Business Context and Reporting Period
This Form 10-K is a combined annual report for Edison International (the parent holding company) and its wholly-owned subsidiary, Southern California Edison Company (SCE). The report covers the fiscal year ended December 31, 2025. SCE is an investor-owned public utility serving approximately 5 million customers across Southern, Central, and Coastal California. Edison International also owns Trio, a global energy advisory firm, though its activities are not material as a separate segment.
Key Financial Metrics (2025 vs. 2024)
| Metric (in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Operating Revenue (SCE) | $19,276 | $17,547 | +$1,729 |
| Net Income (SCE) | $5,033 | $1,794 | +$3,239 |
| Net Income Available to Common (Edison Int'l) | $4,459 | $1,284 | +$3,175 |
| Core Earnings (Edison Int'l) | $2,520 | $1,900 | +$620 |
| Operating Cash Flow (SCE) | $6,152 | $5,383 | +$769 |
| Capital Expenditures (SCE) | $6.7 billion | $5.7 billion | +$1.0 billion |
| Rate Base (SCE, year-end) | $48.2 billion | $45.7 billion | +$2.5 billion |
Debt and Liquidity: As of December 31, 2025, SCE had $33.2 billion in long-term debt and $1.0 billion in outstanding commercial paper. SCE maintained $2.3 billion in available liquidity under its revolving credit facility and held $98 million in cash on hand. Edison International Parent had $38.0 billion in long-term debt and $744 million available under its credit facility.
Material Changes vs. Prior Period
- Wildfire Settlements: The significant increase in net income was driven by regulatory recoveries authorized under the TKM Settlement Agreement (Thomas, Koenigstein, Montecito) and the Woolsey Settlement Agreement. These settlements allowed SCE to recover approximately $1.6 billion and $2.0 billion, respectively, in wildfire-related costs through securitized bonds and rate adjustments.
- 2025 General Rate Case (GRC): The CPUC approved a final decision in September 2025 authorizing a revenue requirement of $9.7 billion for 2025, an increase of $880 million over the adjusted 2024 requirement. This contributed to higher operating revenue.
- Eaton Fire Impact: In January 2025, the Eaton Fire caused significant damage. SCE recorded $1.1 billion in losses related to settlements but also recorded expected recoveries from customer-funded self-insurance ($917 million), the Wildfire Fund ($134 million), and FERC rates ($70 million). The net after-tax charge to earnings was $9 million.
- Asset Impairment: SCE recorded $106 million in asset impairment charges in 2025, primarily due to $88 million in disallowed historical capital expenditures related to the rooftop solar photovoltaic program in the 2025 GRC decision.
Guidance, Outlook, and Risks
- Capital Program: SCE forecasts total capital expenditures of $40.6 billion for 2026–2030, with a significant portion dedicated to distribution grid modernization and wildfire mitigation. The company plans to file for an advanced metering infrastructure program requiring at least $3 billion in spending between 2026 and 2033.
- Cost of Capital: The CPUC set SCE's Return on Equity (ROE) at 10.03% for 2026, with a weighted average return on rate base of 7.59%.
- Wildfire Risks: The company faces ongoing litigation regarding the Eaton Fire, with a bellwether trial set for January 2027. While SCE believes it is likely its equipment was associated with the ignition, it is currently unable to reasonably estimate the full range of potential losses. The company relies on the Wildfire Fund and customer-funded self-insurance for coverage.
- Regulatory Risks: SCE's financial results depend on the ability to recover costs through regulated rates. The CPUC may disallow costs if deemed imprudent. Additionally, the company faces risks related to the sufficiency of the Wildfire Fund and potential legislative changes.
- Climate and Grid Resilience: SCE projects electricity demand to nearly double between 2025 and 2045. The company is investing heavily in grid hardening, energy storage, and clean firm resources to meet California's 2045 net-zero goals.
Key Facts for Investor Verification
- Wildfire Liability Exposure: Verify the status of the Eaton Fire litigation and the sufficiency of the Wildfire Fund and self-insurance coverage to cover potential future claims, given the company's inability to estimate the full loss range.
- Regulatory Recovery: Monitor the CPUC's prudency reviews for the Eaton Fire and other post-AB 1054 wildfires, as disallowances could materially impact earnings.
- Capital Expenditure Execution: Track the execution of the $40.6 billion capital plan (2026–2030), particularly regarding wildfire mitigation and grid modernization, to ensure alignment with regulatory approvals.
- Credit Ratings: Note that S&P downgraded SCE's credit rating to BBB- with a negative outlook in 2025, while Moody's and Fitch maintained stable outlooks. Monitor for further rating actions that could impact borrowing costs.
- Dividend Policy: Edison International intends to maintain a payout ratio of 45%–55% of SCE's core earnings. Verify that SCE's ability to pay dividends remains compliant with CPUC capital structure requirements and California solvency laws.