管理層發言
Good afternoon, and welcome to the Edison International second-quarter 2026 financial teleconference. My name is Michael, and I will be your operator today. When we get to the question-and-answer session, if you have a question, press 1 on your phone. This call is being recorded. I would now like to turn the call over to Sam Ramraj, Vice President of Investor Relations. Mr. Ramraj, you may begin your conference.
Thank you, Michael, and welcome, everyone. Our speakers today are President and Chief Executive Officer, Pedro J. Pizarro and Executive Vice President and Chief Financial Officer, Aaron D. Moss. Also on the call are other members of the management team. Materials supporting today's call are available at www.edisoninvestor.com. These include a Form 10-Q, prepared remarks from Pedro and Aaron, and the teleconference presentation. Tomorrow, we will distribute a regular business update presentation. During this call, we will make forward-looking statements about the outlook for Edison International and its subsidiaries. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. Please read these carefully. The presentation includes certain outlook assumptions as well as reconciliation of non-GAAP measures to the nearest GAAP measure. During the question-and-answer session, please limit yourself to one question and one follow-up. I will now turn the call over to Pedro.
Thank you, Sam, and good afternoon, everyone. My comments today focus on three areas: a legislation update; our continued work to make communities safer and more resilient, including wildfire mitigation and recovery efforts; and our broader progress in supporting a reliable, affordable, and clean energy future. Starting with a brief comment on earnings, Edison International's second quarter 2026 core EPS was $1.04, bringing year-to-date core EPS to $2.97. With this strong start to the first half of the year, we are confident in reaffirming our 2026 core EPS guidance and other financial targets, including our 5% to 7% core EPS growth over the long term. Aaron will discuss our financial performance in his remarks. On the legislative front, we are actively engaged with the governor's office, legislators, and key stakeholders on both wildfire reform and affordability. There is continued recognition that the current framework is placing increasing pressure on customers, communities, and the cost of financing the investments utilities are making to support California's climate goals. Consistent with the themes we have highlighted, discussions center on aligning risk, supporting affordability, and maintaining access to capital at a reasonable cost. But this is about more than utility finance. Moody's recently highlighted that the implications extend beyond utilities. They note that wildfire-related costs can affect electricity rates, affordability, and California's broader economic competitiveness. S&P has also observed that wildfire-related financial risks increasingly extend beyond investor-owned utilities to public utilities, local governments, insurers, and the communities they serve. That is why establishing a durable, long-term solution matters not only for utilities, but for customers, businesses, and the state's economy as a whole. While we are encouraged by Sacramento leadership's focus on this important topic, we also recognize that the outcome remains uncertain. So we will be thoughtful about the implications of what the legislature ultimately enacts. SCE's current GRC authorization supports the utility plan through 2028, and future investments will continue to be evaluated through a disciplined benefit-cost lens. SCE will continue to safely serve customers and maintain its unwavering focus on safety. At the same time, the clarity and quality of the legislative outcome will influence the cost of capital available to support future investment. A durable and financeable framework will help maintain access to lower-cost capital, supporting affordability for customers and continued infrastructure investment. Conversely, a framework without sufficient predictability will increase Edison's financing costs, making SCE's investments for customers' benefit more expensive. It will also influence how we prioritize and deploy future capital. Turning to operations: SCE took the first step in the next GRC process and filed its Risk Assessment and Mitigation Phase, or RAMP, application in May. This outlines the risk mitigations that guide proposed investments in wildfire risk, transmission and distribution reliability, cybersecurity, climate adaptation, and other safety-related measures. For context, the investments identified in past RAMP filings accounted for about one-third of the total capital requested in the GRC. As in prior cycles, this process provides a clear safety- and risk-driven framework for evaluating capital needs and supports consistent engagement with regulators and stakeholders on