2022
ANNU AL REPORT
EDISON INTERNATIONAL & SOUTHERN CALIFORNIA EDISON
2022 FINANCIAL HIGHLIGHTS
Dollar amounts in millions, except per-share data
Years ended December 31,
Operating revenue
Basic earnings (1)
Less: non-core items
2022
2021
2020
$17,220
$14,905
$13,578
$612
$759
$739
2017/2018 Wildfire/Mudslide Events claims and expenses,
net of recoveries
(1,248)
(1,234)
(1,248)
Wildfire Insurance Fund expense
(214)
(215)
(336)
Sale of lease investment
Impairment and other
Settlement of 2007-2012 California tax audits and
Re-measurement of tax assets and liabilities
Customer revenues for EIS insurance contract
Upstream lighting program
Income tax benefit
Total non-core items
Core earnings(1)
Basic earnings per share (1)
Core earnings per share(1)
Total assets at December 31,
Dividends paid per common share
Total shareholder return
Total employees
BUSINESS HIGHLIGHTS
Southern California Edison
Rate base(2)
Capital expenditures(3)
Peak demand (megawatts)
Total system sales (kilowatt-hours, in millions)
–
(91)
–
36
(81)
445
(1,153)
–
(69)
115
24
–
132
116
15
–
–
397
(982)
374
(947)
$1,765
$1,741
$1,686
$1.61
$2.00
$4.63
$4.59
$1.98
$4.52
$78,041
$74,745
$69,372
$2.80
$2.65
$2.55
(2.5)%
13.6% (12.8)%
13,388
13,003
13,351
2022
2021
2020
$40,629 $37,904
$34,710
$5,678
$5,364
$5,536
24,345
21,190
23,133
84,218
83,733
85,399
(1) Edison International’s earnings are prepared in accordance with generally accepted accounting principles (GAAP) used in the United States.
Management uses core earnings and core earnings per share (EPS) internally for financial planning and for analysis of performance. Core
earnings and core EPS are also used when communicating with analysts and investors regarding our earnings results to facilitate comparisons
of the Company’s performance from period to period. Core earnings and core EPS are non-GAAP financial measures and may not be com-
parable to those of other companies. Core earnings and core EPS are defined as basic earnings and basic EPS excluding income or loss from
discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing
earnings. Basic earnings refer to net income attributable to Edison International shareholders.
(2) Represents year-end rate base at December 31, which includes capital expenditures related to certain FERC-approved projects during the
construction phase, and excludes rate base related to wildfire risk mitigation capital expenditures required by California Assembly Bill 1054.
(3) Capital expenditures for each year include accruals.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
For the transition period from to
Commission
File Number
1-9936
1-2313
Exact Name of Registrant
as specified in its charter
EDISON INTERNATIONAL
SOUTHERN CALIFORNIA EDISON COMPANY
EDISON INTERNATIONAL
2244 Walnut Grove Avenue
(P.O. Box 976)
Rosemead, California 91770
(Address of principal executive offices)
(626) 302-2222
(Registrant's telephone number, including area code)
State or Other Jurisdiction of
Incorporation or Organization
California
California
IRS Employer
Identification Number
95-4137452
95-1240335
SOUTHERN CALIFORNIA EDISON COMPANY
2244 Walnut Grove Avenue
(P.O. Box 800)
Rosemead, California 91770
(Address of principal executive offices)
(626) 302-1212
(Registrant's telephone number, including area code)
Edison International:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, no par value
Trading Symbol(s)
EIX
Name of each exchange on which registered
NYSE LLC
Southern California Edison Company: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Edison International
Yes No ☐
Southern California Edison Company
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Edison International
Yes ☐ No
Southern California Edison Company
Yes No ☐
Yes ☐ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Edison International
Southern California Edison Company
Yes No ☐
Yes No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
Edison International
Southern California Edison Company
Yes No ☐
Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated
filer," accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-12 of the Exchange Act. (Check One):
Edison International
Southern California Edison
Company
Large Accelerated Filer
Large Accelerated Filer
Accelerated Filer
☐
Accelerated Filer
☐
☐
Non-accelerated Filer
☐
Non-accelerated Filer
Smaller Reporting Company
Emerging growth company
☐
Smaller Reporting Company
☐
Emerging growth company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act.
Edison International
☐
Southern California Edison Company
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley
Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Edison International
☑
Southern California Edison Company
☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements.
Edison International
☐
Southern California Edison Company
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant
recovery period pursuant to §240.10D-1(b).
Edison International
☐
Southern California Edison Company
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Edison International
Yes ☐ No
Southern California Edison Company
Yes ☐ No
Aggregate market value of voting and non-voting common equity held by non-affiliates of the registrants as of June 30, 2022, the last business day of the most recently completed second fiscal quarter:
Edison International
Approximately $24 billion
Southern California Edison Company
Wholly owned by Edison International
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Common Stock outstanding as of February 16, 2023:
Edison International
Southern California Edison Company
382,566,466
434,888,104
shares
shares (wholly owned by Edison International)
Southern California Edison Company meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format allowed under the General
Instruction.
OMISSION OF CERTAIN INFORMATION
Designated portions of the Edison International Proxy Statement relating to Edison International's 2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
TABLE OF CONTENTS
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Part II, Item 7
SEC Form 10-K
Reference Number
MANAGEMENT OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Highlights of Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Electricity Industry Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2025 General Rate Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Cost of Capital Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Capital Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Southern California Wildfires and Mudslides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Upstream Lighting Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Southern California Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Years ended December 31, 2022, 2021 and 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Earning Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cost-Recovery Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Supplemental Operating Revenue Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Edison International Parent and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Loss from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Southern California Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Available Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Regulatory Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capital Investment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Decommissioning of San Onofre. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SCE Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Margin and Collateral Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Edison International Parent and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Edison International Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Historical Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Southern California Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Edison International Parent and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Contractual Obligations and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Contingencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
MARKET RISK EXPOSURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Interest Rate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Commodity Price Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Investment Price Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Credit Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
CRITICAL ACCOUNTING ESTIMATES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . 36
Accounting for Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Rate Regulated Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Nuclear Decommissioning – Asset Retirement Obligation . . . . . . . . . . . . . . . . . . . . . . . . . 40
Pensions and Postretirement Benefits Other than Pensions. . . . . . . . . . . . . . . . . . . . . . . . 41
Contributions to the Wildfire Insurance Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
NEW ACCOUNTING GUIDANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Part I, Item 1A
RISKS RELATING TO EDISON INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
RISKS RELATING TO SOUTHERN CALIFORNIA EDISON COMPANY . . . . . . . . 44
Regulatory and Legislative Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Operating Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Financing Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Competitive and Market Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Cybersecurity and Physical Security Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
RISKS RELATING TO EDISON INTERNATIONAL AND SOUTHERN
CALIFORNIA EDISON COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . 54 Part II, Item 7A
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . 54
Part II, Item 8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PCAOB ID 238) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ii
Table of Contents
Consolidated Statements of Income for Edison International . . . . . . . . . . . . . . . . . . . . . . 62
Consolidated Statements of Comprehensive Income for Edison International. . . . . . . . 63
Consolidated Balance Sheets for Edison International . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Consolidated Statements of Cash Flows for Edison International . . . . . . . . . . . . . . . . . . 66
Consolidated Statements of Changes in Equity for Edison International . . . . . . . . . . . . 67
Consolidated Statements of Income for Southern California Edison Company. . . . . . . 69
Consolidated Statements of Comprehensive Income for Southern California
Edison Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Consolidated Balance Sheets for Southern California Edison Company. . . . . . . . . . . . . 70
Consolidated Statements of Cash Flows for Southern California Edison Company . . . 72
Consolidated Statements of Changes in Equity for Southern California Edison
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 74
Note 1. Summary of Significant Accounting Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Note 2. Property, Plant and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Note 3. Variable Interest Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Note 4. Fair Value Measurements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Note 5. Debt and Credit Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Note 6. Derivative Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Note 7. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Note 8. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Note 9. Compensation and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Note 10. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Note 11. Regulatory Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Note 12. Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Note 13. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Note 14. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Note 15. Accumulated Other Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Note 16. Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Note 17. Supplemental Cash Flows Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Note 18. Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Part II, Item 9
CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Part II, Item 9A
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Table of Contents
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Part I, Item 1
CORPORATE STRUCTURE, INDUSTRY AND OTHER INFORMATION . . . . . . . . 142
Subsidiaries of Edison International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Regulation of Edison International as a Holding Company . . . . . . . . . . . . . . . . . . . . . . . . 143
Human Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
SOUTHERN CALIFORNIA EDISON COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Overview of Ratemaking Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Purchased Power and Fuel Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
SOUTHERN CALIFORNIA WILDFIRES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Recovery of Wildfire-Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Safety Certification and Wildfire Mitigation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Public Safety Power Shutoffs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
ENVIRONMENTAL CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Greenhouse Gas Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Environmental Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Part I, Item 1B
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Part I, Item 2
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Part I, Item 3
2017/2018 Wildfire/Mudslide Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Environmental Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Part I, Item 4
CERTAIN INFORMATION ABOUT EDISON INTERNATIONAL . . . . . . . . . . . . . . . . . . 162
INFORMATION ABOUT OUR EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 162
Part I
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . 163 Part III, Item 10
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Part III, Item 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . 163 Part III, Item 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Part III, Item 13
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Part III, Item 14
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . 165 Part II, Item 5;
Edison International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Southern California Edison Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Comparison of Five-Year Cumulative Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Part IV, Item 16
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II, Item 9B
166 Part II, Item 6
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Part II, Item 9C
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . 166 Part IV, Item 15
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
SCHEDULES SUPPLEMENTING FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . 174
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
This is a combined Form 10-K separately filed by Edison International and Southern California Edison Company.
Information contained herein relating to an individual company is filed by such company on its own behalf. Each
company makes representations only as to itself and makes no other representation whatsoever as to any other company.
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GLOSSARY
The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
2017/2018 Wildfire/Mudslide
the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the
Events . . . . . . . . . . . . . . . . . . . . . . . . . . Woolsey Fire, collectively
AB 1054. . . . . . . . . . . . . . . . . . . . . . . . . . California Assembly Bill 1054, executed by the governor of California on
July 12, 2019
AB 1054 Excluded Capital
approximately $1.6 billion in wildfire risk mitigation capital expenditures that
Expenditures . . . . . . . . . . . . . . . . . . . . . SCE has excluded from the equity portion of SCE's rate base as required
under AB 1054
AB 1054 Liability Cap . . . . . . . . . . . . . . a cap on the aggregate requirement to reimburse the Wildfire Insurance Fund
over a trailing three calendar year period which applies if certain conditions
are met and is equal to 20% of the equity portion of the utility's transmission
and distribution rate base, excluding general plant and intangibles, in the year
of the applicable prudency determination
ARO(s). . . . . . . . . . . . . . . . . . . . . . . . . . . asset retirement obligation(s)
BRRBA . . . . . . . . . . . . . . . . . . . . . . . . . . Base Revenue Requirement Balancing Account
CAISO . . . . . . . . . . . . . . . . . . . . . . . . . . . California Independent System Operator
Capistrano Wind . . . . . . . . . . . . . . . . . . . a group of wind projects referred to as Capistrano Wind
Capital Structure Compliance
January 1, 2023 to December 31, 2025, the current compliance period for
Period . . . . . . . . . . . . . . . . . . . . . . . . . . SCE's CPUC authorized capital structure
CAPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . California Arrearage Payment Program
CCAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . community choice aggregators which are cities, counties, and certain other
public agencies with the authority to generate and/or purchase electricity for
their local residents and businesses
CDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Coastal Development Permit
CEMA . . . . . . . . . . . . . . . . . . . . . . . . . . . Catastrophic Event Memorandum Account
COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . Coronavirus disease 2019
CPUC . . . . . . . . . . . . . . . . . . . . . . . . . . . . California Public Utilities Commission
CSRP . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Service Re-platform, a SCE project to implement a new customer
service system
DART. . . . . . . . . . . . . . . . . . . . . . . . . . . . a Days Away Restricted or Transferred incident, which is a work-related
Occupational Safety and Health Administration recordable injury or illness
that results in days away from work, restricted duty or transfer of duties
DGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the decommissioning general contractor engaged by SCE to undertake a
significant scope of decommissioning activities at San Onofre
Edison Energy . . . . . . . . . . . . . . . . . . . . . Edison Energy, LLC, an indirect wholly-owned subsidiary of Edison
International, is engaged in the competitive business of providing integrated
decarbonization and energy solutions to commercial, institutional and
industrial customers in North America and Europe
Edison International Proxy
Proxy Statement to be filed with the SEC in connection with Edison
Statement . . . . . . . . . . . . . . . . . . . . . . . International's Annual Meeting of Shareholders' to be held on April 27, 2023
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EEI Serious Injury. . . . . . . . . . . . . . . . . . a work-related injury that is categorized as a "serious injury" by Edison
Electric Institute, which includes injuries that meet any of the following
"serious" criteria: amputations (involving bone); concussions and/or cerebral
hemorrhages; injury to internal organs; bone fractures excluding fingers and
toes, compound bone fractures for fingers and toes; tendon and ligament tears;
herniated disks (neck or back); lacerations resulting in severed tendons and/or
a deep wound requiring internal stitches; second or third degree burns; eye
injuries resulting in eye damage or loss of vision; injections of foreign
materials; severe heat exhaustion and all heat stroke; and dislocation of a
major joint
EEI SIF. . . . . . . . . . . . . . . . . . . . . . . . . . . a work-related fatality or a EEI Serious Injury
EIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Edison Insurance Services, Inc., a wholly-owned subsidiary of Edison
International is licensed to provide insurance to Edison International and its
subsidiaries
Electric Service Provider . . . . . . . . . . . . an entity that offers electric power and ancillary services to retail customers,
other than electrical corporations (like SCE) and CCAs
ERRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy Resource Recovery Account
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal Energy Regulatory Commission
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fitch Ratings, Inc.
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . generally accepted accounting principles in the United States
GHG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . greenhouse gas
GRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . general rate case
IRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inflation Reduction Act of 2022
Koenigstein Fire . . . . . . . . . . . . . . . . . . . a wind-driven fire that originated near Koenigstein Road in the City of Santa
Paula in Ventura County, California, on December 4, 2017
MD&A . . . . . . . . . . . . . . . . . . . . . . . . . . . Management's Discussion and Analysis of Financial Condition and Results
Montecito Mudslides. . . . . . . . . . . . . . . .
of Operations in this report
the debris flows and flooding in Montecito, Santa Barbara County, California,
that occurred in January 2018
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . Moody's Investors Service, Inc.
MW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . megawatts
NEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . net energy metering
NERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . North American Electric Reliability Corporation
NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States Nuclear Regulatory Commission
NSGBA . . . . . . . . . . . . . . . . . . . . . . . . . . New System Generation Balancing Account
OEIS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Office of Energy Infrastructure Safety of the California Natural Resources
Agency
PABA . . . . . . . . . . . . . . . . . . . . . . . . . . . . Portfolio Allocation Balancing Account
Palo Verde . . . . . . . . . . . . . . . . . . . . . . . . nuclear electric generating facility located near Phoenix, Arizona in which
SCE holds a 15.8% ownership interest
PBOP(s) . . . . . . . . . . . . . . . . . . . . . . . . . . postretirement benefits other than pension(s)
PCIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Power Charge Indifference Adjustment
PG&E . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pacific Gas & Electric Company
Post–2018 Wildfires . . . . . . . . . . . . . . . . Collectively, all the wildfires that originated in Southern California after 2018
where SCE’s equipment may be alleged to be associated with the fire’s
ignition
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PSPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Public Safety Power Shutoff(s)
ROE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . return on common equity
RPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . California's Renewables Portfolio Standard
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standard & Poor's Financial Services LLC
Safety Tier 1 Contractors . . . . . . . . . . . .
individuals assigned to contracted work activities that may be high risk and,
without implementation of appropriate safety measures, may be potentially
hazardous or life threatening
San Onofre . . . . . . . . . . . . . . . . . . . . . . . . retired nuclear generating facility located in south San Clemente, California in
which SCE holds a 78.21% ownership interest
SCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Southern California Edison Company, a wholly-owned subsidiary of Edison
International
SCE Recovery Funding LLC . . . . . . . . . a bankruptcy remote, wholly owned special purpose subsidiary, consolidated
by SCE
SDG&E . . . . . . . . . . . . . . . . . . . . . . . . . . San Diego Gas & Electric
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. Securities and Exchange Commission
SED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Safety and Enforcement Division of the CPUC
SED Agreement. . . . . . . . . . . . . . . . . . . . An agreement dated October 21, 2021 between SCE and the SED
SoCalGas . . . . . . . . . . . . . . . . . . . . . . . . . Southern California Gas Company
Thomas Fire. . . . . . . . . . . . . . . . . . . . . . . a wind-driven fire that originated in the Anlauf Canyon area of Ventura
County, California, on December 4, 2017
TKM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . collectively, the Thomas Fire, the Koenigstein Fire and the Montecito
Mudslides
TKM Subrogation Plaintiffs . . . . . . . . . .
the plaintiffs party to the TKM Subrogation Settlement, representing all the
insurance subrogation plaintiffs in the TKM litigation at the time of the
settlement
TKM Subrogation Settlement. . . . . . . . . a settlement entered into by Edison International and SCE in September 2020
Turnover Rate . . . . . . . . . . . . . . . . . . . . .
in the TKM litigation to which the TKM Subrogation Plaintiffs are party
the number of employees (other than interns) who leave the companies for
voluntary or involuntary reasons, excluding death, divided by the average
number of employees during the relevant period
WCCP . . . . . . . . . . . . . . . . . . . . . . . . . . . Wildfire Covered Conductor Program
WEMA. . . . . . . . . . . . . . . . . . . . . . . . . . . Wildfire Expense Memorandum Account
WMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . a wildfire mitigation plan required to be filed under AB 1054 to describe a
utility's plans to construct, operate, and maintain electrical lines and
equipment that will help minimize the risk of catastrophic wildfires caused by
such electrical lines and equipment
Wildfire Insurance Fund . . . . . . . . . . . . .
the insurance fund established under AB 1054
Woolsey Fire . . . . . . . . . . . . . . . . . . . . . . a wind-driven fire that originated in Ventura County in November 2018
Woolsey Subrogation Plaintiffs . . . . . . .
the plaintiffs party to the Woolsey Subrogation Settlement, representing all
the insurance subrogation plaintiffs in the Woolsey Fire litigation at the time
of the settlement
Woolsey Subrogation Settlement . . . . . . a settlement entered into by Edison International and SCE in January 2021 in
the Woolsey litigation to which the Woolsey Subrogation Plaintiffs are party
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's and SCE's current expectations
and projections about future events based on Edison International's and SCE's knowledge of present facts and
circumstances and assumptions about future events and include any statements that do not directly relate to a historical
or current fact. Other information distributed by Edison International and SCE that is incorporated in this report, or that
refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words
"expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could,"
"would," "should," “targets,” and variations of such words and similar expressions, or discussions of strategy or plans,
are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that
could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important
factors that could cause results to differ from those currently expected, or that otherwise could impact Edison
International and SCE, include, but are not limited to the:
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ability of SCE to recover its costs through regulated rates, including uninsured wildfire-related and debris flow-
related costs, costs incurred to mitigate the risk of utility equipment causing future wildfires, costs incurred as a
result of the COVID-19 pandemic, and increased costs due to supply chain constraints, inflation and rising interest
rates;
ability of SCE to implement its WMP and capital program;
risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to
mitigate wildfire risk, including PSPS and fast curve settings, when conditions warrant or would otherwise limit
SCE's operational practices relative to wildfire risk mitigation;
risks associated with SCE implementing PSPS, including regulatory fines and penalties, claims for damages and
reputational harm;
ability of SCE to maintain a valid safety certification;
ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost, including insurance
relating to wildfire-related claims, and to recover the costs of such insurance or, in the event liabilities exceed
insured amounts, the ability to recover uninsured losses (including amounts paid for self-insured retention and co-
insurance) from customers or other parties;
extreme weather-related incidents (including events caused, or exacerbated, by climate change, such as wildfires,
debris flows, flooding, droughts, high wind events and extreme heat events) and other natural disasters (such as
earthquakes), which could cause, among other things, public safety issues, property damage, rotating outages and
other operational issues (such as issues due to damaged infrastructure), PSPS activations and unanticipated costs;
risk that AB 1054 does not effectively mitigate the significant exposure faced by California investor-owned utilities
related to liability for damages arising from catastrophic wildfires where utility facilities are alleged to be a
substantial cause, including the longevity of the Wildfire Insurance Fund and the CPUC's interpretation of and
actions under AB 1054, including its interpretation of the prudency standard clarified by AB 1054;
ability of Edison International and SCE to effectively attract, manage, develop and retain a skilled workforce,
including its contract workers;
decisions and other actions by the CPUC, the FERC, the NRC and other governmental authorities, including
decisions and actions related to nationwide or statewide crisis, determinations of authorized rates of return or return
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on equity, the recoverability of wildfire-related and debris flow-related costs, issuance of SCE's wildfire safety
certification, wildfire mitigation efforts, approval and implementation of electrification programs, and delays in
executive, regulatory and legislative actions;
cost and availability of labor, equipment and materials, including as a result of supply chain constraints and
inflation;
ability of Edison International or SCE to borrow funds and access bank and capital markets on reasonable terms;
risks associated with the decommissioning of San Onofre, including those related to worker and public safety,
public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive
material, delays, contractual disputes, and cost overruns;
pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption, which
could impact, among other things, Edison International's and SCE's business, operations, cash flows, liquidity and/or
financial results and cause Edison International and SCE to incur unanticipated costs;
physical security of Edison International's and SCE's critical assets and personnel and the cybersecurity of Edison
International's and SCE's critical information technology systems for grid control, and business, employee and
customer data;
risks associated with cost allocation resulting in higher rates for utility bundled service customers because of
possible customer bypass or departure for other electricity providers such as CCAs and Electric Service Providers;
risks inherent in SCE's capital investment program, including those related to project site identification, public
opposition, environmental mitigation, construction, permitting, contractor performance, changes in the CAISO's
transmission plans, and governmental approvals;
risks associated with the operation of electrical facilities, including worker and public safety issues, the risk of
utility assets causing or contributing to wildfires, failure, availability, efficiency, and output of equipment and
facilities, and availability and cost of spare parts;
actions by credit rating agencies to downgrade Edison International or SCE's credit ratings or to place those ratings
on negative watch or negative outlook;
changes in tax laws and regulations, at both the state and federal levels, or changes in the application of those laws,
that could affect recorded deferred tax assets and liabilities, effective tax rates and cash flows;
changes in future taxable income, or changes in tax law, that would limit Edison International's and SCE's
realization of expected net operating loss and tax credit carryover benefits prior to expiration;
changes in the fair value of investments and other assets;
changes in interest rates and potential adjustments to SCE's ROE based on changes in Moody's utility bond rate
index;
changes in rates of inflation (including whether inflation-related adjustments to SCE's authorized revenues allowed
by the public utility regulators are commensurate with inflation rates);
governmental, statutory, regulatory, or administrative changes or initiatives affecting the electricity industry,
including the market structure rules applicable to each market adopted by the NERC, CAISO, Western Electricity
Coordinating Council, and similar regulatory bodies in adjoining regions, and changes in the United States' and
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California's environmental priorities that lessen the importance placed on GHG reduction and other climate related
priorities;
availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel
markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their
obligations;
potential for penalties or disallowance for non-compliance with applicable laws and regulations, including fines,
penalties and disallowances related to wildfires where SCE's equipment is alleged to be associated with ignition; and
cost of fuel for generating facilities and related transportation, which could be impacted by, among other things,
disruption of natural gas storage facilities, to the extent not recovered through regulated rate cost escalation
provisions or balancing accounts.
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Additional information about risks and uncertainties, including more detail about the factors described in this report, is
contained throughout this report. Readers are urged to read this entire report, including information incorporated by
reference, and carefully consider the risks, uncertainties, and other factors that affect Edison International's and SCE's
businesses. Forward-looking statements speak only as of the date they are made and neither Edison International nor
SCE are obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by
Edison International and SCE with the SEC. Edison International and SCE post or provide direct links to (i) certain SCE
and other parties' regulatory filings and documents with the CPUC and the FERC and certain agency rulings and notices
in open proceedings in a section titled "SCE Regulatory Highlights," (ii) certain documents and information related to
Southern California wildfires which may be of interest to investors in a section titled "Southern California Wildfires,"
and (iii) presentations, documents and information that may be of interest to investors in a section titled "Presentations
and Updates" at www.edisoninvestor.com in order to publicly disseminate such information. The reports, presentations,
documents and information contained on, or connected to, the Edison investor website are not deemed part of, and are
not incorporated by reference into, this report.
Except when otherwise stated, references to each of Edison International or SCE mean each such company with its
subsidiaries on a consolidated basis. References to "Edison International Parent and Other" mean Edison International
Parent and its subsidiaries other than SCE and its subsidiaries and "Edison International Parent" mean Edison
International on a stand-alone basis, not consolidated with its subsidiaries. Unless otherwise described, all the
information contained in this report relates to both filers.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The discussion related to the results of operations and changes in financial condition for 2021 compared to 2020 is
incorporated by reference to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended
December 31, 2021, which was filed with the SEC in February 2022.
MANAGEMENT OVERVIEW
Highlights of Operating Results
Edison International is the ultimate parent holding company of SCE and Edison Energy. SCE is an investor-owned
public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square
mile area of southern California. Edison Energy is engaged in the competitive business of providing integrated
decarbonization and energy solutions to commercial, institutional and industrial customers in North America and
Europe. Edison Energy's business activities are currently not material to report as a separate business segment.
(in millions)
Net income (loss) attributable to Edison International
SCE
Edison International Parent and Other
Edison International
Less: Non-core items
SCE
2022
2021
2022 vs. 2021
Change
2020
$
847 $
(235)
612
829 $
(70)
759
18 $
(165)
(147)
810
(71)
739
2017/2018 Wildfire/Mudslide Events claims and expenses, net of
recoveries
Wildfire Insurance Fund expense
Upstream lighting program decision
Impairments
Employment litigation matter, net of recoveries
Organizational realignment charge
Sale of San Onofre nuclear fuel
Income tax benefits from re-measurement of tax assets and liabilities
Income tax benefits1
Edison International Parent and Other
Customer revenues for EIS insurance contract, net of claims
Sale of Vidalia lease
Goodwill impairment
Income tax benefit from Settlement of 2007 – 2012 California tax
audits
Income tax expense from re-measurement of tax liabilities
Income tax expense2
Total non-core items
Core earnings (losses)
(1,248)
(214)
(81)
(64)
(23)
(14)
10
—
452
36
—
—
—
—
(7)
(1,153)
(1,234)
(215)
—
(79)
—
—
10
—
404
24
—
—
115
—
(7)
(982)
(14)
1
(81)
15
(23)
(14)
—
—
48
12
—
—
(115)
—
—
(171)
(1,248)
(336)
—
—
—
—
150
18
401
—
132
(34)
—
(3)
(27)
(947)
SCE
Edison International Parent and Other
Edison International
2,029
(264)
1,943
(202)
$ 1,765 $ 1,741 $
86
(62)
1,825
(139)
24 $ 1,686
1
2
SCE non-core items are tax‐effected at an estimated statutory rate of approximately 28%
Edison International Parent and Other non-core items are tax-effected at an estimated statutory rate of approximately 28%;
customer revenues for EIS insurance contract, net of claims are tax-effected at an estimated statutory rate of approximately 20%
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Edison International's earnings are prepared in accordance with GAAP. Management uses core earnings (losses)
internally for financial planning and for analysis of performance. Core earnings (losses) are also used when
communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of
the company's performance from period to period. Core earnings (losses) are a non-GAAP financial measure and may
not be comparable to those of other companies. Core earnings (losses) are defined as earnings attributable to Edison
International shareholders less non-core items. Non-core items include income or loss from discontinued operations and
income or loss from significant discrete items that management does not consider representative of ongoing earnings,
such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax,
regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer
continuing.
Edison International's 2022 earnings decreased $147 million, driven by an increase in Edison International Parent and
Other losses of $165 million, offset by an increase in SCE's earnings of $18 million. Edison International Parent and
Other higher losses consisted of $103 million of lower non-core earnings and $62 million of higher core losses. SCE's
higher net income consisted of $86 million of higher core earnings, offset by $68 million of higher non-core losses.
The increase in SCE's core earnings was primarily due to higher revenue due to the escalation mechanism as set forth in
the 2021 GRC final decision and higher return on rate base from capital balancing accounts, partially offset by higher
operating and maintenance expenses, higher depreciation from increased plant balance and higher interest expense.
The increase in Edison International Parent and Other's core losses was primarily due to higher preferred dividends.
Consolidated non-core items for 2022 and 2021 for Edison International included:
• Charges of $1.2 billion ($899 million after-tax) recorded in 2022 and $1.2 billion ($919 million after-tax) recorded
in 2021 for 2017/2018 Wildfire/Mudslide Events claims and expenses, net of expected recoveries from FERC
customers. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" for
further information.
• Charges of $214 million ($154 million after-tax) recorded in 2022 and $215 million ($155 million after-tax)
recorded in 2021 from the amortization of SCE's contributions to the Wildfire Insurance Fund. See "Notes to
Consolidated Financial Statements—Note 12. Commitments and Contingencies" for further information.
• A charge of $81 million ($64 million after-tax) recorded in 2022 related to the Presiding Officer's Decision ("POD")
in September 2022 on SCE's Upstream Lighting Program. See "—Upstream Lighting Program" for further
information.
•
Impairment charges of $64 million ($46 million after-tax) recorded in 2022 including an impairment charge of
$47 million ($34 million after-tax) related to SCE's CSRP settlement agreement filed with the CPUC in June 2022
and an impairment charge of $17 million ($12 million after-tax) related to historical capital expenditures disallowed
in SCE's GRC track 3 final decision. See "Liquidity and Capital Resources—SCE—Regulatory Proceedings" for
more information. An impairment charge of $79 million ($47 million after-tax) recorded in 2021 related to
disallowed historical capital expenditures in SCE's 2021 GRC final decision.
• A charge of $23 million ($16 million after-tax) recorded in 2022 related to settlement of an employment litigation
matter, net of estimated insurance recoveries. SCE and Edison International settled the matter following an atypical
jury award.
• A charge of $14 million ($10 million after-tax) recorded in 2022 related to organizational realignment services.
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• Gains of $10 million ($7 million after-tax) recorded in both 2022 and 2021 for SCE's sale of San Onofre nuclear
fuel.
• Net earnings of $36 million ($29 million after-tax) for Edison International Parent and Other recorded in 2022,
which includes earnings of $45 million ($36 million after-tax) related to customer revenues for an EIS insurance
contract offset by a charge of $9 million ($7 million after-tax) related to estimated wildfire-related claims insured by
EIS. Earnings of $24 million ($17 million after-tax) recorded in 2021 related to customer revenues for an EIS
insurance contract. See "Notes to Consolidated Financial Statements—Note 18. Related-Party Transactions" for
further information.
• An income tax benefit of $115 million for Edison International Parent and Other recorded in 2021 related to the
settlement of the 2007 – 2012 California tax audits with the California Franchise Tax Board ("FTB").
See "Results of Operations" for discussion of SCE and Edison International Parent and Other results of operations.
Electricity Industry Trends
The electric power industry is undergoing transformative change driven by federal and state government actions to
reduce GHG emissions, as well as technological advances, such as customer-owned generation, electric vehicles and
energy storage. These factors are altering the way in which electricity is generated and delivered as well as the
regulatory and business environment for the industry.
California is committed to reducing its GHG emissions, improving local air quality and supporting continued economic
growth. The state codified into law goals to reduce GHG emissions by 40% from 1990 levels by 2030 and 85% from the
same baseline by 2045, as well as to be carbon neutral by 2045. State and local air quality plans also call for substantial
improvements. In the most polluted areas of the state this includes reducing smog-causing nitrogen oxides 90% below
2010 levels by 2032.
While these policy goals cannot be achieved by the electric sector alone, the electric grid is a critical enabler of the
adoption of energy technologies that support California's climate change and GHG reduction objectives. California has
set RPS targets which require California retail sellers of electricity to provide 60% of power from renewable resources
by 2030. California also requires sellers of electricity to deliver 100% of retail sales from carbon-free sources by 2045,
including interim targets of 90% by 2035 and 95% by 2040. In 2022, approximately 48% of SCE's customer deliveries
came from carbon-free resources. SCE remains well-positioned to meet its long-term RPS and carbon-free power goals
and interim targets. In addition, Edison International is committed to achieving net-zero GHG emissions by 2045, in
alignment with economy-wide climate actions planned by California. This commitment covers the power SCE delivers
to customers and Edison International's enterprise-wide operations.
The current federal administration has also responded to climate change through numerous regulatory and Executive
Order actions including for the development of more robust fuel efficiency and vehicle emission standards. Many of
these actions align with internal company goals and efforts to address and mitigate climate change. Additionally,
building upon the historic infrastructure legislation of 2021, Congress passed the IRA in 2022 that provides significant
new funding to electrify the economy. Edison International believes these actions complement its industry-leading
efforts to equitably transition to a decarbonized economy.
Edison International believes that California's 2045 goals can be achieved most economically through emissions
reductions from using clean electricity to serve 100% of retail sales, electrifying approximately 76% of light-duty
vehicles, 67% of medium-duty vehicles, 38% of heavy-duty vehicles, 85% of buses and 70% of buildings and using low-
carbon fuels for technologies that are not yet viable for electrification. California has demonstrated strong long-term
support of transportation electrification as shown by the approval of SCE's Charge Ready programs and 2022 legislation
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banning sales of new gas vehicles by 2035. However, SCE believes that more state policy support, along with public and
private investment, is needed to enable California to reach its 2030 GHG reduction targets.
To support these goals, Edison International's vision is to lead the transformation of the electric power industry and the
company is focused on opportunities in delivering clean energy, advancing electrification, building a modernized and
more reliable grid, and enabling customers' technology choices. SCE is focused on accelerating clean power and
electrification, strengthening and modernizing the grid, achieving operational and service excellence and proactively
mitigating climate change-related risks, including wildfires. SCE's ongoing focus to drive operational and service
excellence is intended to allow it to achieve these objectives safely while controlling costs and customer rates. SCE
projects that, even as electricity bills increase over time, due to higher efficiency of electrified end-use technologies,
decarbonization and electrification will reduce energy consumption costs for the average family by one-third by 2045.
SCE's focus on the transmission and distribution of electricity aligns with California's policy supporting competitive
power procurement markets.
SCE is undertaking projects and programs to accelerate economy-wide electrification. To support system reliability,
SCE is investing $1.0 billion in utility owned storage capacity as well as contracting for substantial new clean energy
resources. See "—Capital Program" and "Business—SCE—Purchased Power and Fuel Supply—CAISO Wholesale
Energy Market" for further details. SCE also continues to implement its transportation electrification programs. As of
December 31, 2022, SCE had completed construction at 179 sites to support 3,048 charge ports under its suite of light
duty Charge Ready Programs, and 42 sites to support the electrification of 895 medium and heavy-duty vehicles through
its Charge Ready Transport program.
Changes in the electric power industry are impacting customers and jurisdictions outside California as well. Many other
states and countries are also pursuing climate change and GHG reduction objectives and large commercial and industrial
customers are continuing to pursue cost reduction and sustainability goals. Edison Energy provides decarbonization and
energy solutions to commercial, institutional and industrial customers in North America and Europe who may be
impacted by these changes.
