Edison International’s Q2 2026 diluted EPS rose to $1.38 from $0.89 (core EPS $1.54 vs $0.97), mostly because Q2 2025 was booked before the 2025 rate case decision; Eaton Fire settlements of $1.6B so far are offset by insurance and Wildfire Fund recoveries, but further losses remain unestimable.
Revenue
$4.4B
-4.1% YoY
Net income
$534M
+55.7% YoY
Diluted EPS
$1.38
+55.1% YoY
Operating margin
25.1%
Overview: earnings up 56%, mostly because last year's comparison was held down
Edison International, the parent company of the California electric utility Southern California Edison (SCE), reported second-quarter 2026 net income available to common shareholders of $534 million, or $1.38 per diluted share. A year earlier it was $343 million, or $0.89. Core EPS, the company's own adjusted measure that strips out wildfire claims, Wildfire Fund charges and other one-off items, rose to $1.54 from $0.97.
Most of that gain has one cause. SCE's rates are set in a General Rate Case (GRC), a multi-year proceeding in which the California Public Utilities Commission (CPUC) decides how much revenue the utility may collect to cover its costs and earn a return. The final decision in the 2025 GRC did not arrive until the third quarter of 2025, so SCE booked Q2 2025 on the older 2024 authorized revenue. The 10-Q says the revenue the new decision assigned to Q2 2025, but which was only booked later in 2025, was about $193 million. SCE's core earnings rose $198 million this quarter, so a large share of the year-over-year jump is a timing effect in the comparison period. It is not a step up in underlying profitability of the same size.
The Eaton Fire is still the dominant risk. SCE now says it is likely its equipment was involved in starting the January 2025 fire. Its settlement losses so far are covered by customer-funded insurance and the state Wildfire Fund. But the company says further material losses are probable and that it cannot yet estimate a range.
Key metrics (Edison International consolidated)
Metric
Q2 2026
Q2 2025
YoY Change
Operating revenue
$4,357M
$4,543M
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Operating margin is operating income divided by revenue: the share of revenue left after running the business, before interest and tax.
Year to date (six months): revenue was $8,460M, up 1.3% from $8,354M. GAAP net income available to common shareholders was $1,065M, down 40.1% from $1,779M, and diluted EPS was $2.75 against $4.61. Core EPS was $2.97, up from $2.34. The first-half GAAP drop is also a comparison effect: H1 2025 included $968M after tax of non-core gains, mainly cost recoveries authorized under the TKM Settlement Agreement (a 2024 agreement with the California Public Advocates Office on recovering costs from the 2017/2018 Thomas Fire, Koenigstein Fire and Montecito Mudslides) plus insurance reimbursements. Nothing of that size recurred in 2026.
Why revenue fell while profit rose
For a regulated utility, revenue and profit can move in opposite directions. Many costs, including power purchases, vegetation management and certain wildfire mitigation work, are passed through: SCE bills customers exactly what it spends, so those costs change revenue but not earnings. SCE's Q2 revenue fell $184M, and the 10-Q breaks that down as:
-$400M from lower pass-through expenses. Most of this is $425M less operation and maintenance cost, because Q2 2025 included the recognition of previously deferred wildfire mitigation and vegetation management costs authorized for recovery in 2025.
-$57M because Q2 2025 included a return on wildfire-related balancing-account rate base from regulatory decisions received that quarter.
+$273M from the 2025 GRC final decision, including its 2026 escalation mechanism.
The same pass-through effect is why operating expenses fell $503M and operating margin widened from 17.1% to 25.1%. Most of the margin gain comes from smaller pass-through revenue and cost, not from greater efficiency. One cost that did not come back: Q2 2025 carried a $62M charge, mainly for disallowed historical expenses in the 2021 GRC wildfire-mitigation memorandum account.
Below the operating line, SCE's income tax expense rose $136M. Of that, $94M came from higher pre-tax income and $42M from lower flow-through tax benefits passed to customers. At the parent level, preferred stock dividends fell from $22M to $1M, because Edison International redeemed all of its Series A preferred stock for $414M in Q1 2026. The saving was partly offset by higher parent interest expense. Parent and Other core loss narrowed to $80M from $100M.
