Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026, for Edison International (the parent holding company) and its wholly-owned subsidiary, Southern California Edison Company (SCE). SCE is an investor-owned public utility supplying electricity to approximately 50,000 square miles in Southern, Central, and Coastal California. During the second quarter of 2026, Edison International completed the disposition of its former non-utility subsidiary, Trio.
Key Financial Metrics
Edison International (Consolidated)
| Metric (in millions) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Operating Revenue | $4,357 | $8,460 |
| Net Income | $561 | $1,131 |
| Net Income Available to Common Shareholders | $534 | $1,065 |
| Core Earnings (Non-GAAP) | $592 | $1,142 |
| Operating Cash Flow (Six Months) | $2,697 | $2,697 |
| Capital Expenditures (Six Months) | $3,385 | $3,385 |
| Total Assets | $96,171 | $96,171 |
| Total Debt (Long-term + Current) | $40,882 | $40,882 |
Southern California Edison Company (SCE)
| Metric (in millions) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Operating Revenue | $4,348 | $8,444 |
| Net Income | $669 | $1,317 |
| Net Income Available to Common Stock | $643 | $1,262 |
| Core Earnings (Non-GAAP) | $672 | $1,307 |
| Operating Cash Flow (Six Months) | $2,900 | $2,900 |
| Capital Expenditures (Six Months) | $3,384 | $3,384 |
| Total Assets | $96,018 | $96,018 |
| Total Debt (Long-term + Current) | $35,021 | $35,021 |
Material Changes vs. Prior Period
- Quarterly Performance (Q2 2026 vs. Q2 2025): Edison International's net income increased by $191 million ($561M vs. $398M), driven primarily by a $200 million increase in SCE's net income. SCE's core earnings rose $198 million, largely due to the adoption of the 2025 General Rate Case (GRC) final decision. This was partially offset by a $9 million increase in Edison International Parent and Other's loss, attributed to a $29 million non-core loss related to the Trio disposition.
- Semi-Annual Performance (YTD 2026 vs. YTD 2025): Edison International's net income decreased by $714 million ($1,131M vs. $1,890M). This decline was primarily due to a $748 million decrease in SCE's net income. The decrease in SCE's net income was driven by a shift from a $916 million non-core benefit in 2025 (related to the TKM Settlement Agreement) to a $45 million non-core loss in 2026. However, SCE's core earnings increased by $213 million year-over-year.
- Revenue Drivers: For the six months ended June 30, 2026, SCE's operating revenue increased $110 million, primarily due to the 2025 GRC final decision and 2026 escalation mechanisms, partially offset by lower pass-through expenses.
Guidance, Outlook, Risks, and Contingencies
Wildfire Contingencies and Litigation
- Eaton Fire (Jan 2025): SCE believes it is likely its equipment was associated with the ignition. As of June 30, 2026, SCE recorded $1.6 billion in losses related to settlements. Expected recoveries include $917 million from customer-funded self-insurance, $645 million from the Wildfire Fund, and $70 million through FERC rates. The net after-tax charge to earnings was $9 million. A bellwether jury trial is set for January 2027. SCE states it is currently unable to reasonably estimate a range of total losses.
- 2017/2018 Wildfire/Mudslide Events: SCE has settled claims with approximately 13,800 individual plaintiffs. Outstanding claims remain for approximately 50 individual plaintiffs and certain public entities. Accrued liabilities for these events were $173 million as of June 30, 2026.
- Other Wildfire Events: Accrued liabilities for other events (e.g., Saddle Ridge, Coastal, Fairview Fires) were $133 million as of June 30, 2026.
Regulatory and Legislative Risks
- Wildfire Fund: The California Earthquake Authority (CEA) report highlights that inaction on wildfire risk could expose utilities to credit downgrades. SCE relies on the Wildfire Fund for reimbursement of losses exceeding $1.0 billion for the Eaton Fire, subject to CPUC prudency review.
- Capital Program: SCE forecasts total capital expenditures of $37.5 billion to $40.6 billion for 2026–2030. The CAISO approved new transmission projects in May 2026, maintaining total anticipated CAISO-approved capital expenditures at approximately $3 billion.
- Dividends: Edison International intends to maintain a target payout ratio of 45%–55% of SCE's core earnings.
Unusual Items
- Trio Disposition: Edison International recognized a $23 million loss on the disposition of Trio in Q2 2026, classified as a non-core item.
- Corporate Alternative Minimum Tax (CAMT): Under the Inflation Reduction Act, Edison International and SCE are subject to CAMT beginning in 2026. The company expects CAMT paid will be creditable against future income taxes.
Investor Verification Checklist
- Eaton Fire Liability Exposure: Verify the status of the $1.6 billion in recorded settlements versus the total potential exposure, given the company's statement that a range of losses cannot be reasonably estimated.
- Wildfire Fund Solvency: Monitor the California Legislature's actions regarding SB 254 and the sufficiency of the Wildfire Fund's claims-paying capacity (reported as ~$21 billion available for Eaton Fire) to cover future catastrophic events.
- CPUC Prudency Determinations: Track the outcome of the CPUC's prudency review for the Eaton Fire, as a finding of imprudence could require SCE to reimburse the Wildfire Fund up to the Liability Cap (~$4.3 billion) or more if willful disregard is found.
- Capital Expenditure Execution: Assess SCE's ability to execute its $37.5B–$40.6B capital program (2026–2030) amidst supply chain constraints, inflation, and potential regulatory delays.
- Credit Rating Stability: Monitor credit rating agency actions, as downgrades could trigger additional collateral requirements (estimated at $9 million for a downgrade to below investment grade) and increase borrowing costs.