With progress from regulatory agencies on a couple transmission projects, including the planned expansion of the Mesa substation by Southern California Edison (SCE), SCE parent company Edison International (NYSE:EIX) is aiming to build its utility network to support California energy policy objectives, Edison International executives said Feb. 23.
SCE is positioned to grow its rate base and the parent company will pursue transmission projects outside the SCE territory, Ted Craver, president and CEO of Edison International, said during a Feb. 23 call on 4Q15 earnings.
The Mesa substation expansion involves the replacement of a 220-kV substation with a 500-kV substation, along with looping of transmission lines into the substation and connecting the substation with additional existing facilities, SCE said when it filed the application for the project with the California Public Utilities Commission (CPUC) in March 2015.
The project is expected to be in service in 2020 at a cost of $600m, according to Edison International’s 4Q15 earnings presentation, and it has advanced a bit through the regulatory approval process, Jim Scilacci, executive vice president and CFO at Edison International, said during the call.
The project “will provide additional transmission import capability, allowing greater flexibility in the siting of new generation and reducing the amount of new generation required to meet local reliability needs in the western Los Angeles basin,” Scilacci said.
The project is still pending at the CPUC, though other regulatory agencies are involved and may have issued rulings on it recently, an SCE spokesperson told TransmissionHub Feb. 24.
Another major transmission project, the West of Devers facility, is expected to gain CPUC approval by the middle of the year, the SCE spokesperson said.
That $1.1bn project is expected to be in service in 2021, with most of the capital spending after 2017, Edison International indicated in the earnings presentation. The CPUC’s final environmental impact report proposed an alternative project, according to the presentation.
The West of Devers project involves 48 miles of 220-kV double-circuit facilities running from the Devers substation just north of Palm Springs to the San Bernardino and Vista substations to the west, according to TransmissionHub data on the project.
Edison International formed Edison Transmission a few years ago as separate company to pursue competitive transmission opportunities outside of the SCE service territory, while also acquiring smaller companies to take advantage renewable energy growth and meeting the needs of large commercial and industrial customers outside the SCE territory, Craver noted during the call.
Those companies, which include consulting, engineering and procurement firms for large customers are Altenex, Eneractive Solutions and Delta Energy, along with solar power provider SoCore Energy, Craver said during the call. The companies are small in scale compared with Edison International currently, but Craver said he sees the potential for growth to help them contribute more earnings in the future.
With SCE positioned as a “wires-focused business” in alignment with California policy objectives, “we see more opportunities for growth than we do threats in the changes occurring in our industry,” Craver said.
Edison International reported a net loss of $79m, or 24 cents per share, for 4Q15, compared with net income of $420m, or $1.29 per share, in 4Q14. Higher income taxes and lower revenue stemming from a 2015 CPUC general rate case decision affected 4Q15 earnings, the company said in a Feb. 23 statement.
For all of 2015, Edison International reported net income of $1.02bn, or $3.13 per share, compared with net income of $1.61bn, or $4.95 per share, for all of 2014. The higher income taxes and CPUC rate case decision affected 2015 earnings, which were partially offset by an increase in transmission revenue from rate base growth, earnings on funds used during construction and lower operation and maintenance costs, the company said.