To better engage in this broader transformation and provide a view of developments outside of SCE, Edison
International has made several investments in emerging companies in areas related to the technology and business model
changes that are driving industry transformation and may make additional investments in the future. These investments
are not financially material to Edison International.
2025 General Rate Case
SCE expects to file its 2025 GRC application with the CPUC in May 2023, for the four-year period of 2025 – 2028. In
its 2025 GRC, SCE will seek necessary funding for various grid planning and development activities to support
California's clean energy transformation and economy-wide decarbonization objectives, while continuing to prioritize
wildfire mitigation programs in high fire risk areas, focus on increased system reliability, technology enabled grid
investments and provide safe, reliable, and affordable service to customers.
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Cost of Capital Applications
In 2021, SCE filed an application with the CPUC for authority to establish its authorized cost of capital for utility
operations for 2022 and to reset the related annual cost of capital mechanism that can adjust the authorized cost of
capital between SCE's cost of capital proceedings based on changes in Moody's utility bond rate index. In
November 2022, the CPUC issued a decision maintaining SCE's cost of capital at pre-2022 levels for 2022 and closing
the proceedings. In December 2022, intervenors filed an application for rehearing of the decision; if the CPUC takes
further action it may impact revenues collected in rates during 2022.
In April 2022, SCE filed an application with the CPUC for authority to establish its authorized cost of capital for utility
operations for a three-year term beginning in 2023 and to reset the related annual cost of capital adjustment mechanism
(see "Business—SCE—Overview of Ratemaking Process" for further information on the adjustment mechanism). In
December 2022, the CPUC issued a final decision that set SCE's ROE at 10.05%, and maintained SCE's current
authorized capital structure, after CPUC-allowed exclusions, of 52% common equity, 43% long-term debt, and 5%
preferred equity. Under the final decision, SCE's 2023 authorized cost of long-term debt and preferred equity are 4.39%
and 6.50%, respectively. Based on the approved capital structure and costs, SCE's weighted average return on rate base
for 2023 will be 7.44%. Based on the revenue requirement approved in SCE's 2021 GRC, the final decision will decrease
SCE's revenue requirement for 2023 by approximately $90 million compared to the cost of capital currently in rates. In
January an intervenor filed an application for rehearing, if the CPUC takes further action it may impact revenues being
collected in rates during 2023.
The cost of capital adjustment mechanism's benchmark beginning January 1, 2023, is the 12-month, October 1, 2021
through September 30, 2022, average Moody's Baa utility bond yield of 4.37%. If the difference between the benchmark
and the average of the same index for the 12-month period from October 1, 2022 to September 30, 2023 exceeds
100-basis points, SCE's CPUC-authorized ROE will be adjusted for 2024 by half the amount of the difference (up or
down). The average Moody's Baa utility bond yield between October 1, 2022 and February 16, 2023 was 5.78%. The
spot rate for Moody's Baa utility bond was 5.65% on February 16, 2023. An average Moody's Baa utility bond yield of
5.13% or higher from February 17, 2023 through September 30, 2023 would trigger the mechanism to adjust upward.
Capital Program
Total capital expenditures (including accruals) were $5.7 billion in 2022 and $5.4 billion in 2021. SCE's year-end rate
base was $40.6 billion at December 31, 2022, compared to $37.9 billion at December 31, 2021, after excluding rate base
associated with AB 1054 Excluded Capital Expenditures.
SCE's 2022 recorded and 2023 – 2024 forecast capital expenditures are set forth in the table below:
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(in billions)
Traditional capital expenditures
Distribution1
Transmission
Generation
Subtotal
Wildfire mitigation-related capital expenditures
Total capital expenditures
Total capital expenditures using range case
discussed below
2022
2023
2024
Total
2023 – 2024
$
$
4.1
0.3
0.1
4.5
1.2
5.7
*
$
$
$
4.2
0.5
0.2
4.9
1.1
6.0
5.7
$
$
$
3.9
0.6
0.2
4.7
1.1
5.8
5.2
$
$
$
8.1
1.1
0.4
9.6
2.2
11.8
10.9
1
Includes forecast expenditures for the utility owned storage projects described below and reflects delays to the original project
timelines.
* Not applicable
SCE's capital expenditure forecast reflects planned CPUC-jurisdictional spending including amounts requested in SCE's
GRC track 4 filing for the 2024 attrition year of the 2021 GRC, the WCCP and other programs outlined in SCE's WMP
that are above amounts authorized in the 2021 GRC, CPUC-approved utility owned storage expenditures and planned
FERC capital expenditures. See "Liquidity and Capital Resources—SCE—Regulatory Proceedings" for more
information on the GRC track 4 filing.
Potential capital spending variability associated with future regulatory requests based on management judgment,
potential for permitting delays and other operational considerations is reflected in the range case above, including
deferral of all activity on the Riverside Transmission Reliability Project during 2023. For more information, see
"Liquidity—SCE—Capital Investment Plan." The completion of projects, the timing of expenditures, and the associated
cost recovery may be affected by permitting requirements and delays, construction schedules, availability of labor,
equipment and materials, financing, legal and regulatory approvals and developments, community requests or protests,
weather and other unforeseen conditions.
In addition to the amounts presented in the table above SCE expects to make additional CPUC capital expenditures, the
recovery of which will be subject to future regulatory approval. This includes expenditures to be requested in the 2025
GRC application which will reflect SCE's 2023 – 2025 WMP and non-GRC programs including the Building
Electrification Program and an enterprise resource planning software implementation. These capital expenditures and
expected FERC capital expenditures are expected to be in a range of approximately $5.3 billion to $6.8 billion in
aggregate between 2024 and 2025.
Reflected below is SCE's weighted average annual rate base for 2023 – 2024 incorporating authorized CPUC-
jurisdictional expenditures including utility owned storage, planned FERC capital expenditures, and planned non-GRC
projects or programs.
(in billions)
Rate base for expected capital expenditures
Rate base for expected capital expenditures using range case discussed
above
2022
38.6
*
$
$
$
$
2023
2024
41.9
41.6
$
$
44.8
43.9
* Not applicable
Including programs outlined in SCE's WMP subject to future cost recovery proceedings, rate base associated with
wildfire restoration capital expenditures subject to future CEMA applications and planned expenditures from the 2025
GRC and non-GRC programs, SCE's weighted average annual rate base could be up to $45.0 billion in 2024 and is
expected to be between $47.2 billion and $49.5 billion in 2025.
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Utility Owned Storage Projects
In October 2021, SCE contracted with Ameresco, Inc. ("Ameresco") for the construction of utility owned energy storage
projects at three sites in SCE's service territory with an aggregate capacity of 537.5 MW and an in-service date of
August 1, 2022.
In April 2022, SCE received a force majeure event notice from Ameresco in which Ameresco asserted that both
manufacturing delays related to COVID-19 shut-downs in China and new shipping restrictions imposed by Chinese
governmental authorities were then impacting the supply of batteries from China necessary for timely completion of the
projects. Ameresco subsequently supplemented its force majeure notice noting additional supply chain issues related to
COVID-19. Permitting delays and engineering issues and certain changes requested by SCE also impacted the projects
in 2022. SCE expects to receive in aggregate approximately $270 million of tax credits available under the IRA for all
three projects, which will accrue to the benefit of its customers. In January 2023, SCE received a force majeure event
notice from Ameresco in which Ameresco asserted that severe winter storms in Southern California had impacted the
timely completion of the projects.
While Ameresco has advised SCE that it currently expects all three projects to be in-service prior to June 2023, SCE
believes that there is risk of delay beyond Ameresco's projected in-service dates.
SCE is continuing to evaluate the force majeure event notices and is awaiting additional information from Ameresco on
the underlying events. If there is a valid force majeure event under the contracts with Ameresco, subject to certain
conditions, the project schedules and any related triggers of liquidated damages may be extended, and the contract prices
may be increased to account for the impact of the force majeure event. Because Ameresco did not achieve an in-service
date of August 1, 2022, SCE is entitled to liquidated damages under the terms of the contracts subject to any relief
Ameresco may be entitled to under the contracts, including any relief for any valid force majeure events. Once triggered,
liquidated damages accrue daily for up to 60 days up to a maximum of $89 million in aggregate for all three projects.
Subject to reductions for any liquidated damages SCE is paid, SCE currently expects these storage projects to result in
$1.0 billion of capital expenditures. In December 2021, the CPUC approved recovery of these expenditures and
establishment of a balancing account for the associated revenue requirement, which have been reflected in rates
beginning in the first quarter of 2022. Authorized revenue requirements will be included in the annual ERRA review
proceeding and can only be disallowed upon a finding that SCE failed to prudently administer the contracts.
Southern California Wildfires and Mudslides
California has experienced unprecedented weather conditions in recent years due to climate change. The worsening
weather and fuel conditions across California increase the likelihood of wildfires, including those where SCE's
equipment may be alleged to be associated with the fire's ignition, and SCE's service territory remains susceptible to
additional wildfire activity in 2023 and beyond. In response to worsening conditions and increased wildfire activity over
the past several years, SCE has developed and is implementing its WMP to reduce the risk of SCE equipment
contributing to the ignition of wildfires. In addition, California has increased its investment in wildfire prevention and
fire suppression capabilities. In addition to the investments SCE is making as part of its WMP, SCE also uses its PSPS
program to proactively de-energize power lines as a last resort to mitigate the risk of significant wildfires during extreme
weather events.
Wildfires in SCE's territory in December 2017 and November 2018 caused loss of life, substantial damage to both
residential and business properties, and service outages for SCE customers. SCE has incurred material losses in
connection with the 2017/2018 Wildfire/Mudslide Events.
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SCE's equipment has been, and may further be, alleged to be associated with several wildfires that have originated in
Southern California subsequent to 2018. Edison International and SCE expect that any losses incurred in connection with
those fires will be covered by insurance, subject to self-insured retentions and co-insurance, recoveries through electric
rates or third-party receivables, and expect that any such losses after recoveries will not be material.
2017/2018 Wildfire/Mudslide Events
Multiple lawsuits and investigations related to the 2017/2018 Wildfire/Mudslide Events have been initiated against SCE
and Edison International. As of December 31, 2022, in addition to the Local Public Entity Settlement, the TKM
Subrogation Settlement and the Woolsey Subrogation Settlement, SCE had entered into settlements with approximately
9,500 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation. In addition, SCE and the SED executed
the SED Agreement in October 2021, and SCE's obligations under the SED Agreement commenced on August 15, 2022,
when CPUC approval of the SED Agreement became final and non-appealable.
In 2022, SCE accrued estimated losses of $1.3 billion for the 2017/2018 Wildfire/Mudslide Events. As a result, SCE also
recorded expected recoveries through FERC electric rates of $76 million against the charge, and the resulting net charge
to earnings was $1.2 billion ($879 million after-tax).
Through December 31, 2022, SCE has accrued estimated losses of $8.8 billion, expected recoveries from insurance of
$2.0 billion and expected recoveries through FERC electric rates of $376 million related to the 2017/2018
Wildfire/Mudslide Events. The after-tax net charges to earnings recorded through December 31, 2022 have been
$4.6 billion.
As of December 31, 2022, SCE had paid $7.6 billion under executed settlements and had $185 million to be paid under
executed settlements, including $120 million to be paid under the SED Agreement, related to the 2017/2018
Wildfire/Mudslide Events. As of the same date, SCE had recovered $2.0 billion through insurance and approximately
$234 million through FERC-jurisdictional electric rates.
After giving effect to all payment obligations under settlements entered into through December 31, 2022, including
under the SED Agreement, Edison International's and SCE's best estimate of expected losses for remaining alleged and
potential claims related to the 2017/2018 Wildfire/Mudslide Events was $934 million. As of the same date, SCE had
assets for expected recoveries through FERC electric rates of $142 million on their consolidated balance sheets and had
exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Edison International and
SCE may incur a material loss in excess of amounts accrued in connection with the remaining alleged and potential
claims related to the 2017/2018 Wildfire/Mudslide Events.
SCE will seek CPUC-jurisdictional rate recovery of prudently-incurred losses and related costs realized in connection
with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance and FERC-jurisdictional recoveries, other
than for any obligations under the SED Agreement. Based on Edison International's and SCE's current best estimate of
expected losses for the 2017/2018 Wildfire/Mudslide Events, SCE currently expects to seek CPUC-jurisdictional rate
recovery of approximately $6 billion by filing multiple future applications with the CPUC. SCE targets the third quarter
of 2023 for the first of such cost recovery applications, and expects to request recovery of approximately $2 billion in
that filing. SCE's plans with respect to these filings may be delayed or modified. For example, the filings may be delayed
if proceedings related to the 2017/2018 Wildfire/Mudslide Events do not progress as anticipated. SCE believes that, in
light of the CPUC's decision in a cost recovery proceeding involving SDG&E arising from several 2007 wildfires in
SDG&E's service area, there is substantial uncertainty regarding how the CPUC will interpret and apply its prudency
standard to an investor-owned utility in wildfire cost-recovery proceedings for fires ignited prior to the adoption of
AB 1054 on July 12, 2019. Accordingly, while the CPUC has not made a determination regarding SCE's prudency
relative to any of the 2017/2018 Wildfire/Mudslide Events, SCE is unable to conclude, at this time, that uninsured
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CPUC-jurisdictional wildfire-related costs related to the 2017/2018 Wildfire/Mudslide Events are probable of recovery
through electric rates.
Post-2018 Wildfires
Several wildfires have significantly impacted portions of SCE's service territory after 2018, including the 2019 Saddle
Ridge Fire, the 2020 Bobcat Fire, the 2022 Coastal Fire and the 2022 Fairview Fire.
In 2022, SCE recorded a $572 million increase in estimated losses for the Post-2018 Wildfires and recorded
$399 million in expected insurance recoveries against the charge. In light of the prudency standard the CPUC is required
to apply under AB 1054 to utilities holding a safety certificate at the time a wildfire ignited after July 12, 2019, SCE has
concluded, at this time, that both uninsured CPUC-jurisdictional and uninsured FERC-jurisdictional wildfire-related
costs related to the Post-2018 Wildfires, other than for those already authorized for inclusion in electric rates, are
probable of recovery through electric rates. As a result, SCE also recorded expected recoveries through electric rates of
$162 million against the charges accrued related to the Post-2018 Wildfires. The resulting net charge to earnings was
$11 million ($8 million after-tax).
As of December 31, 2022, SCE had paid $13 million under executed settlements related to the Post-2018 Wildfires.
After giving effect to all payment obligations under settlements entered into through December 31, 2022, Edison
International's and SCE's estimated losses (established at the lower end of the estimated range of reasonably possible
losses) for remaining alleged and potential claims related to the Post-2018 Wildfires was $682 million. As of the same
date, SCE had assets for expected recoveries through insurance of $473 million and through electric rates of
$166 million on their consolidated balance sheets related to the Post-2018 Wildfires.
Expected recoveries from insurance recorded for the Post-2018 Wildfires are supported by SCE's insurance coverage for
multiple policy years. While Edison International and SCE may incur material losses in excess of the amounts accrued
for each of the Post-2018 Wildfires, Edison International and SCE expect that any losses incurred in connection with any
such fire will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such
losses after expected recoveries from insurance and through electric rates will not be material.
For further information on Southern California Wildfires and Mudslides, see "Business— Southern California
Wildfires," "Risk Factors," "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting
Policies—Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill
1054" and "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—
Southern California Wildfires and Mudslides" in this report.
Upstream Lighting Program
From 2017 – 2019, SCE administered the Upstream Lighting Program, part of a statewide program administered by
investor-owned utilities that offered discounted energy efficient light bulbs to customers through incentives to lighting
manufacturers. The CPUC began investigating the programs administered by the investor-owned utilities based on
reports that investor-owned utilities, including SCE, shipped a significant number of bulbs under the program that could
not be tracked to customers.
In May 2022, the CPUC issued an order directing SCE to show cause as to why SCE should not be required to:
(i) refund ratepayer funding for the portion of the program budget associated with light bulbs that were unaccounted for,
(ii) refund energy efficiency incentive mechanism ("ESPI") awards associated with unaccounted-for light bulbs, and (iii)
pay penalties for misrepresenting program progress and results to the CPUC. In September 2022, a Presiding Officer's
Decision ("POD") was issued in the proceeding finding that SCE mismanaged its Upstream Lighting Program from 2017
through 2019 and failed to ensure that efficient light bulbs were tracked and sold as intended by the program design. The
POD requires SCE to (i) refund to ratepayers $76.1 million, representing the portion of the program budget associated
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with light bulbs that could not be accounted for, (ii) refund to ratepayers $6.8 million, representing ESPI awards
associated with light bulbs that could not be accounted for, (iii) pay $19.06 million in fines; and (iv) bear the cost of
SCE's investigation, approximately $900,000. The CPUC issued its final decision in November 2022 in line with the
POD.
RESULTS OF OPERATIONS
SCE
SCE's results of operations are derived mainly through two sources:
• Earning activities – representing revenue authorized by the CPUC and the FERC, which is intended to provide SCE
a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission, and
distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs,
depreciation, taxes and a return consistent with the capital structure. Also, included in earnings activities are revenue
or penalties related to incentive mechanisms, other operating revenue and regulatory charges or disallowances.
• Cost-recovery activities – representing CPUC- and FERC-authorized balancing accounts which allow for recovery
of specific project or program costs, subject to reasonableness review or compliance with upfront standards, as well
as non-bypassable rates collected for SCE Recovery Funding LLC. Cost-recovery activities include rates which
provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public
purpose related-program costs (including energy efficiency and demand-side management programs), certain
operation and maintenance expenses, (including vegetation management and wildfire insurance), and repayment of
bonds and financing costs of SCE Recovery Funding LLC. SCE earns no return on these activities.
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Years ended December 31, 2022, 2021, and 2020
The following table is a summary of SCE's results of operations for the periods indicated:
2022
2021
2020
Cost-
Recovery
Activities
Earning
Activities
$ 9,008 $ 8,164 $
Total
Earning
Consolidated Activities
Cost-
Recovery
Earning
Total
Activities Consolidated Activities
17,172
6,375
4,659
$ 7,872 $ 7,002 $
—
2,015
5,540
1,573
14,874
5,540
3,588
2
2,280
$ 7,468 $ 6,078 $
Total
Cost-
Recovery
Activities Consolidated
13,546
4,932
3,523
4,930
1,243
(in millions)
Operating revenue
Purchased power and fuel
Operation and maintenance
Wildfire-related claims, net
of insurance recoveries
Wildfire Insurance Fund
expense
Depreciation and
amortization
Property and other taxes
Impairment, net of other
(income)
Total operating expenses
Operating income (loss)
Interest expense
Other income
Income before income taxes
Income tax (benefit) expense
Net income
Less: Preference stock
dividend requirements
Net income available for
common stock
—
2,793
1,305
214
2,540
482
50
7,384
1,624
(977)
198
845
(109)
954
6,375
1,866
—
—
19
15
—
8,275
(111)
(28)
139
—
—
—
1,305
1,276
214
215
2,559
497
50
15,659
1,513
(1,005)
337
845
(109)
954
2,209
462
67
6,244
1,628
(785)
109
952
17
935
—
—
7
—
—
7,120
(118)
(6)
124
—
—
—
1,276
1,328
215
336
2,216
462
67
13,364
1,510
(791)
233
952
17
935
1,965
435
(151)
6,195
1,273
(757)
149
665
(277)
942
—
—
—
—
—
6,173
(95)
(11)
106
—
—
—
1,328
336
1,965
435
(151)
12,368
1,178
(768)
255
665
(277)
942
132
810
107
—
107
106
—
106
132
—
$ 847 $ — $
847
$ 829 $ — $
829
$ 810 $ — $
Earning Activities
Earning activities in 2022 compared to 2021 were primarily affected by the following:
• Higher operating revenue of $1,136 million is primarily due to:
•
SCE recognized $701 million of revenue for wildfire-related expenses that had been deferred prior to 2021 and
were authorized for recovery in the GRC track 2 in January 2022 and GRC track 3 in June 2022 ($416 million
included in earnings activities, $285 million included in cost-recovery activities).
• An increase of CPUC-related revenue of $376 million primarily due to the escalation mechanism set forth in the
2021 GRC decision.
•
SCE recognized $156 million of revenue on CPUC approval of recovery for CSRP-related costs in
September 2022. The revenue comprised recovery of $174 million of previously deferred expenses and $48
million of previously unrecognized return on rate base and taxes, offset by $66 million of income tax benefits.
See "Liquidity and Capital Resources—SCE—Regulatory Proceedings" for more information.
• An increase of other CPUC-related revenue of $121 million primarily related to higher return, taxes and
operating expenses recovered through capital balancing accounts, including for wildfire mitigation
expenditures.
• An increase in FERC-related revenue of $23 million primarily due to rate base growth.
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• An increase in other operating revenue of $44 million primarily due to deferred revenue and billing associated
with the agreement with Morongo Transmission LLC (offset in depreciation, property and other taxes and
operation and maintenance expenses). See "Notes to Consolidated Financial Statements—Note 7. Revenue" for
further information.
• Higher operation and maintenance costs of $778 million primarily due to the following:
• Higher expenses of $404 million subject to balancing account treatment including the approval in the GRC
track 2 and GRC track 3 to recover wildfire-related expenses that had been deferred as regulatory assets prior to
2021 (offset in revenue above).
• Higher expenses of $95 million related to the POD in September 2022 on SCE's Upstream Lighting Program.
This consisted of $76 million of disallowed costs reclassified from cost recovery activities and $19 million of
fines. See "Management Overview—Upstream Lighting Program" for further information.
• Higher expenses of $57 million related to inspections and maintenance.
• Higher expenses of $27 million previously deferred and expensed on approval for recovery in the CSRP
decision (offset in revenue above).
• Higher uncollectibles expenses of $38 million, including prior period expenses not subject to cost recovery,
following a CPUC decision, which required SCE to change its methodology for calculating the portion of
uncollectibles expenses incremental to GRC authorized expenses.
• A charge of $23 million related to settlement of an employment litigation matter, net of estimated insurance
recoveries.
• Higher expenses of $18 million of wildfire mitigation expenses that were disallowed in the GRC track 3
decision.
• A charge of $14 million related to organizational realignment services.
• Higher other expenses of $102 million including IT costs, franchise fees, capital related costs, safety programs
related to COVID-19, and power plant maintenance costs.
• Higher wildfire-related claims and expenses of $29 million primarily due to higher estimated losses related to
wildfire claims from the 2017/2018 Wildfire/Mudslide Events in 2022 compared to 2021.
• Higher depreciation and amortization expense of $331 million primarily due to $134 million of previously deferred
CSRP depreciation expensed on approval for recovery in the CSRP decision (offset in revenue above) and increased
plant balances in 2022.
• Higher property and other taxes of $20 million primarily due to higher property assessed value in 2022.
• Lower impairment and other operating income of $17 million primarily due to an impairment charge of $79 million
recorded in 2021 related to disallowed historical capital expenditures in SCE's 2021 GRC final decision.
Impairments were recorded in 2022 of $17 million related to the CPUC decision in the GRC track 3 proceeding and
$47 million related to a settlement agreement between SCE and TURN in the CSRP proceeding. See "Liquidity and
Capital Resources—SCE—Regulatory Proceedings" for more information.
• Higher interest expense of $192 million primarily due to increased long-term borrowing and higher interest rates on
short-term debt and balancing account overcollections.
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• Higher other income of $89 million primarily due to a higher interest rates applied to balancing account
undercollections and allowance for funds used during construction.
•
See "Income Taxes" below for the explanation of $126 million increase in income tax benefits.
Cost-Recovery Activities
Cost-recovery activities in 2022 compared to 2021 were primarily affected by the following:
• Higher purchased power and fuel costs of $835 million primarily due to higher power and gas prices, partially offset
by lower load.
• Higher operation and maintenance costs of $293 million primarily due to:
• Higher expenses of $285 million of GRC track 2 and GRC track 3 wildfire mitigation expenses that had been
deferred prior to 2021 and were authorized for recovery in January 2022 and June 2022, respectively. See "—
Earnings Activities" above.
• Higher uncollectible expenses of $83 million primarily due to authorization to recover 2020 and 2021 costs that
had been previously deferred as regulatory assets through the residential uncollectibles balancing account.
• Lower cost recovery activity expenses due to $76 million of disallowed costs reclassified to earnings activities
related to Upstream Lighting Program. See "—Earnings Activities" above.
• Higher depreciation and amortization expense of $12 million due to recovery of expenses associated with AB 1054
Excluded Capital Expenditures financed through securitization.
• Higher property and other taxes of $15 million due to recovery of property taxes associated with AB 1054 Excluded
Capital Expenditures financed through securitization.
• Higher interest expense of $22 million primarily due to recovery of expenses associated with AB 1054 Excluded
Capital Expenditures financed through securitization.
• Higher other income of $15 million primarily driven by higher income related to the non-service cost components
for SCE's pension benefit plans. See "Notes to Consolidated Financial Statements—Note 9. Compensation and
Benefit Plans" for further information.
Supplemental Operating Revenue Information
As a result of the CPUC-authorized decoupling mechanism, SCE revenues are not affected by changes in retail
electricity sales.
Income Taxes
Lower income tax expense of $126 million in 2022 compared to 2021 (a tax benefit was recorded in 2022) was primarily
driven by a decrease in pre-tax income and the absence of a one-time charge recorded in 2021. In July 2021, SCE
received the IRS's response to its private letter ruling request, regarding the scope of the deferred tax normalization
requirements and the computations required to comply with the average rate assumption method. As a result of the IRS
ruling, SCE's estimate changed, and a charge was recorded in 2021 to reduce the 2018 through 2021 cumulative tax
benefits returned to customers. The effective tax rates were (12.9)% and 1.8% for 2022 and 2021, respectively. SCE's
effective tax rate is below the federal statutory rate of 21% for 2022 and 2021 primarily due to the CPUC's ratemaking
treatment for the current tax benefit arising from certain property-related and other temporary differences, which reverse
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over time. The accounting treatment for these temporary differences results in recording regulatory assets and liabilities
for amounts that would otherwise be recorded to deferred income tax expense.
See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for a reconciliation of the federal statutory
rate to the effective income tax rates.
Edison International Parent and Other
Results of operations for Edison International Parent and Other include amounts from other subsidiaries that are not
reportable as segments, as well as intercompany eliminations.
Loss from Operations
The following table summarizes the results of Edison International Parent and Other:
(in millions)
Edison Energy Group and subsidiaries
Corporate expenses and other subsidiaries
Edison International Parent and Other net loss
Less: Preferred stock dividend requirement
Edison International Parent and Other net loss attributable to common shareholders $
$
$
Years ended December 31,
2021
2022
2020
(17) $
(113)
(130) $
105
(235) $
(15) $
5
(10) $
60
(70) $
(35)
(36)
(71)
—
(71)
The net loss attributable to common shareholders from operations of Edison International Parent and Other increased
$165 million in 2022 compared to 2021 primarily due to an income tax benefit of $110 million recorded in 2021 related
to the settlement of the 2007 – 2012 California tax audits with the FTB and higher preferred dividends in 2022.
LIQUIDITY AND CAPITAL RESOURCES
SCE
SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its
cash flow and access to the bank and capital markets. SCE's overall cash flows fluctuate based on, among other things,
its ability to recover its costs in a timely manner from its customers through regulated rates, changes in commodity
prices and volumes, collateral requirements, interest obligations, dividend payments to and equity contributions from
Edison International, obligations to preference shareholders, and the outcome of tax, regulatory and legal matters.
In the next 12 months, SCE expects to fund its cash requirements through operating cash flows, capital market and bank
financings and equity contributions from Edison International Parent, as needed. SCE also has availability under its
credit facility to fund cash requirements. SCE expects to issue bonds to finance or refinance eligible sustainable projects.
Eligible sustainable projects include categories such as renewable energy, clean transportation, energy efficiency and
carbon reduction, climate change adaptation, and socioeconomic advancement and empowerment. SCE maintains
processes to ensure that proceeds from the sale of the bonds are only used for projects that are aligned with the Edison
International sustainable financing framework issued in June 2021. SCE also expects to issue additional debt for general
corporate purposes and to finance payments for future resolutions of claims related to the 2017/2018 Wildfire/Mudslide
Events.
SCE has invested all $1.6 billion of the required AB 1054 Excluded Capital Expenditures. SCE issued securitized bonds
in the amounts of $338 million and $533 million in February 2021 and 2022, respectively, to finance a portion of these
expenditures. SCE expects to use the proceeds of future securitized bonds to repay a term loan of $730 million prior to
its maturity in May 2023, which financed the remaining AB 1054 Excluded Capital Expenditures. SCE has filed a
regulatory application for authorization to issue additional securitized bonds. For further information, see "—Regulatory
Proceedings—Financing Order."
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The IRA was signed into law in August 2022. See "—Edison International Parent and Other— Edison International
Income Taxes" for a description of the impacts of the legislation on the Edison International consolidated tax group
including SCE.
The following table summarizes SCE's current, long-term issuer credit ratings and outlook from the major credit rating
agencies:
Credit Rating
Outlook
Moody's
Baa2
Positive
Fitch
BBB-
Positive
S&P
BBB
Stable
SCE's credit ratings may be affected if, among other things, regulators fail to successfully implement AB 1054 in a
consistent and credit supportive manner or the Wildfire Insurance Fund is depleted by claims from catastrophic
wildfires. Credit rating downgrades increase the cost and may impact the availability of short-term and long-term
borrowings, including commercial paper, credit facilities, bond financings or other borrowings. In addition, some of
SCE's power procurement contracts and environmental remediation obligations would require SCE to pay related
liabilities or post additional collateral if SCE's credit rating were to fall below investment grade. For further details,
see "—Margin and Collateral Deposits."
Available Liquidity
At December 31, 2022, SCE had cash on hand of $766 million and approximately $2.7 billion available to borrow on its
$3.4 billion revolving credit facility. The credit facility is available for borrowing needs until May 2026.
At December 31, 2022, SCE had $195 million outstanding commercial paper, net of discount, at a weighted average
interest rate of 5.20%. The aggregate maximum principal amount under the SCE revolving credit facility may be
increased up to $4.0 billion, provided that additional lender commitments are obtained. For further details, see "Notes to
Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
SCE may finance balancing account undercollections and working capital requirements to support operations and capital
expenditures with commercial paper, its credit facilities or other borrowings, subject to availability in the bank and
capital markets. As necessary, SCE will utilize its available liquidity, capital market financings, other borrowings or
parent company contributions to SCE equity in order to meet its obligations as they become due, including costs related
to the 2017/2018 Wildfire/Mudslide Events. For further information, see "Management Overview—Southern California
Wildfires and Mudslides."
Debt Covenant
SCE's credit facilities and term loan require a debt to total capitalization ratio as defined in the applicable agreements of
less than or equal to 0.65 to 1. At December 31, 2022, SCE's debt to total capitalization ratio was 0.56 to 1.
At December 31, 2022, SCE was in compliance with all financial covenants that affect access to capital.
Regulatory Proceedings
Wildfire Related Regulatory Proceedings
In response to the increase in wildfire activity, and faster progression of and increased damage from wildfires across
SCE's service territory and throughout California, SCE has incurred wildfire mitigation, wildfire insurance and wildfire
and drought restoration related spending at levels significantly exceeding amounts authorized in SCE's GRCs.
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2021 General Rate Case Wildfire Mitigation Memorandum Account Balances
The 2021 GRC decision authorized the establishment of balancing accounts for expenses for vegetation management,
wildfire insurance, and the WCCP program, with expenditures up to certain thresholds approved for cost recovery. SCE
may submit subsequent reasonableness review applications for any spending in excess of these thresholds. SCE has
incurred, and in 2023 expects to incur, vegetation management expenses and capital expenditures for WCCP in excess of
thresholds established in the 2021 GRC. SCE has also incurred, and in 2023 expects to incur, costs in excess of amounts
authorized in the 2021 GRC related to other wildfire mitigation activities, including inspections and maintenance and to
support execution of PSPS events. SCE tracks these incremental amounts in memorandum accounts which will be
subject to approval in future regulatory proceedings. For more information see "Business—SCE—Overview of
Ratemaking Process."
In June 2022, SCE filed an application with the CPUC requesting reasonableness review of these incremental costs
incurred in 2021 related to non-covered conductor wildfire mitigation and vegetation management activities, requesting
a total revenue requirement of approximately $327 million. In October 2022, the CPUC temporarily suspended the
procedural schedule for the proceeding to consider whether there is a sufficient record in the proceeding to address the
issue of whether recorded costs are incremental, reasonable, and properly recoverable. In December 2022, the CPUC
began to conduct an audit of SCE's 2021 incurred costs, with an expectation of issuing an audit report in July 2023.
2021 General Rate Case Track 3
In June 2022, the CPUC issued a decision on SCE's 2021 GRC track 3 filing that authorized SCE to recover
$385 million of incremental wildfire mitigation operation and maintenance expense and approved $465 million of
incremental wildfire mitigation capital expenditures as reasonable. SCE did not obtain a determination of reasonableness
for an additional $197 million of capital expenditures, associated with construction in progress, plant assets and
installation of current limiting fuses, portions of which were defective. SCE expects to provide additional information
supporting its application for recovery of approximately $25 million of current limiting fuses expenditure in its 2025
GRC application. The construction in progress not approved as reasonable in the 2021 GRC track 3 was not eligible for
inclusion in SCE's final financing order application, but is being recovered as part of SCE's authorized rate base included
in the 2021 GRC decision on a forecast basis.
The decision did not find reasonable certain capital expenditures related to vegetation management software purchased
by SCE. As a result of the decision, SCE recorded a $17 million impairment of utility property, plant and equipment.
In October 2022, SCE filed a request to seek recovery of $35 million, after accounting for a $10 million deductible, for
vegetation management-related operations and maintenance expenses not approved in this proceeding. These increased
costs are tracked in a "Z-Factor" memorandum account for vegetation management line clearance costs related to Senate
Bill 247, which went into effect January 1, 2020, and requires SCE to pay line clearance tree trimmers the prevailing
wage of qualified electrical workers.
The decision resulted in a revenue requirement of approximately $400 million including a $15 million 2020 revenue
requirement for capital expenditures previously found reasonable by the CPUC. The approved revenue requirements are
required to be amortized over a 36-month period. SCE is seeking recovery of the approved capital expenditures in a
separate financing order application. See "— Financing Order" below.
Wildfire Expense Memorandum Account
SCE tracks insurance premium costs related to wildfire liability insurance policies as well as other wildfire-related costs
in its WEMA. In December 2020, SCE filed a WEMA application with the CPUC to seek recovery of $215 million of
costs recorded in WEMA at December 31, 2020. The costs primarily related to incremental wildfire insurance premium
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expenses and associated costs for wildfire liability insurance policies that provide coverage for the last six months of
2020. In October 2022, the CPUC extended the statutory deadline for completion of the proceeding to April 2023.
SCE believes that uninsured CPUC-jurisdictional wildfire-related costs related to the Post-2018 Wildfires, other than for
those already authorized for inclusion in electric rates, are probable of recovery through electric rates. As of
December 31, 2022, SCE has recorded total expected recoveries related to the Post-2018 Wildfires of $152 million
within the WEMA and risk management balancing accounts.
2020 Emergency Wildfire Restoration
Multiple wildfires occurred during 2020 which caused damage within SCE's service territory and to SCE's Big Creek
hydroelectric facility.
In March 2022, SCE filed a CEMA application requesting recovery of $207 million of operation and maintenance
expenses incremental to authorized revenue requirements and $312 million of capital expenditures incremental to
amounts authorized in the 2021 GRC primarily related to these restoration efforts. SCE has not yet filed for recovery of
generation restoration costs, as repairs to hydroelectric generation facilities are not complete.
