Edison International's Q3 2025: Contradictions Emerge on Wildfire Recovery, SB 254 Liability, and Financial Protection

Date of Call: October 28, 2025

Financials Results

• EPS: $2.34 core EPS in Q3 2025, up from $1.51 a year ago; 2025 core EPS guidance narrowed to $5.95–$6.20 (2025 baseline $5.84 unchanged).

Guidance:

• 2025 core EPS narrowed to $5.95–$6.20, including up to $0.10 of potential holding-company refinancing costs.
• Reaffirming 5%–7% core EPS CAGR through 2028; 2028 core EPS expected $6.74–$7.14; 2025 baseline $5.84 unchanged.
• 4‑year CapEx plan of $28–29B; projected rate base growth of 7%–8%; ~$500–700M of SB254 wildfire mitigation CapEx in plan but excluded from rate base.
• Expect ~$1.6B TKM securitization mid‑2026 and potential ~$2B Woolsey securitization; current plan requires no equity issuance.
• Maintain 45%–55% payout target and evaluating cost‑efficient holding‑company preferred refinancing options.

Business Commentary:

• Financial Performance and EPS Guidance:
• Edison International reported core earnings per share of $2.34 for Q3 2025, compared to $1.51 in the prior year.
• The company narrowed its 2025 core EPS guidance range to $5.95 to $6.20, reflecting potential refinancing activities and expectations for the remainder of the year.

• The guidance is supported by strong year-to-date performance and a refreshed outlook through 2028.

• Regulatory and Legislative Developments:

• Edison International welcomed the passage of SB 254, which creates a $18 billion continuing account to support investor-owned utilities and address wildfire risk.
• The bill enhances existing frameworks and allows for the securitization of wildfire claims payments, benefiting utilities and customers.

• Edison is confident that these changes will support long-term reforms and improve financial stability.

• Capital Expenditures and Grid Investments:

• The company received final approval for its 2025 General Rate Case, authorizing $9.7 billion in base revenue and significant investments in wildfire mitigation and reliability.
• Edison plans to harden nearly 90% of its distribution lines by year-end and will install another 1,650 miles of covered conductor and 212 miles of undergrounding.

• These investments are aimed at enhancing grid safety and resiliency in high fire risk areas, supported by increased capital expenditure approvals.

• Eaton Fire and Wildfire Recovery:

• Edison International launched a voluntary wildfire recovery compensation program for the Eaton Fire, aiming to resolve claims quickly and minimize fund outflows.
• While investigations continue, it is likely that Edison's equipment was involved in the ignition, but the company believes it can demonstrate reasonable utility actions.
• The program is part of Edison's proactive steps to support community recovery following the fire.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted tangible derisking: "core earnings per share of $2.34 compared to $1.51 a year ago," "narrowing our 2025 core EPS guidance range to $5.95 to $6.20," reaffirmed a "5% to 7% core EPS growth target," and called SB 254 "constructive" for cost recovery and financial stability.

Q&A:

• Question from Nicholas Campanella (Barclays): Is the $0.10 charge related to the preferred equity rate resets (Mar '26 and Mar '27) and what options are you considering to address it?
  Response: The $0.10 reflects expected write-offs (deferred financing costs) tied to preferred refinancing; management is evaluating early and other refinancing options at the holding company and will provide details later.

• Question from Nicholas Campanella (Barclays): When will the Eaton Fire recovery compensation program launch, what participation/visibility do you expect, and when might you have a low‑range liability estimate?
  Response: Program launch is imminent but not yet live; participation will determine visibility and it is only one component of Eaton losses, so no reliable liability estimate is available today.

• Question from Gregg Orrill (UBS): Within the 5%–7% EPS CAGR range, are you trending toward the upper or lower half?
  Response: Management is confident in the 5%–7% CAGR and says the recent regulatory clarity (GRC, TKM, Woolsey) and stronger balance sheet increase conviction, but they did not single out upper vs lower half.