safety and risk priorities. A key topic in RAMP is wildfire mitigation. SCE's strategy continues to be comprehensive, as noted on page 3. What is increasingly important is execution and prioritization. SCE is using more advanced wildfire modeling, improved data, and climate-informed analysis to better identify where wildfire consequences could be greatest. SCE has developed an enhanced wildfire risk model that combines multiple data sources to improve how it identifies, prioritizes, and plans safety measures, while accounting for high-impact wildfire events that may not be reflected in historical data. The utility is also broadening the range of risks and failure scenarios it evaluates, reflecting both lessons learned and a more comprehensive understanding of how wildfire risk can develop. That includes looking beyond individual equipment incidents and assessing how multiple conditions and events can combine to influence safety consequences. All this will inform SCE's mitigation investments in the next GRC, which will include continued grid hardening with additional covered conductor and targeted undergrounding during the 2029 to 2032 period. SCE's preliminary estimates in the RAMP application for continued hardening are about 450 miles of covered conductor and approximately 190 miles of targeted undergrounding. To summarize, SCE's approach is increasingly location-specific, consequence-informed, and adaptive. This builds on the substantial progress SCE has already made hardening its system, including the deployment of about 800 miles of covered conductor and about 90 miles of undergrounding, including all rebuild areas, since January 2025. Importantly, SCE has not experienced a covered conductor failure associated with the risks that technology is designed to mitigate. Combined with millions of inspections and vegetation management activities, as well as expanded situational awareness capabilities, these efforts have materially strengthened the grid and reduced wildfire risk. As a result, SCE is continuing to sharpen how it prioritizes mitigation, not only by looking at where the likelihood of ignition is highest, but also by identifying where the potential consequences to communities could be greatest. The utility is directing mitigation to areas where it can provide the greatest safety benefit, using better data and ongoing learning to adjust as conditions change, all while focusing on affordability for customers. I would now like to highlight an initiative I am personally excited about as we think about Edison's future. We are increasingly combining operating experience with richer data, advanced analytics, and AI-enabled capabilities to improve how risks are identified, prioritized, and managed. Advances in AI will be among the most important tools available for utilities over the next decade. For SCE, the opportunity extends well beyond individual use cases. AI is an important enabler of the utility's long-term transformation, helping accelerate operational excellence, improve how the grid is planned and operated, and strengthen wildfire mitigation efforts. The focus is on delivering tangible outcomes: better decisions, faster execution, lower costs, and improved customer value. As these capabilities continue to mature, SCE expects them to become an increasingly important driver of safety, reliability, affordability, and overall business performance. Aaron will provide some examples of in-flight activity shortly. Moving on to the Wildfire Recovery Compensation Program, or WRCP: There is continued community interest in the voluntary program. SCE has now extended more than 2,200 offers totaling over $775 million to over 12,300 community members impacted by the Eaton Fire. SCE remains committed to providing information to community members to make informed decisions about what is best for their situation. Taking a broader view on sustainability, we remain committed to supporting the clean energy transition while maintaining the safety, reliability, and affordability that our customers expect. Our 2025 sustainability report has details about our accomplishments, goals, and long-term commitments. Here are a couple examples: SCE delivered at least 60% carbon-free power to customers, over 17% cleaner than the national average. SCE contracted approximately 900 megawatts of energy storage, bringing the total at year-end to about 9,200 megawatts owned or under contract, one of the largest storage portfolios in the nation. I am proud of our team, and I am proud of the progress that we continue to make toward a clean energy future that benefits everyone. We have and we will always put customers first by strengthening the grid, mitigating wildfire risk, and advancing clean energy to support affordability and community resilience for generations to come. With that, I am very excited to turn it over to Aaron for his first financial report as our new CFO. Alright, Aaron.