2021 General Rate Case Track 4
SCE made its 2021 GRC track 4 filing with the CPUC in May 2022. SCE is requesting a revenue requirement of
$8.6 billion for 2024. This represents an increase of $938 million compared to SCE's revenue requirement of $7.7 billion
for the 2023 attrition year. A significant component of the track 4 revenue requirement request relates to projects
previously authorized by the CPUC, including those which were completed and put into service since the 2021 GRC
final decision. The other primary drivers of the increase are inflation and SCE's 2024 vegetation management and
wildfire mitigation spending forecasts, partially due to a legislatively required wage rate increase. The schedule adopted
by the CPUC for the 2021 GRC track 4 filing calls for a proposed decision in the fourth quarter of 2023.
Financing Order
In September 2022, SCE filed its third application for an irrevocable order from the CPUC to finance $772 million,
comprised of AB1054 Excluded Capital Expenditures, allowed overhead costs and associated financing expenses,
through the issuance of securitized bonds. The expenditures consist of $204 million approved in the 2021 GRC track 1
and $465 million approved in the 2021 GRC track 3. SCE received a proposed decision on this application in
January 2023, which would authorize the issuance of securitized bonds, if approved. SCE expects a final decision in the
first quarter of 2023.
CSRP
In September 2022, the CPUC approved SCE's CSRP proceeding for expenditures incurred through April 2021. The
approval resulted in a revenue requirement of $388 million through December 2024. See "Notes to Consolidated
Financial Statements—Note 1. Summary of Significant Accounting Polices— Impairments of Long-lived Assets" for
further information.
In May 2022, SCE filed a second CSRP application with the CPUC requesting recovery of $59 million of capital
expenditures and $28 million of operation and maintenance expenses incurred from May 2021 to December 2021. SCE
also expects to propose review and cost recovery for additional post-implementation CSRP costs incurred from
January 2022 through December 2024 in its 2025 GRC filing.
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ERRA Proceeding
SCE's cost-recovery mechanism for its fuel and purchased power-related costs is facilitated in three main balancing
accounts, the ERRA, the PABA, and the NSGBA. SCE sets rates based on an annual forecast of the costs that it expects
to incur during the subsequent year. The undercollection in ERRA and PABA during 2022 resulted in SCE triggering an
established mechanism requiring SCE to file an application to advise the CPUC that SCE's undercollections had
exceeded the trigger amount. In December 2022, the CPUC approved inclusion of the undercollection in a January 1,
2023 rate change.
At December 31, 2022, the ERRA and PABA were undercollected by approximately $1.5 billion due to higher gas and
power prices and in January 2023, SCE notified the CPUC of a further trigger of the mechanism. Due to the new rate
effective in January 2023, undercollections are expected to decrease, however, if undercollections remain above the
trigger level, it could result in a further adjustment to customer rates during 2023. See "Business—SCE—Overview of
Ratemaking Process" for further information.
In October 2022, as part of the 2020 ERRA review proceeding, the CPUC rejected the methodology SCE used to
calculate the portion of uncollectibles expense incremental to amounts authorized in SCE's GRC. This led to a
disallowance of $16 million of uncollectibles expense recorded to the residential uncollectible balancing account
("RUBA") in 2020. Beginning in the fourth quarter of 2022, SCE modified its methodology for calculating incremental
uncollectibles expense to be included in RUBA to align with the decision.
2023 FERC Formula Rate Annual Update
In November 2022, SCE filed its 2023 annual transmission revenue requirement update with the FERC, with the
proposed rate effective January 1, 2023. The update reflects a $2 million increase from SCE's 2022 transmission revenue
requirement included in customer rates. The 2023 filing was in line with the 2022 transmission revenue requirement due
to significant wildfire-related claims expenses recorded in both years.
2022 California Arrearage Payment Program ("CAPP 2022")
In June 2022, California's State Assembly passed legislation to authorize, fund and implement the CAPP 2022, which is
expected to reduce customer arrearages for certain residential customers of California's investor-owned utilities by up to
$1.0 billion. In November 2022, SCE received $202 million of CAPP funds on behalf of customers, which has been
applied to accounts receivable outstanding from individual customers. To the extent SCE's uncollectibles expenses have
been offset by the CAPP 2022, recovery will not be sought through other mechanisms.
Building Electrification Programs Application
In December 2021, SCE filed a $677 million Building Electrification Program Application for a four-year program
(2024 – 2027) to incentivize replacing 250,000 gas-fueled water and space heaters with efficient electric heat pumps and
to upgrade or enhance the electrical infrastructure for 65,000 homes to support electrification. The proposed program
would include $200 million for customer-side electrical infrastructure upgrades for which SCE has requested inclusion
as a regulatory asset in rate base, $69 million in capital expenditures and $408 million of operations and maintenance
expense including heat pump incentives, program administration, and implementation costs. The CPUC is expected to
issue a final decision on the application in mid-2023.
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Capital Investment Plan
Major Transmission Projects
A summary of SCE's most significant transmission and substation construction projects during the next two years is
presented below. The timing of the projects below is subject to timely receipt of permitting, licensing and regulatory
approvals.
Project Name
Riverside Transmission Reliability2
Alberhill System3
Eldorado-Lugo-Mohave Upgrade
Project
Lifecycle Phase
Licensing
Licensing
Construction
Direct
Expenditures
(in millions)1
584
486
247
Inception to Date
(in millions)1
33
48
226
Scheduled In-
Service Date
2026
— 3
2023
1
2
3
Direct expenditures include direct labor, land and contract costs incurred for the respective projects and exclude overhead costs
that are included in the capital expenditures forecast discussed in "Management Overview—Capital Program."
Expenditures and in-service date are based on CPUC approved plans and may be impacted by any changes to those plans
required by Riverside City Council.
Includes the original estimated project cost for Alberhill. In January 2020, SCE submitted a supplemental analysis to the CPUC
which included alternative projects as well as an update to the original project cost. SCE is unable to predict the timing of a final
CPUC decision, the corresponding in-service date, and what the final project costs will be for the Alberhill System Project.
Riverside Transmission Reliability Project
The Riverside Transmission Reliability Project is a joint project between SCE and Riverside Public Utilities ("RPU"),
the municipal utility department of the City of Riverside. While RPU will be responsible for constructing some of the
project's facilities within Riverside, SCE's portion of the project consists of constructing upgrades to its system,
including a new 230 kV substation; certain interconnection and telecommunication facilities and transmission lines in
the cities of Riverside, Jurupa Valley and Norco and in portions of unincorporated Riverside County. In May 2022, the
Riverside City Council voted to review and advise on alternatives to the CPUC approved project. Consequently, SCE
suspended all major activities on the project. In January 2023, the City Council voted to establish a working group to
pursue funding for additional undergrounding. SCE's capital forecast currently includes $128 million and $190 million
of Riverside Transmission Reliability Project expenditures in 2023 and 2024, respectively, which may be affected by
further delays to the project.
Alberhill System Project
The Alberhill System Project consists of constructing a new 500 kV substation, two 500 kV transmission lines to
connect the proposed substation to the existing Serrano-Valley 500 kV transmission line, telecommunication equipment
and subtransmission lines in western Riverside County. The project was designed to meet long-term forecasted electrical
demand in the proposed Alberhill System Project area and to increase electrical system reliability and resiliency. In
April 2018 and July 2018, the CPUC issued a proposed decision and an alternate proposed decision, both denying SCE's
ability to construct the Alberhill System Project based on a perceived lack of need. SCE filed comments on both
proposed decisions requesting that the CPUC grant the certificate of public convenience and necessity ("CPCN") for the
Alberhill System Project. In August 2018, the CPUC issued a decision that did not deny or approve the Alberhill System
Project but directed SCE to submit supplemental information on the Alberhill System Project including but not limited to
a load forecast and cost benefit analysis of several alternatives to the proposed project. Ongoing capital spending has
been deferred as a result of the CPUC request for additional information. In January 2020, SCE submitted a
supplemental analysis to the CPUC for the Alberhill System Project including several alternatives to the proposed
project as well as an update to the original project cost. A final decision on the Alberhill System Project remains
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pending. Given the uncertainty associated with the resolution of the permitting process, potential revisions to the project
have not been reflected in total direct expenditures. SCE continues to believe a system solution is needed for the project
area but is unable to predict the timing of a final CPUC decision in connection with the Alberhill System Project
proceeding.
Approximately 48% of the Alberhill System Project costs spent to date would be subject to recovery through CPUC
revenue and 52% through FERC revenue. In October 2017, SCE obtained approval from the FERC for abandoned plant
treatment for the Alberhill System Project, which allows SCE to seek recovery of 100% of all prudently incurred costs
after the approval date and 50% of prudently incurred costs prior to the approval date. Excluding land costs, which may
be recovered through sale to a third party, SCE has incurred approximately $59 million and $55 million of capital
expenditures, including overhead costs, of which approximately $42 million and $39 million may not be recoverable if
the project is cancelled, as of December 31, 2022 and 2021, respectively.
Eldorado-Lugo-Mohave Upgrade Project
The Eldorado-Lugo-Mohave Upgrade Project will increase capacity on existing transmission lines to allow additional
renewable energy to flow from Nevada to southern California. The project would modify SCE's existing Eldorado, Lugo,
and Mohave electrical substations to accommodate the increased flows from Nevada to southern California; increase the
power flow through the existing 500 kV transmission lines by constructing two new capacitors along the lines; raise
transmission tower heights to meet ground clearance requirements; and install fiber optics on the transmission lines to
provide communications between existing SCE substations. In August 2020, the CPUC approved the CPCN for the
project.
Construction for the project began in November 2020 and the project is expected to be operational in the second quarter
of 2023.
Other Capital Investment Projects and Programs
For a discussion of utility owned storage and forecast wildfire mitigation capital expenditures, including the WCCP, see
"Management Overview—Capital Program." For discussion of Electrification and Clean Energy Transition Programs,
see "— Regulatory Proceedings—Building Electrification Programs Application."
Decommissioning of San Onofre
The decommissioning of a nuclear plant requires the management of three related activities: radiological
decommissioning, non-radiological decommissioning and the management of spent nuclear fuel. SCE has engaged the
DGC to undertake a significant scope of decommissioning activities for Units 1, 2 and 3 at San Onofre. The
decommissioning of San Onofre is expected to take many years.
Under federal law, the U.S. Department of Energy ("DOE") is responsible for the selection and construction of a facility
for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE has not met its contractual
obligation to accept spent nuclear fuel. Extended delays by the DOE have led to the construction of costly alternatives
and associated siting and environmental issues.
Two Independent Spent Fuel Storage Installations ("ISFSI") store nuclear fuel onsite at San Onofre. The first primarily
stores nuclear fuel from Unit 1 ("ISFSI 1") and the second stores nuclear fuel from Units 2 and 3 ("ISFSI 2"). SCE's
CDPs for ISFSI 1 and ISFSI 2 extend through 2035.
Decommissioning of San Onofre Unit 1 began in 1999 and the transfer of spent nuclear fuel from Unit 1 to dry cask
storage in ISFSI 1 was completed in 2005. Major decommissioning work for Unit 1 has been completed except for
certain underground work.
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Decommissioning of San Onofre Units 2 and 3 began in June 2013 and the transfer of spent nuclear fuel from San
Onofre Units 2 and 3 to dry cask storage in the two ISFSIs was completed in August 2020. In October 2019, the
California Coastal Commission approved SCE's application for a CDP, the principal discretionary permit required to
start major decommissioning activities at San Onofre Units 2 and 3. In August 2020, SCE commenced, and is currently
conducting, major decommissioning activities in accordance with the terms of the permit.
In the third quarter of 2021, SCE updated its decommissioning cost estimate for decommissioning activities to be
completed at San Onofre Units 2 and 3 to $3.4 billion (SCE share is $2.6 billion) in 2021 dollars. The decommissioning
cost estimate included costs through the expected decommissioning completion date, currently estimated to be in 2053
for San Onofre Units 2 and 3. SCE filed its updated decommissioning cost estimate with the CPUC in February 2022.
Decommissioning cost estimates are subject to a number of uncertainties including the cost and timing of nuclear waste
disposal, the time it will take to obtain required permits, cost of removal of property, site remediation costs, as well as a
number of other assumptions and estimates, including when the federal government will provide for either interim or
permanent off-site storage of spent nuclear fuel enabling the removal and transport of spent fuel canisters from the San
Onofre site, as to which there can be no assurance. Cost estimates are subject to change as decommissioning proceeds
and such changes may be material.
SCE's share of the San Onofre Units 2 and 3 decommissioning costs recorded during 2022 and 2021 were $187 million
(in 2022 dollars) and $236 million (in 2021 dollars), respectively. The CPUC conducts a reasonableness review of
recorded decommissioning costs.
In February 2022, SCE filed its application for reasonableness review of approximately $570 million (SCE share in 2022
dollars) of recorded San Onofre Units 2 and 3 decommissioning costs incurred during the period 2018 to 2020.
Intervenors in the proceeding have recommended approximately $115 million (SCE share in 2022 dollars) in
disallowances for San Onofre Units 2 and 3 decommissioning costs. This amount includes a recommended disallowance
of approximately $45 million in costs associated with an August 2018 incident that occurred when an SCE contractor
was loading a spent nuclear fuel canister into an ISFSI resulting in fuel transfer operations being suspended for
approximately one year. The remainder of the recommended disallowance amount is primarily for contractor staffing
costs incurred during a delay in issuance of the CDP to allow for decommissioning.
SCE had nuclear decommissioning trust funds for San Onofre Units 2 and 3 of $2.2 billion and $2.8 billion as of
December 31, 2022 and December 31, 2021, respectively. Based upon the resolution of a number of uncertainties,
including the uncertainties of decommissioning discussed above, the financial performance of the nuclear
decommissioning trust fund investments, as well as the resolution of a number of other assumptions and estimates,
additional contributions to the nuclear decommissioning trust's funds may be required. If additional contributions to the
nuclear decommissioning trust funds become necessary, SCE will seek recovery of such additional funds through
electric rates and any such recovery will be subject to a reasonableness review by the CPUC. Cost increases resulting
from contractual disputes, delays in performance by the contractor, elevated levels of inflation, or permitting delays,
among other things, could cause SCE to materially overrun the decommissioning cost estimate and could materially
impact the sufficiency of trust funds.
In December 2022, the CPUC approved disbursements from SCE's nuclear decommissioning trusts to cover forecasted
2023 decommissioning costs for San Onofre Units 2 and 3, of which SCE's share is approximately $300 million in 2023
dollars.
24
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SCE Dividends
CPUC holding company rules require that SCE's dividend policy be established by SCE's Board of Directors on the
same basis as if SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be
necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of both
Edison International and SCE. In addition, the CPUC regulates SCE's capital structure which limits the dividends it may
pay to its shareholders.
The common equity component of SCE's CPUC authorized capital structure is 52% on a weighted average basis over the
Capital Structure Compliance Period, unchanged from the January 1, 2020 to December 31, 2022 compliance period.
The CPUC authorized capital structure differs from the capital structure calculated based on GAAP due to certain
exclusions allowed by CPUC, including the impact of SCE's contributions to the Wildfire Insurance Fund under AB
1054. For further information, see "Business—SCE—Overview of Ratemaking Process" and "Business—Southern
California Wildfires."
In May 2020, the CPUC issued a decision on SCE's application to the CPUC for waiver of compliance with its equity
ratio requirement, that allows SCE to exclude from its equity ratio calculations (i) net charges accrued in connection with
the 2017/2018 Wildfire/Mudslide Events and (ii) debt issued for the purpose of paying claims related to the 2017/2018
Wildfire/Mudslide Events up to an amount equal to the net charges accrued in connection with the 2017/2018
Wildfire/Mudslide Events. With these exclusions, SCE was in compliance with its authorized capital structure for the
compliance period from January 1, 2020 to December 31, 2022. The temporary exclusion lapsed on May 7, 2022. In
April 2022, SCE filed another application requesting continued waiver of compliance with its equity ratio requirement.
Under the CPUC's rules, SCE will not be deemed to be in violation of the equity ratio requirement while the waiver
application is pending resolution. While the exclusion is in place, SCE is required to notify the CPUC if an adverse
financial event reduces SCE's spot equity ratio by more than one percent from the level most recently filed with the
CPUC in the proceeding. The last spot equity ratio SCE filed with the CPUC in the proceeding did not exclude the then
$1.8 billion net charge and was 45.2% as of December 31, 2018 (at the time the common equity component of SCE's
CPUC authorized capital structure was required to remain at or above 48% on a weighted average basis over the
applicable 37-month period). SCE's spot equity ratio on December 31, 2018 would have been 48.7% had the $1.8 billion
net charge at December 31, 2018 been excluded, therefore SCE will notify the CPUC if its spot ratio drops below 47.7%
in any quarter. For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and
Contingencies—Contingencies—Southern California Wildfires and Mudslides."
SCE monitors its compliance with the CPUC's equity ratio requirement based on the weighted average of the common
equity component of SCE's CPUC authorized capital structure over the Capital Structure Compliance Period using its
actual capital structure from the beginning of the Capital Structure Compliance Period through the reporting date
together with forecasted performance and expected financing activities for the remainder of the Capital Structure
Compliance Period. SCE expects to be compliant with its CPUC authorized capital structure at the end of the Capital
Structure Compliance Period.
SCE's ability to declare and pay common dividends may be restricted under the terms of its outstanding series of
preference stock. For further information see "Notes to Consolidated Financial Statements—Note 14. Equity."
As a California corporation, SCE's ability to pay dividends is also governed by the California General Corporation Law.
California law requires that for a dividend to be declared: (a) retained earnings must equal or exceed the proposed
dividend, or (b) immediately after the dividend is made, the value of the corporation's assets must exceed the value of its
liabilities plus amounts required to be paid, if any, in order to liquidate stock senior to the shares receiving the dividend.
Additionally, a California corporation may not declare a dividend if it is, or as a result of the dividend would be, likely to
be unable to meet its liabilities as they mature. Prior to declaring dividends, SCE's Board of Directors evaluates available
information, including when applicable, information pertaining to the 2017/2018 Wildfire/Mudslide Events, to ensure
25
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that the California law requirements for the declarations are met. On February 23, 2023, SCE declared a dividend to
Edison International of $350 million.
The timing and amount of future dividends are also dependent on a number of other factors including SCE's
requirements to fund other obligations and capital expenditures, and its ability to access the capital markets and generate
operating cash flows and earnings. If SCE incurs significant costs related to catastrophic wildfires and is unable to
recover such costs through insurance, the Wildfire Insurance Fund (for fires after July 12, 2019), or from customers or is
unable to access capital markets on reasonable terms, SCE may be limited in its ability to pay future dividends to Edison
International and its preference shareholders.
Margin and Collateral Deposits
Certain derivative instruments, power and energy procurement contracts and other contractual arrangements contain
collateral requirements. In addition, certain environmental remediation obligations require financial assurance that may
be in the form of collateral postings. Future collateral requirements may differ from the requirements at December 31,
2022 due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, the
impact of changes in wholesale power and natural gas prices on SCE's contractual obligations, and the impact of SCE's
credit ratings falling below investment grade.
The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral
that would have been required as of December 31, 2022, if SCE's credit rating had been downgraded to below
investment grade as of that date. The table below also provides the potential collateral that could be required due to
adverse changes in wholesale power and natural gas prices over the remaining lives of existing power and fuel derivative
contracts. Natural gas prices have increased significantly in 2022 due to global demand and extreme weather conditions
in the USA, which resulted in substantially higher collateral postings and potential collateral requirements during the
year.
In addition to amounts shown in the table, power and fuel contract counterparties may also institute new collateral
requirements, applicable to future transactions to allow SCE to continue trading in power and fuel contracts at the time
of a downgrade or upon significant increases in market prices. In particular, SCE has an agreement with a counterparty
for gas transport and balancing services through their pipeline. In December 2022, extreme winter conditions combined
with pipeline constraints led to extremely high natural gas prices and usage, which affected collateral terms within the
arrangement. Through December 31, 2022, the counterparty could have contractually requested $118 million in
collateral from SCE but waived the amount, given the extraordinary conditions. Furthermore, SCE may also be required
to post up to $50 million in collateral in connection with its environmental remediation obligations, within 120 days of
the end of the fiscal year in which the downgrade occurs.
26
Table of Contents
(in millions)
Collateral posted as of December 31, 20221
Incremental collateral requirements for purchased power and fuel contracts resulting from a potential
downgrade of SCE's credit rating to below investment grade2
Incremental collateral requirements for SCE's financial hedging activities resulting from adverse
market price movement3
Posted and potential collateral requirements
$
$
461
252
73
786
1
Net collateral provided to counterparties and other brokers consisted of $437 million in letters of credit and surety bonds and
$24 million of cash collateral.
2 Represents potential collateral requirements for accounts payable and mark-to-market valuation at December 31, 2022.
Requirement varies throughout the period and is generally lower at the end of the month.
3
Incremental collateral requirements were based on potential changes in SCE's forward positions as of December 31, 2022 due to
adverse market price movements over the remaining lives of the existing power and fuel derivative contracts using a 95%
confidence level.
Edison International Parent and Other
In the next 12 months, Edison International expects to fund its net cash requirements through cash on hand, dividends
from SCE, and capital market and bank financings. Edison International may finance its ongoing cash requirements,
including dividends, working capital requirements, payment of obligations, and capital investments, including capital
contributions to subsidiaries, with short-term or other financings, subject to availability in the bank and capital markets.
At December 31, 2022, Edison International Parent had cash on hand of $148 million and $1.4 billion available to
borrow on its $1.5 billion revolving credit facility. The credit facility is available for borrowing needs until May 2026.
At December 31, 2022 Edison International Parent had $90 million outstanding commercial paper, net of discount, at a
weighted-average interest rate of 4.92% supported by the $1.5 billion revolving credit facility. The aggregate maximum
principal amount under the Edison International Parent revolving credit facility may be increased up to $2.0 billion,
provided that additional lender commitments are obtained. For further details, see "Notes to Consolidated Financial
Statements—Note 5. Debt and Credit Agreements."
Edison International Parent has $1.4 billion of debt maturities arising in the next 12 months. Edison International expects
to finance these maturities with $300 million to $400 million of equity content, as viewed by ratings agencies, and
expects to issue debt for the remainder. In August 2022, Edison International Parent established a program to sell shares
of its common stock with aggregate sales price up to $500 million, including through designated broker-dealers at
prevailing market prices (an at-the-market offering). For further information, see "Notes to Consolidated Financial
Statements—Note 14. Equity."
On February 23, 2023, Edison International declared a dividend of $0.7375 per share to be paid on April 30, 2023.
Edison International Parent and Other's liquidity and its ability to pay operating expenses and pay dividends to common
shareholders are dependent on access to the bank and capital markets, dividends from SCE, realization of tax benefits
and its ability to meet California law requirements for the declaration of dividends. Prior to declaring dividends, Edison
International's Board of Directors evaluates available information, including when applicable, information pertaining to
the 2017/2018 Wildfire/Mudslide Events, to ensure that the California law requirements for the declarations are met. For
information on the California law requirements on the declaration of dividends, see "—SCE—SCE Dividends." Edison
International intends to maintain its target payout ratio of 45% – 55% of SCE's core earnings, subject to the factors
identified above.
Edison International's ability to declare and pay common dividends may be restricted under the terms of the Series A and
Series B Preferred Stock. For further information see "Notes to Consolidated Financial Statements—Note 14. Equity."
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Table of Contents
Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the
applicable agreements of less than or equal to 0.70 to 1. At December 31, 2022, Edison International's consolidated debt
to total capitalization ratio was 0.64 to 1.
At December 31, 2022, Edison International Parent was in compliance with all financial covenants that affect access to
capital.
The following table summarizes Edison International Parent's current long-term issuer credit ratings and outlook from
the major credit rating agencies:
Credit Rating
Outlook
Moody's
Baa3
Positive
Fitch
BBB-
Positive
S&P
BBB
Stable
Edison International Parent's credit ratings may be affected if, among other things, regulators fail to successfully
implement AB 1054 in a consistent and credit supportive manner or the Wildfire Insurance Fund is depleted by claims
from catastrophic wildfires. Credit rating downgrades increase the cost and may impact the availability of short-term and
long-term borrowings, including commercial paper, credit facilities, note financings or other borrowings.
Edison International Income Taxes
Net Operating Loss and Tax Credit Carryforwards
Edison International has approximately $3.4 billion of tax effected net operating losses and tax credit carryforwards at
December 31, 2022 (after excluding $121 million of Capistrano Wind attributes and offsetting $310 million of
unrecognized tax benefits), which are available to offset future consolidated tax liabilities.
See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for further information regarding taxes
payable to Capistrano Wind. Edison International expects to utilize its net operating loss and tax credit carryforwards
through 2029 based on currently enacted tax laws.
Inflation Reduction Act of 2022
On August 16, 2022, the IRA was signed into law. The law imposes a 15% corporate alternative minimum tax
("CAMT") on adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1 billion
over a specified 3-year period. The CAMT will be effective January 1, 2023. Based on the current interpretation of the
law and historical financial data, Edison International estimates that it will exceed the $1 billion threshold and be subject
to CAMT on its consolidated Federal tax returns beginning in 2025. SCE expects to be subject to CAMT on its stand-
alone Federal return beginning in 2024.
The law also includes significant extensions, expansions, and enhancements of numerous energy-related investment tax
credits, as well as creating new credits applicable to electricity production which may apply to SCE's capital
expenditures. Under the IRA, SCE expects to generate investment tax credits related to its utility owned storage projects,
which will accrue to the benefit of its customers.
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Table of Contents
Historical Cash Flows
SCE
(in millions)
Net cash provided by operating activities
Net cash provided by financing activities
Net cash used in investing activities
Net increase in cash, cash equivalents and restricted cash
Net Cash Provided by Operating Activities
Years ended December 31,
2021
2022
$ 3,319
2,724
(5,557)
486
$
$
$
158
5,218
(5,152)
224
2020
$ 1,427
3,699
(5,094)
32
$
The following table summarizes major categories of net cash provided by operating activities as provided in more detail
in SCE's consolidated statements of cash flows for 2022, 2021 and 2020:
(in millions)
Net income
Non-cash items1
Subtotal
Contributions to Wildfire Insurance Fund
Changes in cash flow resulting from working capital2
Regulatory assets and liabilities
Wildfire related claims3
Proceeds from Morongo Transmission LLC4
Other noncurrent assets and liabilities5
Net cash provided by operating activities
Years ended December 31,
2021
2020
2022
$
954
2,701
3,655
(95)
327
(51)
(56)
—
(461)
$ 3,319
$
$
935
2,534
3,469
(95)
(705)
(720)
(2,648)
400
457
158
$
942
1,840
2,782
(95)
(136)
(1,799)
(56)
—
731
$ 1,427
Change
2022/2021
186
—
1,032
669
2,592
(400)
(918)
$ 3,161
1
2
3
4
5
Non-cash items include depreciation and amortization, allowance for equity during construction, impairment and other, Wildfire
Insurance Fund amortization expense, deferred income taxes and other.
Changes in working capital items include receivables, unbilled revenue, inventory, amortization of prepaid expenses, accounts
payable, tax receivables and payables, and other current assets and liabilities.
The 2022 amounts include payments of $1.9 billion settlements on 2017/2018 Wildfire/Mudslide Events claims, partially offset
by an increase of estimated losses of $1.3 billion on 2017/2018 Wildfire/Mudslide Events and $0.6 billion on Post-2018
Wildfires. The 2021 amounts were primarily related to settlement payments of $3.9 billion for 2017/2018 Wildfire/Mudslide
Events, partially offset by an increase of $1.3 billion in liabilities for the 2017/2018 Wildfire/Mudslide Events.
Represents $400 million proceeds from Morongo Transmission LLC for use of a portion of the West of Devers transmission line
in 2021.
Includes changes in wildfire-related insurance receivables. Also includes nuclear decommissioning trusts activities. See "Nuclear
Decommissioning Activities" below for further information.
Net cash provided by operating activities was impacted by the following:
Net income and non-cash items increased in 2022 by $186 million from 2021 primarily due to higher revenue due to the
escalation mechanism as set forth in the 2021 GRC final decision and higher return on rate base from capital balancing
accounts, partially offset by higher operation and maintenance expenses and higher interest expense.
Net cash provided by operating activities was also impacted by cash outflow of $95 million related to SCE's
contributions to the Wildfire Insurance Fund in both 2022 and 2021. See "Business—Southern California Wildfires" for
further information.
29
Table of Contents
Net cash inflow (outflow) for working capital was $327 million and $(705) million in 2022 and 2021, respectively. The
net cash inflow for working capital for 2022 was mainly due to an increase in payables of $343 million driven by higher
payables on power purchase contracts and a net decrease of $24 million in customer receivables and unbilled revenue
primarily from $387 million of CAPP funds received in 2022, partially offset by lower collections. The net cash outflow
for working capital in 2021 was mainly due to net increases in unbilled revenue and customer receivables of
$700 million.
Net cash used in regulatory assets and liabilities, including the increase in net undercollections of balancing accounts,
was $51 million and $720 million in 2022 and 2021, respectively. SCE has a number of balancing and memorandum
accounts, which impact cash flows based on differences between timing of collection of amounts through rates and
accrual expenditures. Cash flows were primarily impacted by the following:
2022
• Net undercollections of BRRBA increased by $259 million primarily due to inclusion in BRRBA of $401 million of
revenue requirement authorized under GRC track 2 for collection in customer rates starting March 2022 over a
36-month period, a revenue requirement of approximately $400 million authorized under GRC track 3 for collection
in customer rates starting October 2022 over a 36-month period, and $174 million CSRP related expenses approved
in September 2022. These higher undercollections were partially offset by current year overcollections due to higher
sales volume and average rates due to extreme heat in California and recovery of prior year undercollections,
including 2021 GRC authorized additional revenue requirement for the first nine months of 2021 to be collected
over a 27-month period starting October 2021.
• Undercollections decreased by $180 million related to wildfire risk mitigation and restoration memorandum and
balancing accounts as a result of approval to recover costs in GRC track 2 and track 3, which were transferred to
BRRBA for recovery as mentioned above, partially offset by additional WEMA and wildfire risk mitigation and
restoration costs incurred.
• Net undercollections for ERRA, PABA and NSGBA increased by $795 million primarily due to current year
undercollections due to higher than forecast energy prices and load, partially offset by higher sales volume and
higher average rates driven by extreme heat in California and recovery of prior PABA and NSGBA
undercollections.
•
Increased overcollections of $511 million for the public purpose and energy efficiency programs primarily due to
lower program spending due to timing and increased sales volume.
• Net overcollection increased by $178 million for the FERC balancing accounts primarily due to current year
overcollections due to higher sales volume, recovery of prior year undercollections and lower operating expenses
than amounts included in revenue requirements.
•
Increase in overcollections of $56 million for excess California Department of Water Resources ("DWR") bond and
power charges to be refunded to customers over a 12-month period beginning in June 2022.
• Undercollections in the CSRP memorandum account decreased by $64 million primarily due to transfer
$174 million approved expense to BRRBA as mentioned above, partially offset by related deferred CSRP post
implementation costs.
2021
• Net undercollections of BRRBA increased by $227 million primarily driven by adoption of the 2021 GRC final
decision, including 2021 authorized revenue requirements to be collected over a 27-month period starting October
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2021, and CEMA drought authorized revenue requirement to be collected over a 12-month period starting
October 2021. The undercollections are partially offset by current year overcollection due to higher sales volume,
and recovery of prior year undercollections, including WEMA and the Grid Safety and Resiliency Program being
collected over a two-year and one-year period, respectively, starting October 2020.
• Undercollections of $364 million were related to wildfire-related expenses that are probable of future recovery from
customers.
• Undercollections of CEMA accounts decreased by $62 million as a result of approval to recover drought restoration
costs, which was transferred to BRRBA for recovery, partially offset by additional restoration costs due to wildfire
events in 2020.
• Net undercollections for ERRA, PABA and the NSGBA increased by $251 million primarily due to current year
undercollections as a result of higher gas and power prices, partially offset by higher sales volume, and recovery of
prior PABA and NSGBA undercollections.
• Undercollections from COVID-19-related memorandum and balancing accounts decreased by $82 million due to
transfer of $182 million to ERRA and public purpose programs, partially offset by additional customer uncollectible
expenses.
• Undercollections of $98 million in the CSRP memorandum account were related to CSRP implementation costs.
Cash flows (used in) or provided by other noncurrent assets and liabilities were primarily related to an increase in
wildfire insurance receivables of $(398) million in 2022 and an insurance recovery of $708 million in 2021. See "Notes
to Consolidated Financial Statements—Note 12. Commitments and Contingencies" for further information.
Net Cash Provided by Financing Activities
The following table summarizes cash provided by financing activities for 2022, 2021 and 2020. Issuances of debt is
discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
2022
(in millions)
Issuances of long-term debt, including premium/discount and net of issuance costs $ 5,032
(385)
Long-term debt repaid or repurchased
—
Short-term debt borrowed
(1,543)
Short-term debt repaid
(406)
Commercial paper (repaid), net of borrowing
1,400
Capital contributions from Edison International Parent
—
Redemptions of preferred and preference stock
(1,300)
Payment of common stock dividends to Edison International
(110)
Payment of preferred and preference stock dividends
Other
36
$ 2,724
Net cash provided by financing activities
Years ended December 31,
2021
$ 5,411
(1,037)
2,654
(2,255)
(124)
1,633
—
(975)
(106)
17
$ 5,218
2020
$ 2,676
(699)
2,194
(326)
175
1,432
(308)
(1,332)
(118)
5
$ 3,699
Net Cash Used in Investing Activities
Cash flows used in investing activities are primarily due to capital expenditures and funding of nuclear decommissioning
trusts. Cash used in capital expenditures were $5.8 billion, $5.5 billion and $5.5 billion for 2022, 2021 and 2020,
respectively, primarily related to transmission, distribution and generation investments. SCE had a net redemption of
nuclear decommissioning trust investments of $123 million, $256 million and $197 million in 2022, 2021 and 2020,
respectively. See "Nuclear Decommissioning Activities" below for further discussion.
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Table of Contents
Nuclear Decommissioning Activities
SCE's statements of cash flows include nuclear decommissioning activities, which are reflected in the following line
items:
(in millions)
Net cash used in operating activities:
Net earnings (losses) from nuclear decommissioning trust investments
SCE's decommissioning costs
Net cash provided by investing activities:
Proceeds from sale of investments
Purchases of investments
Net cash impact
Years ended December 31,
2021
2022
2020
$
$
$
78
(189)
(31) $
(238)
25
(223)
4,177
(4,054)
12
3,961
(3,705)
$
(13) $
5,927
(5,730)
(1)
Net cash used in operating activities relates to interest and dividends less administrative expenses, taxes and SCE's
decommissioning costs. Investing activities represent the purchase and sale of investments within the nuclear
decommissioning trusts, including the reinvestment of earnings from nuclear decommissioning trust investments.
Funds for decommissioning costs are requested from the nuclear decommissioning trusts one month in advance.
Decommissioning disbursements are funded from sales of investments of the nuclear decommissioning trusts. The net
cash impact reflects timing of decommissioning payments ($189 million, $238 million and $223 million in 2022, 2021
and 2020, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($201 million, $225 million
and $222 million in 2022, 2021 and 2020, respectively).
Edison International Parent and Other
The table below sets forth condensed historical cash flow from operations for Edison International Parent and Other,
including intercompany eliminations.
