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 reporting period covers the fiscal year ended December 31, 2024. 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
| Metric (in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Operating Revenue (SCE) | $17,547 | $16,275 | +$1,272 |
| Net Income (Edison International) | $1,284 | $1,197 | +$87 |
| Net Income (SCE) | $1,619 | $1,474 | +$145 |
| Core Earnings (Edison International) | $1,900 | $1,825 | +$75 |
| Operating Cash Flow (SCE) | $5,383 | $3,681 | +$1,702 |
| Capital Expenditures (SCE) | $5,703 | $5,446 | +$257 |
| Rate Base (SCE, year-end) | $45.7 billion | $42.7 billion | +$3.0 billion |
| Debt to Total Capitalization (SCE) | 0.58 to 1 | N/A | N/A |
Note: Core earnings exclude non-core items such as wildfire claims and severance costs to reflect ongoing operational performance.
Material Changes vs. Prior Period
- Revenue Growth: SCE operating revenue increased by $1.27 billion, driven primarily by higher CPUC-authorized revenues in Track 4 of the 2021 General Rate Case (GRC) and an increase in the authorized rate of return due to the cost of capital adjustment mechanism.
- Expense Increases: Operation and maintenance expenses rose by $993 million, largely due to higher wildfire mitigation, vegetation management, and emergency restoration costs passed through to customers. Interest expense increased by $219 million due to higher interest rates and additional long-term borrowings.
- Wildfire Claims: Net charges for wildfire-related claims decreased slightly to $647 million in 2024 from $665 million in 2023. This includes $493 million for the 2017/2018 Wildfire/Mudslide Events and $162 million for Other Wildfire Events.
- Non-Core Items: Total non-core items decreased by $12 million to $616 million in 2024. Significant non-core charges included $493 million for 2017/2018 wildfire claims and $146 million for Wildfire Insurance Fund amortization.
Guidance, Outlook, and Risks
Guidance and Outlook
- 2025 General Rate Case: SCE filed an application for the 2025-2028 period requesting a 2025 revenue requirement of approximately $10.3 billion (later updated to $10.5 billion). A final decision is pending, but SCE expects to recognize revenue based on 2024 levels adjusted for the new cost of capital until a decision is issued.
- Capital Program: SCE forecasts capital expenditures of $26.6 billion to $31.5 billion for 2025-2028. Approximately $13 billion is planned for infrastructure replacement to ensure grid reliability and support electrification.
- Rate Growth: SCE projects its bundled system average rate will rise at or below a 2.6% compound annual growth rate from 2024 through 2028.
- Cost of Capital: The CPUC modified the cost of capital adjustment mechanism in October 2024, adjusting SCE's 2025 authorized Return on Equity (ROE) to 10.33%.
Risks and Contingencies
- Wildfire Liability: The company faces significant exposure from the Eaton Fire (January 2025), which caused substantial damage and fatalities. The cause is under investigation; if SCE equipment is implicated, losses could be material. SCE has $1.0 billion in customer-funded self-insurance for 2025, with excess claims potentially covered by the Wildfire Insurance Fund.
- Regulatory Recovery: Recovery of uninsured wildfire costs for pre-AB 1054 fires (e.g., Woolsey Fire) remains uncertain. While the TKM Settlement Agreement allowed recovery of 60% of losses for the Thomas/Koenigstein/Montecito events, the Woolsey Fire recovery proceeding is ongoing.
- Decommissioning: The San Onofre nuclear decommissioning is ongoing with an estimated completion date of 2056. Cost estimates are subject to change based on regulatory approvals, contractor performance, and waste disposal timelines.
- Credit Ratings: SCE's credit ratings are currently Baa1/BBB (Stable) from Moody's/Fitch and BBB (Negative) from S&P. Downgrades could increase borrowing costs and trigger collateral requirements.
Investor Verification Checklist
- Wildfire Exposure: Verify the status of the Eaton Fire investigation and the potential impact on the Wildfire Insurance Fund's solvency.
- Rate Case Outcome: Monitor the CPUC's final decision on the 2025 GRC, specifically the authorized revenue requirement and treatment of wildfire mitigation costs.
- Capital Execution: Track the progress of major transmission projects (e.g., Alberhill System, Riverside Transmission Reliability) and utility-owned storage projects, noting any delays or cost overruns.
- Regulatory Assets: Assess the probability of recovery for regulatory assets related to pre-AB 1054 wildfire events, particularly the Woolsey Fire.
- Interest Rate Sensitivity: Evaluate the impact of rising interest rates on future debt refinancing and the cost of capital adjustment mechanism.