EIX

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended December 31, 2025, for Edison International (the holding company) and its primary subsidiary, Southern California Edison Company (SCE). Edison International is a holding company with no material operations of its own; its financial results are primarily driven by SCE, an investor-owned public utility serving approximately 5 million customers across Southern, Central, and Coastal California. The filing also includes Edison Energy, LLC (Trio), a global energy advisory firm, though its activities are not material as a separate segment.

Key Financial Metrics

Note: Core earnings exclude non-core items such as wildfire-related claim losses and discrete regulatory adjustments.

Material Changes vs. Prior Period

• Significant Earnings Increase: Net income available to common shareholders increased by $3.175 billion (247%) compared to 2024. This was driven by a $3.270 billion increase in SCE's net income, partially offset by a $95 million increase in the loss from Edison International Parent and Other.
• Wildfire Settlements: The increase in earnings was significantly influenced by regulatory recoveries. In 2025, the CPUC approved the TKM Settlement Agreement (Thomas, Koenigstein, Montecito) and the Woolsey Settlement Agreement. These settlements authorized SCE to recover approximately $1.6 billion and $2.0 billion, respectively, of uninsured wildfire-related costs through securitized bonds and rates.
• 2025 General Rate Case (GRC): The CPUC approved a 2025 GRC 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, partially offset by 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 of disallowed historical capital expenditures (rooftop solar) in the 2025 GRC and $18 million related to the TKM and Woolsey settlements.

Guidance, Outlook, and Risks

• Capital Program: SCE forecasts total capital expenditures of $40.6 billion for 2026–2030, with a significant portion allocated to distribution grid modernization and wildfire mitigation. A range case suggests potential reductions to $37.5 billion depending on permitting and operational factors.
• 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 Risk and Legislation: The company faces ongoing risks related to catastrophic wildfires. The passage of SB 254 in September 2025 expanded the Wildfire Fund with a Continuation Account. However, the company notes that the Wildfire Fund may not be sufficient to mitigate all risks, and the CPUC's interpretation of the "prudency" standard for cost recovery remains a critical uncertainty.
• Regulatory and Legislative Risks: Risks include the ability to recover costs through regulated rates, potential disallowances of costs deemed imprudent, and the impact of customer affordability concerns on rate approvals. The company also faces risks related to the decommissioning of the San Onofre nuclear facility, including cost overruns and delays.
• Credit Ratings: Following SB 254, Moody's and Fitch reaffirmed SCE's ratings with stable outlooks, while S&P downgraded SCE's long-term issuer credit rating to BBB- with a negative outlook.

Key Facts for Investor Verification

• Eaton Fire Liability: Verify the final estimated losses and the extent of recoveries from the Wildfire Fund and self-insurance for the Eaton Fire, as the company currently cannot reasonably estimate the full range of potential losses.
• Wildfire Fund Solvency: Monitor the status of the Wildfire Fund and the Continuation Account to ensure sufficient capacity to cover future catastrophic events, as exhaustion of the fund would expose the company to significant uninsured liabilities.
• Regulatory Prudency Determinations: Track CPUC decisions regarding the prudency of SCE's conduct in future wildfire cost recovery proceedings, as disallowances could materially impact earnings.
• Capital Expenditure Execution: Assess the company's ability to execute its $40.6 billion capital plan, particularly regarding permitting delays and supply chain constraints for grid hardening and renewable integration.
• Dividend Sustainability: Confirm that SCE's ability to pay dividends to Edison International remains intact, as the holding company's liquidity and dividend payments are dependent on upstream distributions from SCE.