(in millions)
Net cash used in operating activities
Net cash provided by financing activities
Net cash (used in) provided by investing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Net Cash Used in Operating Activities
Years ended December 31,
2021
2022
2020
$
$
(103) $
157
(17)
37
$
(147) $
227
1
81
$
(164)
28
123
(13)
Net cash used in operating activities decreased in 2022 by $44 million from 2021 due to:
• Outflows of $193 million and $147 million from operating activities in 2022 and 2021, respectively, due to
payments and receipts relating to interest and operating costs.
•
$90 million cash inflow from a wildfire insurance premium received by EIS in 2022.
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Net Cash Provided by Financing Activities
Net cash provided by financing activities was as follows:
(in millions)
Dividends paid to Edison International common shareholders
Dividends paid to Edison International preferred shareholders
Dividends received from SCE
Capital contributions to SCE
Issuance of common stock
Issuance of preferred stock, net of issuance costs
Long-term debt issuance, net of discount and issuance costs
Long-term debt repayments
Issuance of term loan
Commercial paper financing, net
Other
Net cash provided by financing activities
Net Cash (Used in) Provided by Investing Activities
Years ended December 31,
2021
2022
2020
$ (1,050) $
(99)
1,300
(1,400)
13
—
939
(700)
1,000
89
65
157
$
$
(988) $
(35)
975
(1,633)
32
1,977
—
—
—
(130)
29
227
$
(928)
—
1,332
(1,432)
912
—
397
(400)
—
129
18
28
Net cash used in investing activities in 2022 included a net cash outflow of $17 million for a business acquisition at
Edison Energy. For more details, see "Notes to Consolidated Financial Statements—Note 1. Summary of Significant
Accounting Policies—Business Acquisition."
Contractual Obligations and Contingencies
Contractual Obligations
SCE and Edison International Parent and Other have various contractual obligations, which are recorded as liabilities in
the consolidated financial statements. Other items, such as certain purchase commitments and other executory contracts,
are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes
to the financial statements.
For details on long-term debt, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Certain power purchase agreements which SCE entered into with independent power producers are treated as operating
or finance leases. In addition, SCE has other operating lease obligations primarily related to vehicles, office space and
other equipment. For further discussion, see "Notes to Consolidated Financial Statements—Note 12. Commitments and
Contingencies" and "—Note 13. Leases."
SCE also has other purchase obligations primarily related to maintaining reliability and expanding SCE's transmission
and distribution system and nuclear fuel supply contracts. For further discussion, see "Notes to Consolidated Financial
Statements—Note 12. Commitments and Contingencies."
Edison International Parent and Other and SCE have estimated contributions to the pension and PBOP plans. These
amounts represent estimates that are based on assumptions that are subject to change. See "Notes to Consolidated
Financial Statements—Note 9. Compensation and Benefit Plans" for further information.
Edison International and SCE have a total net liability recorded for uncertain tax positions. Edison International and SCE
cannot make reliable estimates of the cash flows by period due to uncertainty surrounding the timing of resolving these
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open tax issues with the tax authorities. See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for
further information.
For details on derivative obligations and asset retirement obligations, see "Notes to Consolidated Financial Statements—
Note 6. Derivative Instruments" and "—Note 1. Summary of Significant Accounting Policies," respectively.
Contingencies
Edison International's and SCE's contingencies are discussed in "Notes to Consolidated Financial Statements—Note 12.
Commitments and Contingencies—Contingencies."
Off-Balance Sheet Arrangements
SCE has variable interests in power purchase contracts with variable interest entities and a variable interest in
unconsolidated Trust II, Trust III, Trust IV, Trust V and Trust VI that issued $400 million (aggregate liquidation
preference) of 5.10%, $275 million (aggregate liquidation preference) of 5.75%, $325 million (aggregate liquidation
preference) of 5.375%, $300 million (aggregate liquidation preference) of 5.45% and $475 million (aggregate liquidation
preference) of 5.00%, trust securities, respectively, to the public. In 2020, SCE Trust II redeemed $180 million of its
trust securities from the public, from its issued trust securities of $400 million. See "Notes to Consolidated Financial
Statements—Note 3. Variable Interest Entities."
MARKET RISK EXPOSURES
Edison International's and SCE's primary market risks include fluctuations in interest rates, commodity prices and
volumes, and counterparty credit. Derivative instruments are used to manage market risks including market risks to
SCE's customers. For further discussion of market risk exposures, including commodity price risk, credit risk and
interest rate risk, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments" and "—Note 4. Fair
Value Measurements."
Interest Rate Risk
Edison International and SCE are exposed to changes in interest rates primarily as a result of financing, investing and
borrowing activities used for liquidity purposes, and to fund business operations and capital investments. The nature and
amount of Edison International's and SCE's long-term and short-term debt can be expected to vary as a result of future
business requirements, market conditions and other factors. Fluctuations in interest rates can affect earnings and cash
flows. Changes in interest rates may impact SCE's authorized rate of return for the period beyond 2023 through a CPUC
cost of capital adjustment mechanism, see "Liquidity and Capital Resources—SCE" and "Business—SCE—Overview of
Ratemaking Process" for further discussion. The following table summarizes the increase or decrease to the fair value of
long-term debt including the current portion, if the market interest rates were changed while leaving all other
assumptions the same:
(in millions)
Edison International:
December 31, 2022
December 31, 2021
SCE:
December 31, 2022
December 31, 2021
Commodity Price Risk
Carrying Value
Fair Value 10% Increase 10% Decrease
$
29,639
25,247
$ 26,824
27,718
$
25,739
26,920
$
28,006
28,565
26,258
22,110
23,469
24,375
22,444
23,603
24,590
25,196
SCE and its customers are exposed to the risk of a change in the market price of natural gas, electric power and
transmission congestion. Due to regulatory mechanisms, exposure to commodity prices is not expected to impact
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earnings but may impact timing of cash flows. SCE's hedging program is designed to reduce exposure to variability in
market prices related to SCE's purchases and sales of electric power and natural gas. As part of this program, SCE enters
into energy options, swaps, forward arrangements and congestion revenue rights ("CRRs"). The transactions are pre-
approved by the CPUC or executed in compliance with CPUC-approved procurement plans. Therefore, SCE expects
recovery of its related hedging costs, as well as procurement costs, through the ERRA balancing account or CPUC-
approved procurement plans. For more details of the ERRA balancing account, see "Liquidity and Capital Resources—
SCE—Regulatory Proceedings—ERRA Proceeding" and "Business—SCE—Overview of Ratemaking Process."
Fair Value of Derivative Instruments
The fair value of derivative instruments is included in the consolidated balance sheets unless subject to an exception
under the applicable accounting guidance. Realized gains and losses from derivative instruments are expected to be
recovered from or refunded to customers through regulatory mechanisms and, accordingly, changes in the fair value of
derivative instruments have no impact on earnings. SCE does not use hedge accounting for these transactions due to this
regulatory accounting treatment. For further discussion on fair value measurements and the fair value hierarchy, see
"Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements."
The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was a net asset of
$240 million and $44 million at December 31, 2022 and 2021, respectively.
The following table summarizes the increase or decrease to the fair values of the net asset of derivative instruments
included in the consolidated balance sheets, if the electricity prices or gas prices were changed while leaving all other
assumptions constant:
(in millions)
Increase in electricity prices by 10%
Decrease in electricity prices by 10%
Increase in gas prices by 10%
Decrease in gas prices by 10%
Investment Price Risk
$
December 31,
2022
2021
$
22
(22)
40
(40)
13
(13)
20
(20)
Edison International and SCE are subject to investment price risk due to securities held as investments in the nuclear
decommissioning trust and various pension and other post-retirement benefit plan trusts.
Nuclear Decommissioning Trust
As of December 31, 2022, SCE's nuclear decommissioning trust investments consist of equity investments of
$1.6 billion and fixed income investments of $2.2 billion. These investments are exposed to price fluctuations in equity
markets and changes in interest rates. SCE's investment policies and CPUC requirements place limitations on the types
and investment grade ratings of the securities that may be held by the nuclear decommissioning trust. These policies
restrict the trust from holding alternative investments and limit the trust funds' exposures to investments in highly
illiquid markets. Due to regulatory mechanisms, investment earnings and realized and unrealized gains and losses
increase or decrease the trust assets and the related regulatory asset or liability, and do not materially affect earnings. For
further discussion on the nuclear decommissioning trust investments, see "Notes to Consolidated Financial Statements—
Note 4. Fair Value Measurements" and "—Note 10. Investments."
PBOP and Pension Plan Assets
The PBOP Plan and the Southern California Edison Company Retirement Plan Trust assets include investments in equity
securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other
investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. These investments are
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exposed to price fluctuations in equity markets and changes in interest rates. The investment of plan assets is overseen
by a fiduciary investment committee. Risk is managed through diversification among multiple asset classes, managers,
styles and securities. See "Notes to Consolidated Financial Statements—Note 9. Compensation and Benefit Plans" for
additional information regarding investment strategy of plan assets.
A significant decline in the value of plan assets could require SCE to increase funding of its pension and PBOP plans in
future periods, which could adversely affect cash flows in those periods. Annual contributions related to SCE employees
made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms.
Credit Risk
Credit risk exposure from counterparties for power and gas trading activities is measured as the sum of net accounts
receivable (accounts receivable less accounts payable) and the current fair value of net derivative assets (derivative
assets less derivative liabilities) reflected on the consolidated balance sheets. SCE enters into master agreements which
typically provide for a right of set-off. Accordingly, SCE's credit risk exposure from counterparties is based on a net
exposure under these arrangements. SCE manages the credit risk on the portfolio of counterparties based on credit
ratings and other publicly disclosed information, such as financial statements, regulatory filings and press releases, to
guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting
agreements. Based on SCE's policies and risk exposures related to credit, SCE does not anticipate a material adverse
effect on their financial statements as a result of counterparty nonperformance. At December 31, 2022, SCE's power and
gas trading counterparty credit risk exposure was $239 million, all of which is associated with entities that have an
investment grade rating of A or higher. SCE assigns a credit rating to counterparties based on the lowest of a
counterparty's S&P's, Moody's and Fitch's rating.
For more information related to credit risks, see "Notes to Consolidated Financial Statements—Note 6. Derivative
Instruments."
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
The accounting policies described below are considered critical to obtaining an understanding of Edison International's
and SCE's consolidated financial statements because their application requires the use of significant estimates and
judgments by management in preparing the consolidated financial statements. Management estimates and judgments are
inherently uncertain and may differ significantly from actual results achieved. Management considers an accounting
estimate to be critical if the estimate requires significant assumptions and changes in the estimate or, the use of
alternative estimates, could have a material impact on Edison International's and SCE's results of operations or financial
position. For more information on Edison International's and SCE's accounting policies, see "Notes to Consolidated
Financial Statements—Note 1. Summary of Significant Accounting Policies."
Accounting for Contingencies
Nature of Estimates Required. Edison International and SCE record loss contingencies when management determines
that the outcome of future events is probable of occurring and when the amount of the loss can be reasonably estimated.
Gain contingencies are recognized in the financial statements when they are realized.
Key Assumptions and Approach Used. The determination of an accrual for a loss contingency is based on management
judgment and estimates with respect to the likely outcome of the matter, including the analysis of different scenarios.
Liabilities are recorded or adjusted when events or circumstances cause these judgments or estimates to change. In
assessing whether a loss is a reasonable possibility, Edison International and SCE may consider the following factors,
among others: the nature of the litigation, claim or assessment, available information, opinions or views of legal counsel
and other advisors, and the experience gained from similar cases. Edison International and SCE provide disclosures for
material contingencies when there is a reasonable possibility that a loss or an additional loss may be incurred.
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Effect if Different Assumptions Used. Actual amounts realized upon settlement of contingencies may be different than
amounts recorded and disclosed and could have a significant impact on the liabilities, revenue and expenses recorded on
the consolidated financial statements. For a discussion of contingencies, guarantees and indemnities, see "Notes to
Consolidated Financial Statements—Note 12. Commitments and Contingencies."
Application to 2017/2018 Wildfire/Mudslide Events
As discussed in "Management Overview," wildfires in SCE's territory in December 2017 and November 2018 caused
loss of life, substantial damage to both residential and business properties, and service outages for SCE customers.
The extent of legal liability for wildfire-related damages in actions against utilities depends on a number of factors,
including whether the utility substantially caused or contributed to the damages and whether parties seeking recovery of
damages will be required to show negligence in addition to causation. Final determinations of legal liability for wildfire
events, including determinations of whether SCE was negligent, would only be made during lengthy and complex
litigation processes and settlements may be reached before determinations of legal liability are ever made.
Edison International and SCE have incurred material losses in connection with the 2017/2018 Wildfire/Mudslide Events.
Estimated losses for the 2017/2018 Wildfire/Mudslide Events litigation are based on a number of assumptions and are
subject to change as additional information becomes available. Actual losses incurred may be higher or lower than
estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged.
For instance, SCE will receive additional information with respect to damages claimed as the claims mediation processes
progress. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to
reach settlements and the outcomes of settlements reached through the ongoing claims mediation processes, uncertainties
related to the sufficiency of insurance held by plaintiffs, uncertainties related to the litigation processes, including
whether plaintiffs will ultimately pursue claims, uncertainty as to the legal and factual determinations to be made during
litigation, including uncertainty as to the contributing causes of the 2017/2018 Wildfire/Mudslide Events, the
complexities associated with fires that merge and whether inverse condemnation will be held applicable to SCE with
respect to damages caused by the Montecito Mudslides, and the uncertainty as to how these factors impact future
settlements.
Each reporting period, management reviews its loss estimates for remaining alleged and potential claims related to the
2017/2018 Wildfire/Mudslide Events. Management's 2022 reviews included a review of large damage claims presented
by a small number of plaintiffs, new lawsuits filed in the Woolsey Fire litigation and information obtained after the
statute of limitations for individual plaintiffs for the Woolsey Fire expired, including information regarding the nature of
claims remaining in the Woolsey Fire litigation. Management also reviewed information obtained from settling a
substantial portion of the claims in the 2017/2018 Wildfire/Mudslide Events litigations, including higher than expected
costs to settle claims. As a result of management's reviews during 2022, SCE recorded a $1.3 billion increase in
estimated losses for the 2017/2018 Wildfire/Mudslide Events during the year.
In total, through December 31, 2022, SCE has accrued estimated losses of $8.8 billion, has paid or is obligated to pay
approximately $7.8 billion in settlements and has recovered $2.0 billion from its insurance carriers and approximately
$234 million through FERC-jurisdictional electric rates in relation to the 2017/2018 Wildfire/Mudslide Events. At
December 31, 2022 Edison International's and SCE's best estimate of expected losses for remaining alleged and potential
claims related to the 2017/2018 Wildfire/Mudslide Events is $934 million.
Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining
alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. Due to the number of uncertainties and
possible outcomes related to the 2017/2018 Wildfire/Mudslide Events litigation, Edison International and SCE cannot
estimate the upper end of the range of reasonably possible losses that may be incurred.
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Rate Regulated Enterprises
Nature of Estimate Required. SCE follows the accounting principles for rate-regulated enterprises which are required
for entities whose rates are set by regulators at levels intended to recover the estimated costs of providing service, plus a
return on net investment, or rate base. Regulators may also impose penalties or grant incentives. Due to timing and other
differences in the collection of revenue, these principles allow a cost that would otherwise be charged as an expense by
an unregulated entity to be capitalized as a regulatory asset if it is probable that such cost is recoverable through future
rates; conversely the principles allow creation of a regulatory liability for amounts collected in rates to recover costs
expected to be incurred in the future or amounts collected in excess of costs incurred and refundable to customers. In
addition, SCE recognizes revenue and regulatory assets from alternative revenue programs, which enables the utility to
adjust future rates in response to past activities or completed events, if certain criteria are met, even for programs that do
not qualify for recognition of "traditional" regulatory assets and liabilities.
Accounting principles for rate-regulated enterprises also require recognition of an impairment loss if it becomes probable
that the regulated utility will abandon a plant investment, or if it becomes probable that the cost of a recently completed
plant will be disallowed, either directly or indirectly, for ratemaking purposes and a reasonable estimate of the amount of
the disallowance can be made.
Key Assumptions and Approach Used. SCE's management assesses at the end of each reporting period whether
regulatory assets are probable of future recovery by considering factors such as the current regulatory environment, the
issuance of rate orders on recovery of the specific or a similar incurred cost to SCE or other rate-regulated entities, and
other factors that would indicate that the regulator will treat an incurred cost as allowable for ratemaking purposes.
Using these factors, management has determined that existing regulatory assets and liabilities are probable of future
recovery or settlement. This determination reflects the current regulatory climate and is subject to change in the future.
SCE also considers whether any plant investments are probable of abandonment or disallowance.
Effect if Different Assumptions Used. Significant management judgment is required to evaluate the anticipated recovery
of regulatory assets and plant investments, the recognition of incentives and revenue subject to refund, as well as the
anticipated cost of regulatory liabilities or penalties. If future recovery of costs ceases to be probable, all or part of the
regulatory assets, plant investments and/or liabilities would have to be written off against current period earnings. At
December 31, 2022, the consolidated balance sheets included regulatory assets of $10.7 billion and regulatory liabilities
of $9.2 billion. If different judgments were reached on recovery of costs and timing of income recognition, SCE's
earnings may vary from the amounts reported.
Application to Southern California Wildfires
Application to 2017/2018 Wildfire/Mudslide Events
Recovery of SCE's losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available
insurance is subject to approval by regulators. Under accounting standards for rate-regulated enterprises, SCE defers
costs as regulatory assets when it concludes that such costs are probable of future recovery in electric rates. SCE utilizes
objectively determinable evidence to form its view on probability of future recovery. The only directly comparable
precedent in which a California investor-owned utility has sought recovery for uninsured wildfire-related costs is
SDG&E's requests for cost recovery related to 2007 wildfire activity, where the FERC allowed recovery of all FERC-
jurisdictional wildfire-related costs while the CPUC rejected recovery of all CPUC-jurisdictional wildfire-related costs
based on a determination that SDG&E did not meet the CPUC's prudency standard. As a result, while SCE does not
agree with the CPUC's decision, it believes that the CPUC's interpretation and application of the prudency standard to
SDG&E creates substantial uncertainty regarding how that standard will be applied to an investor-owned utility in
wildfire cost-recovery proceedings for fires ignited prior to July 12, 2019. SCE will continue to evaluate the probability
of recovery based on available evidence, including judicial, legislative and regulatory decisions, including any CPUC
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decisions illustrating the interpretation and/or application of the prudency standard when making determinations
regarding recovery of uninsured wildfire-related costs. While the CPUC has not made a determination regarding SCE's
prudency relative to any of the 2017/2018 Wildfire/Mudslide Events, SCE is unable to conclude, at this time, that
uninsured CPUC-jurisdictional wildfire-related costs are probable of recovery through electric rates. SCE would record a
regulatory asset at the time it obtains sufficient information to support a conclusion that recovery is probable.
Through the operation of its FERC Formula Rate, and based upon the precedent established in SDG&E's recovery of
FERC-jurisdictional wildfire-related costs, SCE believes it is probable it will recover its FERC-jurisdictional wildfire
and mudslide related costs and has recorded total expected recoveries within the FERC balancing account.
Application to Post-2018 Wildfires
Management judgment was required to assess the probability of recovery of SCE's losses realized in connection with the
Post-2018 Wildfires in excess of available insurance.
The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such
losses were not reasonably or prudently incurred. On July 12, 2019, AB 1054 clarified that the CPUC must allow
recovery of costs and expenses arising from a covered wildfire if the utility's conduct related to the ignition was
consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the
relevant point in time, and based on the information available at that time. Further, utilities with a valid safety
certification at the time of the relevant wildfire will be presumed to have acted prudently related to a wildfire ignition
unless a party in the cost recovery proceeding creates "serious doubt" as to the reasonableness of the utility's conduct, at
which time, the burden shifts back to the utility to dispel that doubt and prove its conduct was prudent. The serious doubt
standard in AB 1054 is modeled after the FERC cost recovery standard. SCE evaluates the probability of recovery for
Post-2018 Wildfires in the context of the prudency standard laid out by AB 1054 above. This assessment is made based
on SCE’s status as a holder of a valid safety certificate, facts known to date related to the ignition, and any regulatory
decisions illustrating the interpretation and/or application of the prudency standard under AB 1054, which as of
December 31, 2022 has not been applied by the CPUC to an actual cost recovery application filed by any California
investor-owned utility. SCE also considers which costs are eligible for recovery based on precedents from other CPUC
cost recovery proceedings. Management’s assessment of the probability of recovery may change, related to changes in
any of these factors in the future.
Income Taxes
Nature of Estimates Required. As part of the process of preparing its consolidated financial statements, Edison
International and SCE are required to estimate income taxes for each jurisdiction in which they operate. This process
involves estimating actual current period tax expense together with assessing temporary differences resulting from
differing treatment of items, such as depreciation, for tax and accounting purposes. These differences result in deferred
tax assets and liabilities, which are included within Edison International's and SCE's consolidated balance sheets,
including net operating loss and tax credit carryforwards. Certain estimates and assumptions are required to determine
whether deferred tax assets can and will be utilized in future periods. Based on currently enacted tax laws, Edison
International expects to generate sufficient taxable income beginning in 2023 to fully utilize all loss and credit
carryovers set to expire beyond 2022.
Edison International and SCE take certain tax positions they believe are in accordance with the applicable tax laws.
However, these tax positions are subject to interpretation by the Internal Revenue Service, state tax authorities and the
courts. Edison International and SCE determine uncertain tax positions in accordance with the authoritative guidance.
Key Assumptions and Approach Used. In determining whether it is more likely than not that all or some portion of net
operating loss and tax credit carryforwards can be utilized, management analyzes the trend of GAAP earnings and then
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estimates the impact of future taxable income, reversing temporary differences and available prudent and feasible tax
planning strategies based on currently enacted tax laws.
Accounting for tax obligations requires management judgment. Edison International's and SCE's management use
judgment in determining whether the evidence indicates it is more likely than not, based solely on the technical merits,
that a tax position will be sustained, and to determine the amount of tax benefits to be recognized. Judgment is also used
in determining the likelihood a tax position will be settled and possible settlement outcomes. In assessing uncertain tax
positions Edison International and SCE consider, among others, the following factors: the facts and circumstances of the
position, regulations, rulings, and case law, opinions or views of legal counsel and other advisers, and the experience
gained from similar tax positions. Edison International and SCE evaluate uncertain tax positions at the end of each
reporting period and make adjustments when warranted based on changes in fact or law.
Effect if Different Assumptions Used. Should a change in facts or circumstances, including a change in enacted tax
legislation, lead to a change in judgment about the ultimate realizability of a deferred tax asset, Edison International and
SCE would record or adjust the related valuation allowance in the period that the change in facts and circumstances
occurs, along with a corresponding increase or decrease in the provision for income taxes.
Actual income taxes may differ from the estimated amounts which could have a significant impact on the liabilities,
revenue and expenses recorded in the financial statements. Edison International and SCE continue to be under audit or
subject to audit for multiple years in various jurisdictions. Significant judgment is required to determine the tax
treatment of particular tax positions that involve interpretations of complex tax laws. Such liabilities are based on
judgment and a final determination could take many years from the time the liability is recorded. Furthermore,
settlement of tax positions included in open tax years may be resolved by compromises of tax positions based on current
factors and business considerations that may result in material adjustments to income taxes previously estimated. For a
discussion of current and deferred taxes, net operating losses and tax credit carryforwards, accounting for uncertainty in
income taxes, unrecognized tax benefits, and tax disputes, see "Notes to Consolidated Financial Statements—Note 8.
Income Taxes."
Nuclear Decommissioning – Asset Retirement Obligation
Key Assumptions and Approach Used. San Onofre Units 1, 2 and 3 decommissioning cost estimates are updated in each
Nuclear Decommissioning Cost Triennial Proceeding ("NDCTP") and when there are material changes to the timing or
amount of estimated future cash flows. Palo Verde decommissioning cost estimates are updated by the operating agent,
Arizona Public Services, every three years and when there are material changes to the timing or amount of estimated
future cash flows. SCE estimates that it will spend approximately $6.3 billion, undiscounted through 2080, to
decommission its nuclear facilities.
The current ARO estimates for San Onofre and Palo Verde are based on:
• Decommissioning Costs. The estimated costs for labor, material, equipment and other, and low-level radioactive
waste costs are included in each of the NRC decommissioning stages: license termination, site restoration and spent
fuel storage. The liability to decommission SCE's nuclear power facilities is based on a 2020 decommissioning
study, filed as part of the 2021 NDCTP, for San Onofre Unit 1, 2 and 3 and a 2019 decommissioning study for Palo
Verde, with revisions to the cost estimate in 2020.
• Escalation Rates. Annual escalation rates are used to convert the decommissioning cost estimates in base year
dollars to decommissioning cost estimates in future-year dollars. Escalation rates are primarily used for labor,
material, equipment and low-level radioactive waste burial costs. SCE's current estimates are based upon SCE's
decommissioning cost methodology used for ratemaking purposes. Average escalation rates range from 2.3% to
7.5% (depending on the cost element) annually.
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• Timing. Initial decommissioning activities at San Onofre Unit 1 started in 1999 and at Units 2 and 3 in 2013. Cost
estimates for San Onofre Units are currently based on completion of decommissioning activities by 2053. Cost
estimates for Palo Verde are based on an assumption that decommissioning will commence promptly after the
current NRC operating licenses expire. The Palo Verde 1, 2, 3 operating licenses currently expire in 2045, 2046 and
2047, respectively.
• Spent Fuel Dry Storage Costs. Cost estimates, including the impact of escalations, are based on an assumption that
the U.S. Department of Energy will begin to take spent fuel from the nuclear industry in 2031 and will remove the
last spent fuel from the San Onofre and Palo Verde sites by 2051 and 2078, respectively.
• Changes in Decommissioning Technology, Regulation and Economics. The current cost studies assume the use of
current technologies under current regulations and at current cost levels.
See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" for further discussion of the plans for
decommissioning of San Onofre.
Effect if Different Assumptions Used. The ARO for decommissioning SCE's nuclear facilities was $2.3 billion as of
December 31, 2022, based on the decommissioning studies performed and the subsequent cost estimate updates.
Changes in the estimated costs, execution strategy or timing of decommissioning, or in the assumptions and judgments
by management underlying these estimates, could cause material revisions to the estimated total cost to decommission
these facilities which could have a material effect on the recorded liability.
The following table illustrates the increase to the ARO liability if the cost escalation rate was adjusted while leaving all
other assumptions constant:
(in millions)
Uniform increase in escalation rate of 1 percentage point
Increase to ARO at
December 31, 2022
584
$
The increase in the ARO liability driven by an increase in the escalation rate would result in a decrease in the regulatory
liability for recoveries in excess of ARO liabilities.
Pensions and Postretirement Benefits Other than Pensions
Nature of Estimate Required. Authoritative accounting guidance requires companies to recognize the overfunded or
underfunded status of defined benefit pension and other postretirement plans as assets and liabilities in the balance sheet;
the assets and/or liabilities are normally offset through other comprehensive income (loss). In accordance with
authoritative guidance for rate-regulated enterprises, regulatory assets and liabilities are recorded instead of charges and
credits to other comprehensive income (loss) for its postretirement benefit plans that are recoverable in utility rates.
Edison International and SCE have a fiscal year-end measurement date for all of their postretirement plans.
Key Assumptions of Approach Used. Pension and other postretirement benefit obligations and the related effects on
results of operations are calculated using actuarial models. Two critical assumptions, discount rate and expected return
on assets, are important elements of plan expense, and the discount rate is important to liability measurement.
Additionally, health care cost trend rates are critical assumptions for postretirement health care plans. These critical
assumptions are evaluated at least annually. Other assumptions, which require management judgment, such as rate of
compensation increases and rates of retirement and turnover, are evaluated periodically and updated to reflect actual
experience.
As of December 31, 2022, Edison International's and SCE's pension plans had a $3.5 billion and $3.2 billion projected
benefit obligation, respectively, and total 2022 expense for these plans was $19 million and $16 million, respectively. As
of December 31, 2022, the accumulated benefit obligation for both Edison International's and SCE's PBOP plans were
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$1.3 billion, and total 2022 expense for Edison International's PBOP plan were $1 million, and no expense for SCE's
PBOP plan. Annual contributions made to most of SCE's pension and PBOP plan are anticipated to be recovered through
CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the related annual expense.
Pension expense is recorded for SCE based on the amount funded to the trusts, as calculated using an actuarial method
required for ratemaking purposes, in which the impact of market volatility on plan assets is recognized in earnings on a
more gradual basis. Any difference between pension expense calculated in accordance with ratemaking methods and
pension expense calculated in accordance with authoritative accounting guidance for pension is accumulated as a
regulatory asset or liability, and is expected, over time, to be recovered from or returned to customers. As of
December 31, 2022, this cumulative difference amounted to $63 million, meaning that the ratemaking method has
recognized less in expense than the accounting method since implementation of authoritative guidance for employers'
accounting for pensions in 1987, which was offset by a regulatory liability for the current funding level of SCE's pension
plan.
Edison International and SCE used the following critical assumptions to determine expense for pension and PBOP for
2022:
(in millions)
Discount rate1
Expected long-term return on plan assets2
Assumed health care cost trend rates3
* Not applicable to pension plans.
Pension
Plans
2.75 %
5.50 %
*
Postretirement
Benefits Other
than Pensions
2.95 %
3.50 %
6.25 %
1
2
The discount rate enables Edison International and SCE to state expected future cash flows at a present value on the
measurement date. Edison International and SCE select its discount rate by performing a yield curve analysis. This analysis
determines the equivalent discount rate on projected cash flows by matching the timing and amount of expected future benefit
payments to the corresponding yields from the Willis Towers Watson RATE: Link 10th – 90th percentile yield curve model on the
measurement date.
To determine the expected long-term rate of return on pension plan assets, current and expected asset allocations are considered,
as well as historical and expected returns on plan assets. A portion of PBOP trusts asset returns are subject to taxation, so the
3.50% rate of return on plan assets above is determined on an after-tax basis. Actual time-weighted, annualized returns on the
pension plan assets were (13.4)%, 5.1% and 7.4% for the one-year, five-year and ten-year periods ended December 31, 2022,
respectively. Actual time-weighted, annualized returns on the PBOP plan assets were (18.9)%, 2.1% and 5.8% over these same
periods. Accounting principles provide that differences between expected and actual returns are recognized over the average
future service of employees.
3
The health care cost trend rate gradually declines to 5.0% for 2029 and beyond.
As of December 31, 2022, Edison International and SCE had unrecognized pension gains of $122 million and
$131 million, respectively, and unrecognized PBOP gains of $869 million and $867 million, respectively. The
unrecognized pension and PBOP gains primarily consisted of the cumulative impact of the increased discount rates on
the respective benefit obligations and the cumulative difference between the expected and actual rate of return on plan
assets. Of these deferred gains, $139 million of SCE's pension gains and $867 million of SCE's PBOP gains are recorded
as regulatory liabilities, respectively, and are expected to refund over the average expected future service of employees.
Edison International's and SCE's pension and PBOP plans are subject to limits established for federal tax deductibility.
SCE funds its pension and PBOP plans in accordance with amounts allowed by the CPUC. Executive pension plans have
no plan assets.
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Effect if Different Assumptions Used. Changes in the estimated costs or timing of pension and other postretirement
benefit obligations, or the assumptions and judgments used by management underlying these estimates, could have a
material effect on the recorded expenses and liabilities.
The following table summarizes the increase or decrease to projected benefit obligation for pension and the accumulated
benefit obligation for PBOP if the discount rate were changed while leaving all other assumptions constant:
Edison International
SCE
Increase in
Decrease in
discount rate discount rate discount rate discount rate
Decrease in
Increase in
(in millions)
Change to projected benefit obligation for pension
Change to accumulated benefit obligation for PBOP
by 1%
by 1%
by 1%
by 1%
$
(135) $
(142)
$
158
174
(108) $
(141)
126
173
A one percentage point increase in the expected rate of return on pension plan assets would decrease Edison
International's and SCE's current year expense by $33 million and $31 million, respectively, and a one percentage point
increase in the expected rate of return on PBOP plan assets would decrease both Edison International's and SCE's
current year expense by $21 million.
Contributions to the Wildfire Insurance Fund
Nature of Estimates Required. At December 31, 2022, Edison International and SCE have a $2.2 billion long-term asset
and a $204 million current asset reflected as "Wildfire Insurance Fund contributions" in the consolidated balance sheets
for the initial $2.4 billion contribution made during 2019 and the present value of annual contributions SCE committed
to make to the Wildfire Insurance Fund, reduced by amortization. At December 31, 2022, a long-term liability of
$536 million has been reflected in "Other deferred credits and other long-term liabilities" for the present value of unpaid
contribution amounts. Contributions were discounted to the present value at the date SCE committed to participate in the
Wildfire Insurance Fund using US treasury interest rates.
Management concluded it would be most appropriate to account for the contributions to the Wildfire Insurance Fund
similar to prepaid insurance, ratably allocating the expense to periods based on an estimated period of coverage.
Key Assumptions and Approach Used. The Wildfire Insurance Fund does not have a defined life. Instead, the Wildfire
Insurance Fund will terminate when the administrator determines that the fund has been exhausted. In 2022,
management estimated that the Wildfire Insurance Fund will provide insurance coverage for a period of 15 years from
the date SCE committed to participate in the Wildfire Insurance Fund. The determination of the correct period in which
to record an expense in relation to contributions to the Wildfire Insurance Fund depends, among other factors, on
management's assessment of: the future occurrence and magnitude of wildfires; the involvement of SCE, or other
electrical corporations which could access the Wildfire Insurance Fund, in the ignition of those fires; the probable future
outcomes of CPUC cost recovery proceedings for wildfire claims, which may require reimbursement of the fund by
electrical corporations; and the use of the contributions by the administrator of the Wildfire Insurance Fund. Further
information regarding these factors may become available due to the actions of the fund administrator, or other entities,
which could require management to reassess the period of coverage. In estimating the period of coverage, Edison
International and SCE used Monte Carlo simulations based on eight years (2014 – 2021) of historical data from wildfires
caused by electrical utility equipment to estimate expected loss. The details of the operation of the Wildfire Insurance
Fund and estimates related to claims by SCE, PG&E and SDG&E against the fund have been applied to the expected
loss simulations to estimate the period of coverage of the fund. The most sensitive inputs to the estimated period of
coverage are the expected frequency of wildfire events caused by investor-owned utility electrical equipment and the
estimated costs associated with those forecasted events. These inputs are most affected by the historical data used in
estimating expected losses. Using a 15-year period (2007 – 2021) of historical data would increase the period of
coverage to over 20 years.
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Based on information available in the first quarter of 2023 regarding catastrophic wildfires during 2022, SCE reassessed
its estimate of the life of the Wildfire Insurance Fund. After incorporating 2022 expected losses into the historical data
for the Monte Carlo simulations, SCE determined the expected life of the Wildfire Insurance Fund remained 15 years
from the date SCE committed to participate in the Wildfire Insurance Fund.
Effect if Different Assumptions Used. Changes in the estimated life of the insurance fund could have a material impact
on the expense recognition.
NEW ACCOUNTING GUIDANCE
New accounting guidance is discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant
Accounting Policies—New Accounting Guidance."
