Edison International (EIX) Q3 2026 earnings review
Edison's underlying profit rises, but wildfire liabilities mount
Edison International, the parent of Southern California Edison, grew its underlying profit while its wildfire liabilities and political risks deepened. Reported profit per share excluding one-offs fell 18% to $1.92, because last year included a one-time rate catch-up. Stripping out that prior-year boost, profit per share rose 7% by our math on annual rate increases. Finance chief Aaron Moss kept the full-year outlook unchanged, which by our math leaves fourth-quarter profit falling 38% as the utility pulls maintenance work forward.
| Profit per share, excluding one-offs (clean comparison) | +7.3% from a year ago by our math, stripping out last year's 55-cent rate catch-up |
|---|---|
| Reported profit per share, excluding one-offs | $1.92 -18% from a year ago ($2.34 reported) |
| Eaton Fire settlements entered into | $1.8B includes $1.1B of compensation program offers; total loss still unestimated |
| 2026 profit per share outlook, excluding one-offs | Unchanged $5.90–6.20; middle of the range: $6.05 |
⚖️ Verdict: 🔴 Bearish
The story got worse because two major external catalysts went against the utility. First, California's regular legislative session ended without wildfire liability reform, and chief executive Pedro Pizarro warned that without a fix SCE will request less grid capital in its 2029 rate filing. Second, Los Angeles County investigators concluded that SCE equipment sparked the Eaton Fire, while signed settlements reached $1.8 billion with no total loss estimate in sight.
The question now is whether California lawmakers reconvene to pass wildfire reform before a November 15 deadline, or leave the utility exposed into 2027. Passing a cap would protect credit ratings and preserve the post-2028 spending plan, while inaction risks credit downgrades and a smaller 2029 capital request. The November 15 legislative deadline and the November 30 claims cutoff will settle the near-term path.
🐂 Bull Case
Rate Increases Lift Underlying Utility Profit
Edison International is the parent of Southern California Edison (SCE), which supplies electricity to 15 million people. Reported profit per share excluding one-offs—which the company calls core earnings per share—fell 18% from a year ago to $1.92. That drop is an accounting quirk from last year's General Rate Case (GRC), the state proceeding that sets customer prices every four years.
In the third quarter of 2025, SCE booked a 55-cent catch-up for the first half of that year, finance chief Aaron Moss said. Stripping out that one-time boost, third-quarter profit per share grew 7.3% from a year ago by our math, because annual price increases took effect and preferred dividend costs fell. Moss reaffirmed the 5% to 7% yearly profit growth target through 2030.
What to watch: the 2027 transmission rate filing with federal regulators, due by December 1, 2026. A filing near the preliminary $1.7 billion target would lock in the next leg of regulated revenue growth.
Wildfire Recoveries Turn Cash Flow Positive
Electric utilities spend heavily on power lines and substations, so their capital spending usually exceeds their operating cash flow. Over the first nine months of 2026, Edison generated $5.39 billion in operating cash flow, up 28% from a year ago, as regulators allowed SCE to collect past wildfire and grid costs.
- Third-quarter operating cash flow: $2.70 billion, up 27.1% from a year ago by our math
- Nine-month free cash flow: $187 million, improving by $583 million from last year's deficit by our math
- Common stock issuance planned through 2030: $0
Because cash collections jumped, the utility group funded $5.21 billion of nine-month grid investments without issuing new shares. Moss also redeemed $538 million of preferred stock this year, cutting nine-month preferred dividend payments from $87 million to $15 million.
What to watch: full-year funds from operations relative to total debt in the fourth-quarter report. Staying inside management's 15% to 17% target band would prove the company can fund its grid plan without selling stock.
State Regulator Approves Grid Safety Plan
SCE replaces bare overhead wires with insulated lines—called covered conductor—and buries cables to stop equipment from sparking fires. By September 30, the utility had hardened about 90% of its distribution lines in high fire risk areas, including more than 7,200 miles of insulated wire, chief executive Pedro Pizarro said.
During the quarter, California's Office of Energy Infrastructure Safety approved SCE's 2026 through 2028 Wildfire Mitigation Plan. Pizarro noted the agency called its high-voltage inspection program "the most comprehensive among the large IOUs", inspecting 77% of high-risk transmission lines by ground and air each year with artificial intelligence cameras. Holding an approved safety plan gives the utility a legal presumption that it acted reasonably during regulatory cost reviews.
What to watch: the annual safety certification from the state infrastructure office later this year. Securing that certificate preserves the utility's legal presumption of reasonable conduct for the coming fire season.
🐻 Bear Case
Sacramento Ended Without Wildfire Reform
California law holds utilities strictly liable for property damage from wildfires their equipment sparks, and state lawmakers are debating whether to cap that exposure. A legislative fix would lower borrowing costs and unlock grid spending, but Pizarro said, "We were disappointed when California’s legislative session concluded without action on a durable, long-term solution."
Edison is lobbying for a special session before a November 15 deadline, seeking a shareholder liability cap not tied to the state's Wildfire Fund. Without a new law, wider credit spreads will cost customers "an incremental $300 million over the life of the bonds we expect SCE will issue in 2027 alone", Moss said. Pizarro warned that "Without durable wildfire reform in place, SCE would request less capital than it otherwise would for projects that enable electrification, the clean energy transition, and economic growth" when it files its 2029 rate case in six months.
That warning matters because Edison's profit plan relies on annual capital spending stepping up from $7.6 billion in 2028 to $9.0 billion in 2029. If lawmakers push reform into 2027 or credit agencies cut Edison below investment grade, the company may trim the very projects that drive its post-2028 growth.
