QUOTE AND NEWS
Forbes  3 hrs ago  Comment 
Despite an expected dip in profit, analysts are generally optimistic about Edison International as it prepares to reports its third-quarter earnings on Tuesday, October 28, 2014. The consensus earnings per share estimate is $1.35 per share.The...
Forbes  Oct 23  Comment 
The worst performing sector as of midday Thursday is the Utilities sector, higher by 0.7%. Within that group, Edison International (NYSE: EIX) and FirstEnergy (NYSE: FE) are two large stocks that are lagging, showing a loss of 0.2% and 0.1%,...
Benzinga  Oct 23  Comment 
SunEdison, Inc., (NYSE: SUNE), a leading global solar technology manufacturer and provider of solar energy services, today announced the completion of a 1.7 MW DC roof-mounted solar photovoltaic (PV) system in Hesperia, California that will both...
Market Intelligence Center  Oct 22  Comment 
MarketIntelligenceCenter.com's patented trade-picking algorithms have identified an attractive covered-call trade on Edison International (EIX). Look at the Dec. '14 $60.00 covered call for a net debit in the $58.28 area. This trade has a...
Insurance Journal  Oct 2  Comment 
The U.S. Supreme Court on Thursday agreed to weigh whether to revive certain claims made in a class action lawsuit filed by employees against utility Edison International over its pension plan management. The nine justices will consider a lawsuit...
DailyFinance  Sep 30  Comment 
Sparky the Wonder Bug will entertain thousands of elementary school students across Southern California Edison’s (SCE) service territory beginning this week, teaching youngsters about electrical safety through a live theatre...
Resource Investor  Sep 19  Comment 
Petroceltic International plc, the independent oil and gas exploration development and production company focused on the Middle East and the Black Sea regions announced that a joint venture with Edison International Spa was the successful bidder...
Motley Fool  Sep 9  Comment 
Rooftop solar systems could be a threat to the power industry or, if utilities embrace them, a saving grace.
Market Intelligence Center  Sep 9  Comment 
MarketIntelligenceCenter.com's patented trade-picking algorithms have identified an attractive covered-call trade on Edison International (EIX). Look at the Jan. '15 $60.00 covered call for a net debit in the $57.46 area. This trade has a...
Forbes  Sep 3  Comment 
In afternoon trading on Wednesday, Utilities stocks are the best performing sector, higher by 0.5%. Within that group, FirstEnergy (NYSE: FE) and Edison International (NYSE: EIX) are two of the day's stand-outs, showing a gain of 1.3% and 1.3%,...




 

Edison International (NYSE:EIX) provides electricity to millions of customers around the nation. Southern California Edison (SCEDM), EIX's largest subsidiary by revenue, serves over 13 million people throughout Southern California, while its other subsidiary, Edison Mission Group (EMG) sells electricity to other electric utility companies that have need of excess capacity. SCE and EMG, combined, own 14,000+ megawatts (MW) of electrical generation capacity, enough electricity to power over 10 million homes.[1]

Electric utility companies are under increasing legislative pressure to adopt cleaner electricity generation methods while maintaining competitive prices. Southern California Edison has been a leader in moving to cleaner sources of electricity generation with nearly 17 percent[2] of its energy mix coming from wind, solar, biomass, small hydropower and geothermal resources. SCE does not disappoint in the nuclear department either, with 17 percent of energy delivered to customers originating from a nuclear source.[3] This diversification of energy sources as well as being on the leading edge of renewable energy positions EIX well for the future.

Company Overview

Business Financials

In 2009, EIX earned a total of $12.4 billion in total revenues. This was a decline from its 2008 total revenues of $14.1 billion. As a result, this decrease in total revenues had an adverse impact on EIX's net income. Between 2008 and 2009, EIX's net income declined from $1.2 billion in 2008 to $945 million in 2009.[4]

Business Segments

Southern California Edison-SCE (Electric Utility)

Southern California Edison is the largest electric utility in California, serving more than 13 million people via 4.8 million customer accounts in a 50,000 square-mile area of Southern California.[5] SCE is regulated by the California Public Utilities Commission meaning that rates are mandated rather determined through the free market.

