Edison International adjusts CapEx budget, liquidity and hedge positions

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Due to a number of moving parts, Edison International on Nov. 6 said it has trimmed its five-year capital expenditure budget, added additional generation hedges in the third quarter and adjusted its liquidity position during the quarter to reflect the return of more normal operating conditions.

Executives on the company's third-quarter earnings call said Southern California Edison Co.'s 2009 to 2013 CapEx plan has been cut slightly to a base case of $19.8 billion, with the low case now standing at $16.8 billion. The reduction primarily reflects changes to the utility's transmission project plans caused by longer-than-expected processes to develop the projects, Edison International CFO James Scilacci Jr. said.

SoCalEd will spend $800 million, or 4%, of the five-year CapEx budget on its solar rooftop program; $1.2 billion, or 6%, of the budget on its SmartConnect smart grid program; $2.8 billion, or 14%, on generation; $4.9 billion, or 25%, on transmission; and $10.1 billion, or 51%, on distribution.

With the CapEx changes, executives on the call said the company in its base case now expects SoCalEd's rate base to grow from $14.8 billion in 2009 to $22.8 billion by 2013, a 13% five-year compound annual growth rate. In the low case, the company expects SoCalEd's rate base to grow from $14.7 billion in 2009 to $20.5 billion in 2013, a 10% compound annual growth rate.

On the liquidity front, Scilacci said Edison International had previously drawn down its credit facilities in order to hold cash while credit markets were in turmoil. However, as operating conditions have returned to normal, the company finished paying back the drawn levels of its facilities to traditional levels during the third quarter, Scilacci said.

Edison International reported SoCalEd, as of Sept. 30, had $3.57 billion of available liquidity, compared to $3.26 billion as of June 30.

At Edison Mission Group Inc., Edison International Chairman, President and CEO Theodore Craver Jr. said liquidity needs will be reduced in 2009 and 2010 by negotiating payment deferrals with the unit's wind turbine suppliers.

Edison Mission's Midwest Generation business has now hedged 20,099 GWh of generation for 2010 at an average price of $43.70 per MWh, and 816 GWh for 2011 at an average price of $70.11 per MWh. The merchant generation unit has hedged 3,616 GWh of 2010 generation from its Homer City plant at an average price of $79.49 per MWh.

Scilacci said the company added 14,276 GWh of new generation hedges since June 30, of which 13,118 GWh were for the Midwest generation assets. The company said it added 204 GWh of 2011 generation hedges for the Midwest generation assets in the third quarter.