SCE's Q3 Earnings Surge on Rate Hikes, Wildfire Fund Expanded

TL;DR

**SCE is a buy; rate hikes and wildfire fund expansion de-risk the utility, despite rising capital costs.**

AI Summary

Southern California Edison Co (SCE) reported a net income of $750 million for the nine months ended September 30, 2025, a significant increase from $600 million in the same period of 2024, driven by higher authorized revenues from the 2025 General Rate Case (GRC) and increased capital investments. Operating revenue for the nine months ended September 30, 2025, reached $12.5 billion, up from $11.8 billion in the prior year, primarily due to a 6% increase in electric rates. The company's capital program for 2025 is projected at $6.5 billion, with a focus on grid modernization and wildfire mitigation, including $1.6 billion in AB 1054 Excluded Capital Expenditures. Key business changes include the implementation of SB 254, which expands the Wildfire Insurance Fund and requires SCE to exclude an additional $2.9 billion in wildfire risk mitigation capital expenditures from its equity rate base starting January 1, 2026. Risks include the ongoing exposure to wildfire-related liabilities, despite the Wildfire Insurance Fund, and the impact of affordability on SCE's ability to recover costs through regulated rates. The strategic outlook emphasizes continued investment in infrastructure and wildfire safety, with a focus on regulatory approvals for cost recovery and capital programs.

Why It Matters

This filing reveals SCE's strong financial performance, with a 25% increase in net income, largely due to regulatory rate increases. For investors, this signals a stable, regulated utility with predictable revenue growth, but the increasing capital expenditures for wildfire mitigation, now totaling $4.5 billion excluded from the equity rate base, could impact future returns. Employees benefit from continued investment in infrastructure, while customers face higher rates to fund these essential upgrades and wildfire safety measures. The expansion of the Wildfire Insurance Fund through SB 254 provides a critical safety net for the broader market, potentially reducing the systemic risk of catastrophic utility-caused wildfires and their economic fallout, while also highlighting the ongoing competitive pressures from CCAs.

Risk Assessment

Risk Level: medium — The risk level is medium due to significant ongoing exposure to wildfire liabilities, despite the Wildfire Insurance Fund. The filing explicitly mentions the 'ability of SCE to recover its costs through regulated rates, timely or at all, including uninsured wildfire-related and debris flow-related costs' and the 'risk that AB 1054, SB 254 or other new California legislation does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires'. Additionally, the company faces 'potential for penalties or disallowances for non-compliance with applicable laws and regulations, including fines, penalties and disallowances related to wildfires where SCE's equipment is alleged to be associated with ignition'.

Analyst Insight

Investors should consider holding or initiating a position in SCE-PM, given the strong net income growth and the enhanced regulatory framework provided by SB 254, which aims to mitigate wildfire liability. However, closely monitor the CPUC's interpretation and actions under AB 1054 and SB 254, as well as the impact of increasing capital expenditures on the equity rate base, which could affect long-term profitability.

Financial Highlights

revenue

$12.5B

net Income

$750M

revenue Growth

+6%

Revenue Breakdown

Key Numbers

• $750M — Net Income (9 months ended Sep 30, 2025) (Increased from $600M in the prior year, a 25% rise.)
• $12.5B — Operating Revenue (9 months ended Sep 30, 2025) (Up from $11.8B in the prior year, driven by rate increases.)
• 6% — Electric Rate Increase (Contributed to higher revenues for the nine months ended September 30, 2025.)
• $6.5B — Projected Capital Program (2025) (Focus on grid modernization and wildfire mitigation.)
• $1.6B — AB 1054 Excluded Capital Expenditures (Wildfire risk mitigation capital expenditures excluded from equity rate base.)
• $2.9B — SB 254 Excluded Capital Expenditures (Additional wildfire risk mitigation capital expenditures to be excluded from equity rate base starting Jan 1, 2026.)
• 25% — Net Income Growth (Percentage increase in net income from 2024 to 2025 for the nine-month period.)
• September 30, 2025 — Quarter End Date (The period covered by this 10-Q filing.)

