SCE faces significant wildfire-related liabilities, with ongoing lawsuits and potential for higher losses than currently accrued. Regulatory approvals for cost recovery are uncertain, particularly for pre-AB 1054 wildfire claims. Fluctuating commodity prices and credit downgrades could increase collateral requirements and borrowing costs. Decommissioning of San Onofre presents cost and schedule risks. Customer rate affordability could limit SCE's ability to implement its strategy.
Financial Upside
SCE's earnings are expected to increase due to higher revenue authorized in rate cases, including Track 4 and cost of capital adjustments. The customer-funded wildfire self-insurance program could reduce claims-related losses. Recovery of prior year undercollections in balancing accounts could boost cash flow. New transmission projects and utility-owned storage projects present potential future revenue streams.