Thanks, Pedro. Good afternoon, everyone. It is great to be with you today. During my prior roles at Edison, I have had the chance to get to know many of you over the years. As I step into this role, I am looking forward to continuing those conversations and discussing how we are executing on our strategy, investing in the business, and creating long-term value for all of our stakeholders. In my remarks today, I will cover our second quarter 2026 results, capital plans, and reaffirmed earnings guidance. EIX reported second-quarter earnings per share of $1.54 compared to $0.97 last year. Page 6 provides the year-over-year quarterly variance analysis. The quarter reflects continued stability in our core operations. Results benefited from regulatory decisions last year, including the GRC decision, as well as the ongoing reduction in interest expense associated with the Woolsey cost recovery. Let me reinforce what Pedro said: With this strong start to the first half of the year, we are confident in reaffirming our 2026 core EPS guidance. We are also reaffirming our long-term core EPS growth rate of 5% to 7%. This outlook is supported by our capital investment plan, constructive regulatory framework, and continued focus on operational excellence. At SCE, results for the quarter were primarily driven by the timing of the GRC decision last year along with continued focus on strong performance across our core operations. We continue to optimize how we approach O&M spending over the course of the year. This allows us to prioritize our work to address operational needs as they arise while maintaining overall cost control. This approach supports both near-term performance and long-term value creation for customers and capital providers. The parent and other core loss was favorable by $0.06, primarily driven by the net financing benefits of the preferred stock redemptions we initiated at the end of 2025 and completed in Q1 of this year. Turning to SCE's capital plan, we continue to see strong investment opportunities across the business, driven by infrastructure replacement, wildfire mitigation, and growing demand for electrification. Our plan is centered around these priorities and supports long-term rate base growth of about 7%. We remain focused on optimizing these investments in a way that balances system needs with customer affordability. As part of that execution, we are pleased with SCE's progress on its wildfire mitigation investments. Of SCE's roughly 16,800 distribution line miles in high-fire-risk areas, SCE has successfully hardened about 90%, including nearly 7,200 miles of covered conductor. These investments remain a central part of our capital plan and are key to reducing wildfire risk and improving system resilience over time. Moving to financing activities: SCE successfully completed the Woolsey Fire cost recovery securitization earlier this week, generating approximately $2 billion in proceeds. We were pleased with the outcome and the strong demand we saw from capital providers. The proceeds will be used to recover claims and other costs, including retiring related debt, further strengthening our balance sheet. Now let me transition to operational excellence, which benefits customer affordability and long-term performance. This is an area where I spent significant time in my prior roles within the utility and will remain an ongoing focus as we look to enhance both efficiency and execution across the business. As part of that effort, we are continuing to simplify processes and expand the use of emerging technologies, including targeted AI applications, in areas where they can improve productivity and quality. Our efforts are focused on high-volume, repeatable work where we see meaningful opportunities to drive productivity and quality. For example, our planning organizations produce on the order of 100,000 project designs each year, and we are deploying tools to help automate initial design generation and the validation of final designs against our standards. We expect these improvements to accelerate design cycles by 20% to 30%. Similarly, we process approximately 40,000 permits annually across multiple agencies and systems. We see opportunities to streamline this process, reduce cycle times by approximately 20%, and improve throughput. Efforts like these are intended to create additional capacity in the system, support timely execution of our capital program, and improve cost performance over time. Our focus on operational excellence is one of the important ways we deliver consistent financial results. Looking at our year-to-date performance reinforces our confidence in the outlook for the business. We see continued momentum in our capital program, strong regulatory visibility, and stable operational performance, all of which position us well for the rest of the year. Consequently, we are reaffirming our 2026 core EPS guidance range of $5.90 to $6.20. Our priorities remain consistent: delivering on our operational commitments, advancing our capital plan, and maintaining a strong cost framework, all while supporting a safe and reliable system for customers. Let me conclude by saying that we are pleased with our results. The business is performing as expected. Our capital plan remains on track, and we are well positioned to deliver on our financial commitments for 2026 and beyond. That concludes my remarks.
Michael, please open the call for questions. As a reminder, we request you to limit yourself to one question and one follow-up.
分析師問答
Thank you, sir. If you would like to ask a question, please press 1 on your phone. One moment for the first question, please. Nicholas Campanella with Barclays. Your line is open, sir.