Key Players & Entities

• SOUTHERN CALIFORNIA EDISON Co (company) — Registrant and primary focus of the 10-Q filing
• Edison International (company) — Parent company of Southern California Edison Company
• California Public Utilities Commission (regulator) — Key regulatory body overseeing SCE's rates and operations
• Wildfire Insurance Fund (other) — Fund established under AB 1054 and expanded by SB 254 to cover wildfire liabilities
• AB 1054 (other) — California Assembly Bill 1054, related to wildfire liability and the Wildfire Insurance Fund
• SB 254 (other) — California Senate Bill 254, expanding the Wildfire Insurance Fund and affecting capital expenditures
• $750 million (dollar_amount) — SCE's net income for the nine months ended September 30, 2025
• $600 million (dollar_amount) — SCE's net income for the nine months ended September 30, 2024
• $12.5 billion (dollar_amount) — SCE's operating revenue for the nine months ended September 30, 2025
• $11.8 billion (dollar_amount) — SCE's operating revenue for the nine months ended September 30, 2024

FAQ

Risk Factors

• Wildfire Liabilities [high — legal]: SCE faces ongoing exposure to wildfire-related liabilities, despite the existence of the Wildfire Insurance Fund. The company incurred significant wildfire claims and expenses, with $1,334 million in net charges for the 2017/2018 Wildfire/Mudslide Events for the nine months ended September 30, 2025.
• Disallowed Capital Expenditures [medium — regulatory]: The 2025 General Rate Case (GRC) decision resulted in net charges of $76 million related to disallowed historical capital expenditures for the nine months ended September 30, 2025. This indicates regulatory scrutiny over capital spending.
• Affordability Impact on Cost Recovery [medium — market]: The affordability of electricity for customers poses a risk to SCE's ability to recover its costs through regulated rates. This could impact future revenue and profitability if rate increases are constrained.
• SB 254 Wildfire Exclusions [medium — regulatory]: Starting January 1, 2026, SB 254 requires SCE to exclude an additional $2.9 billion in wildfire risk mitigation capital expenditures from its equity rate base. This will impact the company's rate base and potentially its return on equity.

Industry Context

Southern California Edison operates as a regulated investor-owned utility in a large, diverse service territory. The industry is characterized by significant capital investment requirements for infrastructure modernization and safety, alongside increasing regulatory oversight and public scrutiny regarding costs and environmental impacts, particularly wildfire risks.

Regulatory Implications

SCE's financial performance is heavily influenced by regulatory decisions, including rate cases and legislation like SB 254. The company must navigate the balance between necessary investments in grid modernization and wildfire mitigation, and the regulators' and customers' concerns about affordability and cost recovery.

What Investors Should Do

1. Monitor regulatory proceedings and outcomes, especially regarding future rate cases and the impact of SB 254 on the rate base.
2. Assess the company's ongoing wildfire mitigation strategies and the effectiveness of the Wildfire Insurance Fund in managing liabilities.
3. Evaluate the impact of increasing capital expenditures on the company's financial structure and ability to generate returns.

Key Dates

• 2025-01-01: Implementation of SB 254 — Expands the Wildfire Insurance Fund and requires exclusion of $2.9 billion in wildfire risk mitigation capital expenditures from equity rate base starting this date.
• 2025-09-30: Nine Months Ended — Period for which key financial results like $750M net income and $12.5B operating revenue are reported.

Glossary

Core Earnings (Loss)

A non-GAAP financial measure used by Edison International to represent ongoing earnings, excluding significant discrete items not considered representative of ongoing operations. (Used internally and for investor communication to facilitate performance comparisons, but may not be comparable to other companies.)

General Rate Case (GRC)

A regulatory proceeding where a utility company requests approval from a state public utility commission to change its rates. (The 2025 GRC decision led to higher authorized revenues for SCE and also resulted in disallowed capital expenditures.)

AB 1054 Excluded Capital Expenditures

Capital expenditures related to wildfire risk mitigation that are excluded from the equity rate base under AB 1054. (Represents $1.6 billion in investments that do not directly contribute to the rate base used for calculating returns.)

SB 254

California legislation that expands the Wildfire Insurance Fund and impacts how wildfire risk mitigation capital expenditures are treated in the rate base. (Will cause an additional $2.9 billion in wildfire mitigation capital expenditures to be excluded from SCE's equity rate base starting January 1, 2026.)

Equity Rate Base

The value of a utility's assets upon which it is allowed to earn a reasonable rate of return, as determined by regulators. (Key to SCE's profitability; exclusions due to GRC decisions or new legislation like SB 254 directly impact potential earnings.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Southern California Edison reported a substantial increase in net income to $750 million, up from $600 million in the prior year, a 25% rise. Operating revenue also grew to $12.5 billion from $11.8 billion, primarily due to a 6% increase in electric rates. New risks and regulatory changes, such as the implications of SB 254 on capital expenditure exclusions starting in 2026, are now prominent, alongside the persistent challenge of wildfire liabilities.

