Edison International

EIX · NYSE · USD

Can California put a durable wildfire cost framework in place before SCE's next rate case, and how much capital can the utility invest without weakening its credit?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Regulatory visibility

    The bull case is that the last round of rate cases removed the main regulatory unknowns, so earnings growth now depends on how much capital the utility can deploy.

  • Wildfire cost framework

    A state fund and securitization now stand between the utility and the full cost of a fire, which lowers the chance that one event forces a share sale or a ratings cut.

  • Capital plan funding

    Management intends to fund the whole construction program without selling new shares, so each dollar of added rate base reaches a share count that is barely growing.

  • Affordable rates

    Because SCE charges less than its large California peers, management argues that further spending on the grid remains defensible with regulators and in Sacramento.

Bear case

  • Eaton Fire liability

    The bear case is that the Eaton Fire liability is still unestimable, with tens of thousands of claims outstanding, so the eventual cost to shareholders stays an open number.

  • Legislative uncertainty

    California may finish its session without a durable wildfire framework, which management says would raise the cost of capital and could trigger further credit downgrades.

  • Credit rating cushion

    SCE already sits at the lowest investment-grade rating, leaving little room if wildfire costs or a weak policy outcome push the balance sheet further.

  • Back-loaded growth

    Earnings growth is weighted toward the later years of the plan, so the targets rest on a rate case and a capital budget that have not yet been approved.

Bull and bear points

Growth & Execution

In short: An approved rate case gives multiyear visibility, but growth still needs approvals not yet granted.

Bull · 3

  • Growth target extended to 2030

    A year ago management planned only through 2028; it now targets 5% to 7% core EPS growth through 2030 and reaffirmed the 2028 range.

    Tone shiftQ3 FY2025 → Q4 FY2025

  • Rate base growth from grid spending

    Rate base is projected to grow about 7% a year through 2030 under a $38 billion to $41 billion capital plan, with spending rising again in the next rate case.

    Q4 FY2025 call

  • Broad sources of load growth

    Management expects sales to grow 1% to 3% a year near term from electric vehicles, new housing and business customers, with data centers only a moderate contributor.

    Q3 FY2025 call
Bear · 2

  • Capital tied to pending approvals

    The AMI 2.0 smart meter program and the NextGen ERP system still need commission decisions, and together they account for a sizeable share of planned spending.

    Q1 FY2026 call

  • Growth weighted to later years

    Management guides 2026 growth to only about 3.5%, says 2027 reaches the top of the range, and leaves 2029 and 2030 dependent on a rate case not yet filed.

    Q4 FY2025 call

Profitability & Financial Strength

In short: Credit targets are met without selling shares, but free cash flow is negative after heavy grid spending.

Bull · 1

  • No new common equity through 2030

    Management plans to fund the capital program without selling new shares through 2030, building on a diluted share count that rose 0.8% over the past three years.

    Q1 FY2026 call
Bear · 3

  • Negative free cash flow

    Free cash flow was negative $389 million over the last twelve months because capital spending consumed nearly all of the cash the utility generated.

    Filed financials

  • Rising net debt

    Net debt rose to $40.6 billion from $37.5 billion a year earlier as wildfire claim payments and construction spending outran internally generated cash.

    Filed financials

  • Thin credit rating cushion

    S&P cut both companies one notch, leaving SCE at the lowest investment-grade level, so a further downgrade would raise borrowing costs that customers ultimately pay.

    Q2 FY2026 call

Market Position

In short: SCE charges the lowest rates of California's large utilities, while wildfire liability drives financing costs.

Bull · 3

  • Lowest rates among California utilities

    SCE's system average rate is about 20% below those of the other large California investor-owned utilities, which management uses to argue further grid spending stays affordable.

    Q4 FY2025 call

  • State wildfire fund backstop

    SB 254 adds an $18 billion state backstop for future fires and lets SCE securitize claims before a reasonableness review, limiting the cash it must raise after an event.

    Q3 FY2025 call

  • Grid hardening largely complete

    About 90% of SCE's high-fire-risk distribution lines are hardened, and management reports no covered conductor failure tied to the risks that technology targets.

    Q2 FY2026 call
Bear · 3

  • Eaton Fire losses unestimable

    SCE has recorded costs tied to Eaton but cannot estimate a range of total losses, with roughly 30,000 plaintiffs in litigation and claims open into 2028.

    Q1 FY2026 call

  • Confidence in Sacramento has faded

    A year ago management expected meaningful legislation; it now calls the outcome uncertain and says a weak framework would raise financing costs and alter capital plans.

    Tone shiftQ3 FY2025 → Q2 FY2026

  • Political pressure on utility structure

    Candidates for governor have proposed breaking up the utilities and cutting rates, and management is spending time rebutting claims it says have no factual basis.

    Q1 FY2026 call