Hey. Good afternoon. Thanks for the time. So I know that everyone's working to get to a financeable solution for the fund, and I acknowledge in your comments that it is a broader state issue with a range of stakeholders being impacted. At the same time, you said that future investments will be evaluated and there is some uncertainty. Can you talk about what is on the table from the utility side and how you are thinking about weighing things like future securitization of capital or upfront contributions in the legislation? I know that you are in the early stage of the GRC with visibility, but are there scenarios where we could expect a new plan come third quarter? Thank you.
Nick, thanks for the question. To reiterate some of my earlier comments: we are in a unique position in that we have a GRC in hand at SCE. It has been approved. We have full line-of-sight visibility through 2028. Our capital spending plan, as we have shared, can be executed without any equity needs. We have gone further and extended guidance beyond that rate case to provide insights on where we think 2029–2030 are headed, and we continue to believe there is no need for equity through that 2030 time period. So, particularly as we talk about through 2028, we have line of sight, and that is already approved by the PUC. We do not know what is going to happen in Sacramento. I appreciate the efforts of everyone engaged there, and I appreciate investors who are weighing in and providing perspectives. It is important that policymakers understand what is at stake. California is competing with other states and global locations for investment, so that context matters. Ideally, we would see a comprehensive solution; we may not. There are four weeks left, and we have not seen final language. People are working hard, but this is not just a utility issue; it is a cross-economy issue. There is certainly a possibility we might not see a complete answer this year. We might see a partial answer, or some work done in 2026 and some left for 2027, especially with a new governor and several new legislators. It is difficult to say exactly how we would react without knowing the final outcome. Clearly, if the outcome is viewed unfavorably by the market and dramatically changes the inherent cost of our equity, we would be thoughtful about avoiding negative NPV decisions on behalf of investors, while upholding our obligations to safety and reliability under PUC regulations. That will be the balancing act. When we see what happens by August 31st, we will analyze the implications and determine whether any near-term actions are needed or whether impacts are longer term, and we will keep you all posted.
I appreciate you running through that. Thank you. And then just my second question: I noticed the slight change in the 10-Q language around Eaton and that you believe the equipment was associated versus could have been. I understand you previously said you are not aware of any other evidence, but can you frame how that disclosure fits into the context of the wildfire compensation program and getting greater visibility eventually on what the low end of the range could be from a liability standpoint?
Thanks, Nick. We always review our language to make sure it is as streamlined and straightforward as possible for investors and the community. The adjustment to the language is primarily streamlining and reflects the passage of time. Our view is based on the information we have in hand today. Since last quarter, three more months have passed and no other viable alternatives have appeared. We felt that the slight streamlining was appropriate in reflecting that SCE's equipment likely was associated with the events. We also recognize that a number of other factors impacted the extent of the Eaton Fire, including weather and other factors that appeared in the cross claims SCE filed against a number of entities. Regarding how this dovetails with WRCP and our ability to estimate potential liability: we have said for a long time that liability is probable given the circumstances, and we have taken accountability and launched the WRCP to help the community. The numbers I shared earlier—over 2,200 offers and the claims volume—when you think about over 12,300 individuals who presented claims, that is still a relatively small number compared with litigation. We now have, I believe, over 30,000 claims filed in litigation. We do not yet have sufficient volume in WRCP claims to provide an estimate of the low end of an estimable range under GAAP principles. Similarly, on subrogation claims, we have entered settlements with two insurers at around $0.55 on the dollar, but that is two subrogation claims settled out of what may be many. Again, we do not have sufficient volume to yield an estimate. I hope that covers your questions.
Thank you for the thoughts.
And the next question comes from Carly Davenport with Goldman Sachs. Your line is open.
Hey, good afternoon. Thank you so much for taking the questions. Maybe just a follow-up on the wildfire side. You continue to work through the claims on the Wildfire Recovery Compensation Program. Curious if you have any view on timing to cross that $1 billion threshold and when you might envision making first filings to tap into the wildfire fund for reimbursement.
