Business Overview and History
Edison International was incorporated in 1987 as the parent holding company of Southern California Edison (SCE), a California public utility incorporated in 1909. SCE, Edison International's principal subsidiary, is primarily engaged in the business of supplying and delivering electricity through its electrical infrastructure to an approximately 50,000-square-mile area across Southern, Central, and Coastal California.
SCE has served customers in its service area since 1909. Over the decades, SCE has grown to become one of the largest electric utilities in the United States, serving approximately 5.32 million customers. SCE has invested significantly in expanding and upgrading its transmission and distribution systems to meet the growing electricity needs of its service area.
In the early 2000s, California experienced an energy crisis that led to electricity shortages and price spikes. SCE, along with other California utilities, faced significant challenges during this period. The state implemented market reforms and other measures to address the crisis, and SCE was able to recover from the impacts.
More recently, SCE has faced the challenge of wildfires in its service area. Severe weather conditions, including drought and high winds, have contributed to an increase in the frequency and severity of wildfires in California. SCE has worked to harden its electrical infrastructure and implement enhanced wildfire mitigation measures in response to this threat.
Despite these challenges, SCE has remained a critical provider of electricity to its customers and a key part of the economy and communities it serves. The company has continued to invest in upgrading and modernizing its systems to improve reliability and prepare for the future energy needs of its service area.
Over the decades, Edison International has navigated the industry's evolution, investing heavily in grid modernization, renewable energy integration, and customer-centric initiatives. The financial crisis of 2008 and the subsequent natural gas price spikes in the mid-2010s further tested the company's mettle, but Edison International emerged stronger, leveraging its operational expertise and regulatory relationships to continue delivering reliable service to its customers.
In recent years, the company has been at the forefront of California's ambitious clean energy goals, investing billions in the state's transition to a low-carbon future. Edison International's commitment to sustainability is reflected in its target to achieve net-zero greenhouse gas emissions by 2045, aligning with the state's broader climate action plan.
Financial Performance and Outlook
Edison International's financial performance has been strong, with the company consistently meeting or exceeding its annual earnings per share (EPS) guidance over the past two decades. In 2024, the company reported core EPS of $4.93, slightly above the midpoint of its guidance range. This solid performance underscores the company's ability to effectively manage its operations and navigate the industry's challenges.
For the fiscal year 2024, Edison International reported annual revenue of $17.60 billion and net income of $1.55 billion. The company's annual operating cash flow stood at $5.01 billion, while free cash flow was negative $693 million, reflecting the significant capital investments made during the year.
In the fourth quarter of 2024, Edison International generated revenue of $3.98 billion and net income of $340 million. The company's financial position remains solid, with $193 million in cash and $2.10 billion in available credit as of December 31, 2024. Edison International's liquidity is further supported by its credit facilities, including a $1.50 billion revolving credit facility at the parent company level and a $3.40 billion revolving credit facility at SCE.
The company's balance sheet reflects a debt-to-equity ratio of 0.12, a current ratio of 0.85, and a quick ratio of 0.78 as of December 31, 2024, indicating a stable financial position.
Looking ahead, Edison International has revised its 2025 core EPS guidance to a range of $5.94 to $6.34 per share. This updated guidance incorporates the impact of the recently approved TKM settlement, which includes a $0.30 one-time true-up for historical interest expense and a $0.14 annual reduction in unrecoverable risk expense.
Furthermore, Edison International has maintained its target of 5% to 7% core EPS growth from the 2025 base through 2028, with the $0.14 interest expense reduction from the TKM settlement factored into the 2028 EPS range. This consistent and robust growth outlook is underpinned by the company's strategic investments in grid modernization, renewable energy integration, and customer-centric initiatives, which are expected to drive sustained operational and financial performance.
It's worth noting that SCE will be recording revenue at 2024 rates, adjusted for the change in ROE, until it receives a final decision on its 2025 General Rate Case (GRC). As a result, quarterly results comparisons may not be meaningful until the GRC decision is received, at which point a true-up will be recorded.
Regulatory Environment and Cost Recovery
Edison International's financial stability and growth are heavily influenced by the regulatory environment in California, where the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC) play pivotal roles in the company's ratemaking and cost recovery processes.
The recent approval of the TKM settlement agreement by the CPUC was a significant milestone, allowing SCE to recover approximately $1.6 billion, or 60%, of the wildfire claims payments and associated costs related to the pre-AB 1054 wildfires. This settlement signals a constructive cost recovery framework in California, providing a positive precedent for the company's future endeavors.