GAAP vs. core: what was excluded this quarter
Q2 non-core items totaled -$58M after tax (-$0.15 per share):
-$26M after tax of Wildfire Fund amortization, the same as a year ago. SCE's contributions to the fund are expensed gradually over the fund's estimated 20-year coverage period, like a prepaid insurance premium.
-$3M after tax of wildfire claims and legal costs net of expected recoveries.
-$29M after tax of losses on disposing of Trio, a small non-utility subsidiary. This includes a $23M loss on disposition and $5M of employee-related costs. The company recognized no tax benefit on the loss.
The Eaton Fire: what the filing says
Cause: Los Angeles County Fire Department is still leading the origin-and-cause investigation. SCE has not conclusively determined that its equipment caused the fire. It says "a viable explanation is that a de-energized idle SCE transmission facility in the preliminary area of origin was associated with the ignition" and that, absent other evidence, its equipment was likely involved. The Los Angeles District Attorney's Office is investigating whether any crimes were committed. SCE says it is "not aware of any basis for felony liability." Any fines or penalties cannot be recovered from insurance, the Wildfire Fund or customer rates.
Litigation: As of July 23, 2026, SCE knew of about 2,000 lawsuits representing about 32,000 individual plaintiffs, plus subrogation plaintiffs (insurers suing to recover what they paid out) and public-entity plaintiffs. The first bellwether jury trial is set for January 2027.
Losses booked: Through June 30, 2026, SCE had recorded $1.6B in losses from settlements with insurers and with claimants in its Wildfire Recovery Compensation Program, a fast-track claims program launched in fall 2025. It recorded matching expected recoveries of $917M from customer-funded self-insurance, $645M from the Wildfire Fund and $70M through federally regulated (FERC) transmission rates. The net after-tax hit to earnings so far is $9M, which is the after-tax cost of the required $12.5M shareholder contribution to the self-insurance program. In Q2 alone, SCE booked $350M of Eaton claims and offset all of it with expected Wildfire Fund recoveries.
Cash and liabilities: Eaton settlements paid came to $237M in Q2 and $517M since inception. The accrued Eaton liability rose to $1,128M at June 30 from $897M at year-end.
No range estimate: The company says it is "probable" that Edison International and SCE "will incur additional material losses" but that they "are currently unable to reasonably estimate a range of losses."
How the Wildfire Fund backstop works for this fire
California's AB 1054 (2019) created the Wildfire Fund, a pool funded by utilities and customers that pays wildfire damage claims above a threshold. SB 254, effective September 19, 2025, expanded it by adding a new Continuation Account for fires ignited on or after that date. The original AB 1054 money, now called the Initial Account, covers fires ignited before it, including the Eaton Fire. The filing says:
SCE used up its self-insurance for Eaton losses as of February 11, 2026. The fund administrator has confirmed that Eaton is a "covered wildfire."
The Initial Account reimburses eligible third-party claims above $1.0B, subject to administrator approval. The administrator has reported that about $21B of claims-paying capacity will be available for the Eaton Fire.
After most claims are resolved, the CPUC will review whether SCE acted prudently. Because SCE held a valid safety certification when the fire started, it is presumed prudent unless a party raises "serious doubt." If costs are disallowed, SCE would have to repay the fund only up to a Liability Cap of about $4.3B, unless the administrator finds "conscious or willful disregard" of others' safety. SCE says it can make a good-faith showing that it acted as a reasonable utility. It has recorded no repayment liability, because it judges one neither probable nor estimable.
SCE has not changed its estimate that the fund will last about 20 years. It warns that the amortization period could be shortened, or the contribution asset impaired, once Eaton losses become estimable. The Continuation Account's contribution trigger has not been met, so SCE has recorded no obligation for it.