Carly, between the subrogation settlements that we have made and the WRCP settlements we are making, we are crossing that $1 billion threshold. We have worked out with the CEA, which is the administrator of the Wildfire Fund, a prefunding mechanism so that we do not come out of pocket for any of those dollars, and we are working with them on the process to fund the claims now.
Got it. Really helpful. Thank you for that. And then maybe as we think about potential outcomes in the legislative session and potential action following that, could you talk a bit about potential options on the table if reform does not move forward this session? You referenced the RAMP filing for the next GRC; any potential changes you might see on the next GRC filing if we do not see reform move forward this session?
To reemphasize, we do not yet know what will happen, so it is difficult to say what the reaction might be. I acknowledged that if whatever comes out significantly impacts the underlying cost of equity, that will influence future investments. There are obligations that are sacrosanct around safety and reliability under the PUC. Where there is flexibility, we could consider rethinking some elements or factoring changes into future capital programs. Aaron, anything to add? No. Okay. Carly, I know you want more specifics, but we are not there yet. We want to be thoughtful and will respond after we see the legislative outcomes.
Got it. Understood. Thank you very much for the color.
And the next question comes from Richard Sunderland with Truist Securities. Your line is open, sir.
Hey. Good afternoon. Thanks for the time today. Pedro, I wanted to go back to some of your comments in the script where you talked about a number of different issues and focus around the legislature, but affordability was certainly part of that. Given the attention on affordability in the political backdrop and in light of that legislation, how do you think the affordability conversation stands right now, whether in the context of that legislation or more broadly? How has that tone changed over the past few months?
That is a great question. Affordability is a topic that colors many discussions, not just in California but across the country. We are in a period that has followed pressures from COVID and other economic changes. In many parts of the country, you see significant pressures as energy consumption grows, driving infrastructure needs. The industry is ready to meet those needs, but region by region there are specific pressures. Here in California, energy is often not the main driver of household affordability; housing costs dominate the affordability impacts for average consumers, along with other cost pressures. In that environment, there is a tendency to seek levers to pull. When you have a high-visibility topic like wildfire in Sacramento, where utility cost recovery is involved and there are connections to insurance rates and availability, a lot gets wrapped into the affordability conversation. One important point we make to legislators is that this is about customer affordability because if there is insufficient action in 2026, there is a strong likelihood of credit rating downgrades for investor-owned utilities in California, and potentially for other sectors. I referenced recent Moody's and S&P reports that discuss broader implications across the economy. That could be a significant cost impact through higher cost of debt that would be passed through to SCE customers if we do not have a credit-supportive framework within the next four weeks.
If you look at the S&P ratings, the utility is at BBB-, so there is nowhere left within investment-grade ratings. The next step would be non-investment-grade, which adds substantial cost.
Right, non-investment-grade would add a lot of cost. So affordability is really framed around the impact of the absence of legislation on customer costs, which is why the CEA report emphasized the sense of urgency.
Great. I will leave it there. Thank you both.
And the next question comes from Gregg Orrill with UBS. Your line is open, sir.
Congratulations on the result. I was wondering if there is a way to get a sense of how much of the impact was timing and how much of the upside is, in your view, normalized?
Gregg, two quarters does not make a year, and we are focused on delivering our guidance for the year. The quarter is a data point and having a strong start to the year gives us the opportunity to invest in the business, de-risk future periods, and drive efficiency. We are happy about the quarter, but we reaffirmed our guidance at $5.90 to $6.20.
Okay. Got it. Thank you.
And the next question comes from Paul Zimbardo with Jefferies. Your line is open, sir.
Good afternoon, team. Thanks for taking the question. First, following up on Pedro's comments about rating agencies and potential downgrades: I saw you tweaked that language. Is that something the agencies have directly communicated, or are you referencing their published reports discussing those scenarios without legislation?