RISK FACTORS
RISKS RELATING TO EDISON INTERNATIONAL
Edison International's liquidity and ability to pay dividends depends on its ability to borrow funds, access to bank and
capital markets, monetization of tax benefits held by Edison International, and SCE's ability to pay dividends and tax
allocation payments to Edison International. Edison International is a holding company and, as such, it has no material
operations of its own. Edison International's ability to meet its financial obligations, make investments, and to pay
dividends on its common stock is primarily dependent on the earnings and cash flows of SCE and SCE's ability to make
upstream distributions. If SCE does not make upstream distributions to Edison International and Edison International is
unable to access the bank and capital markets on reasonable terms, Edison International may be unable to continue to
pay dividends to its shareholders or meet its financial obligations.
Prior to paying dividends to Edison International, SCE has financial and regulatory obligations that must be satisfied,
including, among others, debt service and preference stock dividends. Further, SCE and Edison International cannot pay
dividends if California law requirements for the declaration of dividends are not met. For information on CPUC and
California law requirements related to the declaration of dividends, see "Liquidity and Capital Resources—SCE—SCE
Dividends" in the MD&A. SCE may also owe tax-allocation payments to Edison International under applicable tax-
allocation agreements.
Edison International's ability to obtain financing, as well as its ability to refinance debt and make scheduled payments of
principal and interest, are dependent on numerous factors, including its levels of indebtedness, maintenance of
acceptable credit ratings, financial performance, liquidity and cash flow, and other market conditions. In addition, the
factors affecting SCE's business will impact Edison International's ability to obtain financing. Edison International's
inability to borrow funds from time to time could have a material effect on Edison International's liquidity and
operations.
See "Risks Relating to Southern California Edison Company" below for further discussion.
RISKS RELATING TO SOUTHERN CALIFORNIA EDISON COMPANY
Regulatory and Legislative Risks
SCE's financial results depend upon its ability to recover its costs and to earn a reasonable rate of return on capital
investments in a timely manner from its customers through regulated rates.
SCE's ongoing financial results depend on its ability to recover its costs from its customers, including the costs of
electricity purchased for its customers, through the rates it charges its customers as approved by the CPUC and FERC.
SCE's financial results also depend on its ability to earn a reasonable return on capital, including long-term debt and
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equity. SCE's ability to recover its costs and earn a reasonable rate of return can be affected by many factors, including
the time lag between when costs are incurred and when those costs are recovered in customers' rates and differences
between the forecast or authorized costs embedded in rates (which are set on a prospective basis) and the amount of
actual costs incurred.
The CPUC or the FERC may not allow SCE to recover costs on the basis that such costs were not reasonably or
prudently incurred or for other reasons. Further, SCE may incur expenses before the relevant regulatory agency approves
the recovery of such costs. For example, SCE has incurred, and expects to further incur, wildfire mitigation expenses and
increased labor and material costs due to supply chain constraints and elevated levels of inflation before it is clear
whether such costs will be recoverable from customers. Also, the CPUC may deny recovery of costs incurred by SCE,
including uninsured wildfire-related costs, if the CPUC determines that SCE was not prudent. For further information on
recovery of uninsured wildfire-related costs, including costs related to the 2017/2018 Wildfire/Mudslide Events, see
"Business—Southern California Wildfires—Recovery of Wildfire-Related Costs" and "Management Overview—
Southern California Wildfires and Mudslides" in the MD&A. In addition, while SCE supports California's environmental
goals, it may be prevented from fully executing on its strategy to support such goals by regulatory delay or lack of
approval of cost-recovery for the costs of such strategic actions and electrification programs from the relevant regulatory
agencies.
SCE's authorized return on investment is established by multiplying an authorized rate of return, determined by the
CPUC in standalone cost of capital proceedings, by SCE's authorized CPUC rate base. SCE's CPUC-authorized cost of
capital is subject to potential adjustment should interest rates move substantially in years between cost of capital
proceedings. For further information on the cost of capital mechanism see "Management Overview—Cost of Capital
Applications" in the MD&A.
SCE's capital investment plan, increasing procurement of renewable power and energy storage, inflation, commodity
price volatility, increasing self-generation, load departures to CCAs or Electric Service Providers, and increasing
environmental regulations, among other things, collectively place continuing upward pressure on customer rates. If
customer rates continue to increase, the CPUC may face greater pressure to approve lesser amounts in SCE’s ratemaking
or cost recovery proceedings. To relieve some of this upward rate pressure, the CPUC may authorize lower revenues or
increase the period over which SCE is allowed to recover amounts, which could impact SCE’s ability to timely recover
its operating costs. For example, in track 3 of the 2021 GRC, while the CPUC authorized SCE to recover costs through
electric rates over a 36-month period, SCE may not recover all of its interest expense incurred as a result of financing
such costs because the CPUC has only authorized interest accruals on the balances at a short-term rate of interest. If SCE
is unable to obtain a sufficient rate increase or modify its rate design to recover its costs and an adequate return on
capital in rates in a timely manner, its financial condition and results of operations could be materially affected.
SCE is subject to extensive regulation and the risk of adverse regulatory and legislative decisions, delays in regulatory
or legislative decisions, and changes in applicable regulations or legislation.
SCE operates in a highly regulated environment. SCE's business is subject to extensive federal, state and local energy,
environmental and other laws and regulations. Among other things, the CPUC regulates SCE's retail rates and capital
structure, and the FERC regulates SCE's wholesale rates and capital structure. The NRC regulates the decommissioning
of San Onofre in addition to the local and state agencies that require permits. The construction, planning, siting and
operation of SCE's power plants, energy storage projects, and transmission lines in California are also subject to
regulation by the CPUC and other local, state and federal agencies.
SCE must periodically apply for licenses and permits from these various regulatory authorities, including environmental
regulatory authorities, and must abide by their respective rules, regulations and orders. Should SCE be unsuccessful in
obtaining necessary licenses or permits or should these regulatory authorities initiate any investigations or enforcement
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actions or impose fines, penalties or disallowances on SCE, SCE may be prevented from executing its strategy and its
business could be materially affected. The process of obtaining licenses and permits from regulatory authorities may be
delayed or defeated by opponents and such delay or defeat could have a material effect on SCE's business.
To the extent the Wildfire Insurance Fund and other provisions of AB 1054 do not effectively mitigate the significant
risk faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where
utility facilities are a substantial cause, not achieving a more comprehensive solution could have a detrimental effect on
SCE's business and financial condition. The effectiveness of AB 1054 to mitigate the wildfire-related risk faced by SCE
is conditioned in part on the performance of OEIS and various entities formed under AB 1054 and related legislation to,
among other things, administer the Wildfire Insurance Fund, approve WMPs, issue safety certifications, oversee and
enforce compliance with wildfire safety standards, and develop metrics to reduce risk and measure compliance with risk
reduction. In addition, CPUC approval is required to recover the costs SCE is incurring to strengthen its wildfire
mitigation and prevention efforts described in SCE's WMPs. See "Business—Southern California Wildfires" and
"Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings" in the
MD&A.
In addition, existing regulations may be revised or re-interpreted and new laws and regulations may be adopted or
become applicable to SCE, or its facilities or operations, in a manner that may have a detrimental effect on SCE's
business or result in significant additional costs. In addition, regulations adopted via the public initiative or legislative
process may apply to SCE, or its facilities or operations, in a manner that may have a detrimental effect on SCE's
business or result in significant additional costs.
SCE's energy procurement activities are subject to regulatory and market risks that could materially affect its
financial condition and liquidity.
SCE obtains energy, capacity, environmental credits and ancillary services needed to serve its customers from its own
generating plants and through contracts with energy producers and sellers. California law and CPUC decisions allow
SCE to recover, through the rates it is allowed to charge its customers, reasonable procurement costs incurred in
compliance with an approved procurement plan. Nonetheless, SCE's cash flows remain subject to volatility primarily
resulting from changes in commodity prices, including as a result of gas supply constraints. Additionally, significant and
prolonged gas use restrictions may adversely impact the reliability of the electric grid if critical generation resources are
limited in their operations. For further information, see "Business—SCE—Purchased Power and Fuel Supply." SCE is
also subject to the risks of unfavorable or untimely CPUC decisions about the compliance with SCE's procurement plan
and the reasonableness of certain procurement-related costs.
SCE may not be able to hedge its risk for commodities on economic terms or fully recover the costs of hedges through
the rates it is allowed to charge its customers, which could materially affect SCE's liquidity and results of operations, see
"Market Risk Exposures" in the MD&A.
Operating Risks
Damage claims against SCE for wildfire-related losses may materially affect SCE's financial condition and results of
operations.
Prolonged drought conditions and shifting weather patterns in California resulting from climate change as well as,
among other things, buildup of dry vegetation in areas severely impacted by years of historic drought and lack of
adequate clearing of hazardous fuels by responsible parties have increased the duration of the wildfire season and the
risk of severe wildfire events.
Severe wildfires and increased urban development in high fire risk areas in California have given rise to large damage
claims against California utilities for fire-related losses alleged to be the result of utility practices and/or the failure of
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electric and other utility equipment. Catastrophic wildfires can occur in SCE's service territory even if SCE effectively
implements its WMPs. California courts have previously found utilities to be strictly liable for property damage,
regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a
substantial cause of a wildfire that caused the property damage. The rationale generally stated by these courts for
applying this theory to investor-owned utilities is that property losses resulting from a public improvement, such as the
distribution of electricity, can be spread across the larger community that benefited from such improvement. However, in
November 2017, the CPUC issued a decision denying an investor-owned utility's request to include in its rates uninsured
wildfire-related costs arising from several 2007 fires, finding that the investor-owned utility did not prudently manage
and operate its facilities prior to or at the outset of the 2007 wildfires. An inability to recover uninsured wildfire-related
costs could materially affect SCE's business, financial condition and results of operations. For example, if SCE is unable
to, or believes that it may be unable to, recover damages related to catastrophic wildfires through insurance, the Wildfire
Insurance Fund (which is only available for fires ignited after July 12, 2019) or electric rates, or access the bank and
capital markets on reasonable terms, SCE may not have sufficient cash or equity to pay dividends or may be restricted
from declaring such dividends because it does not meet CPUC or California law requirements related to the declaration
of dividends. For information on the California law requirements on the declaration of dividends, see "Liquidity and
Capital Resources—SCE—SCE Dividends" in the MD&A. Also see "Notes to Consolidated Financial Statements—
Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Edison International's and SCE's costs of accessing capital markets has increased due to the risks associated with
wildfires in Southern California. Edison International's and SCE's access to the bank and capital markets could also be
constrained and/or the costs of accessing those markets could increase further as a result of wildfire risk, including if
Edison International's and/or SCE's credit ratings are downgraded or placed on negative watch due to concerns about
Edison International and/or SCE's financial health as a result of wildfires.
SCE's insurance coverage for wildfires may not be sufficient.
Edison International has experienced increased costs and difficulties in obtaining insurance coverage for wildfires that
could arise in connection with SCE's ordinary operations. Edison International, SCE and its contractors may experience
coverage reductions and/or increased wildfire insurance costs in future years. No assurance can be given that losses will
not exceed the limits of SCE's or its contractors' insurance coverage. SCE may not be able to recover uninsured losses
(including amounts paid for self-insured retention and co-insurance) and increases in the cost of insurance in electric
rates. Losses which are not fully insured or cannot be recovered through the Wildfire Insurance Fund or electric rates
could materially affect Edison International's and SCE's financial condition and results of operations. For more
information on wildfire insurance risk, see "Notes to Consolidated Financial Statements—Note 12. Commitments and
Contingencies—Contingencies—Southern California Wildfires and Mudslides."
SCE may not effectively implement its wildfire mitigation plans.
SCE will face a higher likelihood of catastrophic wildfires in its service territory if it cannot effectively implement its
WMPs. For example, SCE may not be able to effectively implement its WMPs if it experiences unanticipated difficulties
relative to sourcing, engaging, and retaining effectively trained contract workers or procuring materials it needs to fulfill
its mitigation obligations under the WMPs. In addition, if SCE does not have an approved WMP, SCE will not be issued
a safety certification from the CPUC and will consequently not benefit from the presumption of prudency or the
AB 1054 Liability Cap.
The CPUC may assess penalties on SCE if it finds that SCE has failed to substantially comply with its WMP. In
addition, SCE may be subject to mandated changes to, or restrictions on, its operational wildfire mitigation practices or
be subject to regulatory fines and penalties or claims for damages and reputational harm if SCE does not execute its
wildfire mitigation practices in compliance with applicable rules and regulations. SCE’s wildfire mitigation practices
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include PSPS and using fast-curve settings. In addition, SCE may be subject to regulatory fines and penalties or claims
for damages and reputational harm if it is determined that SCE has placed excessive or unreasonable reliance on PSPS.
SCE establishes the criteria under which it implements PSPS in its territory. To the extent SCE's criteria for
implementing PSPS are not sufficient to mitigate the risk of wildfires during high wind events, SCE does not fully
implement PSPS when criteria are met due to other overriding conditions or SCE's regulators or others mandate changes
to, or restrictions on, its criteria or other operational PSPS practices, SCE will face a higher likelihood of catastrophic
wildfires in its territory during high wind events. Similarly, if SCE is prohibited from implementing its desired fast-curve
settings, SCE will face a higher likelihood of catastrophic wildfires in its territory.
For more information on AB 1054, see "Business—Southern California Wildfires—Recovery of Wildfire-Related
Costs—2019 Wildfire Legislation."
SCE will not benefit from all of the features of AB 1054 if the Wildfire Insurance Fund is exhausted.
Catastrophic wildfires could rapidly exhaust the Wildfire Insurance Fund and SCE will not be reimbursed by the
Wildfire Insurance Fund or benefit from the AB 1054 Liability Cap if the fund has been exhausted as a result of damage
claims previously incurred by SCE or the other participating utilities.
For more information on AB 1054, see "Business—Southern California Wildfires and Mudslides—Recovery of
Wildfire-Related Costs—2019 Wildfire Legislation."
Climate change exacerbated weather-related incidents and other natural disasters could materially affect SCE's
financial condition and results of operations.
Weather-related incidents, including storms and events caused, or exacerbated, by climate change, such as wildfires,
flooding and debris flows, and other natural disasters such as earthquakes can disrupt the generation and transmission of
electricity, and can seriously damage the infrastructure necessary to deliver power to SCE's customers. The impacts of
climate change continue to evolve and remain dynamic and unpredictable.
Climate change has caused, and exacerbated, extreme weather events and wildfires in southern California, and wildfires
could cause, among other things, public safety issues, property damage and operational issues. In addition, the risk of
flooding and debris flows occurring as a result of rain may be heightened. For example, the 2017/2018
Wildfire/Mudslide Events resulted in, among other things, loss of life, property damage and loss of service. For more
information on the impact of the 2017/2018 Wildfire/Mudslide Events on SCE and Edison International, see "Notes to
Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California
Wildfires and Mudslides."
Extreme heat events can lead to prolonged widespread outages due to, among other things, state-wide capacity supply
shortages or equipment failure. Extreme weather events can also lead to use of PSPS. Weather-related events, such as
debris flows, flooding and melting of a significantly higher than normal snowpack, and earthquakes can cause over-
topping or failure at an SCE dam resulting in a rapid release of water that could cause, among other things, public safety
issues, property damage and operational issues.
Weather-related incidents and other natural disasters can lead to lost revenue and increased expense, including higher
maintenance and repair costs, which SCE may not be able to recover from its customers. These incidents can also result
in regulatory penalties and disallowances, particularly if SCE encounters difficulties in restoring power to its customers
on a timely basis or if fire-related losses are found to be the result of utility practices and/or the failure of electric and
other utility equipment. In addition, these occurrences could lead to significant claims for damages, including for loss of
life and property damage. These occurrences could materially affect SCE's business, financial condition and results of
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operations, and the inability to restore power to SCE's customers could also materially damage the business reputation of
SCE and Edison International.
For additional information related to climate related risks, see “Business—Environmental Considerations—
Environmental Risks.”
The generation, transmission and distribution of electricity are dangerous and involve inherent risks of damage to
private property and injury to SCE’s workforce and the general public.
Electricity poses hazards for SCE’s workforce and the general public should they come in contact with electrical current
or equipment, including through energized downed power lines or if equipment malfunctions. In addition, the risks
associated with the operation of transmission and distribution assets and power generation and storage facilities include
public and workforce safety issues and the risk of utility assets causing or contributing to wildfires.
Injuries and property damage caused by such events can subject SCE to liability that, despite the existence of insurance
coverage, can be significant. In addition, SCE may be held responsible for the actions of its contractors. No assurance
can be given that future losses will not exceed the limits of SCE's or its contractors' insurance coverage. The CPUC has
increased its focus on public safety with an emphasis on heightened compliance with construction and operating
standards and the potential for penalties being imposed on utilities. Additionally, the CPUC has delegated to its staff the
authority to issue citations to electric utilities, which can impose fines of up to $100,000 per violation per day (capped at
a maximum of $8 million), pursuant to the CPUC's jurisdiction for violations of safety rules found in statutes,
regulations, and the CPUC's General Orders. The CPUC also can issue fines greater than $8 million outside of the
citation program. Such penalties and liabilities could be significant and materially affect SCE's liquidity and results of
operations.
SCE's financial condition and results of operations could be materially affected if it is unable to successfully manage
the risks inherent in constructing, operating, and maintaining its facilities and workforce.
SCE's infrastructure is aging and could pose a risk to system reliability. SCE is also constructing utility owned storage to
mitigate possible state-wide capacity shortages in 2023 and later years, and any delays in construction may result in
those facilities being unavailable to reduce the impact of any capacity shortages in summer 2023. In addition, as
described above, wildfires in SCE's service territory can cause significant public safety issues, property damage and
operational issues.
In order to mitigate these risks, SCE is engaged in a significant and ongoing infrastructure investment program. This
substantial investment program has inherent operational risks and elevates the need for superior execution in SCE's
activities. SCE's financial condition and results of operations could be materially affected if it is unable to successfully
manage these risks as well as the risks inherent in constructing, operating, and maintaining its facilities, the operation of
which can be hazardous and important for system reliability. SCE's inherent operating risks include such matters as the
risks of human performance, workforce capabilities, contractor management, data and records accuracy, public
opposition to infrastructure projects, delays, environmental remediation and mitigation costs, difficulty in estimating
costs or in recovering costs that are above original estimates, system limitations and degradation, maintaining physical
security of workforce and assets, maintaining cybersecurity of data and assets, and delays and interruptions in necessary
supplies, including key components necessary for the timely construction of utility owned storage. For example, SCE's
financial condition may be materially affected as a result of safety incidents, delays, permitting violations and violations
of regulatory requirements, among other things, caused by SCE's failure to appropriately manage its contractor
workforce or from contractual violations by SCE's contractors and the inability for SCE to recover through contractual
indemnities or insurance held by the contractor. SCE's financial condition may also be materially affected as a result of
data or records inaccuracies, for example inaccurate records could lead to missing or delayed compliance with SCE's
policies and regulatory requirements, and could contribute to safety incidents. SCE's financial condition and results of
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operations could also be materially affected if SCE is unable to attract, train and retain a qualified and diverse workforce,
including due to the constrained labor market in California and nationally and SCE's relations with its unionized
workforce. SCE's financial condition and results of operations could also be materially affected as a result of atypical
resolutions to litigation proceedings arising from its operations, including atypical settlements and verdicts. For instance,
SCE was subject to an atypical jury verdict in a recent employment litigation matter.
There are inherent risks associated with owning and decommissioning nuclear power generation facilities and
obtaining cost reimbursement, including, among other things, insufficiency of nuclear decommissioning trust funds,
costs exceeding current estimates, execution risks, potential harmful effects on the environment and human health
and the hazards of storage, handling and disposal of radioactive materials. Existing insurance and ratemaking
arrangements may not protect SCE fully against losses from a nuclear incident.
SCE funds decommissioning costs with assets that are currently held in nuclear decommissioning trusts. Based upon the
financial performance of the nuclear decommissioning trust fund investments, as well as the resolution of a number of
other uncertainties, assumptions and estimates, additional contributions to the nuclear decommissioning trust’s funds
may be required. If additional contributions to the nuclear decommissioning trust funds become necessary, recovery of
any such additional funds through electric rates is subject to the CPUC's review and approval.
The costs of decommissioning San Onofre are subject to reasonableness reviews by the CPUC. These costs may not be
recoverable through regulatory processes or otherwise unless SCE can establish that the costs were reasonably incurred.
In addition, SCE faces inherent execution risks including such matters as the risks of human performance, workforce
capabilities, public opposition, permitting delays, and governmental approvals. Decommissioning costs ultimately
incurred could exceed the current estimates and cost increases resulting from contractual disputes, delays in performance
by the contractor, elevated levels of inflation, or permitting delays, among other things, could cause SCE to materially
overrun current decommissioning cost estimates and could materially impact the sufficiency of trust funds. See
"Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" in the MD&A.
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Even though San Onofre is being decommissioned, the presence of spent nuclear fuel still poses a potential risk of a
nuclear incident. Federal law limits public liability claims from a nuclear incident to the amount of available financial
protection, which is currently approximately $13.7 billion for Palo Verde and $560 million for San Onofre. SCE and
other owners of San Onofre and Palo Verde have purchased the maximum private primary insurance available of
$450 million per site. In the case of San Onofre, the balance is covered by a US Government indemnity. In the case of
Palo Verde, the balance is covered by a loss sharing program among nuclear reactor licensees. There is no assurance that
the CPUC would allow SCE to recover the required contribution made pursuant to this loss sharing program in the case
of one or more nuclear incidents with claims that exceeded $450 million at a nuclear reactor which is participating in the
program. If this public liability limit of $13.7 billion is insufficient, federal law contemplates that additional funds may
be appropriated by Congress. There can be no assurance of SCE's ability to recover uninsured costs in the event the
additional federal appropriations are insufficient. For more information on nuclear insurance risk, see "Notes to
Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Nuclear Insurance."
SCE's distribution of water and propane gas on Catalina Island involves inherent risks of damage to private property
and the environment and injury to employees and the general public.
SCE owns and operates the water distribution system that serves Catalina Island, California and a propane gas
distribution system that serves the City of Avalon on Catalina Island, California. Production, storage, treatment and
distribution of water for human use and the transportation, storage, distribution and use of gas can be hazardous, and can
cause damage to private property and the environment and injury to employees and the general public if equipment fails
or does not perform as anticipated. For example, the risks of operating a water distribution system include the potential
for burst pipes and water contamination and the risks of operating gas distribution system include the potential for gas
leaks, fire or explosion. The risks related to SCE's operation of its water and gas distribution systems may be exacerbated
due to aging infrastructure. SCE has requested that the CPUC allow SCE to include certain water system costs in electric
rates and may make similar requests for the water and gas systems in the future. If such requests are denied, significant
costs may not be recoverable from customers. In addition, SCE may have to pay fines, penalties and remediation costs if
it does not comply with laws and regulations in the operation of the water and gas distribution systems. An inability to
recover costs associated with any such damages or injuries or any fines, penalties or remediation costs, from insurance or
through electric rates, could materially affect SCE's business, financial condition and results of operations.
Financing Risks
As a capital-intensive company, SCE relies on access to the capital markets. If SCE were unable to access the capital
markets or the cost of financing were to substantially increase, its liquidity and operations could be materially
affected.
SCE regularly accesses the capital markets to finance its activities and is expected to do so by its regulators as part of its
obligation to serve as a regulated utility. SCE's needs for capital for its ongoing infrastructure investment program are
substantial. SCE's ability to obtain financing, as well as its ability to refinance debt and make scheduled payments of
principal and interest, are dependent on numerous factors, including SCE's levels of indebtedness, maintenance of
acceptable credit ratings, financial performance, liquidity and cash flow, and other market conditions. In addition, the
actions of other California investor-owned utilities and legal, regulatory and legislative decisions impacting investor-
owned utilities can affect market conditions and therefore, SCE's ability to obtain financing. SCE's inability to obtain
additional capital from time to time could have a material effect on SCE's liquidity and operations.
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Competitive and Market Risks
SCE's inability to effectively and timely respond to the changes that the electricity industry is undergoing, as a result
of increased competition, technological advances, and changes to the regulatory environment, could materially
impact SCE's business model, financial condition and results of operations.
Customers and third parties are increasingly deploying distributed energy resources ("DERs"), such as solar generation,
energy storage, energy efficiency and demand response technologies. California's environmental policy objectives are
accelerating the pace and scope of industry change. This change will require modernization of the electric distribution
grid to, among other things, accommodate two-way flows of electricity and increase the grid's capacity to interconnect
DERs. In addition, enabling California's clean energy economy goals will require sustained investments in grid
modernization, renewable integration projects, energy efficiency programs, energy storage options and electric vehicle
infrastructure. If SCE is unable to effectively adapt to these changes, its business model, its ability to execute on its
strategy, and ultimately its financial condition and results of operations could be materially impacted.
Customer-owned generation and load departures to CCAs or Electric Service Providers each reduce the amount of
electricity that customers purchase from utilities and have the effect of increasing utility rates unless customer rates are
designed to allocate the costs of the distribution grid across all customers that benefit from its use. For example, some
customers in California who generate their own power are not currently required to pay all transmission and distribution
charges and non-bypassable charges, subject to limitations, which results in increased costs for those customers who do
not own their generation. If regulations aren't changed such that customers pay their share of transmission and
distribution costs and non-bypassable charges and the demand for electricity reduces so significantly that SCE is no
longer effectively able to recover such costs from its customers, SCE's business, financial condition and results of
operations will be materially impacted.
In addition, the FERC has opened transmission development to competition from independent developers, allowing such
developers to compete with incumbent utilities for the construction and operation of transmission facilities.
For more information. See "Business—SCE—Competition."
Cybersecurity and Physical Security Risks
SCE's systems and network infrastructure are targets for physical and cyber attacks, intrusions or other catastrophic
events that could result in their failure or reduced functionality.
Regulators such as NERC and U.S. Government agencies, including the Departments of Defense, Homeland Security
and Energy, have increasingly stressed that threat sources continue to seek to exploit potential vulnerabilities in the U.S.
national electric grid and other energy infrastructures, and that such attacks and disruptions, both physical and cyber, are
highly sophisticated and dynamic. Several U.S. Government agencies have highlighted the increasing risks related to
physical attacks, ransomware attacks and cybersecurity risks related to the electric sector, including its supply chains,
and that the risks may escalate during periods of heightened geopolitical tensions.
SCE's operations require the continuous availability of critical information technology systems, sensitive customer and
employee data and network infrastructure and information, all of which are targets for malicious actors. New cyber and
physical threats arise as SCE moves from an analog to a digital electric grid. For example, SCE's grid modernization
efforts and the move to a network-connected grid increases the number of “threat surfaces” and potential vulnerabilities
that an adversary can target. SCE system data and architecture are also disclosed, either intentionally or unintentionally,
to third parties and the public by regulators, employees, contractors and vendors. This system information may be used
by malicious actors to understand SCE’s systems to prepare for a cyber or physical attack.
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SCE depends on a wide array of vendors to provide it with services and equipment. Malicious actors may attack vendors
to disrupt the services they provide to SCE, or to use those vendors as a conduit to attack SCE. Additionally, the
equipment and material provided by SCE's vendors may contain cyber vulnerabilities. A compromise of equipment
and/or exfiltration of SCE data, whether by physical or by electronic means, could result in loss or changes to
confidential or sensitive electronic data, loss of intellectual property and interruption of business processes. While some
of SCE's vendors have experienced cybersecurity incidents, such incidents have not, to SCE's knowledge, resulted in a
material impact to SCE to date.
SCE's systems have experienced, and will continue to experience, cybersecurity incidents involving attacks of malicious
code, unauthorized access attempts, and other illicit activities, but to SCE's knowledge it has not experienced a material
cybersecurity or data breach to date. Though SCE actively monitors developments in this area, no security measures can
completely shield its systems, infrastructure and data from cyber attacks, intrusions or other catastrophic events that
could result in their failure or reduced functionality.
If SCE's information technology and operational technology systems' security measures were to be breached, or a critical
system failure were to occur without timely recovery, SCE could be unable to fulfill critical business functions, such as
delivery of electricity to customers, and/or sensitive confidential personal and other data could be compromised, which
could result in violations of applicable privacy and other laws, material financial loss to SCE or to its customers, loss of
confidence in SCE's security measures, customer dissatisfaction, and significant litigation and/or regulatory exposure, all
of which could materially affect SCE's financial condition and results of operations and materially damage the business
reputation of Edison International and SCE.
RISKS RELATING TO EDISON INTERNATIONAL AND SOUTHERN CALIFORNIA EDISON COMPANY
Edison International's and SCE's financial condition and results of operations could be materially impacted by
events, like the COVID-19 pandemic, that cause significant disruption to workforces, supply chains, economies,
or societies on a regional, statewide, national or global basis.
Edison International and SCE could be materially and adversely impacted by events, such as the widespread outbreak of
a communicable disease, that result in, among other things, significant disruption to supply chains, economies, societies
or workforces on a regional, statewide, national or global basis. For example, the global spread of COVID-19, which
was declared a pandemic by the World Health Organization in March 2020, created significant uncertainty, volatility and
disruption globally and has impacted the operations of Edison International and SCE.
Many of the risks and uncertainties identified in this Form 10-K are, and will be, exacerbated by the impacts of an event
like a pandemic and the actions being taken by governmental entities, businesses, individuals and others in response to
such an event. For example, SCE may be unable to effectively execute its PSPS program due to, among other things,
requests from local and State authorities not to shut off the power during a pandemic or other event, and thereby may
increase the risk of SCE equipment being associated with the ignition of wildfires.
In addition, impacts of a pandemic or similar event on SCE's customers and third parties could also result in SCE facing,
among other things, significant reductions in demand for electricity and payment delays and/or defaults from customers
which could result in significant under-collections. In addition, Edison International and SCE could also face payment
delays and/or defaults from insurers and other counterparties. Furthermore, Edison International's and SCE's access to
the bank and capital markets could also be constrained and/or the costs of accessing those markets could increase as a
result of a pandemic or similar event, including if Edison International's and/or SCE's credit ratings are downgraded, or
placed on negative watch due to concerns about Edison International and/or SCE's financial health as a result of the
impacts of the pandemic. SCE may also incur significant incremental costs as a result of actions it is taking in response
to a pandemic or a similar event, including costs being incurred to maintain its operations and assist its employees who
are required to telework or are otherwise impacted by the event. SCE could also face delays in important legal and
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regulatory proceedings. These impacts, among others, could materially and adversely impact Edison International's and
SCE's business, operations, cash flows, liquidity and financial results.
Edison International's and SCE's business activities are concentrated in one industry and in one region.
Edison International's and SCE's business activities are concentrated in the electric utility industry. Edison International's
principal subsidiary, SCE, serves customers only in southern and central California. As a result, Edison International's
and SCE's future performance may be affected by events and economic factors unique to California or by regional
regulation, legislation or judicial decisions. For example, California courts have applied strict liability to investor-owned
utilities in wildfire and other litigation matters. See "Notes to Consolidated Financial Statements—Note 12.
Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responding to this section is included in the MD&A under the heading "Market Risk Exposures."
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Edison International
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Edison International and its subsidiaries (the
“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive
income, of changes in equity and of cash flows for each of the three years in the period ended December 31, 2022,
including the related notes and schedule of condensed financial information of parent as of December 31, 2022 and 2021
and for each of the three years in the period ended December 31, 2022 appearing under Item 15 (collectively referred to
as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting
as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
Contingent Liability – 2017/2018 Wildfire/Mudslide Events
As described in Note 12 to the consolidated financial statements, the Thomas Fire, the Koenigstein Fire, the Montecito
Mudslides and the Woolsey Fire (collectively, the "2017/2018 Wildfire/Mudslide Events") within the Company's service
territory caused loss of life, substantial damage to both residential and business properties, and service outages for SCE
customers in the Santa Barbara, Ventura, and Los Angeles Counties. Numerous claims related to wildfire events have
been initiated against the Company. The Company has incurred material losses in connection with the 2017/2018
Wildfire/Mudslide Events. As of December 31, 2022, SCE had paid $7.6 billion under executed settlements, had
$185 million to be paid under executed settlements, including $120 million to be paid under the SED executed
Agreement, and had $934 million of estimated losses for remaining alleged and potential claims reflected on their
consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had assets for
expected recoveries through FERC electric rates of $142 million on their consolidated balance sheets and had exhausted
expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Each reporting period, management
reviews its loss estimates for remaining alleged and potential claims related to wildfire events. The process for
estimating losses associated with alleged and potential wildfire related claims requires management to exercise
significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of
known and expected claims by third parties based on currently available information, opinions of counsel regarding
litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling
wildfire litigation claims. As additional information becomes available, management's estimates and assumptions
regarding the causes and financial impact of wildfire events may change. For instance, as a result of additional
information, in 2022 management accrued additional estimated losses of $1.3 billion for claims related to the 2017/2018
Wildfire/Mudslide Events, against which SCE has recorded expected recoveries through FERC electric rates of
$76 million. The resulting net charge to earnings was $1.2 billion ($879 million after-tax).
The principal considerations for our determination that performing procedures relating to the 2017/2018
Wildfire/Mudslide Events contingent liability is a critical audit matter are the significant judgment by management when
determining the probability of a loss being incurred and the best estimate of expected potential loss for these
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contingencies related to assumptions and subjective factors based on currently available information and assessments,
opinions regarding litigation risk, and prior experience with litigating and settling other wildfire cases. This in turn led to
a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's
conclusion related to these loss contingencies.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management's evaluation of loss contingencies associated with wildfires and mudslides. These procedures
also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel,
assessing the reasonableness of management's assessment regarding whether it is reasonably possible or probable and
reasonably estimable that a loss has been incurred, evaluating the assumptions and methods used by management in
developing the best estimate of expected potential losses, including currently available information and assessments,
opinions regarding litigation risk, and prior experience with litigating and settling other wildfire cases, and testing
damage claim settlements. When assessing the assumptions related to the best estimate of expected potential losses, the
assumptions used were evaluated for reasonableness considering (i) current damage claim settlements, (ii) past wildfire
litigation history, and (iii) third-party source data.
Recoverability of Regulatory Assets That Are Not Currently Reflected In Rates
As described in Notes 1 and 11 to the consolidated financial statements, the Company's accounting policies conform to
accounting principles generally accepted in the United States of America, including the accounting principles for rate-
regulated enterprises, which reflect the ratemaking policies of the CPUC and the FERC. Management applies
authoritative guidance for rate-regulated enterprises to the portion of its operations in which regulators set rates at levels
intended to recover the estimated costs of providing service, plus a return on net investments in assets, or rate base.
Regulators may also impose certain penalties or grant certain incentives. Due to timing and other differences in the
collection of electric utility revenue, these accounting principles require an incurred cost that would otherwise be
charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable that the cost is
recoverable through future rates. As disclosed by management, management assesses at the end of each reporting period
whether regulatory assets are probable of future recovery by considering factors such as the current regulatory
environment, the issuance of rate orders on recovery of the specific or a similar incurred cost of the Company or other
rate-regulated entities, and other factors that would indicate that the regulator will treat an incurred cost as allowable for
ratemaking purposes. As of December 31, 2022, $1.52 billion recorded in wildfire and drought restoration accounts and
wildfire-related memorandum accounts represent wildfire and drought restoration costs that are probable of future
recovery from customers.
The principal consideration for our determination that performing procedures relating to the Company's recoverability of
regulatory assets that are not currently reflected in rates is a critical audit matter is the significant judgment by
management in determining the costs probable of recovery and reported as an asset on the balance sheet. This in turn led
to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's
assessment of the recoverability of regulatory assets not currently reflected in rates.
