Edison International’s first quarter earnings fell to $84 million, or $0.22 per share, compared to net income of $259 million, or $0.68 per share, in the first quarter of 2021.
Corporate earnings were driven down by its higher preferred dividends.
While overall corporate profits were in the red, at a loss of $63 million, earnings from utility Southern California Edison exceeded those of its parent in the first quarter. SCE reaped a $181 million increase in its 2021 general rate case approved by state regulators. SCE’s first quarter earnings for this year were $147 million, which is less than half of the $296 million the utility earned in the same quarter of 2021.
The utility experienced unexpectedly higher costs to settle 2017-18 litigation from utility equipment-ignited wildfires and subsequent mudslides. The settlements reached in the first quarter of this year rose to $700 million because of “large damage claims presented by a small number of plaintiffs and new lawsuits filed in the Woolsey Fire litigation,” Pedro Pizarro, Edison International CEO, told financial analysts May 3. In response, the company revised its estimated fire settlement costs upward by $416 million, to a total $7.9 billion. To date, SCE has settled 80% of the fire liability claims.
The company is legally challenging California’s inverse condemnation law that makes investor-owned utilities strictly liable for wildfire damage. Last month, it filed a notice of appeal in a state appellate court, with a resolution not expected for one to two years, Pizarro said.
In addition, SCE is seeking higher profits from its equity in its newly filed 2023 cost of capital application at the California Public Utilities Commission. It seeks a 10.53% return on equity compared to its current rate of 10.3%. Pizarro said electrifying homes, buildings, and transportation in the state is the optimal way to lower emissions with the company leading the way. To accomplish that he said it was “reasonable “ for the company to pursue a rate of return in the upper end because SCE “will be a key enabler of the clean energy transition and will invest significant amounts of capital in its infrastructure.”
The company projected steady 7-9% growth between 2021-2025, with shareholder returns expected to be in the double digits, said Maria Rigatti, EI executive vice president and chief financial officer. Capital expenditures, upon which it earns a profit, are expected to be $27-$30 billion over the same four-year period.
Solid summer supplies
In spite of supply chain constraints, SCE’s portfolio of resources is in a “better position” this summer than last summer. But not all of its 535 MW of battery projects at three substations under an agreement announced last October with Ameresco is expected to be online by this August because of Covid and shipping restrictions. However, company officials estimate at least 300 MW will be online this summer.
SCE is required to bring online 4 GW of the 11.5 GW state regulators ordered to be connected to the grid by 2026 to secure the system during extreme heat. It is procuring resources for next year and 2024.
The utility had covered 3,200 miles of its overhead lines in high fire threat areas as of the end of March—nearly double what it covered at the same time last year. Unlike its sister utility, Pacific Gas & Electric that is putting huge amounts of resources into undergrounding overhead lines, SCE’s main strategy to reduce powerline-sparked fires is insulating them. It plans to insulate a total of 4,000 miles of overhead wires by the end of this year, with ratepayer recovery of the costs for 4,600 miles of covered conductors. SCE has 17,000 circuit miles of distribution lines in high fire risk areas, with 7,000 underground.