• Question from Shahriar Pourreza (Wells Fargo): What is the Phase 2 process under SB 254, how public will it be, and what data will be used to limit liability?
  Response: Phase 2 is CEA‑led with public abstracts (due Nov 3) and full papers (due Dec 12) and subsequent public discussions; management expects transparent stakeholder submissions to inform reform options.

• Question from Shahriar Pourreza (Wells Fargo): Given '26 could be binary, how might capital allocation (buybacks/dividends) change?
  Response: Priority is protecting customers via healthy balance sheets and ratings; no equity issuance in current plan, continuing measured capital returns (target 45%–55% payout) and exploring cost‑efficient pref refinancings.

• Question from Anthony Crowdell (Mizuho): Was the $0.10 refinancing cost already contemplated in 2026/2027 forecasts or does pulling it into 2025 change those years?
  Response: The $0.10 is tied to potential write‑offs from refinancing which could occur earlier given recent settlements; whether recognized in 2025 versus later depends on timing of any refinancing.

• Question from Paul Zimbardo (Jefferies): How linear is EPS beyond 2025 and when will you provide 2026 guidance?
  Response: 2026 guidance will be provided on the Q4 call; the GRC frames the 4‑year plan but annual execution/timing causes lumpiness, so detailed phasing will be disclosed with next guidance.

• Question from Paul Zimbardo (Jefferies): With enhanced legacy recoveries, are you trending toward the upper half of your 15%–17% FFO/debt target?
  Response: They remain comfortable within the 15%–17% FFO/debt target and are evaluating financing options, but expect to remain within that range.

• Question from Carly Davenport (Goldman Sachs): How does the cost of capital filing outcome fit into your financial plan and affordability concerns?
  Response: They filed for a higher ROE range and made a strong showing; the proposed decision is expected in November and various ROE scenarios are modeled into the 5%–7% EPS outlook.

• Question from Carly Davenport (Goldman Sachs): What drove the slight reduction in FERC CapEx and how do you view FERC upside opportunities?
  Response: The FERC decrease reflects timing shifts; CAISO's long‑term plans show $45–55B transmission potential and SCE plans to pursue incumbent and competitive transmission opportunities.

• Question from David Paz (Wolfe): Will SB 254 ineligible CapEx (~$2.3B) be backfilled elsewhere in the plan or how should we model it?
  Response: About $500–700M of SB254 CapEx is included in the CapEx slide but excluded from rate base; remaining SB254 CapEx is expected to be spent after the current rate case cycle and addressed in the 2029 GRC.

• Question from David Paz (Wolfe): Should the remainder of SB254 CapEx be modeled across 2029–2032 or upfront based on SB254 guidance?
  Response: They expect that CapEx to be spent after 2029; timing will be clarified when the 2029 GRC is filed.

• Question from Aidan Kelly (JPMorgan): Can you break down the near‑term 1%–3% sales growth between electrification, residential, and C&I?
  Response: Near‑term sales growth is a balanced mix: roughly one‑third from transportation electrification (EVs), plus residential new builds and modest commercial/industrial growth; durable, diversified drivers.

Contradiction Point 1

Wildfire Recovery Compensation Program

This involves the launch and purpose of the Wildfire Recovery Compensation Program, impacting the company's liability and financial obligations related to wildfire claims.

Can you provide details on the Eaton Fire recovery compensation program and how it estimates claims? - Nicholas Campanella (Barclays Bank PLC)

2025Q3: The program has not launched yet. It will take time to see participation rates, and even then, it's just one component of potential losses. We don't yet have an estimate of when we'll have an estimate. - Pedro Pizarro(CEO)

What are the advantages of the new wildfire recovery compensation program, and why launch it now? - Ryan Levine (Citi)

2025Q2: The program helps the community by resolving claims quickly, reducing legal costs, and ensuring efficient use of the wildfire fund. It's a proactive step given the probable loss and existing litigation. - Pedro Pizarro(CEO)

Contradiction Point 2

SB 254 and Utility Liability

It concerns the company's potential liability under SB 254, which is crucial for understanding its financial exposure related to wildfire costs.