The filing also covers a report that the California Earthquake Authority, which administers the Wildfire Fund, delivered in April 2026 under SB 254. The report sets out policy options on catastrophe risk and utility liability but recommends none of them. Edison says it "cannot predict whether or when" a comprehensive legislative fix will arrive, and warns that inaction could bring credit downgrades.
Capital spending, rate base and wildfire mitigation
Capex: Capital expenditures including accruals were $3.1B in the first half, the same as H1 2025. Cash capex was $3,385M against $3,120M. SCE's plan, unchanged from the 10-K, is $37.5B–$40.6B of capex for 2026–2030 and weighted-average annual rate base of $50.8B–$67.9B over that period. Rate base is the asset value on which the utility is allowed to earn a return.
Wildfire mitigation: In February 2026, state regulators (OEIS) approved SCE's 2026–2028 Wildfire Mitigation Plan. In March 2026 they issued its safety certification, which runs to at least March 2, 2027. Utility shareholders fund part of this work: SCE must keep $1.6B of wildfire-mitigation capex out of the equity portion of its rate base under AB 1054, and expects to exclude a further $2.9B approved from 2026 onward under SB 254. The 10-Q does not break out quarterly wildfire-mitigation spending.
Other regulatory items: SCE filed for a $3.1B AMI 2.0 smart-meter replacement program for 2026–2033. The Alberhill System Project got its CPUC permit, with construction set to start in Q3 2026. SCE's preliminary 2027 FERC transmission revenue requirement is $1.7B, up $159M or 11%, mainly to recover past undercollections. In May 2026 the CPUC granted a limited rehearing on part of the 2021 GRC wildfire-mitigation disallowance.
Financing and balance sheet
Total debt (short-term, current and long-term) was $42.4B at June 30, up from $40.4B at year-end. In H1, SCE issued $1.7B of mortgage bonds and took out a $1.5B term loan due March 2027. The parent issued $550M of 4.80% notes due 2031 and $500M of 5.00% notes due 2028. In July 2026, a special-purpose SCE entity issued about $2.0B of securitized recovery bonds for Woolsey Fire settlement costs. These are bonds repaid from a dedicated customer charge.
Operating cash flow for the first half rose to $2,697M from $2,106M. The parent's consolidated debt-to-capitalization ratio was 0.66 against a covenant ceiling of 0.70. SCE's was 0.57 against a ceiling of 0.65. The parent's margin is tighter. The company is targeting a dividend payout of 45%–55% of SCE's core earnings.
Takeaway: The 59% jump in core EPS mostly reflects a weak comparison: about $193M of GRC revenue that belonged to Q2 2025 was booked later in 2025, so the quarter says little about the underlying growth rate. Eaton Fire settlements so far have cost shareholders only $9M after tax, because self-insurance and the $21B Initial Account are absorbing them. The real exposure is what comes after: a loss range the company still cannot estimate, a CPUC prudency review that could require repaying the fund up to about $4.3B, and a jury trial in January 2027.
Outlook
The following comes from Edison International's July 30, 2026 earnings release (Form 8-K Exhibit 99.1), not the 10-Q. Management reaffirmed 2026 core EPS guidance of $5.90–$6.20 and "continued confidence" in 5–7% annual core EPS growth from 2025 to 2030. It cut GAAP basic EPS guidance to $5.70–$6.00 from $5.86–$6.16, but only to reflect the -$0.20 of non-core items already booked in H1. Core expectations did not change.
First-half core EPS of $2.97 is about 49% of the guidance midpoint ($6.05). That fits a normal year, because the 2025 GRC decision now spreads authorized revenue evenly across the year. From Q3 onward, the favorable comparison goes away: Q3 2025 already reflected the GRC decision. Earnings growth for the rest of 2026 will therefore rest on rate-base growth and the GRC escalation mechanism, not catch-up revenue.
What will move the stock is outside quarterly earnings: the Eaton cause findings, any loss estimate, the January 2027 bellwether trial, and whether Sacramento acts on the SB 254 report's options before rating agencies act on their own.