Edison International recorded a net income of $276 million, or $0.85 per share, for the second quarter of 2016, down from $379 million, or $1.16 per share, in the same period for 2015, the California utility announced Thursday in its latest earning report.
Based in Rosemead, Calif., Edison International is the parent company of Southern California Edison (SCE), majority owner of the closed San Onofre Nuclear Generating Station (SONGS).
Chairman and CEO Ted Craver during Thursday’s earnings call addressed the California Public Utilities Commission’s (CPUC) reopening of the 2014 SONGS settlement, which resulted in state ratepayers shouldering $3.3 billion of the $4.7 billion cost to shutter the plant following its permanent closure in 2013. The settlement was reached a year after ex parte conversations between former CPUC President Michael Peevey and former SCE executive Stephen Pickett in Warsaw, Poland, where the two discussed the settlement.
Craver noted that four of the six entities that signed off on the settlement – minority owner San Diego Gas & Electric, Friends of the Earth, the Coalition of California Utility Employees, and SCE — submitted filings after the case was reopened this summer, stating that the ex parte communications had no impact on the settlement agreement, a deal he said remains “reasonable.” The state Office of Ratepayer Advocates and the consumer advocate organization The Utility Reform Network are seeking to impose additional penalties on SCE.
“We strongly believe this is opportunistic and inappropriate,” Craver said of the claims. “We also note that before approving the settlement, the commission asked the settling parties to amend the settlement in meaningful ways, all of which were more favorable for customers, which the parties ultimately did. … We are hopeful the commission will see the record as demonstrating the validity and appropriateness of the settlement by reaffirming the settlement and dismissing the pending appeals.”
SCE’s second-quarter 2016 net income declined by $69 million from the same span in 2015, from $384 million to $315 million, the company said, “primarily due to $100 million of income tax benefits from revisions to liabilities for uncertain tax positions recorded in the second quarter of 2015.” That impact was partially offset “by the implementation of the 2015 General Rate Case decision and 2016 incremental return on the pole loading rate base.”
Craver reaffirmed the company’s full-year earnings “based on second quarter results and more favorable SCE earnings expected for the balance of the year.” The 2016 earnings guidance ranges from $3.82 to $4.02 per share.
However, as stated in the company’s first-quarter report, quarterly year-over-year comparisons are not very meaningful, given “timing mismatches,” Craver said. Those mismatches include a delay in SCE’s 2015-17 General Rate Case decision and the impact of taxes; significant SCE tax benefits recorded last year but not in 2016; the absence of Edison capital asset sales compared to 2015; and the timing of Edison energy costs versus revenues. Craver said the company will hold off on reconsidering any guidance adjustment until third-quarter results are in.
“The larger point that I want to leave with you is that core earnings are on track for the full year,” Craver said. “In fact, based on second-quarter results, although there are various puts and takes amongst the business, out current outlook indicates that consolidates results for the full year are in the top half of our guidance range.”
For the first half of 2016, Edison reported net income of $546 million, or $1.68 per share, compared to $678 million, or $2.08 per share, during the same period in 2015. SCE’s net income for the same period decreased $88 million, or $0.27 per share, from 2015.
