Edison International CEO: Business development has been scaled back at Edison Transmission

Edison International (NYSE:EIX) President and CEO Pedro Pizarro on Feb. 21 said that business development has been scaled back at Edison Transmission, noting that the company sees limited FERC Order 1000 opportunities in its target markets.

“We will continue our role as a launch partner for the Grid Assurance initiative to support transmission system reliability nationally,” Pizarro said during the company’s 4Q16 earnings call, according to prepared remarks posted on the company’s website.

As TransmissionHub reported, Grid Assurance was formed by eight large investor-owned utility firms to purchase and store grid equipment at strategic locations to aid service restoration in case of an emergency.

Exelon (NYSE:EXC) and Southern (NYSE:SO), two of the founding members of Grid Assurance, are no longer equity investors in the business, a spokesperson told TransmissionHub in May 2016. Their exit leaves six current owners – American Electric Power (NYSE:AEP), Berkshire Hathaway Energy, Duke Energy (NYSE:DUK), Edison International, Eversource (NYSE:ES) and Great Plains Energy (NYSE:GXP) – and Grid Assurance is open to other equity investors if companies are interested, the spokesperson said.

Pizarro said during the call that Edison International still sees a reasonable floor for Southern California Edison (SCE) investments of at least $4bn annually in SCE capital spending and at least $2bn annually in rate base growth.

“We will continue to see some timing-related movement in capital expenditures and rate base, especially on transmission project approvals,” he said.

Edison International Executive Vice President and CFO Maria Rigatti said during the call that the SCE capital spending forecast has been updated largely to reflect revised estimates for the timing of major transmission projects, and that overall, capital expenditures between 2016 and 2020 are about $450m lower, with $350m of the change related to transmission projects.

Spending on the Tehachapi transmission project is essentially complete, she said, according to the prepared remarks.

Now that the line is in full service, the company has removed about $90m from its forecast to reflect lower final project costs, she said, adding, “This benefits our customers but reduces rate base for 2017 and beyond.”

Discussing the California Public Utilities Commission’s (CPUC) recent approval of the company’s Mesa 500-kV Substation Facility Project, Rigatti noted that SCE is moving ahead on construction planning activities, with actual construction to begin in 2Q17.

“This decision, as with the West of Devers project approval from the U.S. Bureau of Land Management [(BLM)] published in January, reaffirms our view that approval and construction of our key California ISO-driven projects are more a matter of timing rather than whether they will be built,” she said. “With increased clarity around the planning process, construction completion for some projects is now scheduled for 2021 and 2022 and a portion of the spending previously anticipated to occur through 2020 will now occur in that later time period. Though the projects are all scheduled to be in service by 2021, there can be some final remediation and closing out of final project costs following a project being placed in service.”

As TransmissionHub reported, the Mesa substation project consists of several main components, including construction of the new 500/220/66/16-kV Mesa substation and demolition of the existing 220/66/16-kV substation, increasing the substation’s footprint from about 22 acres to 69 acres.

The West of Devers project, according to SCE’s website, will consist of removing and replacing about 48 corridor miles of existing 220-kV transmission lines with new double-circuit 220-kV transmission lines, between the existing Devers substation (near Palm Springs), El Casco substation (Redlands), Vista substation (in Grand Terrace), and San Bernardino substation.

The CPUC approved a certificate of public convenience and necessity for the project in August 2016, and SCE received the record of decision from the BLM in December 2016, the website noted. Subject to all necessary environmental permits and regulatory approvals, construction is set to begin in 3Q17, and the project is expected to be in service in August 2021, according to the website.

According to the company’s Feb. 21 earnings presentation, SCE’s other large transmission projects are the Alberhill System project, which has a total cost of $397m, and remaining investment of $361m, along with a projected in-service date of 2021; the Riverside Transmission Reliability project, which has a total cost of $233m, and remaining investment of $228m, along with a projected in-service date of 2021; and the Eldorado-Lugo-Mohave Upgrade project, which has a total cost of $269m, and remaining investment of $264m, along with a projected in-service date of 2020.

Rigatti said during the call that the updated forecast does not include about $1bn of potential capital investments that the company has outside of normal general rate case (GRC) and FERC spending that could be approved and implemented between 2017 and 2022, including transportation electrification proposals.

Pizarro noted that SCE and the other investor-owned utilities last month collectively proposed roughly $1bn of investment in the area of transportation electrification to complement the passenger vehicle pilot programs that are now underway.

SCE’s proposals accounted for more than half the total, at $573m, and include some more immediate pilot projects, such as electrification projects for cargo-handling and other mobile equipment at the Port of Long Beach and for electric transit buses, he said. The largest proposal is for heavy duty vehicle charging infrastructure that will support development of appropriate battery technologies for heavy-duty vehicles, including creative tariff proposals to accelerate early adoption, he said.

Earnings report

Edison International on Feb. 21 reported 4Q16 net income of $345m, or $1.06 per share, compared to a net loss of $79m, or 24 cents loss per share, in 4Q15. As adjusted, 4Q16 core earnings were $332m, or $1.02 per share, compared to core earnings of $287m, or 88 cents per share, in 4Q15, the company said.

Among other things, the company said that SCE’s 4Q16 net income increased by $419m, or $1.29 per share, from 4Q15.

Article amended at 4 p.m., EST, on May 4, 2017, to note that the Mesa substation project consists of several main components.

About Corina Rivera-Linares 3060 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.