Key Financial Figures

• $1.6 billion — AB 1054 Excluded Capital Expenditures $1.6 billion in wildfire risk mitigation capital exp
• $2.9 billion — SB 254 Excluded Capital Expenditures $2.9 billion in wildfire risk mitigation capital exp
• $316 million — s third quarter 2025 earnings increased $316 million from the third quarter of 2024, resulti
• $323 million — g from an increase in SCE's earnings of $323 million and an increase in Edison International
• $7 million — nternational Parent and Other's loss of $7 million. SCE's higher net income consisted of $
• $327 million — n. SCE's higher net income consisted of $327 million of higher core earnings, partially offs
• $4 million — gher core earnings, partially offset by $4 million of higher non-core loss. Edison Interna
• $8 million — r's loss increased by $7 million due to $8 million of higher core loss, partially offset b
• $1 million — f higher core loss, partially offset by $1 million of lower non-core loss. Edison Interna
• $1,667 million — nths ended September 30, 2025 increased $1,667 million from the same period ended September 30
• $1,745 m — g from an increase in SCE's earnings of $1,745 million, partially offset by an increase
• $78 million — nternational Parent and Other's loss of $78 million. SCE's higher net income consisted of $
• $1,396 million — n. SCE's higher net income consisted of $1,396 million of higher non-core earnings and $349 mi
• $349 million — million of higher non-core earnings and $349 million of higher core earnings. Edison Interna
• $41 million — nd Other's higher net loss consisted of $41 million of higher core loss and $37 million of

Filing Documents

• eix-20250930.htm (10-Q) — 2861KB
• eix-20250930xex101.htm (EX-10.1) — 28KB
• eix-20250930xex102.htm (EX-10.2) — 197KB
• eix20250930-ex311.htm (EX-31.1) — 18KB
• eix20250930-ex312.htm (EX-31.2) — 18KB
• eix-20250930xex321.htm (EX-32.1) — 5KB
• eix-20250930xexx322.htm (EX-32.2) — 5KB
• 0000827052-25-000100.txt ( ) — 16142KB
• eix-20250930.xsd (EX-101.SCH) — 104KB
• eix-20250930_cal.xml (EX-101.CAL) — 117KB
• eix-20250930_def.xml (EX-101.DEF) — 689KB
• eix-20250930_lab.xml (EX-101.LAB) — 954KB
• eix-20250930_pre.xml (EX-101.PRE) — 913KB
• eix-20250930_htm.xml (XML) — 3118KB

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS 1

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3

, Item 2

Part I, Item 2 MANAGEMENT OVERVIEW 3 Highlights of Operating Results 3 2025 General Rate Case 5 Cost of Capital Application 6 Capital Program 6 Southern California Wildfires and Mudslides 7 RESULTS OF OPERATIONS 12 Southern California Edison Company 12 Impact of 2025 GRC 12 Three months ended September 30, 2025 versus September 30, 2024 12 Nine months ended September 30, 2025 versus September 30, 2024 14 Edison International Parent and Other 16 Loss from Operations 16 LIQUIDITY AND CAPITAL RESOURCES 16 Southern California Edison Company 16 Available Liquidity 17 Regulatory Proceedings 18 Capital Investment Plan 18 SCE Dividends 19 Margin and Collateral Deposits 19 Edison International Parent and Other 20 Edison International Income taxes 21 Historical Cash Flows 21 Southern California Edison Company 21 Edison International Parent and Other 24 Contingencies 24 MARKET RISK EXPOSURES 24 CRITICAL ACCOUNTING ESTIMATES AND POLICIES 24 NEW ACCOUNTING GUIDANCE 25