What to watch: whether California lawmakers pass a bill by the November 15 constitutional deadline, and credit agency reviews thereafter. Missed action or a credit downgrade would threaten the 2029 capital step-up.
Fire Department Blames Utility Equipment for Eaton
Edison faces thousands of claims from the January 2025 Eaton Fire, and the company uses its Wildfire Recovery Compensation Program (WRCP) to settle directly with residents. While fast settlements resolve legal disputes without court battles, they also push total damages above the company's $1 billion insurance layer.
During the third quarter, the Los Angeles County Fire Department published redacted investigation reports. "Those reports concluded that the Eaton Fire ignition was caused by SCE equipment," Pizarro said. Pizarro maintained that SCE's conduct was "consistent with the actions of a reasonable utility" and that "there is no basis for a finding of felony liability". Total settlements reached $1.8 billion by September 30, including $1.1 billion of program offers across more than 3,200 offers—up $325 million from last quarter by our math.
Despite $1.8 billion in signed settlements and an official causation finding, Edison stated it is "currently unable to reasonably estimate a range of losses that may be incurred in connection with the Eaton Fire" for a seventh straight quarter. SCE has already booked $859 million of expected reimbursements from the state Wildfire Fund. If state regulators later rule that SCE acted unreasonably, the utility must repay the fund up to a roughly $4.3 billion liability cap.
What to watch: total claims submitted before the compensation program closes on November 30, 2026. Once that window shuts, management will have fewer reasons to withhold a total loss estimate in the fourth-quarter report.
Extra Spending Will Weigh on Fourth Quarter
Through September, Edison earned $4.89 per share excluding one-offs, up 4.5% from a year ago and reaching 81% of its full-year target midpoint. Even so, Moss kept the full-year outlook at $5.90 to $6.20 with a "bias toward the middle of the range", saying the strong first nine months let the company "invest in the business to de-risk future periods and drive ongoing efficiency".
By our math, hitting the $6.05 midpoint leaves just $1.16 per share for the fourth quarter, down 38% from $1.86 a year ago. Part of that drop comes from lapping a 46-cent Woolsey Fire regulatory settlement booked in late 2025. Even after stripping out last year's one-time items, fourth-quarter profit per share will fall 21% by our math because management is pulling maintenance spending into late 2026.
What to watch: fourth-quarter operation and maintenance expense in the full-year results. A jump in maintenance costs accompanied by profit near $6.05 per share would confirm management spent the early cushion on grid upkeep.
💲 Other KPIs
Quarterly interest costs rose 11.7% from a year ago to $545 million, while total debt minus cash grew 3.0% from year-end to $41.4 billion by our math. All long-term debt carries fixed rates, but refinancing $2 billion to $4 billion of annual maturities at guided 6.0% to 6.5% rates keeps lifting borrowing costs.
Customer bills owed to the utility jumped 54.3% from December 31, 2025 to $2.26 billion by our math, even as nine-month operating revenue fell 5.4%. The increase pulled $853 million out of operating cash flow over the first nine months after peak summer cooling demand.
Day-to-day grid operating and maintenance costs fell 2.8% from a year ago to $1.14 billion, following a 32.2% drop in the second quarter. Measured against lower pass-through revenue, however, the expense line rose by 2.9 percentage points of revenue to 23.4% by our math.
🔮 Guidance
Unchanged. Management kept its full-year target at $5.90 to $6.20 per share, with finance chief Aaron Moss pointing to the $6.05 middle of the range. By our math, that leaves $1.16 for the fourth quarter, down 38% from a year ago as SCE laps last year's Woolsey Fire settlement and pulls forward maintenance work.
Cut. The utility group lowered its reported profit per share outlook by 4 cents to $5.66 to $5.96. By our math, the $5.81 middle of the range leaves $1.16 for the fourth quarter. The reduction mechanically reflects 4 cents of net wildfire Fund and non-core charges booked in the third quarter.
Unchanged. The plan still calls for $6.25 to $6.65 per share next year. At the $6.45 middle of the range, profit per share rises 6.6% from the 2026 target midpoint by our math, supported by regulated rate base expanding from $50.8 billion to $54.4 billion.
Unchanged. Edison reaffirmed its 2028 target of $6.74 to $7.14 per share. The $6.94 middle of the range represents 7.6% growth over the 2027 midpoint by our math, tracking the final year of the approved 2025 rate case.
Unchanged. Management maintained its five-year grid investment plan of $38 billion to $41 billion, including $7.3 billion for 2026. Chief executive Pedro Pizarro cautioned that SCE will request less capital for 2029 and 2030 if California does not pass wildfire liability reform.
❓ Key Questions
Will Eaton losses be estimated after November 30?
The compensation program closes to new submissions on November 30, 2026, and total settlements have already reached $1.8 billion. Investors need to know if the closing date gives SCE enough certainty to publish a total loss range in the fourth-quarter report.
How much capital would SCE cut in the 2029 filing?
Pizarro stated that without wildfire reform, SCE will request less capital for electrification and clean energy when it files its 2029 rate case in six months. Management has not sized how much of the $9.0 billion annual spending plan for 2029 and 2030 is at risk.
Did construction start on the Alberhill project in Q3?
Last quarter, management expected construction on the Alberhill System Project to begin in the third quarter of 2026. The current release and remarks did not mention whether work started on schedule.
How much maintenance spending was pulled into Q4?
Moss said strong nine-month results allow SCE to pull forward investments to de-risk future years, leaving an implied $1.16 per share for the fourth quarter by our math. Specifying the exact dollar pull-forward would clarify the underlying run-rate.