Furthermore, the implementation of AB 1054, the state's landmark wildfire legislation, has reshaped the regulatory landscape, offering a more predictable and supportive framework for utilities like SCE. The legislation's provisions, including the establishment of the Wildfire Insurance Fund and the revised prudency standard, have bolstered investor confidence in the long-term viability of California's investor-owned utilities.
Operational Highlights and Grid Resilience
Edison International's operational excellence is exemplified by its continued progress in hardening the grid and enhancing system resilience. In 2024, SCE installed more than 800 miles of covered conductor, bringing the total deployment to over 6,400 miles. This robust grid modernization effort has significantly improved the utility's ability to mitigate wildfire risks and ensure the reliable delivery of electricity to its customers.
The company's focus on public safety and risk mitigation is further demonstrated by its proactive use of Public Safety Power Shutoffs (PSPS) during extreme weather events. In 2024, SCE initiated PSPS 21 times, reducing customer minutes interrupted by 16% compared to the prior year, despite the intensity of the weather conditions.
Edison International's commitment to operational excellence extends beyond its core utility business. The company's non-utility subsidiary, Trio, has emerged as a global leader in providing integrated sustainability and energy solutions to commercial, industrial, and institutional customers, diversifying the company's revenue streams and contributing to its overall financial strength.
SCE's capital expenditures totaled $5.70 billion in 2024, primarily related to investments in its distribution, transmission, and generation assets. The company forecasts capital expenditures of $26.60 billion to $31.50 billion for the 2025-2028 period to support grid modernization, renewable integration, and other initiatives. SCE's year-end rate base was $45.70 billion at December 31, 2024, reflecting the significant investments made in its infrastructure.
Environmental, Social, and Governance (ESG) Initiatives
As a utility at the forefront of the clean energy transition, Edison International has placed a strong emphasis on its environmental, social, and governance (ESG) initiatives. The company's target to achieve net-zero greenhouse gas emissions by 2045 underscores its dedication to sustainability and aligns with California's ambitious climate goals.
In 2024, approximately 46% of SCE's customer deliveries came from carbon-free resources, including 9% from nuclear generation, 4% from large hydroelectric, and 38% from renewable sources eligible under California's Renewables Portfolio Standard (RPS). SCE plans to continue increasing its carbon-free generation to meet California's mandates, which require 90% of retail sales to be from carbon-free resources by 2035 and 100% by 2045.
Edison International's investment in renewable energy integration, energy storage, and electric vehicle infrastructure has positioned the company as a key enabler of the state's clean energy future. The company's efforts to modernize the grid and enhance system resilience have also played a crucial role in supporting the state's climate adaptation and mitigation strategies.
Beyond its environmental commitments, Edison International has also demonstrated a strong focus on social responsibility and corporate governance. The company's workforce development initiatives, diversity and inclusion programs, and community engagement efforts have earned it widespread recognition as a responsible corporate citizen.
Risks and Challenges
While Edison International's future appears promising, the company faces various risks and challenges that warrant close attention. The ongoing investigation into the potential role of SCE's equipment in the Eaton Fire, a devastating wildfire that struck Southern California in January 2025, remains a significant concern. The ultimate determination of SCE's liability, if any, and the associated financial implications could have a material impact on the company's performance.
Moreover, the company's financial health is closely tied to the regulatory environment in California. Any unfavorable regulatory decisions or changes in the state's policies could adversely affect Edison International's ability to recover its costs and earn a reasonable return on its investments.
Additionally, the company's capital-intensive nature and the ongoing need for grid modernization and infrastructure upgrades expose it to the risks of cost overruns, supply chain disruptions, and labor shortages – factors that could pressure the company's financial performance and customer rates.
Conclusion
Edison International's unwavering commitment to delivering reliable, sustainable, and customer-centric energy solutions has positioned the company as a leader in the utility industry. Its strategic investments in grid modernization, renewable energy integration, and customer-focused initiatives have strengthened its resilience and positioned it for long-term growth.
As the company navigates the evolving regulatory landscape and addresses the challenges posed by extreme weather events and the transition to a low-carbon economy, Edison International's proven track record of operational excellence and financial discipline instills confidence in its ability to continued success. With a robust growth outlook, a focus on environmental sustainability, and a steadfast dedication to its customers and communities, Edison International remains poised to power the future of the electric utility industry.