Edison Mission Group-EMG (Nonutility Power Generation)

Edison Mission Group consists of owned or leased interests in 29 domestic operating power plants with an aggregate electrical generating capacity of 10,473MW.[6] EMG's power plants are located throughout the United States from where the electricity is sold or traded to regional utility companies that need purchase electricity to serve their customer base.

EMG owns one of the largest portfolios of wind energy projects in the U.S., with 19 projects currently in operation or under construction.

Edison Capital (Financial Services)

Edison Capital has investments worldwide in energy and infrastructure project which include power generation, electric transmission and distribution, transportations and telecommunications.

Key Trends/Forces

Shielded by Fossil Fuel Price Volatility

Unlike other utility companies such as American Electric Power Company (AEP), EIX's Southern California Edison has remained largely unaffected by the rising cost of fossil fuel prices. SCE's electrical generation mix has diversified away from traditional fossil fuels such as coal towards cleaner burning natural gas. Nuclear and renewable energy sources also comprise a significant portion of the energy mix which, characteristically, has a very steady and predictably cost basis.

To other utilities, fuel input costs will remain volatile as the booming overseas growth from industrializing counties such as China and India have pushed fossil fuel demand and prices new to new heights.

Nuclear Power & Electricity Generation

The key difference between nuclear and fossil plants is the cost structure. Nuclear plants require very large capital investments (to construct the plant) but little expenditure for fuel because it takes relatively little uranium to power a plant. On the other hand, fossil fuel plants require relatively little capital investment but have high fuel costs because they require large amounts of coal, oil or gas. In the past, low fossil fuel prices gave given fossil fuel plants a cost advantage over nuclear plants. The cost advantage, compounded by the stigmas of nuclear energy (the "not in my backyard" phenomenon) has prevented new nuclear construction for almost 30 years.[7]

Record fossil fuel prices have begun to reverse this trend. The possibility and implications of peak oil may reinforce this reversal. Already, nuclear utilities such as Exelon, Entergy and Duke Energy Corporation (DUK) have begun filing for permits for construction of new nuclear plants. Southern California Edison operates the San Onofre Nuclear Generating Station which provides nearly 20% of the electrical power to the residents of Southern California.

California, Global Warming and Environmentalism

Over the past few years, global warming has moved from the fringes to become one of the single greatest single challenges facing the world today. A growing body of scientific evidence ties carbon dioxide emissions to rising temperatures. As a result of growing popular awareness of the risks of global warming, many large corporations have stepped up their efforts to project greener images. Additionally, many expect the U.S. government to enact more stringent legislation limiting carbon emissions. Environmental awareness is another key trend driving the renaissance of nuclear energy. Compared to their fossil fuel peers, nuclear energy plants have negligible emissions.

California, EIX's main operating region, continuing in its tradition of environmental leadership by enacting aggressive renewable energy goals. The California Renewables Portfolio Standards requires electric utilities to provide 20% of their electricity from renewable sources by 2010 and 33% by 2020. [8]

Weather

Weather can have a material impact on EIX's business. Warmer than expected winters can lead to lower demand for heating energy, whereas a cooler than expected summer can lead to lower energy demand for cooling.

Government Regulation of Prices

The U.S. government plays a critical role in the financial performance of the highly regulated energy sector since the government sets the price of electricity. Electricity is considered as a necessary service, and with regulation in place, the government can guarantee that adequate service at an affordable price will be rendered to all who apply for it. How are prices set? Federal agencies that supervise the utilities ensure that it is affordable and that it provides utilities a "fair" return on their investment without earning excessive profits. How "fair" returns on investment and excessive profits are determined has been subject of much controversy. The subjective nature of regulation and price mandates has spurred the movement for increased transparency through deregulation and market-based pricing.

Each of EIX's utility businesses face a variety of challenges and potential benefits that may arise from changes in legislation and regulatory schemes.

References

  1. Power of Electricity
  2. SCE - Renewable Energy
  3. EIX's 2006 Annual Report (Pg 19)
  4. EIX 10-K 2009 Item 6 Pg. 61
  5. Southern California Edison Corporate Profile
  6. Reuters EIX Profile
  7. Scientific American (9/26/07) - Nuclear Power Reborn
  8. California Renewables Portfolio Standard
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