A couple things, Paul. On our ratings and California IOU ratings, we are referencing prior published reports. Pedro's prepared remarks referenced separate reports that both Moody's and S&P issued over the past month about California, which discuss broader ramifications of wildfire across the California economy. Neither was intended to be breaking news; both were already published by the rating agencies.
Okay. That is helpful. The other question: I saw you sold Trio to X-energy. Why make that decision now?
Trio remains a business we believe in, but given our focus at Edison and some ongoing needs Trio may have, we thought a different partner would be a better fit as an owner. The transaction made sense for us. It has not been material to EIX historically, and we wish the team well. It is a great team and we believe they can continue to be successful.
Okay. Thanks for the time.
And the next question comes from Aidan Kelly with JPMorgan. Your line is open, sir.
Hey, good afternoon. Appreciate the time. I wanted to come back to the RAMP application. Could you speak to the pace of mitigation spend required across SCE's service territory and how this might compare relative to the last cycle? I know you mentioned about 450 miles of covered conductor and 190 miles of undergrounding, but if you were to tee it up from a capital perspective, how would you frame the size relative to past applications?
In the past, about one-third of our GRC requests showed up in the RAMP application. This time around, RAMP is about $2.5 billion, so it translates to slightly more than a third. It ties to the level of spending in our $8 billion to $9 billion CapEx forecast for 2029 that we share in our investor materials.
Got it. Appreciate the color. And for the Eaton Fire, any update on the Los Angeles County Fire Department's investigation you can share, any sense on timeline or key milestones?
We do not have an update. We are not privy to their timing. We are, of course, ready to cooperate and have cooperated when asked. Typically for complex fires, you might see a report in 12 to 18 months. Clearly it has been more than 18 months now, but we do not have insight on when their report might come out.
Makes sense. Appreciate the time. I will leave it there.
And our next question comes from Ryan Levine with Citi. Your line is open, sir.
Hi. Two questions. First, how have the education efforts ramped up in Sacramento compared to last year on the wildfire bill? Is this broader given the complexity of the bill? Any color on the process would be helpful.
Good question. We are very focused on education efforts. If you look back to 2017–2018 and SB 901, that was a major ramp-up because it was creating a new framework. SB 254 was different as it built on AB 1054; the legislature asked the CEA to produce a report to provide more education, which was helpful. The CEA report that came out in April has provided a platform for discussions this year. That said, some legislators are newer and may not have been present for earlier cycles, so starting points for policymakers vary. The CEA report has been a useful platform for discussion and for helping policymakers understand the issues.
One more specific question on the RAMP process: How does the ongoing undergrounding cost-benefit analysis impact the decision around how much covered conductor or undergrounding you are planning to do? Is there upside to the 190-mile undergrounding plan you filed in your RAMP?
Every RAMP cycle we look at the latest approved risk frameworks and our own models to translate risk into benefit-cost ratios. We aim for a portfolio with benefit-cost ratios above 1.0 and evaluate projects on a segment-by-segment basis. Risk models have been refined to incorporate the latest intelligence. For undergrounding, we consider the cost, which varies by segment, and combine that with the level of risk to calculate benefit-cost. We will do projects that are above 1.0 and compare covered conductor versus undergrounding, while considering factors like egress, terrain, and feasibility. Feasibility is a constraint that affects cost. Based on the RAMP, we included about 190 miles of undergrounding in a base scenario, but we will continue to evaluate whether there are other places where undergrounding is the right solution, for example, to reduce Public Safety Power Shutoffs and other impacts. The RAMP is a good starting point; we provide our benefit-cost analysis and will get feedback before we file the next general rate case, and we will decide what goes into the rate case as we get closer next year.
Great. Thanks for the time.
And that was our last question. I will now turn the call back over to Mr. Sam Ramraj.
Thanks, everyone, for joining us. This concludes the conference call. Have a good rest of the day.
You may now disconnect. Thank you. This concludes today's conference call. You may go ahead and disconnect at this time. Have a great rest of your day. Thank you.