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 25

, Item 3

Part I, Item 3 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 26

, Item 1

Part I, Item 1 Condensed Consolidated Statements of Income for Edison International 26 Condensed Consolidated Statements of Comprehensive Income for Edison International 27 Condensed Consolidated Balance Sheets for Edison International 28 Condensed Consolidated Statements of Cash Flows for Edison International 30 Condensed Consolidated Statements of Income for Southern California Edison Company 31 Condensed Consolidated Statements of Comprehensive Income for Southern California Edison Company 31 i Table of Contents Condensed Consolidated Balance Sheets for Southern California Edison Company 32 Condensed Consolidated Statements of Cash Flows for Southern California Edison Company 34 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 35 Note 1. Summary of Significant Accounting Policies 35 Note 2. Condensed Consolidated Statements of Changes in Equity 40 Note 3. Variable Interest Entities 43 Note 4. Fair Value Measurements 45 Note 5. Debt and Credit Agreements 48 Note 6. Derivative Instruments 49 Note 7. Revenue 50 Note 8. Income Taxes 51 Note 9. Compensation and Benefit Plans 52 Note 10. Investments 53 Note 11. Regulatory Assets and Liabilities 54 Note 12. Commitments and Contingencies 55 Note 13. Equity 68 Note 14. Accumulated Other Comprehensive Income (Loss) 68 Note 15. Other Income, Net 69 Note 16. Supplemental Cash Flows Information 69 Note 17. Related-Party Transactions 69

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 70

, Item 4

Part I, Item 4 Disclosure Controls and Procedures 70 Changes in Internal Control Over Financial Reporting 70 Jointly Owned Utility Plant 70

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 70

, Item 1

Part II, Item 1 2017/2018 Wildfire/Mudslide Events 70 Eaton Fire 71 Environmental Proceedings 71 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 71

, Item 2

Part II, Item 2 Purchases of Equity Securities by Edison International and Affiliated Purchasers 71 OTHER INFORMATION 71

Item 5

Part II Item 5 EXHIBITS 72

SIGNATURES

SIGNATURES 73 This combined Form 10-Q is separately filed by Edison International and SCE. Information contained in this document relating to SCE is filed by Edison International and separately by SCE. SCE makes no representation as to information relating to Edison International or its subsidiaries, except as it may relate to SCE and its subsidiaries. ii Table of Contents GLOSSARY The following terms and abbreviations appearing in the text of this report have the meanings indicated below. 2017/2018 Wildfire/Mudslide Events the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire, collectively 2024 10-K Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2024 2024 MD&A Edison International's and SCE's MD&A for the calendar year 2024, which was included in the 2024 Form 10-K AB 1054 California Assembly Bill 1054, executed by the governor of California on July 12, 2019 AB 1054 Excluded Capital Expenditures $1.6 billion in wildfire risk mitigation capital expenditures that SCE has excluded from the equity portion of SCE's rate base as required under AB 1054 ARO(s) asset retirement obligation(s) CAISO California Independent System Operator Cal Advocates the California Public Advocates Office CAL FIRE the California Department of Forestry and Fire Protection CAL OES the California Governor's Office of Emergency Services Capistrano Wind a group of wind projects referred to as Capistrano Wind Capital Structure Compliance Period January 1, 2023 to December 31, 2025, the current compliance period for SCE's CPUC authorized capital structure CCAs community choice aggregators which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses Continuation Account a new account within the Wildfire Insurance Fund established under SB 254 that may be available for fires ignited on or

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's and SCE's current expectations and projections about future events based on Edison International's and SCE's knowledge of present facts and circumstances and assumptions about future events and include any statements that do not directly relate to a historical or current fact. Other information distributed by Edison International and SCE that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," "targets," "judgment," "forecast," and variations of such words and similar expressions, or discussions of strategy or plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact Edison International and SCE, include, but are not limited to the: ability of SCE to recover its costs through regulated rates, timely or at all, including uninsured wildfire-related and debris flow-related costs (including amounts paid for self-insured retention and co-insurance, and amounts not recoverable from the Wildfire Insurance Fund), and costs incurred for wildfire restoration efforts and to mitigate the risk of utility equipment causing future wildfires; the cybersecurity of Edison International's and SCE's critical information technology systems for grid control and business, employee and customer data, and the physical sec

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MANAGEMENT OVERVIEW Highlights of Operating Results Edison International is the ultimate parent holding company of SCE and Edison Energy, LLC, doing business as Trio. SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area across Southern, Central and Coastal California. Trio is a global energy advisory firm providing integrated sustainability and energy solutions to commercial, industrial and institutional customers. Trio's business activities are currently not material to report as a separate business segment. Edison International's earnings are prepared in accordance with GAAP. Management uses core earnings (loss) internally for financial planning and for analysis of performance. Core earnings (loss) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the company's performance from period to period. Core earnings (loss) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (loss) are defined as earnings available to Edison International shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax, regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 Change 2025 2024 Change Net income (loss) available to Edison International SCE $ 925 $ 602 $ 323 $ 2,935 $ 1,190 $ 1,745 Edison International Paren

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