Edison trading unit may be probed

Edison International, parent of Southern California Edison, said Friday that third-quarter profit was little changed and revealed that federal regulators might investigate the company’s energy trading operation.

Edison International said the Federal Energy Regulatory Commission’s enforcement staff told the Rosemead-based company late last month that it was ready to recommend an investigation into whether its Edison Mission Marketing & Trading unit violated FERC energy trading rules. The staff also said it would recommend that the commission “seek monetary sanctions” against the trading operation “with respect to certain bidding practices.”

Edison International said in a regulatory filing that the unit had complied with the FERC rules and that it intended to contest any allegations of a violation. Both FERC and the company declined to elaborate.

The Edison Mission trading unit, based in Boston, has about 100 employees.

Net income at Edison International fell to $458 million, or $1.38 a share, from $462 million, or $1.39, in the year-earlier quarter. Sales rose to $3.8 billion from $3.78 billion.

Edison International’s profit in the third quarter of 2005 was buoyed by tax-related gains at Southern California Edison and benefits from the sale of some overseas power plants. Its shares fell 62 cents, or 1.4%, to $44.32 on Friday after the company said earnings next year might be lower than previously forecast.

For 2007, the company’s earnings target was changed to a range of $3.05 to $3.45 a share, from an earlier forecast of $3.35 a share, because of a drop in electricity prices in markets served by its power plant unit and increased costs for wind power development. The forecast assumes no effect on energy trading, which contributed pretax profit of $195 million last year.

Edison International also said third-quarter core earnings, which exclude gains and losses related to taxes and discontinued operations, increased to $436 million, or $1.32 a share, from $408 million, or $1.24. Analysts polled by Thomson Financial had estimated earnings of $1.24 a share.

Edison International repeated its forecast for core earnings this year of $2.91 a share.

Southern California Edison’s profit fell to $263 million from $280 million a year earlier, when it had a $61-million tax benefit.

*

Bloomberg News was used in compiling this report.