Edison International

Overview Key strengths Key risks Large utility holding company with lower-risk, rate-regulated utility operations serving more than 5 million customers. Susceptibility to severe wildfires, and higher risks from California courts' interpretation of inverse condemnation. Generally, a predictable regulatory construct that includes multiyear rate case filings with subsequent attrition rate increases and formula rates. Drought-like conditions, including 27% of the company?s service territory identified as having high fire risk, increase wildfire risk. Credit-supportive protections under Assembly Bill 1054 established a $21 billion wildfire fund, a liability cap, and specified standards of a utility's reasonable conduct. Proactive wildfire mitigation activities, including the use of Public Safety Power Shutoffs (PSPS) to mitigate risk of wildfires. Elevated negative discretionary cash flow, including close to

...We expect Edison's consolidated financial measures to improve without weakening business risk. We view the California Public Utilities Commission's (CPUC) decision on Track 1 of SCE's general rate case as stabilizing for credit quality. As part of the rate case decision, the CPUC authorized a base revenue requirement of $6.9 billion for Southern California Edison (SCE). In addition, the general rate case (GRC) decision also includes multiyear step rate increases of $382 million (a 5.54% increase) and $437 million (a 6% increase) for 2022 and 2023, respectively. The commission also approved recovery for SCE's investments to enhance safety, reliability, and resiliency, modernize its grid, and mitigate wildfire risks. The commission also established and renewed a number of the memorandum and balancing accounts for several items that support cost recovery, including items such as vegetation management. Overall, we view the outcome as indicative of Edison's effective regulatory risk management,...

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