Edison International (EIX)
Q4 2011 Earnings Call
February 29, 2012 5:00 pm ET
Scott Cunningham - Interim Head of Corporate Communications and Vice President of Investor Relations
Theodore F. Craver - Chairman, Chief Executive Officer and President
W. James Scilacci - Chief Financial Officer, Executive Vice President and Treasurer
Ronald L. Litzinger - President of Southern California Edison Company
Pedro J. Pizarro - Vice President and President of Edison Mission Group Inc
Jonathan P. Arnold - Deutsche Bank AG, Research Division
Dan Eggers - Crédit Suisse AG, Research Division
Michael J. Lapides - Goldman Sachs Group Inc., Research Division
James L. Dobson - Wunderlich Securities Inc., Research Division
Steven I. Fleishman - BofA Merrill Lynch, Research Division
Jonathan Cohen - ISI Group Inc., Research Division
Travis Miller - Morningstar Inc., Research Division
Paul B. Fremont - Jefferies & Company, Inc., Research Division
Previous Statements by EIX
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I would now like to turn the call over to Mr. Scott Cunningham, Vice President of Investor Relations. Thank you. Mr. Cunningham, you may begin your conference.
Thanks, Sharon, and good afternoon, everyone. Our principal speakers today will be Chairman and CEO, Ted Craver; and Chief Financial Officer, Jim Scilacci. Also with us are other members of the management team. Ted's prepared remarks, presentation that accompanies Jim's comments, earnings press release and our Edison International 10-K are available on our website at www.edisoninvestor.com. Tomorrow, we will issue our regular quarterly business update presentation that will use these and other slides for ongoing investor discussions.
During this call, we will make forward-looking statements about the financial outlook for Edison International and its subsidiaries and about other future events. Actual results could differ materially from current expectations. Important factors that could cause different results are set forth in our SEC filings. We encourage you to read them carefully. Presentation includes certain outlook assumptions, as well as reconciliation of non-GAAP measures to the nearest GAAP measure.
With that, I'll turn the call over to Ted Craver.
Theodore F. Craver
Thank you, Scott, and good afternoon, everyone. Today, Edison International reported fourth quarter earnings of $0.75 per share and full year core earnings of $3.22 per share. We are pleased that our fourth quarter results have allowed us to deliver 2011 core earnings well above the high end of our guidance range.
Southern California Edison, Edison Mission Group and the parent, all contributed to outperforming the earnings guidance. Of particular note, Southern California Edison's core earnings increased $0.20 in the quarter and $0.32 for the full year due to rate base growth and a favorable tax adjustment that Jim will discuss a little later.
Typically, at this time of the year, we provide earnings guidance for the coming year. However, we will not be providing 2012 guidance until we receive a final decision in Southern California Edison's General Rate Case, which we hope will be in the first half of 2012.
In the absence of specific earnings guidance, Jim will discuss some of the key drivers to our 2012 earnings in his remarks.
On a reported basis, we showed a loss for the full year of $0.11 per share, due primarily to impairment charges at EMG. These impairment charges are largely the result of a sharp decline in power prices, combined with the need for substantial investment in retrofits for our coal fleet to comply with environmental regulations. I'll say more about those charges later during my remarks about EMG.
Let me begin by covering some recent developments at Southern California Edison. First, let me provide a brief update on the timing of the Southern California Edison's 2012 General Rate Case. As of now, we don't have a timeline for when we will get a final decision, although we hope it'll be in the first half of the year. Commission is aware of the need for a timely GRC decision, and we expect a proposed decision will be forthcoming shortly. But it is also important to remember that the final decision will be retroactive to January 1.
Our value proposition at Southern California Edison is driven by growth in capital investment, which is expected to result in average annual growth in rate base of 7% to 9% through 2014. This growth is largely driven by California policy mandates, as well as infrastructure replacement to ensure public safety and reliability.
Over the last 5 years, Southern California Edison has delivered compound annual growth in rate base of 11%, and its core earnings have increased at a 12% compound annual growth rate.
One large component of SCE's capital program is investment in transmission to connect renewable generators such as the Tehachapi and Devers-Colorado River projects. At these projects, we are seeing higher costs to mitigate various environmental impacts and from permitting delays. These additional costs are included in SCE's updated capital spending forecast.
I would also like to provide an update on the outage work taking place at our San Onofre Nuclear Generating Station, or at we refer to as SONGS. Unit 2 is offline for a planned outage -- planned refueling outage and we took Unit 3 offline on January 31 to inspect a water leak in its steam generator. Steam generators in Unit 2 were replaced in 2010, and Unit 3's were replaced in 2011.
Planned inspections of the steam generators in Unit 2 found isolated areas of wear in some of the heat transfer tubes. We are in the process of preventively removing tubes from service as prescribed by industry guidelines and well within design margins for this kind of repair activity.