Edison International’s net income for the second quarter of 2022 fell to $241 million, or $0.63 per share, compared to income of $318 million, or $0.84 per share, in the second quarter of 2021. Net income for utility Southern California Edison also dropped, with its share price reported at $0.70, compared to $0.95 per share in the second quarter of last year.
Similar to Pacific Gas & Electric, the fall in SCE earnings was largely attributed to wildfire liability. It also reflects dividend payouts, and in SCE’s case, higher preferred dividends.
Edison paid out $400 million for fire damages, with roughly 90% of the claims from the fires and mudslides from 2017-2018 resolved.
“SCE is well on its way to reaching substantial resolution of claims” for the Thomas, Woolsey and other fires, Pedro Pizzaro, EI CEO and president, told financial analysts at the end of last week. The fires sparked by utility equipment killed 20 people, destroyed thousands of homes and burned hundreds of thousands of acres.
The company expects to file an application to the California Public Utilities Commission for approval of the issuance of more ratepayer-backed bonds to recover its wildfire liability costs.
SCE issued more than $3 billion in long-term ratepayer-backed bonds under state law to recover its wildfire expenses and losses related to Covid. It also expects to seek approval from the CPUC to issue another $1.25 billion later this year, according to Maria Rigatti, company CFO.
Like PG&E, Edison’s ratings inched up after the bond issuances. Moody’s and Fitch raised their outlook for EI and SCE “to positive from stable,” according to Pizarro.
The utility also reached a $16 million settlement with two former employees who complained of retaliation by the company for reporting sexual harassment against coworkers.
Self insurance
The company was able to get the cost of its liability insurance lowered and also has been increasing the level of its self-insurance to reduce expenses.
Pizarro stressed the company’s wildfire mitigation work, which largely entails the covering of power lines over 3,500 circuit miles. Another 1,200 miles of covered conductors are expected to be added each year.
The company is focused mainly on covering lines, and not undergrounding power lines that is far more expensive, to reduce fire risks, unlike PG&E. PG&E plans to underground 10,000 miles of lines. Its territory is covered with large swaths of forest whereas SCE territory, which is not as extensive, is largely “grasslands and chaparrals,” Pizzaro said. The company’s Wildfire Mitigation Plan includes plans to bury hundreds of miles of lines, not thousands, he said.
“Investing in wildfire risk mitigation is a core component in adapting to climate change,” according to Pizarro.
Edison continues to project 7%-9% rate base growth from 2021-2025.
Two reasons for that can be found in their 2021 general rate case (GRC), which added $0.34 to earnings. The CPUC approved Edison’s request for a rate revenue increase, which added $.08 to revenue, and a subsequent GRC ruling, which added $.26 to revenue.
Last month, the state Office of Energy Infrastructure Safety, which began operating a year ago, approved SCE’s 2022 Wildfire Mitigation Plan Update. It now goes to the CPUC for a vote.