What options exist to limit EIX's liability in Phase 2 of SB 254, and what are the key data points? - Shahriar Pourreza (Wells Fargo Securities)

2025Q3: Phase 2 will evaluate long-term reforms to socialize risks and costs. The California Earthquake Authority is leading the process. This is a public process with input from stakeholders, with a goal to reduce exposure and allocate costs equitably. - Pedro Pizarro(CEO)

What is an acceptable funding structure if half of the $18 billion comes from utilities, and are there plans for upfront shareholder debt or equity contributions via legislation to support the solution? - Nicholas Joseph Campanella (Barclays)

2025Q2: At this stage, it's too early to comment on specific elements of a proposed package. Utah's investor-owned utility framework supports shareholder investments and recovery of prudently incurred costs. Ideal legislation would align with investor-owned utility rate-making principles without shareholder contributions like in AB 1054. Currently, the fund has $22 billion in capacity without needing a large upfront contribution. - Pedro Pizarro(CEO)

Contradiction Point 3

Wildfire Liability and Financial Protection

It involves the potential liability and financial protection for Edison International against wildfires, which impacts operational risk and financial stability.

What viable options exist to limit EIX's liability under Phase 2 of SB 254, and what are the key data points? - Anthony Crowdell (Mizuho Securities USA)

2025Q3: Phase 2 will evaluate long-term reforms to socialize risks and costs. The California Earthquake Authority is leading the process. This is a public process with input from stakeholders, with a goal to reduce exposure and allocate costs equitably. - Pedro Pizarro(President, CEO & Director)

What steps are you proposing to ensure investor certainty on wildfire financial protection? - David Arcaro (Morgan Stanley)

2024Q4: There are multiple levers to enhance AB 1054's framework. One potential action is scaling up the wildfire fund and ensuring the liability cap is maintained. Other solutions might involve insurance reform, building codes, and fuel management. - Pedro Pizarro(President, CEO, Director, SCE)

Contradiction Point 4

Wildfire Liability and Fund Availability

It involves the company's assessment of potential liability and access to the wildfire fund, which are critical for financial planning and risk management.

Can you explain the Eaton Fire recovery compensation program and its ability to provide estimates on claims? - Nicholas Campanella (Barclays Bank PLC)

2025Q3: The program has not launched yet. It will take time to see participation rates, and even then, it's just one component of potential losses. We don't yet have an estimate of when we'll have an estimate. - Pedro Pizarro(President, CEO & Director)

Does the material loss disclosure suggest a potential reimbursement from the wildfire fund? - Paul Zimbardo (Jefferies)

2025Q1: The fund is available to pay damage claims. We believe we can show prudent operations. If Edison's equipment is linked to the fire, we access the fund. - Maria Rigatti(Executive VP & CFO), Pedro Pizarro(President and Chief Executive Officer)

Contradiction Point 5

Cost of Capital and Regulatory Framework

It involves the cost of capital and regulatory framework, which are critical for Edison International's financial health and strategic planning.

Regarding customer costs and the capital filing outcome, what is your position? - Carly Davenport (Goldman Sachs)

2025Q3: We're still in the process. Our filing reflects increased risks. We're confident in our position and await the process conclusion. - Pedro Pizarro(President, CEO & Director)

What steps are you advocating to ensure investor certainty on wildfire financial protection? - David Arcaro (Morgan Stanley)

2024Q4: The cost of capital filing will include quantitative and qualitative analysis of the January events. The filing will discuss market reactions and ongoing costs. The focus will be on structural changes rather than fixing the issue solely through cost of capital adjustments. - Maria Rigatti(EVP & CFO)