01—Abstract
Summary
Summary of the 8-K filed September 19, 2025. Cited figures are marked; the original filing is the authoritative source.
On September 19, 2025, Edison International (EIX) and Southern California Edison (SCE) disclosed a proposed settlement of SCE's application to recover Woolsey Fire costs.
If the California Public Utilities Commission (CPUC) approves it, SCE would recover 35% of its roughly $5.6 billiona in Woolsey-related losses (WEMA costs), or about $2.0 billion, and 85% of about $84 million in restoration costs (CEMA), or about $71 million. The settlement is joined by the Public Advocates Office, EPUC and SBUA, but other parties may still oppose it or take no position. SCE would also waive recovery of about $157 million of pre-AB 1054 losses and will not seek $250 million of Woolsey-related costs under a prior administrative consent order.
The settlement matters most for its earnings and balance-sheet effects. SCE expects a one-time EPS benefit of about 44 cents, recognized in the quarter of a final CPUC decision, plus ongoing interest expense savings of about 18 cents per share annualized. The company also estimates an FFO-to-debt improvement of about 90 basis points.
If the CPUC approves the settlement, SCE would permanently exclude after-tax equity charges and associated debt tied to the disallowed costs from its CPUC regulatory capital structure. Combined with the previously approved TKM settlement, SCE would recover roughly 43% (about $3.6 billionb) of 2017/2018 wildfire and mudslide costs above insurance and FERC recoveries. SCE expects a final CPUC decision within 3 to 6 months.
Woolsey recovery would then be financed through securitized bonds, with proceeds expected by year-end 2026 if securitization is approved. If securitization is denied, the authorized amount would be recovered through rates over five years using long-term debt. Investors should watch the comment period, any ALJ action on its timing, and the CPUC's final decision, since these determine the timing and size of the one-time benefit.
02—Key points
Key Highlights
- SCE would recover 35% of approximately $5.6 billion in Woolsey Fire losses (WEMA), or about $2.0 billion ($1.97 billion), subject to CPUC approval.
- Restoration costs (CEMA) would be recovered at 85%, or about $71 million of roughly $84 million incurred.
- Estimated permanent disallowances total about $3.7 billion, including $3.5 billion of WEMA disallowance plus waived pre-AB 1054 losses (~$157 million) and $250 million not sought under the SED administrative consent order.
- SCE expects a one-time EPS benefit of about 44 cents in the quarter of final CPUC approval, plus roughly 18 cents per share of annualized interest expense savings going forward.
- The settlement would improve credit metrics by roughly 90 basis points of FFO-to-debt and permanently exclude related equity charges and debt from SCE's CPUC capital structure.
- Approval is not assured: other parties may oppose the settlement, and a final decision is targeted within 3 to 6 months, with securitized bond proceeds (~$2.0 billion) expected by year-end 2026.
- Combined with the approved TKM settlement, total recovery of 2017/2018 wildfire and mudslide costs above insurance and FERC recoveries would be about 43% (~$3.6 billion).
03—Questions
Frequently Asked Questions
How much of the Woolsey Fire cost would SCE recover, and what is the customer impact?
If approved, SCE would recover about $2.0 billion, or 35% of roughly $5.6 billion in WEMA losses, plus about $71 million of restoration costs (85% of about $84 million). The estimated cost to an average non-CARE residential customer is about $1.24 per month, compared with an average bill of about $171, assuming securitization.
What is the earnings impact for investors?
SCE expects a one-time EPS benefit of about 44 cents in the quarter the CPUC issues its final decision, reflecting recognized interest expense true-up. Going forward, it expects about 18 cents per share in annualized interest expense savings from lower financing costs.
What happens if the CPUC rejects the securitization application?
The parties agreed that if SCE's securitization application is denied, the authorized amounts would be recovered in rates over five years, financed with long-term debt. This would reduce the financing benefit relative to securitization.
Is the settlement final, and what is the timeline?
No. The settlement is subject to CPUC approval. Parties have 30 days to comment, with replies due 15 days later unless the administrative law judge shortens the period. SCE anticipates a final decision within 3 to 6 months, then roughly 6 months for securitization approval, with proceeds expected by the end of 2026.
Does this settlement resolve SCE's 2017/2018 wildfire and mudslide exposure?
It is a significant step but not a full resolution. Together with the approved TKM settlement, SCE would recover about 43% (~$3.6 billion) of 2017/2018 wildfire and mudslide costs above insurance and FERC recoveries. The remainder, including the waived pre-AB 1054 losses and other disallowances, is not recoverable under these agreements.
04—Continue