AB 1054 framework during the current legislative session. Management also warned that securitizing capital, as some proposals contemplate, could raise customer costs by weakening credit quality. The outcome matters because AB 1054 governs utility liability for catastrophic wildfires and the Wildfire Insurance Fund. Management has said a fuller solution could be addressed next year if not completed this session.
Is the 2025-2028 earnings growth target still achievable?
Management reaffirmed the 5-7% core EPS CAGR for 2025-2028 and the 2025 core EPS range of $5.94-$6.34. The 2028 target is based on the midpoint of the original 2025 guidance ($5.50-$5.90) plus a 14-cent run-rate interest expense reduction from the TKM settlement. Key sensitivities include the CPUC ROE (about 7 cents per 10 bps), the GRC outcome (15-35 cents if the requested depreciation increase is not authorized), and financing costs. Management indicated that the financing plan requires minimal equity, apart from roughly $0.4 billion of equity excluding the one-time TKM true-up.

04—Continue

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