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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the Company's regulatory accounting process, including controls over management's assessment of the
probability of recovering regulatory assets not currently reflected in rates. These procedures also included, among others,
obtaining the Company's correspondence with regulators, evaluating management's assessment regarding the probability
of recovery of the regulatory assets at the balance sheet date, evaluating the accounting and disclosure implications, and
calculating regulatory assets balances based on provisions outlined in the rate orders. This evidence included reference to
historical precedence of similar items and accounting treatment utilized by comparable companies under similar
regulatory jurisdictions as well as evaluating progress in discussions between management and the regulator.
/s/PricewaterhouseCoopers LLP
Los Angeles, California
February 23, 2023
We have served as the Company’s auditor since 2002.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Southern California Edison Company
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Southern California Edison Company and its
subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of
comprehensive income, of changes in equity and of cash flows for each of the three years in the period ended
December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows
for each of the three years in the period ended December 31,2022 in conformity with accounting principles generally
accepted in the United States of America.
Basis for Opinions
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express opinions on the Company’s consolidated financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects. The Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinions.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
Contingent Liability – 2017/2018 Wildfire/Mudslide Events
As described in Note 12 to the consolidated financial statements, the Thomas Fire, the Koenigstein Fire, the Montecito
Mudslides and the Woolsey Fire (collectively, the "2017/2018 Wildfire/Mudslide Events") within the Company's service
territory caused loss of life, substantial damage to both residential and business properties, and service outages for SCE
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customers in the Santa Barbara, Ventura, and Los Angeles Counties. Numerous claims related to wildfire events have
been initiated against the Company. The Company has incurred material losses in connection with the 2017/2018
Wildfire/Mudslide Events. As of December 31, 2022, SCE had paid $7.6 billion under executed settlements, had
$185 million to be paid under executed settlements, including $120 million to be paid under the SED executed
Agreement, and had $934 million of estimated losses for remaining alleged and potential claims reflected on their
consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had assets for
expected recoveries through FERC electric rates of $142 million on their consolidated balance sheets and had exhausted
expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Each reporting period, management
reviews its loss estimates for remaining alleged and potential claims related to wildfire events. The process for
estimating losses associated with alleged and potential wildfire related claims requires management to exercise
significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of
known and expected claims by third parties based on currently available information, opinions of counsel regarding
litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling
wildfire litigation claims. As additional information becomes available, management's estimates and assumptions
regarding the causes and financial impact of wildfire events may change. For instance, as a result of additional
information, in 2022 management accrued additional estimated losses of $1.3 billion for claims related to the 2017/2018
Wildfire/Mudslide Events, against which SCE has recorded expected recoveries through FERC electric rates of
$76 million. The resulting net charge to earnings was $1.2 billion ($879 million after-tax).
The principal considerations for our determination that performing procedures relating to the 2017/2018
Wildfire/Mudslide Events contingent liability is a critical audit matter are the significant judgment by management when
determining the probability of a loss being incurred and the best estimate of expected potential loss for these
contingencies related to assumptions and subjective factors based on currently available information and assessments,
opinions regarding litigation risk, and prior experience with litigating and settling other wildfire cases. This in turn led to
a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's
conclusion related to these loss contingencies.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management's evaluation of loss contingencies associated with wildfires and mudslides. These procedures
also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel,
assessing the reasonableness of management's assessment regarding whether it is reasonably possible or probable and
reasonably estimable that a loss has been incurred, evaluating the assumptions and methods used by management in
developing the best estimate of expected potential losses, including currently available information and assessments,
opinions regarding litigation risk, and prior experience with litigating and settling other wildfire cases, and testing
damage claim settlements. When assessing the assumptions related to the best estimate of expected potential losses, the
assumptions used were evaluated for reasonableness considering (i) current damage claim settlements, (ii) past wildfire
litigation history, and (iii) third-party source data.
Recoverability of Regulatory Assets That Are Not Currently Reflected In Rates
As described in Notes 1 and 11 to the consolidated financial statements, the Company's accounting policies conform to
accounting principles generally accepted in the United States of America, including the accounting principles for rate-
regulated enterprises, which reflect the ratemaking policies of the CPUC and the FERC. Management applies
authoritative guidance for rate-regulated enterprises to the portion of its operations in which regulators set rates at levels
intended to recover the estimated costs of providing service, plus a return on net investments in assets, or rate base.
Regulators may also impose certain penalties or grant certain incentives. Due to timing and other differences in the
collection of electric utility revenue, these accounting principles require an incurred cost that would otherwise be
charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable that the cost is
recoverable through future rates. As disclosed by management, management assesses at the end of each reporting period
whether regulatory assets are probable of future recovery by considering factors such as the current regulatory
environment, the issuance of rate orders on recovery of the specific or a similar incurred cost of the Company or other
rate-regulated entities, and other factors that would indicate that the regulator will treat an incurred cost as allowable for
ratemaking purposes. As of December 31, 2022, $1.52 billion recorded in wildfire and drought restoration accounts and
wildfire-related memorandum accounts represent wildfire and drought restoration costs that are probable of future
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recovery from customers.
The principal consideration for our determination that performing procedures relating to the Company's recoverability of
regulatory assets that are not currently reflected in rates is a critical audit matter is the significant judgment by
management in determining the costs probable of recovery and reported as an asset on the balance sheet. This in turn led
to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's
assessment of the recoverability of regulatory assets not currently reflected in rates.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the Company's regulatory accounting process, including controls over management's assessment of the
probability of recovering regulatory assets not currently reflected in rates. These procedures also included, among others,
obtaining the Company's correspondence with regulators, evaluating management's assessment regarding the probability
of recovery of the regulatory assets at the balance sheet date, evaluating the accounting and disclosure implications, and
calculating regulatory assets balances based on provisions outlined in the rate orders. This evidence included reference to
historical precedence of similar items and accounting treatment utilized by comparable companies under similar
regulatory jurisdictions as well as evaluating progress in discussions between management and the regulator.
/s/PricewaterhouseCoopers LLP
Los Angeles, California
February 23, 2023
We have served as the Company’s auditor since 2002.
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CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Income
Edison International
(in millions, except per-share amounts)
Total operating revenue
Purchased power and fuel
Operation and maintenance
Wildfire-related claims, net of insurance recoveries
Wildfire Insurance Fund expense
Depreciation and amortization
Property and other taxes
Impairment, net of other (income)
Gain on sale of lease interest and other operating income
Total operating expenses
Operating income
Interest expense
Other income
Income before income taxes
Income tax benefit
Net income
Less: Preference stock dividend requirements of SCE
Less:
Preferred stock dividend requirement of Edison International
Net income attributable to Edison International common shareholders
Basic earnings per share:
Weighted average shares of common stock outstanding
Basic earnings per common share attributable to Edison International
common shareholders
Diluted earnings per share:
Weighted average shares of common stock outstanding, including effect of
dilutive securities
Diluted earnings per common share attributable to Edison International
common shareholders
Years ended December 31,
2021
$ 14,905
5,540
3,645
1,276
215
2,218
465
71
(2)
13,428
1,477
(925)
237
789
(136)
925
106
60
759
2022
$ 17,220
6,375
4,724
1,313
214
2,561
501
54
(5)
15,737
1,483
(1,169)
348
662
(162)
824
107
105
612
2020
$ 13,578
4,932
3,609
1,328
336
1,967
438
(116)
(133)
12,361
1,217
(902)
251
566
(305)
871
132
—
739
$
$
$
381
380
373
$
1.61
$
2.00
$
1.98
383
380
374
$
1.60
$
2.00
$
1.98
The accompanying notes are an integral part of these consolidated financial statements.
62
Table of Contents
Consolidated Statements of Comprehensive Income
Edison International
(in millions)
Net income
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions
Other comprehensive income, net of tax
Comprehensive income
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Edison International
Years ended December 31,
2021
2022
2020
$
824
$
925
$
871
43
43
867
107
760
$
15
15
940
106
834
$
—
—
871
132
739
$
The accompanying notes are an integral part of these consolidated financial statements.
63
Table of Contents
Consolidated Balance Sheets
(in millions)
ASSETS
Cash and cash equivalents
Receivables, less allowances of $347 and $193 for uncollectible accounts at respective
dates
Accrued unbilled revenue
Inventory
Prepaid expenses
Regulatory assets
Wildfire Insurance Fund contributions
Other current assets
Total current assets
Nuclear decommissioning trusts
Marketable securities
Other investments
Total investments
Utility property, plant and equipment, less accumulated depreciation and amortization
of $12,260 and $11,407 at respective dates
Nonutility property, plant and equipment, less accumulated depreciation of $106 and
$98 at respective dates
Total property, plant and equipment
Receivables, less allowances of $7 and $116 for uncollectible accounts at respective
dates
Regulatory assets (include $834 and $325 related to Variable Interest Entities "VIEs" at
respective dates)
Wildfire Insurance Fund contributions
Operating lease right-of-use assets
Long-term insurance receivables
Other long-term assets
Total long-term assets
Total assets
Edison International
December 31,
2022
2021
$
914
$
390
1,695
641
474
248
2,497
204
397
7,070
3,948
5
50
4,003
53,274
212
53,486
2
8,181
2,155
1,442
465
1,237
13,482
78,041
$
1,398
794
420
258
1,778
204
249
5,491
4,870
12
39
4,921
50,497
203
50,700
122
7,660
2,359
1,932
75
1,485
13,633
74,745
$
The accompanying notes are an integral part of these consolidated financial statements.
64
Table of Contents
Consolidated Balance Sheets
(in millions, except share amounts)
LIABILITIES AND EQUITY
Short-term debt
Current portion of long-term debt
Accounts payable
Wildfire-related claims
Customer deposits
Regulatory liabilities
Current portion of operating lease liabilities
Other current liabilities
Total current liabilities
Long-term debt (include $809 and $314 related to VIEs at respective dates)
Deferred income taxes and credits
Pensions and benefits
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Wildfire-related claims
Other deferred credits and other long-term liabilities
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies (Note 12)
Preferred stock (50,000,000 shares authorized; 1,250,000 shares of Series A and
750,000 shares of Series B issued and outstanding at respective dates)
Common stock, no par value (800,000,000 shares authorized; 382,208,498 and
380,378,145 shares issued and outstanding at respective dates)
Accumulated other comprehensive loss
Retained earnings
Total Edison International's shareholders' equity
Noncontrolling interests – preference stock of SCE
Total equity
Total liabilities and equity
Edison International
December 31,
2022
2021
$
2,015
2,614
2,359
121
167
964
506
1,601
10,347
27,025
6,149
422
2,754
8,211
936
1,687
2,988
23,147
60,519
2,354
1,077
2,002
131
193
603
582
1,667
8,609
24,170
5,740
496
2,772
8,981
1,350
1,733
3,105
24,177
56,956
1,978
1,977
6,200
(11)
7,454
15,621
1,901
17,522
78,041
$
6,071
(54)
7,894
15,888
1,901
17,789
74,745
$
$
The accompanying notes are an integral part of these consolidated financial statements.
65
Table of Contents
Consolidated Statements of Cash Flows
Edison International
(in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization
Allowance for equity during construction
Impairment and other expense (income)
Gain on sale of lease interest and other operating income
Deferred income taxes
Wildfire Insurance Fund amortization expense
Other
Nuclear decommissioning trusts
Proceeds from Morongo Transmission LLC
Contributions to Wildfire Insurance Fund
Changes in operating assets and liabilities:
Receivables
Inventory
Accounts payable
Tax receivables and payables
Other current assets and liabilities
Regulatory assets and liabilities, net
Wildfire-related insurance receivable
Wildfire-related claims
Other noncurrent assets and liabilities
Net cash provided by operating activities
Cash flows from financing activities:
Long-term debt issued, plus premium and net of discount and issuance costs of
$(62), $(43) and $23 for the respective years
Long-term debt repaid
Short-term debt issued
Short-term debt repaid
Common stock issued
Preferred stock issued, net
Preferred and preference stock redeemed
Commercial paper borrowing (repayments), net
Dividends and distribution to noncontrolling interests
Common stock dividends paid
Preferred stock dividends paid
Other
Net cash provided by financing activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of nuclear decommissioning trust investments
Purchases of nuclear decommissioning trust investments
Other
Net cash used in investing activities
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Years ended December 31,
2021
2022
2020
$
824
$
925
$
871
2,633
(137)
54
(5)
(177)
214
80
(123)
—
(95)
(252)
(58)
367
18
322
(51)
(390)
(56)
48
3,216
5,971
(1,085)
1,000
(1,543)
13
—
—
(317)
(110)
(1,050)
(99)
101
2,881
(5,778)
4,177
(4,054)
81
(5,574)
523
394
917
$
2,288
(118)
71
(2)
43
215
40
(256)
400
(95)
(514)
(21)
138
13
(333)
(720)
708
(2,648)
(123)
11
5,412
(1,037)
2,654
(2,255)
32
1,977
—
(254)
(106)
(988)
(35)
45
5,445
(5,505)
3,961
(3,705)
98
(5,151)
305
89
394
$
2,029
(121)
(116)
(133)
(296)
336
36
(197)
—
(95)
(283)
(43)
87
113
4
(1,799)
932
(56)
(6)
1,263
3,073
(1,099)
2,994
(1,126)
912
—
(308)
304
(118)
(928)
—
23
3,727
(5,484)
5,927
(5,730)
316
(4,971)
19
70
89
$
The accompanying notes are an integral part of these consolidated financial statements.
66
Table of Contents
Consolidated Statements of Changes in Equity
Edison International
Equity Attributable to Edison International Shareholders
Accumulated
Other
Preferred Common Comprehensive Retained
(in millions, except per share amounts)
Balance at December 31, 2019
Net income
Common stock issued, net of issuance cost
Common stock dividends declared
($2.5750 per share)
Dividends to noncontrolling interests
($0.757 - $0.886 per share for preferred
stock; $62.50 - $143.75 per share for
preference stock)
Noncash stock-based compensation
Redemption of preferred and preference
stock
Balance at December 31, 2020
Net income
Other comprehensive income
Common stock issued, net of issuance cost
Preferred stock issued, net of issuance cost
Common stock dividends declared
($2.6875 per share)
Preferred stock dividend accrued
($43.5972 per share for Series A and
$6.8056 per share for Series B)
Dividends to noncontrolling interests
($62.50 - $143.75 per share for preference
stock)
Noncash stock-based compensation
Balance at December 31, 2021
Net income
Other comprehensive income
Common stock issued, net of issuance cost
Common stock dividends declared
($2.8375 per share)
Preferred stock dividend declared ($53.750
per share for Series A and $42.08333 per
share for Series B)
Dividends to noncontrolling interests
($65.1098 - $143.75 per share for
preference stock)
Noncash stock-based compensation
Other
Balance at December 31, 2022
Stock
Stock
Loss
$ — $ 4,990 $
—
—
—
—
—
—
—
942
—
—
30
—
$ — $ 5,962 $
—
—
—
1,977
—
—
—
—
—
—
71
—
—
—
—
38
$ 1,977 $ 6,071 $
—
—
—
—
—
—
—
1
—
—
87
—
—
—
42
—
$ 1,978 $ 6,200 $
Noncontrolling
Interests
Preferred
and
Preference
Stock
Total
Equity
2,193 $ 15,496
871
942
132
—
Earnings Subtotal
(69) $ 8,382 $ 13,303 $
—
—
739
942
739
—
—
(965)
(965)
—
(965)
—
—
—
(1)
—
29
(117)
1
(117)
30
—
—
—
(69) $ 8,155 $ 14,048 $
—
15
—
—
819
15
71
1,977
819
—
—
—
(308)
(308)
1,901 $ 15,949
925
15
71
1,977
106
—
—
—
—
(1,021)
(1,021)
—
(1,021)
—
(60)
(60)
—
(60)
—
39
—
—
—
1
(54) $ 7,894 $ 15,888 $
—
43
—
717
43
87
717
—
—
(106)
—
(106)
39
1,901 $ 17,789
824
43
87
107
—
—
—
(1,083)
(1,083)
—
(1,083)
—
(74)
(74)
—
(74)
—
—
—
(11) $ 7,454 $ 15,621 $
—
42
1
—
—
—
(107)
—
—
(107)
42
1
1,901 $ 17,522
The accompanying notes are an integral part of these consolidated financial statements.
67
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(This page has been left blank intentionally.)
68
Table of Contents
Consolidated Statements of Income
Southern California Edison Company
(in millions)
Operating revenue
Purchased power and fuel
Operation and maintenance
Wildfire-related claims, net of insurance recoveries
Wildfire Insurance Fund expense
Depreciation and amortization
Property and other taxes
Impairment, net of other (income)
Total operating expenses
Operating income
Interest expense
Other income
Income before taxes
Income tax (benefit) expense
Net income
Less: Preference stock dividend requirements
Net income available for common stock
Consolidated Statements of Comprehensive Income
(in millions)
Net income
Other comprehensive income (loss), net of tax:
Pension and postretirement benefits other than pensions
Other comprehensive income (loss), net of tax
Comprehensive income
Years ended December 31,
2021
$ 14,874
5,540
3,588
1,276
215
2,216
462
67
13,364
1,510
(791)
233
952
17
935
106
829
2022
$ 17,172
6,375
4,659
1,305
214
2,559
497
50
15,659
1,513
(1,005)
337
845
(109)
954
107
847
2020
$ 13,546
4,932
3,523
1,328
336
1,965
435
(151)
12,368
1,178
(768)
255
665
(277)
942
132
810
$
$
$
Years ended December 31,
2021
2022
2020
$
954
$
935
$
942
24
24
978
$
9
9
944
$
(2)
(2)
940
$
The accompanying notes are an integral part of these consolidated financial statements.
69
Table of Contents
Consolidated Balance Sheets
Southern California Edison Company
(in millions)
ASSETS
Cash and cash equivalents
Receivables, less allowances of $347 and $193 for uncollectible accounts at respective
dates
Accrued unbilled revenue
Inventory
Prepaid expenses
Regulatory assets
Wildfire Insurance Fund contributions
Other current assets
Total current assets
Nuclear decommissioning trusts
Other investments
Total investments
Utility property, plant and equipment, less accumulated depreciation and amortization
of $12,260 and $11,407 at respective dates
Nonutility property, plant and equipment, less accumulated depreciation of $94 and $88
at respective dates
Total property, plant and equipment
Receivables, less allowances of $7 and $116 for uncollectible accounts at respective
dates
Regulatory assets (include $834 and $325 related to VIEs at respective dates)
Wildfire Insurance Fund contributions
Operating lease right-of-use assets
Long-term insurance receivables
Long-term insurance receivables due from affiliate
Other long-term assets
Total long-term assets
Total assets
December 31,
2022
2021
$
766
$
279
1,675
638
474
292
2,497
204
384
6,930
3,948
36
3,984
53,274
206
53,480
2
8,181
2,155
1,433
139
334
1,169
13,413
77,807
$
1,393
794
420
257
1,778
204
222
5,347
4,870
34
4,904
50,497
196
50,693
122
7,660
2,359
1,925
75
—
1,453
13,594
74,538
$
The accompanying notes are an integral part of these consolidated financial statements.
70
Table of Contents
Consolidated Balance Sheets
Southern California Edison Company
(in millions, except share amounts)
LIABILITIES AND EQUITY
Short-term debt
Current portion of long-term debt
Accounts payable
Wildfire-related claims
Customer deposits
Regulatory liabilities
Current portion of operating lease liabilities
Other current liabilities
Total current liabilities
Long-term debt (include $809 and $314 related to VIEs at respective dates)
Deferred income taxes and credits
Pensions and benefits
Asset retirement obligations
Regulatory liabilities
Operating lease liabilities
Wildfire-related claims
Other deferred credits and other long-term liabilities
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies (Note 12)
Preference stock
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued
and outstanding at respective dates)
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total equity
Total liabilities and equity
December 31,
2022
2021
$
$
925
2,214
2,351
121
167
964
505
1,578
8,825
24,044
7,545
105
2,754
8,211
928
1,687
2,919
24,149
57,018
1,945
2,168
8,441
(8)
8,243
20,789
77,807
$
$
2,354
377
1,999
131
193
603
582
1,631
7,870
21,733
7,181
111
2,772
8,981
1,343
1,733
2,979
25,100
54,703
1,945
2,168
7,033
(32)
8,721
19,835
74,538
The accompanying notes are an integral part of these consolidated financial statements.
71
Table of Contents
Consolidated Statements of Cash Flows
Southern California Edison Company
(in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile to net cash provided by operating activities:
Years ended December 31,
2021
2022
2020
$
954
$
935
$
942
Depreciation and amortization
Allowance for equity during construction
Impairment and other expense (income)
Deferred income taxes
Wildfire Insurance Fund amortization expense
Other
Nuclear decommissioning trusts
Proceeds from Morongo Transmission LLC
Contributions to Wildfire Insurance Fund
Changes in operating assets and liabilities:
Receivables
Inventory
Accounts payable
Tax receivables and payables
Other current assets and liabilities
Regulatory assets and liabilities, net
Wildfire-related insurance receivable
Wildfire-related claims
Other noncurrent assets and liabilities
Net cash provided by operating activities
Cash flows from financing activities:
Long-term debt issued, plus premium and net of discount and issuance costs
of $(51), $(43) and $26 for the respective years
Long-term debt repaid
Short-term debt borrowed
Short-term debt repaid
Capital contributions from Edison International Parent
Preferred and preference stock redeemed
Commercial paper (repayments) borrowing, net
Common stock dividends paid
Preferred and preference stock dividends paid
Other
Net cash provided by financing activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sale of nuclear decommissioning trust investments
Purchases of nuclear decommissioning trust investments
Other
Net cash used in investing activities
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
$
2,626
(137)
50
(111)
214
59
(123)
—
(95)
(245)
(58)
366
(1)
265
(51)
(398)
(56)
60
3,319
5,032
(385)
—
(1,543)
1,400
—
(406)
(1,300)
(110)
36
2,724
(5,776)
4,177
(4,054)
96
(5,557)
486
280
766
$
2,280
(118)
67
62
215
28
(256)
400
(95)
(513)
(21)
131
31
(333)
(720)
708
(2,648)
5
158
5,411
(1,037)
2,654
(2,255)
1,633
—
(124)
(975)
(106)
17
5,218
(5,503)
3,961
(3,705)
95
(5,152)
224
56
280
$
2,021
(121)
(151)
(263)
336
18
(197)
—
(95)
(290)
(43)
63
141
(7)
(1,799)
932
(56)
(4)
1,427
2,676
(699)
2,194
(326)
1,432
(308)
175
(1,332)
(118)
5
3,699
(5,480)
5,927
(5,730)
189
(5,094)
32
24
56
The accompanying notes are an integral part of these consolidated financial statements.
72
Table of Contents
Consolidated Statements of Changes in Equity
Southern California Edison Company
(in millions, except per share amounts)
Balance at December 31, 2019
Net income
Other comprehensive loss
Capital contribution from Edison
International Parent
Dividends declared on common stock
($2.6030 per share)
Dividends declared on preferred stock
($0.757 - $0.886 per share) and preference
stock ($62.50 - $143.75 per share)
Stock-based compensation
Noncash stock-based compensation
Redemption of preferred and preference
stock
Balance at December 31, 2020
Net income
Other comprehensive income
Capital contribution from Edison
International Parent
Dividends declared on common stock
($2.9893 per share)
Dividends declared on preference stock
($62.50 - $143.75 per share)
Stock-based compensation
Noncash stock-based compensation
Balance at December 31, 2021
Net income
Other comprehensive income
Capital contribution from Edison
International Parent
Dividends declared on common stock
($3.0468 per share)
Dividends declared on preference stock
($65.1098 - $143.75 per share)
Stock-based compensation
Noncash stock-based compensation
Balance at December 31, 2022
Preferred
and
Preference Common
Stock
Stock
Additional
Paid-in
Capital
$ 2,245 $ 2,168 $ 3,939 $
—
—
—
—
—
—
Accumulated
Other
Comprehensive Retained
Earnings
Loss
Total
Equity
(39) $ 9,514 $ 17,827
942
942
(2)
—
—
(2)
—
—
—
—
—
—
—
—
—
—
1,432
—
—
1,432
—
—
(5)
14
— (1,132)
(1,132)
—
—
—
(117)
—
(1)
(117)
(5)
13
(300)
—
$ 1,945 $ 2,168 $ 5,387 $
—
—
—
—
—
—
7
—
(308)
(15)
(41) $ 9,191 $ 18,650
935
935
9
—
—
9
—
—
—
—
1,633
—
—
—
1,633
— (1,300)
(1,300)
—
—
—
—
—
—
$ 1,945 $ 2,168 $ 7,033 $
—
—
—
(7)
20
—
—
—
—
—
—
—
(106)
(106)
(7)
—
21
1
(32) $ 8,721 $ 19,835
954
954
24
—
—
24
—
—
—
—
1,400
—
—
—
—
—
—
—
$ 1,945 $ 2,168 $ 8,441 $
—
(14)
22
—
—
1,400
— (1,325)
(1,325)
(107)
(107)
—
(14)
—
—
—
22
—
(8) $ 8,243 $ 20,789
The accompanying notes are an integral part of these consolidated financial statements.
73
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization and Basis of Presentation
Edison International is the ultimate parent holding company of Southern California Edison Company ("SCE") and
Edison Energy, LLC ("Edison Energy Group"). SCE is an investor-owned public utility primarily engaged in the
business of supplying and delivering electricity to an approximately 50,000 square mile area of Southern California.
Edison Energy Group is an indirect wholly-owned subsidiary of Edison International and a holding company for Edison
Energy, LLC ("Edison Energy") which is engaged in the competitive business of providing decarbonization and energy
solutions to commercial, institutional and industrial customers in North America and Europe. Edison Energy's business
activities are currently not material to report as a separate business segment. These combined notes to the consolidated
financial statements apply to both Edison International and SCE unless otherwise described. Edison International's
consolidated financial statements include the accounts of Edison International, SCE, and other wholly owned and
controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its
subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its
competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not
consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE, its wholly
owned and controlled subsidiaries and a variable interest entity of which SCE is the primary beneficiary, SCE Recovery
Funding LLC. All intercompany transactions have been eliminated from the consolidated financial statements.
Edison International's and SCE's accounting policies conform to accounting principles generally accepted in the United
States of America ("GAAP"), including the accounting principles for rate-regulated enterprises, which reflect the
ratemaking policies of the California Public Utility Commission ("CPUC") and the Federal Energy Regulatory
Commission ("FERC"). SCE applies authoritative guidance for rate-regulated enterprises to the portion of its operations
in which regulators set rates at levels intended to recover the estimated costs of providing service, plus a return on net
investments in assets, or rate base. Regulators may also impose certain penalties or grant certain incentives. Due to
timing and other differences in the collection of electric utility revenue, these principles require an incurred cost that
would otherwise be charged to expense by a non-regulated entity to be capitalized as a regulatory asset if it is probable
that the cost is recoverable through future rates; and conversely the principles require recording of a regulatory liability
for amounts collected in rates to recover costs expected to be incurred in the future or amounts collected in excess of
costs incurred and refundable to customers. In addition, SCE recognizes revenue and regulatory assets from alternative
revenue programs, which enables the utility to adjust future rates in response to past activities or completed events, if
certain criteria are met. SCE assesses, at the end of each reporting period, whether regulatory assets are probable of
future recovery. See Note 11 for composition of regulatory assets and liabilities.
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual
results could differ from those estimates. Certain prior year amounts have been conformed to the current year's
presentation, including separate presentation of common stock and preferred and preference stock dividends in SCE's
consolidated statements of cash flows.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of investments in money market funds. Generally, the carrying value of cash equivalents equals
the fair value, as these investments have original maturities of three months or less. The cash equivalents were as
follows:
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(in millions)
Money market funds
Edison International
SCE
December 31,
2022
2021
2022
2021
$
784
$
329
$
647
$
230
Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution,
are reclassified from cash to accounts payable at the end of each reporting period.
The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of
cash flows:
(in millions)
Edison International:
Cash and cash equivalents
Short-term restricted cash1
Total cash, cash equivalents and restricted cash
SCE:
Cash and cash equivalents
Short-term restricted cash1
Total cash, cash equivalents and restricted cash
December 31, December 31,
2022
2021
$
$
$
$
914 $
3
917 $
766 $
—
766 $
390
4
394
279
1
280
1
Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.
Allowance for Uncollectible Accounts
The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over
the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California and exposes
SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical
amounts written-off, assessment of customer collectibility and current economic trends, including unemployment rates
and likelihood of recession for the region. At December 31, 2022, this included the estimated impacts of the COVID-19
pandemic. In addition, in June 2022, California's state assembly passed legislation to authorize, fund and implement the
California Arrearage Payment Program ("CAPP") 2022, which reduced customer arrearages for certain residential
customers. The allowance for uncollectible accounts recorded against qualified arrearages was reduced by $83 million
based on the receipt of CAPP in the fourth quarter of 2022.
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The following table sets forth the changes in allowance for uncollectible accounts for SCE:
(in millions)
Balance at December 31, 2019
Current period provision for uncollectible accounts
Included in operation and maintenance expenses in earning activities1
Included in operation and maintenance expenses in cost-recovery activities2
Deferred to regulatory memorandum accounts
Write-offs, net of recoveries
Balance at December 31, 2020
Current period provision for uncollectible accounts
Included in operation and maintenance expenses in earning activities1
Included in operation and maintenance expenses in cost-recovery activities2
Deferred to regulatory memorandum accounts
Write-offs, net of recoveries
Balance at December 31, 2021³
Current period provision for uncollectible accounts
Included in operation and maintenance expenses in earning activities1
Included in operation and maintenance expenses in cost-recovery activities2,4
Deferred to regulatory memorandum accounts4
Write-offs, net of recoveries
Balance at December 31, 2022³
Customers
All others
Total
$
35 $
14 $
49
36
15
105
(16)
175 $
33
74
17
(6)
293 $
71
58
(18)
(70)
334 $
9
—
—
(10)
13 $
11
—
—
(8)
16 $
11
—
—
(7)
20 $
45
15
105
(26)
188
44
74
17
(14)
309
82
58
(18)
(77)
354
$
$
$
1
2
3
4
Earning activities is one of SCE's disaggregated revenue sources. See Note 7 for further details.
Cost-recovery activities is one of SCE's disaggregated revenue sources. See Note 7 for further details. This portion of costs from
the allowance for uncollectible expenses is recovered through the residential uncollectibles balancing account.
Approximately $7 million and $116 million of allowance for uncollectible accounts are included in long-term "Receivables" on
SCE's consolidated balance sheets as of December 31, 2022 and December 31, 2021, respectively.
Represents current year changes in the allowance for uncollectible accounts and excludes authorized recovery of previously
deferred balances.
Inventory
SCE's inventory is primarily composed of materials, supplies and spare parts, and generally stated at weighted average
cost.
Emission Allowances and Energy Credits
SCE is allocated greenhouse gas ("GHG") allowances annually which it is then required to sell into quarterly auctions.
GHG proceeds from the auctions are recorded as a regulatory liability to be refunded to customers. SCE purchases GHG
allowances in quarterly auctions or from counterparties to satisfy its GHG emission compliance obligations and recovers
such costs of GHG allowances from customers. GHG allowances held for use are classified as "Other current assets" on
the consolidated balance sheets and are stated, similar to an inventory method, at the lower of weighted average cost or
market. SCE will evaluate GHG allowances for impairment upon a triggering event that would indicate SCE might not
recover the full cost of an allowance. SCE had GHG allowances held for use of $87 million and $47 million at
December 31, 2022 and 2021, respectively. GHG emission obligations were $55 million and $34 million at
December 31, 2022 and 2021, respectively, and are classified as "Other current liabilities" on the consolidated balance
sheets.
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SCE is allocated low carbon fuel standard ("LCFS") credits which it sells to market participants. Proceeds from the sales,
net of selling fees and program administration expenses, are recorded in a balancing account to be refunded to eligible
customers. SCE's net proceeds from the sale of these LCFS credits were $218 million and $193 million and are classified
as "Regulatory liabilities" on the consolidated balance sheets at December 31, 2022 and 2021, respectively.
Property, Plant and Equipment
SCE plant additions, including replacements and betterments, are capitalized. Direct material and labor and indirect costs
such as construction overhead, administrative and general costs, pension and benefits, and property taxes are capitalized
as part of plant additions. The CPUC authorizes a capitalization rate for each of the indirect costs which are allocated to
each project based on either labor or total costs.
Estimated useful lives authorized by the CPUC in the 2021 General Rate Case ("GRC") and weighted average useful
lives of SCE's property, plant and equipment, are as follows:
Generation plant
Distribution plant
Transmission plant
General plant and other
Estimated Useful Lives
10 years to 55 years
20 years to 67 years
30 years to 65 years
5 years to 60 years
Weighted Average
Useful Lives
39 years
50 years
53 years
20 years
Depreciation of utility property, plant and equipment is computed on a straight-line, remaining-life basis. SCE's
depreciation expense was $2.5 billion, $2.0 billion and $1.8 billion for 2022, 2021 and 2020, respectively. Depreciation
expense stated as a percent of average original cost of depreciable utility plant was, on a composite basis, 4.2%, 3.7%
and 3.6% for 2022, 2021 and 2020, respectively. The original costs of retired property are charged to accumulated
depreciation. See Note 2 for further information.
Nuclear fuel for the Palo Verde Nuclear Generating Station ("Palo Verde") is recorded as utility plant (nuclear fuel in the
fabrication and installation phase is recorded as construction in progress) in accordance with CPUC ratemaking
procedures. Palo Verde nuclear fuel is amortized using the units of production method.
Allowance for funds used during construction ("AFUDC") represents the estimated cost of debt and equity funds that
finance utility-plant construction and is capitalized during certain plant construction. AFUDC is recovered in rates
through depreciation expense over the useful life of the related asset. AFUDC equity represents a method to compensate
SCE for the estimated cost of equity used to finance utility plant additions and is recorded as part of construction in
progress. AFUDC equity was $137 million, $118 million and $121 million in 2022, 2021 and 2020, respectively, and is
reflected in "Other income." AFUDC debt was $53 million, $50 million and $53 million in 2022, 2021 and 2020,
respectively and is reflected as a reduction of "Interest expense."
Major Maintenance
Major maintenance costs for SCE's facilities and equipment are expensed as incurred.
Impairment of Long-Lived Assets
Impairments of long-lived assets are evaluated based on a review of estimated future cash flows expected to be
generated whenever events or changes in circumstances indicate that the carrying amount of such investments or assets
may not be recoverable. If the carrying amount of a long-lived asset exceeds expected future cash flows, undiscounted
and without interest charges, an impairment loss is recognized in the amount of the excess of fair value over the carrying
amount. Fair value is determined via market, cost and income-based valuation techniques, as appropriate.
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Accounting principles for rate-regulated enterprises also require recognition of an impairment loss if it becomes probable
that the regulated utility will abandon a plant investment, or if it becomes probable that the cost of a recently completed
plant will be disallowed, either directly or indirectly, for ratemaking purposes and a reasonable estimate of the amount of
the disallowance can be made.
In September 2022, the CPUC approved the settlement agreement between SCE and The Utility Reform Network for
SCE's Customer Service Re-platform ("CSRP") proceeding filed in 2021 for expenditures incurred through April 2021.
As a result of the settlement agreement, SCE recorded a $47 million ($34 million after-tax) impairment of property,
plant and equipment, reflected in "Impairment, net of other (income)" in the consolidated statements of income.
In August 2021, as a result of adoption of 2021 GRC, SCE recorded $79 million ($47 million after-tax) in impairment
charges related to disallowed historical capital expenditures of pole replacements the CPUC determined were performed
prematurely in 2021. The impairment is included in "Impairment, net of other (income)" in the consolidated statements
of income.
As of December 31, 2022 and 2021, SCE has $177 million and $186 million in assets recorded in property, plant and
equipment in relation to restoration costs related to the 2017/2018 Wildfire/Mudslide Events, respectively, which may
not be recoverable. These assets would be impaired if the restoration costs are permanently disallowed by the CPUC in
future cost recovery proceedings. For further details, see Note 12.
Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill 1054
(the "Wildfire Insurance Fund" and "AB 1054")
Edison International and SCE accounted for the contributions to the Wildfire Insurance Fund similarly to prepaid
insurance. No period of coverage was provided in AB 1054, therefore expense is being allocated to periods ratably based
on an estimated period of coverage. At December 31, 2022 and 2021, Edison International and SCE had a $2.2 billion
and a $2.4 billion long-term asset, respectively, as well as a $204 million current asset for both years, reflected as
"Wildfire Insurance Fund contributions" in their consolidated balance sheets for the initial $2.4 billion contribution made
during 2019 and the present value of annual contributions SCE committed to make to the Wildfire Insurance Fund,
reduced by amortization. At December 31, 2022 and 2021, long-term liabilities of $536 million and $620 million,
respectively, have been reflected in "Other deferred credits and other long-term liabilities" for the present value of
unpaid contributions. Contributions were discounted to the present value using US treasury interest rates at the date SCE
committed to participate in the Wildfire Insurance Fund.
In 2022 and 2021, the asset was amortized based on an estimated period of coverage of 15 years. All expenses related to
the contributions are being reflected in "Wildfire Insurance Fund Expense" in the consolidated statements of income.
Changes in the estimated period of coverage provided by the Wildfire Insurance Fund could lead to material changes in
future expense recognition. In estimating the period of coverage, Edison International and SCE used Monte Carlo
simulations based on historical data from wildfires caused by electrical utility equipment to estimate expected losses,
using eight years (2014 – 2021) of available historical data in 2022 and seven years (2014 – 2020) of available historical
data in 2021. The details of the operation of the Wildfire Insurance Fund and estimates related to claims by SCE, Pacific
Gas & Electric Company ("PG&E"), and San Diego Gas & Electric ("SDG&E") against the fund have been applied to
the expected loss simulations to estimate the period of coverage of the fund. The most sensitive inputs to the estimated
period of coverage are the expected frequency of wildfire events caused by investor-owned utility electrical equipment
and the estimated costs associated with those forecasted events. Edison International and SCE evaluate all inputs
annually, or upon claims being made from the fund for catastrophic wildfires, and the expected life of the insurance fund
will be adjusted as required. Based on information available in the first quarter of 2023 regarding catastrophic wildfires
during 2022, SCE reassessed its estimate of the life of the Wildfire Insurance Fund. Using nine years of historical data
(2014 – 2022) of wildfires caused by electrical utility equipment to create Monte Carlo simulations of expected losses,
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the expected life of the Wildfire Insurance Fund remained 15 years from the date SCE committed to participate in the
Wildfire Insurance Fund.
Edison International and SCE will assess the Wildfire Insurance Fund contribution assets for impairment in the event
that a participating utility's electrical equipment is found to be the substantial cause of a catastrophic wildfire, based on
the ability of SCE to benefit from the coverage provided by the Wildfire Insurance Fund in an amount equal to the
recorded assets.
Nuclear Decommissioning and Asset Retirement Obligations
The fair value of a liability for an asset retirement obligation ("ARO") is recorded in the period in which it is incurred,
including a liability for the fair value of a conditional ARO, if the fair value can be reasonably estimated even though
uncertainty exists about the timing and/or method of settlement. When an ARO liability is initially recorded, SCE
capitalizes the cost by increasing the carrying amount of the related long-lived asset. For each subsequent period, the
liability is increased for accretion expense and the capitalized cost is depreciated over the useful life of the related asset.
SCE has not recorded an ARO for assets that are expected to operate indefinitely or where SCE cannot estimate a
settlement date (or range of potential settlement dates). As such, ARO liabilities are not recorded for certain retirement
activities, including certain hydroelectric facilities.
The following table summarizes the changes in SCE's ARO liability:
(in millions)
Beginning balance
Accretion1
Revisions
Liabilities settled
Ending balance
December 31,
2022
2021
2,772
143
28
(189)
2,754
$
$
2,930
157
(77)
(238)
2,772
$
$
1
An ARO represents the present value of a future obligation. Accretion is an increase in the liability to account for the time value
of money resulting from discounting.
AROs related to decommissioning of SCE's nuclear power facilities are based on site-specific studies conducted as part
of each Nuclear Decommissioning Cost Triennial Proceeding ("NDCTP") conducted before the CPUC. Revisions of an
ARO are established for updated site-specific decommissioning cost estimates.
The ARO for decommissioning SCE's San Onofre Nuclear Generating Station ("San Onofre") and Palo Verde nuclear
power facilities is $2.3 billion as of December 31, 2022. The liability to decommission SCE's nuclear power facilities is
based on a 2020 decommissioning study, filed as part of the 2021 NDCTP, for San Onofre Unit 1, 2 and 3 and a 2019
decommissioning study for Palo Verde, with revisions to the cost estimate in 2020.
SCE records an ARO regulatory liability as a result of timing differences between the recognition of costs and the
recovery of costs through the ratemaking process. For further information, see Note 11.
Decommissioning of San Onofre Unit 1 began in 1999 and the transfer of spent nuclear fuel from Unit 1 to dry cask
storage in the Independent Spent Fuel Storage Installation ("ISFSI") 1 was completed in 2005. Major decommissioning
work for Unit 1 has been completed except for certain underground work.
Decommissioning of San Onofre Units 2 and 3 began in June 2013 and the transfer of spent nuclear fuel from San
Onofre Units 2 and 3 to dry cask storage in the two ISFSIs was completed in August 2020. In October 2019, the
California Coastal Commission approved SCE's application for a Coastal Development Permit, the principal
discretionary permit required to start major decommissioning activities at San Onofre Units 2 and 3. In August 2020,
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SCE commenced, and is currently conducting, major decommissioning activities in accordance with the terms of the
permit.
Decommissioning costs, which are recovered through customer rates over the term of each nuclear facility's operating
license, are recorded as a component of depreciation expense, with a corresponding credit to the ARO regulatory
liability. Due to regulatory recovery of SCE's nuclear decommissioning expense, prudently incurred costs for nuclear
decommissioning activities do not affect SCE's earnings. Amortization of the ARO asset (included within the
unamortized nuclear investment) and accretion of the ARO liability are deferred as decreases to the ARO regulatory
liability account, resulting in no impact on earnings.
SCE has collected in rates amounts for the future decommissioning of its nuclear assets and has placed those amounts in
independent trusts. Amounts collected in rates in excess of the ARO liability are classified as regulatory liabilities.
Changes in the estimated costs, timing of decommissioning or the assumptions underlying these estimates could cause
material revisions to the estimated total cost to decommission. SCE currently estimates that it will spend approximately
$6.3 billion through 2080 to decommission its nuclear facilities. This estimate is based on SCE's decommissioning cost
methodology used for ratemaking purposes, escalated at rates ranging from 2.3% to 7.5% (depending on the cost
element) annually. These costs are expected to be funded from independent decommissioning trusts. SCE estimates
annual after-tax earnings on the decommissioning funds of 1.6% to 4.9% dependent on asset class. If the assumed return
on trust assets is not earned or costs escalate at higher rates, SCE expects that additional funds needed for
decommissioning will be recoverable through future rates, subject to a reasonableness review. See Note 10 for further
information.
Due to regulatory recovery of SCE's nuclear decommissioning expense, prudently incurred costs for nuclear
decommissioning activities do not affect SCE's earnings. SCE's nuclear decommissioning costs are subject to CPUC
review through the triennial regulatory proceedings. SCE's nuclear decommissioning trust investments primarily consist
of fixed income investments that are classified as available-for-sale and equity investments. Due to regulatory
mechanisms, investment earnings and realized gains and losses have no impact on earnings. Unrealized gains and losses
on decommissioning trust funds, including impairment, increase or decrease the trust assets and the related regulatory
asset or liability and have no impact on electric utility revenue or decommissioning expense. SCE reviews each fixed
income security for impairment on the last day of each month. If the fair value on the last day of the month is less than
the amortized cost for that security, SCE impairs the disclosed amortized cost. If the fair value is greater or less than the
carrying value for that security at the time of sale, SCE recognizes a related realized gain or loss, respectively.
Deferred Financing Costs
Debt premium, discount and issuance expenses incurred in connection with obtaining financing are deferred and
amortized on a straight-line basis. Under CPUC ratemaking procedures, SCE's debt reacquisition expenses are amortized
over the remaining life of the reacquired debt or, if refinanced, the life of the new debt. SCE had unamortized losses on
reacquired debt of $109 million and $121 million at December 31, 2022 and 2021, respectively, reflected as long-term
"Regulatory assets" in the consolidated balance sheets. In addition, Edison International and SCE had debt issuance costs
related to issuances of long-term debt of $178 million and $165 million at December 31, 2022 and $153 million and
$143 million at December 31, 2021, respectively. These costs are recorded as an offset to long-term debt.
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Amortization of deferred financing costs charged to interest expense is as follows:
(in millions)
Amortization of deferred financing costs charged to
interest expense
Revenue Recognition
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$
37
$
34
$
32
$
31
$
29
$
27
Revenue is recognized by Edison International and SCE when a performance obligation to transfer control of the
promised goods is satisfied or when services are rendered to customers. This typically occurs when electricity is
delivered to customers, which includes amounts for services rendered but unbilled at the end of a reporting period.
SCE's Revenue from Contracts with Customers
Provision of Electricity
SCE principally generates revenue through supplying and delivering electricity to its customers. Rates charged to
customers are based on tariff rates, approved by the CPUC and FERC. Starting with SCE's 2021 GRC, revenue will be
authorized through quadrennial GRC proceedings, which are intended to provide SCE a reasonable opportunity to
recover its costs and earn a return on its CPUC-jurisdictional rate base. The CPUC sets an annual revenue requirement
for the base year and the remaining three years are set by a methodology established in the GRC proceeding. Revenue
was previously authorized by the CPUC in triennial GRC proceedings. As described above, SCE also earns revenue,
with no return, to recover costs for power procurement, certain wildfire related expenses and other activities.
Revenue is authorized by the FERC through a formula rate which is intended to provide SCE a reasonable opportunity to
recover transmission capital and operating costs that are prudently incurred, including a return on its FERC-jurisdictional
rate base. Under the operation of the formula rate, transmission revenue is updated to actual cost of service annually.
For SCE's electricity sales for both residential and non-residential customers, SCE satisfies the performance obligation
of delivering electricity over time as the customers simultaneously receive and consume the delivered electricity.
Energy sales are typically on a month-to-month implied contract for transmission, distribution and generation services.
Revenue is recognized over time as the energy is supplied and delivered to customers and the respective revenue is billed
and paid on a monthly basis.
CPUC and FERC rates decouple authorized revenue from the volume of electricity sales and the price of energy
procured so that SCE receives revenue equal to amounts authorized by the relevant regulatory agencies. As a result, the
volume of electricity sold to customers and specific customer classes does not have a direct impact on SCE's financial
results. See Note 7 for further information on SCE's revenue.
Sales and Use Taxes
SCE bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and
use taxes are franchise fees, which SCE pays to various municipalities (based on contracts with these municipalities) in
order to operate within the limits of the municipality. SCE bills these franchise fees to its customers based on a CPUC-
authorized rate. These franchise fees, which are required to be paid regardless of SCE's ability to collect from the
customer, are accounted for on a gross basis. SCE's franchise fees billed to customers were $172 million, $147 million
and $131 million for the years ended December 31, 2022, 2021, and 2020, respectively. When SCE acts as an agent for
sales and use tax, the taxes are accounted for on a net basis. Amounts billed to and collected from customers for these
taxes are remitted to the taxing authorities and are not recognized as electric utility revenue.
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SCE's Alternative Revenue Programs
The CPUC and FERC have authorized additional, alternative revenue programs which adjust billings for the effects of
broad external factors. These alternative revenue programs allow SCE to recover costs that SCE has been authorized to
pass on to customers, including costs of certain operations and maintenance activities, costs to purchase electricity and
natural gas, and to fund public purpose, demand response, and customer energy efficiency programs. In general, revenue
is recognized for these alternative revenue programs at the time the costs are incurred. SCE begins recognizing revenues
for these programs when a program has been established by an order from either the CPUC or FERC that allows for
automatic adjustment of future rates, the amount of revenue for the period is objectively determinable and probable of
recovery and the revenue will be collected within 24 months following the end of the annual period.
Power Purchase Agreements
SCE enters into power purchase agreements ("PPAs") in the normal course of business. A power purchase agreement
may be considered a variable interest in a variable interest entity ("VIE"). If SCE is the primary beneficiary in the VIE,
SCE should consolidate the VIE. None of SCE's PPAs resulted in consolidation at December 31, 2022 and 2021. See
Note 3 for further discussion of PPAs that are considered variable interests.
A PPA may also contain a lease for accounting purposes. See "Leases" below and Note 12 and Note 13 for further
discussion of SCE's PPAs. A PPA that does not contain a lease may be classified as a derivative which is recorded at fair
value on the consolidated balance sheets. These PPAs may be eligible for an election to designate as a normal purchase
or sale, which is accounted for on an accrual basis as an executory contract.
PPAs that do not meet the above classifications are accounted for on an accrual basis.
Derivative Instruments
SCE records derivative instruments on its consolidated balance sheets as either assets or liabilities measured at fair value
unless otherwise exempted from derivative treatment as normal purchases or sales. The normal purchases and sales
exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable
period in the normal course of business.
Realized gains and losses from SCE's derivative instruments are expected to be recovered from or refunded to customers
through regulatory mechanisms and, therefore, SCE's fair value changes have no impact on purchased power expense or
earnings. SCE does not use hedge accounting for derivative transactions due to regulatory accounting treatment.
Where SCE's derivative instruments are subject to a master netting agreement and certain criteria are met, SCE presents
its derivative assets and liabilities on a net basis on its consolidated balance sheets. In addition, derivative positions are
offset against margin and cash collateral deposits. The results of derivative activities are recorded as part of cash flows
from operating activities on the consolidated statements of cash flows. See Note 6 for further information on derivative
instruments.
Leases
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified assets for a
period of time in exchange for consideration. An entity controls the use when it has a right to obtain substantially all of
the benefits from the use of the identified asset and has the right to direct the use of the asset. SCE determines if an
arrangement is a lease at contract inception. For all classes of underlying assets, except battery storage assets which were
first contracted in 2020 and for which each component will be separately accounted for, SCE includes both the lease and
non-lease components as a single component and accounts for it as a lease. Lease liabilities are recognized based on the
present value of the lease payments over the lease term at the commencement date. SCE calculates and uses the rate
implicit in the lease if the information is readily available or if not available, SCE uses its incremental borrowing rate in
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determining the present value of lease payments. Incremental borrowing rates are comprised of underlying risk-free rates
and secured credit spreads relative to first mortgage bonds with like tenors of lease term durations. Lease right-of-use
("ROU") assets are based on the liability, subject to adjustments, such as lease incentives. The ROU assets also include
any lease payments made at or before the commencement date. SCE excludes variable lease payments in measuring
lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments.
SCE's lease terms include options to extend or terminate the lease when it is reasonably certain that such options will be
exercised. SCE elected to exclude from the balance sheet short-term lease contracts of one year or less.
SCE enters into power purchase agreements that may contain leases. This occurs when a power purchase agreement
designates a specific power plant, SCE obtains substantially all of the economic benefits from the use of the plant and
has the right to direct the use of the plant. SCE also enters into a number of agreements to lease property and equipment
in the normal course of business, primarily related to vehicles, office space and other equipment. See Note 13 for further
discussion of SCE's contracts that are classified as operating and finance leases.
Edison International Parent and Other's leases primarily relate to Edison Energy Group. The leases for Edison
International Parent and Other are immaterial to Edison International.
Stock-Based Compensation
Stock options, performance shares, deferred stock units and restricted stock units have been granted under Edison
International's long-term incentive compensation programs. For equity awards that are settled in common stock, Edison
International either issues new common stock, or uses a third party to purchase shares from the market and deliver such
shares for the settlement of the awards. Stock options, performance shares, deferred stock units and restricted stock units
are settled in common stock. For awards that are otherwise settled entirely in common stock, Edison International
substitutes cash awards to the extent necessary to satisfy applicable tax withholding obligations or government levies.
Stock-based compensation expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite
service period based on estimated fair values. For equity awards paid in common stock, fair value is determined at the
grant date. For equity awards that have market conditions defined in the grants, expense is recognized based on grant
date fair value if the requisite service period is fulfilled. However, with respect to the portion of the performance shares
payable in common stock that are subject to financial performance conditions defined in the grants, the number of
performance shares expected to be earned is subject to revision and updated at each reporting period, with a related
adjustment to compensation expense.
For awards granted to retirement-eligible participants, stock compensation expense is recognized on a prorated basis
over the initial year. For awards granted to participants who become eligible for retirement during the requisite service
period, stock compensation expense is recognized over the period between the date of grant and the date the participant
first becomes eligible for retirement. Edison International and SCE estimate the number of awards that are expected to
vest rather than account for forfeitures when they occur. Share-based payments may create a permanent difference
between the amount of compensation expense recognized for book and tax purposes. The tax impact of this permanent
difference is recognized in earnings in the period it is created. See Note 9 for further information.
Employee Stock Purchase Plan
The Edison International Employee Stock Purchase Plan ("ESPP"), effective beginning July 2021, allows eligible
employees to make purchases of Edison International’s common stock. The maximum aggregate numbers of shares that
may be issued under the ESPP is 3,000,000 shares. Eligible employees may authorize payroll deductions of between 1%
and 10% of their compensation, up to a maximum of $25,000, to purchase shares of common stock at 97% of the market
price on the last day of each six months offering period. The ESPP is considered noncompensatory and stock issuances
under the ESPP are recorded directly in equity.
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SCE Dividends
CPUC holding company rules require that SCE's dividend policy be established by SCE's Board of Directors on the
same basis as if SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be
necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of both
Edison International and SCE. In addition, the CPUC regulates SCE's capital structure which limits the dividends it may
pay to its shareholders.
The common equity component of SCE's CPUC authorized capital structure is 52% on a weighted average basis over the
January 1, 2023 to December 31, 2025 compliance period ("Capital Structure Compliance Period"). This is unchanged
from the January 1, 2020 to December 31, 2022 compliance period. The CPUC authorized capital structure differs from
the capital structure calculated based on GAAP due to certain exclusions allowed by CPUC, including the impact of
SCE's contributions to the Wildfire Insurance Fund under AB 1054. For further information, see "Business—SCE—
Overview of Ratemaking Process" and "Business—Southern California Wildfires."
In May 2020, the CPUC issued a decision on SCE's application to the CPUC for waiver of compliance with its equity
ratio requirement, that allows SCE to exclude from its equity ratio calculations (i) net charges accrued in connection with
the 2017/2018 Wildfire/Mudslide Events and (ii) debt issued for the purpose of paying claims related to the 2017/2018
Wildfire/Mudslide Events up to an amount equal to the net charges accrued in connection with the 2017/2018
Wildfire/Mudslide Events. With these exclusions, SCE was in compliance with its authorized capital structure for the
compliance period from January 1, 2020 to December 31, 2022. The temporary exclusion lapsed on May 7, 2022. In
April 2022, SCE filed another application requesting continued waiver of compliance with its equity ratio requirement.
Under the CPUC's rules, SCE will not be deemed to be in violation of the equity ratio requirement while the waiver
application is pending resolution. While the exclusion is in place, SCE is required to notify the CPUC if an adverse
financial event reduces SCE's spot equity ratio by more than one percent from the level most recently filed with the
CPUC in the proceeding. The last spot equity ratio SCE filed with the CPUC in the proceeding did not exclude the then
$1.8 billion net charge and was 45.2% as of December 31, 2018 (at the time the common equity component of SCE's
CPUC authorized capital structure was required to remain at or above 48% on a weighted average basis over the
applicable 37-month period). SCE's spot equity ratio on December 31, 2018 would have been 48.7% had the $1.8 billion
net charge at December 31, 2018 been excluded, therefore SCE will notify the CPUC if its spot ratio drops below 47.7%
in any quarter. For further information, see "Note 12. Commitments and Contingencies—Contingencies—Southern
California Wildfires and Mudslides."
SCE monitors its compliance with the CPUC's equity ratio requirement based on the weighted average of the common
equity component of SCE's CPUC authorized capital structure over the Capital Structure Compliance Period using its
actual capital structure from the beginning of the Capital Structure Compliance Period through the reporting date
together with forecasted performance and expected financing activities for the remainder of the Capital Structure
Compliance Period. SCE expects to be compliant with its CPUC authorized capital structure at the end of its current
compliance period, December 31, 2025.
SCE's ability to declare and pay common dividends may be restricted under the terms of its outstanding series of
preference stock. For further information see Note 14.
As a California corporation, SCE's ability to pay dividends is also governed by the California General Corporation Law.
California law requires that for a dividend to be declared: (a) retained earnings must equal or exceed the proposed
dividend, or (b) immediately after the dividend is made, the value of the corporation's assets must exceed the value of its
liabilities plus amounts required to be paid, if any, in order to liquidate stock senior to the shares receiving the dividend.
Additionally, a California corporation may not declare a dividend if it is, or as a result of the dividend would be, likely to
be unable to meet its liabilities as they mature. Prior to declaring dividends, SCE's Board of Directors evaluates available
information, including when applicable, information pertaining to the 2017/2018 Wildfire/Mudslide Events, to ensure
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that the California law requirements for the declarations are met. On February 23, 2023, SCE declared a dividend to
Edison International of $350 million.
The timing and amount of future dividends are also dependent on a number of other factors including SCE's
requirements to fund other obligations and capital expenditures, and its ability to access the capital markets and generate
operating cash flows and earnings. If SCE incurs significant costs related to catastrophic wildfires and is unable to
recover such costs through insurance, the Wildfire Insurance Fund (for fires after July 12, 2019), or from customers or is
unable to access capital markets on reasonable terms, SCE may be limited in its ability to pay future dividends to Edison
International and its preference shareholders.
Edison International Dividend
In December 2022, Edison International declared a 5% increase to the annual dividend rate from $2.80 per share to
$2.95 per share. On February 23, 2023, Edison International declared a dividend of $0.7375 per share to be paid on
April 30, 2023. Edison International intends to maintain its target payout ratio of 45% – 55% of SCE's core earnings.
Earnings Per Share
Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings
allocation formula that determines EPS for each class of common stock and participating security. Edison International's
participating securities are stock-based compensation awards, payable in common shares, which earn dividend
equivalents on an equal basis with common shares once the awards are vested. See Note 9 and Note 14 for further
information.
EPS attributable to Edison International common shareholders was computed as follows:
(in millions, except per-share amounts)
Basic earnings per share:
Net income attributable to common shareholders
Net income available to common shareholders
Weighted average common shares outstanding
Basic earnings per share
Diluted earnings per share:
Net income attributable to common shareholders
Net income available to common shareholders
Income impact of assumed conversions
Net income available to common shareholders and assumed conversions
Weighted average common shares outstanding
Incremental shares from assumed conversions
Adjusted weighted average shares – diluted
Diluted earnings per share
Years ended December 31,
2021
2022
2020
$
$
$
$
$
$
$
612
612
381
1.61
612
612
1
613
381
2
383
1.60
$
$
$
$
$
$
$
759
759
380
2.00
759
759
1
760
380
—
380
2.00
$
$
$
$
$
$
$
739
739
373
1.98
739
739
—
739
373
1
374
1.98
In addition to the participating securities discussed above, Edison International also may award stock options, which are
payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to
purchase 5,839,549, 10,239,501, and 9,066,753 shares of common stock for the years ended December 31, 2022, 2021,
and 2020, respectively, were outstanding, but were not included in the computation of diluted earnings per share because
the effect would have been antidilutive.
Income Taxes
Edison International and SCE estimate their income taxes for each jurisdiction in which they operate. This involves
estimating current period tax expense along with assessing temporary differences resulting from differing treatment of
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items (such as depreciation) for tax and accounting purposes. These differences result in deferred tax assets and
liabilities, which are included in the consolidated balance sheets.
Income tax expense includes the current tax liability from operations and the change in deferred income taxes during the
year. Interest income, interest expense, and penalties associated with income taxes are generally reflected in "Income tax
benefit" on the consolidated statements of income.
Edison International's eligible subsidiaries are included in Edison International's consolidated federal income tax and
combined state tax returns. Edison International has tax-allocation and payment agreements with certain of its
subsidiaries. Pursuant to an income tax-allocation agreement approved by the CPUC, SCE's tax liability is computed as
if it filed its federal and state income tax returns on a separate return basis.
Business Acquisition
In October 2022, Edison Energy acquired 100% of Alfa Energy Ltd., an international energy and sustainability
consultancy based in the United Kingdom, for total consideration of $22 million, including the estimated fair value of
contingent consideration up to 14 million British pounds ($17 million U.S. dollars at December 31, 2022) that the sellers
will be entitled to if certain financial thresholds are achieved after 3 years. As a result of the acquisition, Edison Energy
recognized goodwill of $16 million, which is included in "Other long-term assets" on Edison International's consolidated
balance sheets as of December 31, 2022.
New Accounting Guidance
Accounting Guidance Adopted
In November 2021, the Financial Accounting Standards Board ("FASB") issued an accounting standards update to
require business entities that account for transactions with a government by providing additional details about the
transactions and their accounting impact. Edison International and SCE have adopted this standard on January 1, 2022
using the prospective adoption approach. The adoption of this standard did not have a material impact on Edison
International's and SCE's annual disclosure.
In December 2022, the FASB issued an accounting standards update to defer the original sunset date for applying the
reference rate reform relief in Accounting Standards Codification ("ASC") 848 to December 31, 2024 from
December 31, 2022. Edison International and SCE have adopted the standard as of December 1, 2022 prospectively.
SCE has certain preference stocks, for which the distributions will be payable at a floating rate referenced to the London
Interbank Offered Rate ("LIBOR") from 2022. Upon adoption of this standard, if contract amendments are made where
LIBOR is no longer valid, SCE expects to utilize the expedients in ASC 848 through the allowed period of
December 31, 2024.
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Note 2. Property, Plant and Equipment
SCE's utility property, plant and equipment included in the consolidated balance sheets is composed of the following:
(in millions)
Distribution
Transmission
Generation
General plant and other
Accumulated depreciation
Construction work in progress
Nuclear fuel, at amortized cost
Total utility property, plant and equipment
Capitalized Software Costs
December 31,
2022
32,754
18,106
3,880
6,121
(12,260)
48,601
4,551
122
53,274
$
$
$
$
2021
30,821
17,016
3,769
6,108
(11,407)
46,307
4,067
123
50,497
SCE capitalizes costs incurred during the application development stage of internal use software projects to property,
plant and equipment. SCE amortizes capitalized software costs ratably over the expected lives of the software, primarily
ranging from 5 to 7 years and commencing upon operational use. Capitalized software costs, included in general plant
and other above, was $2.0 billion at both December 31, 2022 and 2021, and accumulated amortization was $0.7 billion
and $0.6 billion, at December 31, 2022 and 2021, respectively. Amortization expense for capitalized software was
$344 million, $311 million and $218 million in 2022, 2021 and 2020, respectively. At December 31, 2022, amortization
expense is estimated to be $342 million, $309 million, $262 million, $190 million and $110 million for 2023 through
2027, respectively.
Jointly Owned Utility Projects
SCE owns undivided interests in transmission and generating assets for which each participant provides its own
financing. SCE's proportionate share of these assets is reflected in the consolidated balance sheets and included in the
above table. SCE's proportionate share of expenses for each project is reflected in the consolidated statements of income.
The following is SCE's investment in each asset as of December 31, 2022:
(in millions)
Transmission systems:
Eldorado
Pacific Intertie
Generating station:
Palo Verde (nuclear)
Total
Plant in
Service
Construction
Work in
Progress
Accumulated
Depreciation
Nuclear Fuel
(at amortized cost)
Net Book Ownership
Value
Interest
$ 351 $
354
107 $
2
(56) $
(82)
2,180
$ 2,885 $
56
165 $
(1,653)
(1,791) $
— $
—
402
274
122
705
122 $ 1,381
77 %
50 %
16 %
In addition to the jointly owned assets in the table above, SCE has ownership interests in jointly owned power poles with
other companies.
Note 3. Variable Interest Entities
A VIE is defined as a legal entity that meets one of two conditions: (1) the equity owners do not have sufficient equity at
risk, or (2) the holders of the equity investment at risk, as a group, lack any of the following three characteristics:
decision-making rights, the obligation to absorb losses or the right to receive the expected residual returns of the entity.
The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the
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VIE that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to
receive benefits from the entity that could potentially be significant to the VIE. The primary beneficiary is required to
consolidate the VIE. Commercial and operating activities are generally the factors that most significantly impact the
economic performance of such VIEs. Commercial and operating activities include construction, operation and
maintenance, fuel procurement, dispatch and compliance with regulatory and contractual requirements.
Variable Interest in VIEs that are Consolidated
SCE Recovery Funding LLC is a bankruptcy remote, wholly owned special purpose subsidiary, consolidated by SCE.
SCE Recovery Funding LLC is a VIE and SCE is the primary beneficiary. SCE Recovery Funding LLC was formed in
2021 for the purpose of issuing and servicing securitized bonds related to SCE's AB 1054 Excluded Capital
Expenditures.
In February 2022 and 2021, SCE Recovery Funding LLC issued $533 million and $338 million of securitized bonds,
respectively, and used the proceeds to acquire SCE's right, title and interest in and to non-bypassable rates and other
charges to be collected from certain existing and future customers in SCE's service territory, associated with the AB
1054 Excluded Capital Expenditures ("Recovery Property"), until the bonds are paid in full and all financing costs have
been recovered. The securitized bonds are secured by the Recovery Property and cash collections from the non-
bypassable rates and other charges are the sole source of funds to satisfy the debt obligation. The bondholders have no
recourse to SCE. For further details, see Note 5.
The following table summarizes the impact of SCE Recovery Funding LLC on SCE's and Edison International's
consolidated balance sheets.
(in millions)
Other current assets
Regulatory assets: non-current
Regulatory liabilities: current
Current portion of long-term debt
Other current liabilities
Long-term debt1
$
December 31,
2022
December 31,
2021
$
45
834
33
29
4
809
19
325
14
14
1
314
1
The bondholders have no recourse to SCE. Balance is net of unamortized debt issuance costs.
Variable Interest in VIEs that are not Consolidated
Power Purchase Agreements
SCE has PPAs that are classified as variable interests in VIEs, including agreements through which SCE provides the
natural gas to fuel the plants, fixed price contracts for renewable energy, and resource adequacy agreements that, upon
the seller's election, include the purchase of energy at fixed prices. SCE has concluded that it is not the primary
beneficiary of these VIEs since it does not control the commercial and operating activities of these entities. Since
payments for capacity are the primary source of income, the most significant economic activity for these VIEs is the
operation and maintenance of the power plants.
As of the balance sheet date, the carrying amount of assets and liabilities in SCE's consolidated balance sheet that relate
to involvement with VIEs that are not consolidated result from amounts due under the PPAs. Under these contracts, SCE
recovers the costs incurred through demonstration of compliance with its CPUC-approved long-term power procurement
plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity
arrangements, performance guarantees or other commitments associated with these contracts other than the purchase
commitments described in Note 12. As a result, there is no significant potential exposure to loss to SCE from its variable
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interest in these VIEs. The aggregate contracted capacity dedicated to SCE from these VIE projects was 3,907
megawatts ("MW") and 3,545 MW at December 31, 2022 and 2021, respectively, and the amounts that SCE paid to
these projects were $608 million and $673 million for the years ended December 31, 2022 and 2021, respectively. These
amounts are recoverable in customer rates, subject to reasonableness review.
Unconsolidated Trusts of SCE
SCE Trust II, Trust III, Trust IV, Trust V and Trust VI were formed in 2013, 2014, 2015, 2016 and 2017, respectively,
for the exclusive purpose of issuing the 5.10%, 5.75%, 5.375%, 5.45% and 5.00% trust preference securities,
respectively ("trust securities"). The trusts are VIEs. SCE has concluded that it is not the primary beneficiary of these
VIEs as it does not have the obligation to absorb the expected losses or the right to receive the expected residual returns
of the trusts. SCE Trust II, Trust III, Trust IV, Trust V and Trust VI issued to the public trust securities in the face
amounts of $400 million, $275 million, $325 million, $300 million and $475 million (cumulative, liquidation amounts of
$25 per share), respectively, and $10,000 of common stock each to SCE. The trusts invested the proceeds of these trust
securities in Series G, Series H, Series J, Series K and Series L Preference Stock issued by SCE in the principal amounts
of $400 million, $275 million, $325 million, $300 million and $475 million (cumulative, $2,500 per share liquidation
values), respectively, which have substantially the same payment terms as the respective trust securities.
The Series G, Series H, Series J, Series K and Series L Preference Stock and the corresponding trust securities do not
have a maturity date. Upon any redemption of any shares of the Series G, Series H, Series J, Series K or Series L
Preference Stock, a corresponding dollar amount of trust securities will be redeemed by the applicable trust (see Note 14
for further information). The applicable trust will make distributions at the same rate and on the same dates on the
applicable series of trust securities if and when the SCE board of directors declares and makes dividend payments on the
related Preference Stock. The applicable trust will use any dividends it receives on the related Preference Stock to make
its corresponding distributions on the applicable series of trust securities. If SCE does not make a dividend payment to
any of these trusts, SCE would be prohibited from paying dividends on its common stock. SCE has fully and
unconditionally guaranteed the payment of the trust securities and trust distributions, if and when SCE pays dividends on
the related Preference Stock.
The Trust II, Trust III, Trust IV, Trust V and Trust VI balance sheets as of December 31, 2022 and 2021, consisted of
investments of $220 million, $275 million, $325 million, $300 million and $475 million in the Series G, Series H,
Series J, Series K and Series L Preference Stock, respectively, $220 million, $275 million, $325 million, $300 million
and $475 million of trust securities, respectively, and $10,000 each of common stock.
The following table provides a summary of the trusts' income statements:
(in millions)
2022
Dividend income
Dividend distributions
2021
Dividend income
Dividend distributions
2020
Dividend income
Dividend distributions
Trust II
Years ended December 31,
Trust IV
Trust III
Trust V
Trust VI
$
$
$
$
$
$
11
11
20
20
20
20
$
$
$
16
16
16
16
16
16
$
$
$
17
17
17
17
17
17
$
$
$
16
16
16
16
16
16
24
24
24
24
24
24
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Note 4. Fair Value Measurements
Recurring Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (referred to as an "exit price"). Fair value of an asset or
liability considers assumptions that market participants would use in pricing the asset or liability, including assumptions
about nonperformance risk. As of December 31, 2022 and 2021, nonperformance risk was not material for Edison
International and SCE.
Assets and liabilities are categorized into a three-level fair value hierarchy based on valuation inputs used to determine
fair value.
Level 1 – The fair value of Edison International's and SCE's Level 1 assets and liabilities is determined using unadjusted
quoted prices in active markets that are available at the measurement date for identical assets and liabilities. This level
includes exchange-traded equity securities, U.S. treasury securities, mutual funds and money market funds.
Level 2 – Edison International's and SCE's Level 2 assets and liabilities include fixed income securities, primarily
consisting of U.S. government and agency bonds, municipal bonds and corporate bonds, and over-the-counter
derivatives. The fair value of fixed income securities is determined using a market approach by obtaining quoted prices
for similar assets and liabilities in active markets and inputs that are observable, either directly or indirectly, for
substantially the full term of the instrument.
The fair value of SCE's over-the-counter derivative contracts is determined using an income approach. SCE uses
standard pricing models to determine the net present value of estimated future cash flows. Inputs to the pricing models
include forward published or posted clearing prices from an exchange (Intercontinental Exchange) for similar
instruments and discount rates. A primary price source that best represents trade activity for each market is used to
develop observable forward market prices in determining the fair value of these positions. Broker quotes, prices from
exchanges or comparison to executed trades are used to validate and corroborate the primary price source. These price
quotations reflect mid-market prices (average of bid and ask) and are obtained from sources believed to provide the most
liquid market for the commodity.
Level 3 – The fair value of SCE's Level 3 assets and liabilities is determined using the income approach through various
models and techniques that require significant unobservable inputs. This level includes derivative contracts that trade
infrequently such as congestion revenue rights ("CRRs"). Edison International Parent and Other does not have any
Level 3 assets and liabilities.
Assumptions are made in order to value derivative contracts in which observable inputs are not available. In
circumstances where fair value cannot be verified with observable market transactions, it is possible that a different
valuation model could produce a materially different estimate of fair value. Modeling methodologies, inputs, and
techniques are reviewed and assessed as markets continue to develop and more pricing information becomes available
and the fair value is adjusted when it is concluded that a change in inputs or techniques would result in a new valuation
that better reflects the fair value of those derivative contracts. See Note 6 for a discussion of derivative instruments.
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SCE
The following table sets forth assets and liabilities of SCE that were accounted for at fair value by level within the fair
value hierarchy:
(in millions)
Assets at fair value
Derivative contracts
Money market funds and other 6
Nuclear decommissioning trusts:
Stocks2
Fixed Income3
Short-term investments, primarily cash equivalents
Subtotal of nuclear decommissioning trusts4
Total assets
Liabilities at fair value
Derivative contracts
Total liabilities
Net assets
(in millions)
Assets at fair value
Derivative contracts
Money market funds and other
Nuclear decommissioning trusts:
Stocks2
Fixed Income3
Short-term investments, primarily cash equivalents
Subtotal of nuclear decommissioning trusts4
Total assets
Liabilities at fair value
Derivative contracts
Total liabilities
Net assets
December 31, 2022
Level 1
Level 2
Level 3
Netting
and
Collateral1
Total
$ —
47
1,610
941
137
2,688
3,335
—
—
392
22
—
1,281
64
1,345
1,759
116
116
67
—
—
—
—
—
67
4
4
$ 3,335 $ 1,643 $
63 $
December 31, 2021
(218) $
—
241
669
—
—
—
—
(218)
1,610
2,222
201
4,033
4,943
1
(119)
(119)
1
(99) $ 4,942
Level 1
Level 2
Level 3
Netting
and
Collateral1
Total
$ — $
230
26 $
23
49 $
—
(31) $
—
44
253
1,972
1,083
102
3,157
3,387
—
—
—
1,607
125
1,732
1,781
42
42
$ 3,387 $ 1,739 $
—
—
—
—
49
—
—
—
—
(31)
1,972
2,690
227
4,889
5,186
5
5
44 $
(47)
(47)
—
—
16 $ 5,186
1
2
3
4
Represents the netting of assets and liabilities under master netting agreements and cash collateral.
Approximately 74% and 75% of SCE's equity investments were in companies located in the United States at December 31, 2022
and 2021, respectively.
Includes corporate bonds, which were diversified by the inclusion of collateralized mortgage obligations and other asset backed
securities of $49 million and $30 million at December 31, 2022 and 2021, respectively.
Excludes net payables of $85 million and $19 million at December 31, 2022 and 2021, respectively, which consist of interest and
dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.
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SCE Fair Value of Level 3
The following table sets forth a summary of changes in SCE's fair value of Level 3 net derivative assets and liabilities:
(in millions)
Fair value of net assets at beginning of period
Sales
Settlements
Total realized/unrealized gains1
Fair value of net assets at end of period
Years ended December 31,
2022
2021
$
$
44
(8)
(54)
81
63
$
$
108
(2)
(63)
1
44
1
Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.
There were no material transfers into or out of Level 3 during 2022 and 2021.
The following table sets forth SCE's valuation techniques and significant unobservable inputs used to determine fair
value for significant Level 3 assets and liabilities:
Fair Value
(in millions)
Assets
Liabilities
Valuation
Technique
Significant
Unobservable
Input
Range
(per MWh)
Weighted
Average
(per MWh)
Congestion revenue rights
December 31, 2022
$
67
$
December 31, 2021
49
Level 3 Fair Value Uncertainty
Auction
prices
Auction
prices
CAISO CRR
auction prices
CAISO CRR
auction prices
4
5
$(7.91) - $3,856.67
$
1.64
(18.87) - 43.03
1.46
For CRRs, increases or decreases in CAISO auction prices would result in higher or lower fair value, respectively.
Nuclear Decommissioning Trusts
SCE's nuclear decommissioning trust investments include equity securities, U.S. treasury securities and other fixed
income securities. Equity and treasury securities are classified as Level 1 as fair value is determined by observable
market prices in active or highly liquid and transparent markets. The remaining fixed income securities are classified as
Level 2. The fair value of these financial instruments is based on evaluated prices that reflect significant observable
market information such as reported trades, actual trade information of similar securities, benchmark yields,
broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. There are no securities classified as
Level 3 in the nuclear decommissioning trusts.
SCE's investment policies and CPUC requirements place limitations on the types and investment grade ratings of the
securities that may be held by the nuclear decommissioning trust funds. These policies restrict the trust from holding
alternative investments and limit the trust funds' exposures to investments in highly illiquid markets. With respect to
equity and fixed income securities, the trustee obtains prices from third-party pricing services which SCE is able to
independently corroborate as described below. The trustee monitors prices supplied by pricing services, including
reviewing prices against defined parameters' tolerances and performs research and resolves variances beyond the set
parameters. SCE corroborates the fair values of securities by comparison to other market-based price sources obtained
by SCE's investment managers. Differences outside established thresholds are followed-up with the trustee and resolved.
For each reporting period, SCE reviews the trustee determined fair value hierarchy and overrides the trustee level
classification when appropriate.
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Edison International Parent and Other
Edison International Parent and Other assets measured at fair value and classified as Level 1 consisted of equity
investments of $5 million and $12 million and money market funds of $137 million and $99 million at December 31,
2022 and December 31, 2021, respectively. Assets measured at fair value and classified as Level 2 consisted of short-
term investments of $2 million and $6 million at December 31, 2022 and December 31, 2021, respectively.
Fair Value of Debt Recorded at Carrying Value
The carrying value and fair value of Edison International's and SCE's long-term debt (including current portion of long-
term debt) are as follows:
(in millions)
Edison International
SCE
C
1 Carrying value is net of debt issuance costs.
December 31, 2022
Fair
arrying
Value2
Value1
December 31, 2021
Fair
Value2
Carrying
Value1
$ 29,639 $ 26,824 $ 25,247 $ 27,718
24,375
22,110
26,258
23,469
2 The fair value of Edison International's and SCE's short-term and long-term debt is classified as Level 2.
Note 5. Debt and Credit Agreements
Long-Term Debt
The following table summarizes long-term debt (rates and terms are as of December 31, 2022) of Edison International
and SCE:
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(in millions)
Edison International Parent and Other:
Debentures and notes:
2023 – 2029 (2.95% to 6.95%)
Current portion of long-term debt
Unamortized debt discount/premium and issuance costs, net
Total Edison International Parent and Other
SCE:
First and refunding mortgage bonds:
2023 – 2052 (0.70% to 6.05%)
Pollution-control bonds:
2023 – 2035 (1.45% to 2.63%)
Debentures and notes:
2029 – 2053 (5.06% to 6.65%)
Senior secured recovery bonds1:
2028 – 2046 (0.86% to 3.24%)
Other long-term debt2
Current portion of long-term debt
Unamortized debt discount/premium and issuance costs, net
Total SCE
Total Edison International
December 31,
2022
2021
$
$
3,400
(400)
(19)
2,981
3,150
(700)
(13)
2,437
23,900
20,314
752
306
849
600
(2,214)
(149)
24,044
27,025
$
752
306
333
518
(377)
(113)
21,733
24,170
$
1
2
The senior secured recovery bonds are payable only from and secured by the Recovery Property at SCE Recovery Funding LLC,
and do not constitute a debt or other legal obligation of, or interest in, SCE or any of its affiliates, except for SCE Recovery
Funding LLC. For further details, see Note 3.
2022 amount represents a term loan due in 2024 with an interest rate of adjusted term secured overnight financing rate ("SOFR")
plus 0.90%. 2021 amount represent short-term obligations refinanced on a long-term basis subsequent to December 31, 2021.
Edison International and SCE long-term debt maturities over the next five years are as follows:
(in millions)
2023
2024
2025
2026
2027
Liens and Security Interests
Edison
International
$
$
2,614
2,680
2,030
381
1,981
SCE
2,214
2,180
1,230
381
1,381
Almost all of SCE's properties are subject to a trust indenture lien. SCE has pledged first and refunding mortgage bonds
as collateral for borrowed funds obtained from pollution-control bonds issued by government agencies. SCE has a debt
covenant that requires a debt to total capitalization ratio to be less than or equal to 0.65 to 1. At December 31, 2022,
SCE's debt to total capitalization ratio was 0.56 to 1 and was in compliance with all other financial covenants that affect
access to capital. Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as
defined in the applicable agreements of less than or equal to 0.70 to 1. At December 31, 2022, Edison International
consolidated debt to total capitalization ratio was 0.64 to 1.
Credit Agreements and Short-Term Debt
The following table summarizes the status of the credit facilities at December 31, 2022:
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Table of Contents
(in millions, except for rates)
Borrower
Termination
date
SOFR
plus (bps)
Commitment
Outstanding
borrowings
Outstanding
letters of credit
Amount
available
Edison
International
Parent1, 3
SCE2, 3
Total Edison International
May 2026
May 2026
128 $
108
$
1,500 $
3,350
4,850 $
90 $
195
285 $
— $
431
431 $
1,410
2,724
4,134
1
2
3
At December 31, 2022, Edison International Parent had $90 million outstanding commercial paper, net of discount, at a
weighted-average interest rate of 4.92%. At December 31, 2021 Edison International Parent did not have any outstanding
commercial paper.
At December 31, 2022 and December 31, 2021, SCE had $195 million and $601 million outstanding commercial paper, net of
discount, at a weighted-average interest rate of 5.20% and 0.45%, respectively.
Proceeds are used to support commercial paper borrowings and general corporate purposes. The aggregate maximum principal
amount under the SCE and Edison International Parent revolving credit facilities may be increased up to $4.0 billion and
$2.0 billion, respectively, provided that additional lender commitments are obtained.
Short-term Term Loans
As of December 31, 2022, Edison International Parent had outstanding term loans of $600 million due in April 2023 and
$400 million due in November 2023, each bearing interest at either an adjusted term SOFR plus 0.70% and 0.95%,
respectively, or a base rate with no applicable margin. The term loan proceeds were used for general corporate purposes.
As of December 31, 2022, SCE had a $730 million outstanding balance on its green term loan agreement due in
May 2023 and bears interest at an adjusted term SOFR plus 0.55%.
Note 6. Derivative Instruments
Derivative financial instruments are used to manage exposure to commodity price risk. These risks are managed in part
by entering into forward commodity transactions, including options, swaps and futures. To mitigate credit risk from
counterparties in the event of nonperformance, master netting agreements are used whenever possible and counterparties
may be required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with
the transaction.
Commodity Price Risk
Commodity price risk represents the potential impact that can be caused by a change in the market value of a particular
commodity. SCE's electricity price exposure arises from energy purchased from and sold to wholesale markets as a
result of differences between SCE's load requirements and the amount of energy delivered from its generating facilities
and PPAs. SCE's natural gas price exposure arises from natural gas purchased for the Mountainview power plants,
Peaker plants and Qualifying Facilities contracts where pricing is based on a monthly natural gas index and PPAs in
which SCE has agreed to provide the natural gas needed for generation, referred to as tolling arrangements.
Credit and Default Risk
Credit and default risk represent the potential impact that can be caused if a counterparty were to default on its
contractual obligations and SCE would be exposed to spot markets for buying replacement power or selling excess
power. In addition, SCE would be exposed to the risk of non-payment of accounts receivable, primarily related to the
sales of excess power and realized gains on derivative instruments.
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Table of Contents
Certain power and gas contracts contain master netting agreements or similar agreements, which generally allow
counterparties subject to the agreement to offset amounts when certain criteria are met, such as in the event of default.
The objective of netting is to reduce credit exposure. Additionally, to reduce SCE's risk exposures counterparties may be
required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with the
transaction.
Certain power and gas contracts contain a provision that requires SCE to maintain an investment grade rating from the
major credit rating agencies that have credit ratings for SCE, referred to as a credit-risk-related contingent feature. If
SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover
derivative liabilities and the related outstanding payables. The net fair value of all derivative liabilities with these credit-
risk-related contingent features was less than $1 million as of December 31, 2022 and 2021, for which SCE posted
collateral of $24 million and no collateral to its counterparties for its derivative liabilities and related outstanding
payables as of December 31, 2022, and 2021, respectively. If the credit-risk-related contingent features underlying these
agreements were triggered on December 31, 2022, SCE would be required to post $58 million of collateral, most of
which is related to outstanding payables.
Fair Value of Derivative Instruments
SCE presents its derivative assets and liabilities on a net basis on its consolidated balance sheets when subject to master
netting agreements or similar agreements. Derivative positions are also offset against margin and cash collateral
deposits. In addition, SCE has provided collateral in the form of letters of credit. Collateral requirements can vary
depending upon the level of unsecured credit extended by counterparties, changes in market prices relative to contractual
commitments and other factors. See Note 4 for a discussion of fair value of derivative instruments. The following table
summarizes the gross and net fair values of SCE's commodity derivative instruments:
(in millions)
Commodity derivative contracts
Gross amounts recognized
Gross amounts offset in the
consolidated balance sheets
Cash collateral received4
Net amounts presented in the
consolidated balance sheets
Derivative Assets
Derivative Liabilities
Short-Term1 Long-Term Subtotal Short-Term3 Long-Term Subtotal Net Assets
December 31, 2022
$
459 $
— $ 459 $
120 $
— $ 120 $
339
(119)
(99)
—
(119)
(99)
(119)
— (119)
—
—
(99)
$
241 $
— $ 241 $
1 $
— $
1 $
240
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Table of Contents
(in millions)
Commodity derivative contracts
Gross amounts recognized
Gross amounts offset in the
consolidated balance sheets
Cash collateral posted4
Net amounts presented in the
consolidated balance sheets
Derivative Assets
Derivative Liabilities
Short-Term1 Long-Term2 Subtotal Short-Term Long-Term Subtotal Net Assets
December 31, 2021
$
70 $
6 $ 76 $
46 $
2 $
48 $
(30)
—
(2)
—
(32)
—
(30)
(16)
(2)
—
(32)
(16)
$
40 $
4 $ 44 $
— $
— $ — $
28
—
16
44
1
2
3
4
Included in "Other current assets" on Edison International's and SCE's consolidated balance sheets.
Included in "Other long-term assets" on Edison International's and SCE's consolidated balance sheets.
Included in "Other current liabilities" on Edison International's and SCE's consolidated balance sheets.
At December 31, 2022, SCE received cash collateral and accrued the obligation to return cash collateral totaled $99 million, all
of which was offset against derivative assets. At December 31, 2021, SCE posted $65 million of cash, of which $16 million was
offset against derivative liabilities and $49 million was reflected in "Other current assets" on the consolidated balance sheets.
Financial Statement Impact of Derivative Instruments
SCE recognizes realized gains and losses on derivative instruments as purchased power expense and expects that such
gains or losses will be part of the purchased power costs recovered from customers. As a result, realized gains and losses
do not affect earnings, but may temporarily affect cash flows. Due to expected future recovery from customers,
unrealized gains and losses are recorded as regulatory assets and liabilities and therefore also do not affect earnings. The
remaining effects of derivative activities and related regulatory offsets are reported in cash flows from operating
activities in the consolidated statements of cash flows.
The following table summarizes the components of SCE's economic hedging activity:
(in millions)
Realized gains
Unrealized gains (losses)
Notional Volumes of Derivative Instruments
2022
Years ended December 31,
2021
2020
$
$
178
310
$
200
(75)
87
17
The following table summarizes the notional volumes of derivatives used for SCE's economic hedging activities:
Commodity
Electricity options, swaps and forwards
Natural gas options, swaps and forwards
Congestion revenue rights
Unit of
Measure
GWh
Bcf
GWh
Economic Hedges
December 31,
2022
2021
1,022
42
44,028
1,869
58
33,216
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Table of Contents
Note 7. Revenue
SCE's revenue is disaggregated by two revenue sources:
•
• Earning activities – representing revenue authorized by the CPUC and FERC, which is intended to provide SCE a
reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission and
distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs,
depreciation, taxes and a return consistent with the capital structure. Also, included in earnings activities are revenue
or penalties related to incentive mechanisms, other operating revenue and regulatory charges or disallowances.
• Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery
•
of specific project or program costs, subject to a reasonableness review or compliance with upfront standards as well
as non-bypassable rates collected for SCE Recovery Funding LLC. Cost-recovery activities include rates which
provide recovery, subject to a reasonableness review of, among other things, fuel costs, purchased power costs,
public purpose related-program costs (including energy efficiency and demand-side management programs), certain
operation and maintenance expenses, and repayment of bonds and financing costs of SCE Recovery Funding LLC.
SCE earns no return on these activities.
The following table is a summary of SCE's revenue:
2022
Cost-
2021
Cost-
2020
Cost-
(in millions)
Revenues from contracts
with customers1,2
Alternative revenue
programs and other
operating revenue3
Total operating revenue
Earning Recovery
Activities Activities Consolidated Activities Activities Consolidated Activities Activities Consolidated
Earning Recovery
Earning Recovery
Total
Total
Total
$ 8,327
8,433 $ 16,760 $ 7,523 $ 6,824
14,347 $ 6,920 $ 5,539 $
12,459
681
(269)
412
349
178
527
548
539
$ 9,008 $ 8,164 $ 17,172 $ 7,872 $ 7,002 $ 14,874 $ 7,468 $ 6,078 $
1,087
13,546
1
2
3
SCE recorded CPUC revenue based on an annual revenue requirement set by a methodology established in the GRC proceeding
and FERC revenue authorized through a formula rate. For further information, see Note 1.
At December 31, 2022 and 2021, SCE's receivables related to contracts from customers were $2.3 billion and $2.3 billion, which
included accrued unbilled revenue of $638 million and $794 million, respectively.
Includes differences between amounts billed and authorized levels for both the CPUC and FERC.
Deferred Revenue
In July 2021, Morongo Transmission LLC ("Morongo") paid SCE $400 million for the use of a portion of the West of
Devers transmission line transfer capability for a period of 30 years. SCE recognized the entire proceeds as deferred
revenue and is amortizing deferred revenue from the use of the transfer capability over the 30-year term on a straight-
line basis resulting in revenue of $13 million per year. As of December 31, 2022, the deferred revenue was $381 million,
of which $13 million and $368 million are included in "Other current liabilities" and "Other deferred credits and other
long-term liabilities," respectively, on SCE's consolidated balance sheets. For the years ended December 31, 2022 and
2021, SCE has recognized revenue of $13 million and $6 million, respectively.
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Table of Contents
Note 8. Income Taxes
Current and Deferred Taxes
The components of income tax (benefit) expense by location of taxing jurisdiction are:
(in millions)
Current:
Federal
State
Deferred:
Federal
State
Total
$
$
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
2
13
15
$ — $
(179)
(179)
13
(22)
(9)
2
2
$ — $ — $
(103)
(74)
(177)
(162) $
83
(40)
43
(136) $
(230)
(66)
(296)
(305) $
(44)
(67)
(111)
(109) $
(45)
(45)
83
(21)
62
17
$
12
(26)
(14)
(207)
(56)
(263)
(277)
The components of net accumulated deferred income tax liability are:
(in millions)
Deferred tax assets:
Property
Wildfire-related1
Nuclear decommissioning trust assets in excess of nuclear ARO
liability
Loss and credit carryforwards2
Regulatory balances
Pension and postretirement benefits other than pensions, net
Leases
Other
Sub-total
Less: valuation allowance3
Total
Deferred tax liabilities:
Property
Regulatory balances
Nuclear decommissioning trust assets
Leases
Other
Total
Accumulated deferred income tax liability, net4
Edison International
SCE
2022
December 31,
2021
2022
2021
$
$
859
458
856
558
$
$
840
457
835
558
321
3,479
641
130
406
162
6,456
39
6,417
517
3,078
652
153
543
165
6,522
44
6,478
321
2,157
641
26
406
135
4,983
—
4,983
517
1,697
652
30
543
179
5,011
6
5,005
10,091
1,462
321
406
225
12,505
$ 6,088
9,645
1,242
517
543
207
12,154
$ 5,676
10,078
1,462
321
406
200
12,467
$ 7,484
9,633
1,242
517
543
186
12,121
$ 7,116
1
2
Relates to accrued estimated losses for wildfire-related claims, net of expected recoveries from insurance and FERC customers,
and contributions to the Wildfire Insurance Fund. For further information, see Note 12 and Note 1.
As of December 31, 2022, unrecognized tax benefits of $310 million and $254 million for Edison International and SCE,
respectively, are presented net against the deferred tax asset for the loss and tax credit carryforwards. As of December 31, 2021,
the unrecognized tax benefits netted against deferred tax assets and tax credit carryforwards were $277 million and $221 million
for Edison International and SCE, respectively.
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Table of Contents
3
As of December 31, 2022, Edison International has recorded a valuation allowance on deferred tax assets which are estimated to
expire before being utilized. The valuation allowance for Edison International includes $35 million for non-California state net
operating loss carryforwards and $4 million for California capital losses generated from sale of SoCore Energy in 2018. As of
December 31, 2021, the valuation allowance on deferred tax assets which are estimated to expire before being utilized for Edison
International includes $33 million for non-California state net operating loss carryforwards, $4 million for California capital
losses generated from sale of SoCore Energy in 2018, and $7 million for federal and California charitable contribution carryover
from 2017. Valuation allowance for SCE includes $6 million for federal and California charitable contribution carryover from
2017.
4
Included in "Deferred income taxes and credits" on the consolidated balance sheets.
Net Operating Loss and Tax Credit Carryforwards
The amounts of net operating loss and tax credit carryforwards (after-tax) are as follows:
Edison International
SCE
Loss
December 31, 2022
Loss
Credit
Credit
(in millions)
Expire in 2023
Expire between 2024 to 2027
Expire between 2029 to 2042
No expiration date1
Total
$
Carryforwards Carryforwards Carryforwards Carryforwards
—
— $
—
—
60
544
—
10
60
554 $
6 $
25
870
1,450
2,351 $
10 $
26
1,670
1,529
3,235 $
$
1
Under the Tax Cut and Jobs Act signed into law on December 22, 2017 ("Tax Reform"), that it was an event vs. net operating
losses generated after December 31, 2017 can carryforward indefinitely.
Edison International consolidates for federal income tax purposes, but not for financial accounting purposes, a group of
wind projects referred to as Capistrano Wind. The amount of net operating loss and tax credit carryforwards recognized
as part of deferred income taxes includes $121 million and $223 million related to Capistrano Wind for 2022 and 2021,
respectively. The change in Capistrano's carryforwards is primarily due to a sale of the Capistrano Wind projects
consummated in the third quarter of 2022. The tax impact of the sale and cancellation of debt is approximately
$125 million. The tax attributes not utilized as of December 31, 2022 will be available for the Edison International
consolidated group to utilize in the future. When the remaining Capistrano tax attributes are used in the future by Edison
International, payments will be made to those entities under a tax allocation agreement. Under the tax allocation
agreement, Edison International has recorded a corresponding liability as part of other long-term liabilities related to its
obligation to make payments to Capistrano Wind when these tax benefits are realized.
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Table of Contents
Effective Tax Rate
The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the
income tax provision:
(in millions)
Income from operations before income taxes
Provision for income tax at federal statutory
rate of 21%
Increase (decrease) in income tax from:
State tax, net of federal benefit
Property-related
Change related to uncertain tax position1
Wildfire related charges2
Average rate assumption method ("ARAM")
adjustment3
Corporate-owned life insurance cash
surrender value
Other
Total income tax (benefit) expense
Effective tax rate
Edison International
SCE
Years ended December 31,
2022
$ 662
2021
$ 789
2020
$ 566
2022
$ 845
2021
$
952
2020
$ 665
139
166
119
(70)
(219)
—
—
(47)
(233)
(147)
31
(61)
(320)
(15)
—
—
87
—
177
(57)
(219)
—
—
—
200
140
(33)
(233)
(37)
31
(52)
(320)
(19)
—
87
—
(9)
(3)
$ (162)
(8)
15
$ (136)
(8)
(20)
$ (305)
(9)
(1)
$ (109)
$
(24.5)%
(17.2)%
(53.9)%
(12.9)%
(8)
10
17
1.8 %
(8)
(18)
$ (277)
(41.7)%
1
2
3
In 2021, Edison International and SCE recognized tax benefits related to a settlement with the California Franchise Tax Board
"FTB" for tax years 2007 – 2012. See further discussion in Tax Disputes below. In 2020, Edison International and SCE
recognized tax expense and benefit, respectively, primarily due to the re-measurement of uncertain tax positions related to the
2010 – 2012 California state tax filings currently under audit.
Relates to the non-tax deductible portions of the SED Agreement (as defined in Note 12). See Note 12 for further discussion
under 2017/2018 Wildfire/Mudslide Events.
In July 2021, SCE received the IRS' response to its private letter ruling request, regarding the scope of the deferred tax
normalization requirements and the computations required to comply with the average rate assumption method. As a result,
SCE's estimate changed and a cumulative true-up of $87 million reduction in tax benefits was recorded in the third quarter of
2021, for the period of January 1, 2018 to June 30, 2021.
The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related
and other temporary differences which reverse over time. Flow-through items reduce current authorized revenue
requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods.
The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and
memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory
assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to
be recovered in future rates. For further information, see Note 11.
Accounting for Uncertainty in Income Taxes
Authoritative guidance related to accounting for uncertainty in income taxes requires an enterprise to recognize, in its
financial statements, the best estimate of the impact of a tax position by determining if the weight of available evidence
indicates it is more likely than not, based solely on the technical merits, that the position will be sustained upon
examination. The guidance requires the disclosure of all unrecognized tax benefits, which includes both the reserves
recorded for tax positions on filed tax returns and the unrecognized portion of affirmative claims.
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Table of Contents
Unrecognized Tax Benefits
The following table provides a reconciliation of unrecognized tax benefits:
(in millions)
Balance at January 1,
Tax positions taken during the current year:
Increases
Tax positions taken during a prior year:
Increases1
Decreases2
Settlements with taxing authorities3
Balance at December 31,
Edison International
2021
2020
2022
2022
SCE
2021
2020
$
613
$
679
$
370
$
340
$
320
$
282
54
—
(21)
—
646
$
53
3
(118)
(4)
613
$
55
274
(20)
—
679
$
54
—
(20)
—
374
$
53
1
(29)
(5)
340
$
56
4
(22)
—
320
$
1
2
3
Edison International recorded favorable tax positions in 2020 in connection with the Edison Mission Energy bankruptcy that
required a revaluation of the reserve for uncertain tax positions.
Decrease in 2021 was related to re-measurement as a result of a settlement with the FTB for tax years 2007 – 2012.
In 2021, Edison International reached a settlement with the FTB for tax years 2007 – 2012.
As of December 31, 2022, if recognized, $341 million of unrecognized tax benefits would impact Edison International's
effective tax rate and $69 million of the unrecognized tax benefits would impact SCE's effective tax rate.
Tax Disputes
Tax years that remain open for examination by the IRS and FTB are 2019 – 2021 and 2013 – 2021, respectively.
Accrued Interest and Penalties
The total amount of accrued interest and penalties related to income tax liabilities are:
(in millions)
Accrued interest and penalties
Edison International
SCE
December 31,
2022
$ —
2021
$ —
2022
2021
$
23
$
20
The net after-tax interest and penalties recognized in income tax (benefit) expense are:
(in millions)
Net after-tax interest and penalties tax (benefit)
expense
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$
— $
(41) $
4 $
2
$
(2)
$
6
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Table of Contents
Note 9. Compensation and Benefit Plans
Employee Savings Plan
The 401(k) defined contribution savings plan is designed to supplement employees' retirement income. The employer
contributions were as follows:
(in millions)
2022
2021
2020
Edison
International
Years ended December 31,
SCE
$
$
103
97
93
101
96
92
Pension Plans and Postretirement Benefits Other Than Pensions
Pension Plans
Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting
minimum service requirements. Employees hired by the participating companies on or after December 31, 2017 are no
longer eligible to participate in the pension plan. In lieu of that, an additional non-contributory employer contribution is
deposited into the Edison 401(k) Savings Plan. SCE recognizes pension expense for its nonexecutive plan as calculated
by the actuarial method used for ratemaking. The expected contributions (all by the employer) for Edison International
and SCE are approximately $35 million and $8 million, respectively, for the year ending December 31, 2023. Annual
contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved
regulatory mechanisms.
The funded position of Edison International's pension is sensitive to changes in market conditions. Changes in overall
interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund
Edison International's pension are affected by movements in the equity and bond markets. Due to SCE's regulatory
recovery treatment, a regulatory asset is recorded equal to the unfunded status and a regulatory liability is recorded equal
to the funded status. See Note 11 for further information.
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Table of Contents
Information on pension plan assets and benefit obligations for continuing and discontinued operations is shown below.
(in millions)
Change in projected benefit obligation
Projected benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain
Benefits paid
Projected benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets at end of year
Funded status at end of year
Amounts recognized in the consolidated balance sheets consist of 1:
Long-term assets
Current liabilities
Long-term liabilities
Amounts recognized in accumulated other comprehensive loss consist
of:
Net loss1
Amounts recognized as a regulatory liability
Accumulated benefit obligation at end of year
Pension plans with plan assets in excess of an accumulated benefit
obligation:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Weighted average assumptions used to determine obligations at end of
year:
Discount rate
Rate of compensation increase
Edison International
SCE
Years ended December 31,
2022
2021
2022
2021
$ 4,171
120
111
(589)
(289)
$ 3,524
$ 4,296
(575)
30
(289)
3,462
(62)
$
$ 4,476
130
103
(245)
(293)
$ 4,171
$ 4,171
368
50
(293)
4,296
125
$
$ 139
(26)
(175)
(62)
$
$
$
384
(26)
(233)
125
$ 3,694
115
97
(503)
(244)
$ 3,159
$ 4,061
(544)
2
(244)
3,275
116
$
$
$
128
(2)
(10)
116
$ 3,984
126
92
(246)
(262)
$ 3,694
$ 3,940
348
35
(262)
4,061
367
$
$
$
384
(2)
(15)
367
$
17
(139)
$ 3,401
74
(395)
$ 3,947
8
(139)
$ 3,049
12
(395)
$ 3,491
3,524
3,401
3,462
4,171
3,947
4,296
3,159
3,049
3,275
3,694
3,491
4,061
5.36 %
4.00 %
2.75 %
4.00 %
5.36 %
4.00 %
2.75 %
4.00 %
1
The SCE liability excludes a long-term payable due to Edison International Parent of $93 million and $132 million at
December 31, 2022 and 2021, respectively, related to certain SCE postretirement benefit obligations transferred to Edison
International Parent. SCE's accumulated other comprehensive loss of $8 million and $12 million at December 31, 2022 and 2021,
excludes net losses of $3 million and $32 million related to these benefits, respectively.
For Edison International and SCE, respectively, the 2022 actuarial gains are primarily related to $1.0 billion and
$929 million in gains from an increase in the discount rate (from 2.75% as of December 31, 2021 to 5.36% as of
December 31, 2022), partially offset by $456 million and $430 million in losses from economic assumption and
experience. For Edison International and SCE, respectively, the 2021 actuarial gains are primarily related to
$159 million and $149 million in gains from an increase in discount rate (from 2.38% as of December 31, 2020 to 2.75%
as of December 31, 2021), $69 million and $83 million in gains from valuation and experience.
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Table of Contents
Net periodic pension expense components are:
(in millions)
Service cost
Non-service cost (benefit)
Interest cost
Expected return on plan assets
Settlement costs
Amortization of prior service cost
Amortization of net loss
Regulatory adjustment
Total non-service benefit1
Total expense recognized
$
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$
120
$
130
$
121
$
118
$
127
$
119
111
(227)
4
—
5
6
(101)
19
$
103
(222)
—
1
11
25
(82)
48
$
124
(215)
—
2
10
16
(63)
58
$
101
(215)
4
—
2
6
(102)
16
$
95
(211)
—
1
7
25
(83)
44
$
114
(203)
—
1
7
16
(65)
54
1
Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.
Other changes in pension plan assets and benefit obligations recognized in other comprehensive income:
(in millions)
Net (gain) loss
Settlement charges
Amortization of net loss
Total (gain) loss recognized in other
comprehensive income
Total recognized in expense and other
comprehensive income
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$
(45) $
(4)
(8)
(10) $
—
(11)
$
11
—
(10)
(24) $
(4)
(5)
(5) $
—
(7)
(57)
(21)
1
(33)
(12)
9
—
(7)
2
$
(38) $
27
$
59
$
(17) $
32
$
56
In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities
instead of charges and credits to other comprehensive income for the portion of SCE's postretirement benefit plans that
are recoverable in utility rates.
Edison International and SCE used the following weighted average assumptions to determine pension expense:
Discount rate
Rate of compensation increase
Expected long-term return on plan assets
Interest crediting rate for cash balance account
Starting rate
Ultimate rate
Year ultimate rate is reached
2022
Years ended December 31,
2021
2.38 %
4.00 %
5.50 %
2.75 %
4.00 %
5.50 %
2020
3.11 %
4.10 %
6.00 %
3.12 %
4.50 %
2026
3.03 %
4.50 %
2025
3.61 %
5.00 %
2025
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The following benefit payments, which reflect service rendered and expected future service, are expected to be paid:
(in millions)
2023
2024
2025
2026
2027
2028 – 2032
Edison
International
310
$
314
313
321
308
1,428
$
SCE
269
274
276
282
276
1,291
Postretirement Benefits Other Than Pensions ("PBOP(s)")
Employees hired prior to December 31, 2017 who are retiring at or after age 55 with at least 10 years of service may be
eligible for postretirement healthcare benefits. Eligibility for a company contribution toward the cost of these benefits in
retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date.
Employees hired on or after December 31, 2017 are no longer eligible for retiree healthcare benefits. In lieu of those
benefits, Edison International will provide a health reimbursement account of $200 per month available only after
meeting certain age and service year requirements. Under the terms of the Edison International Welfare Benefit Plan
("PBOP Plan"), each participating employer (Edison International or its participating subsidiaries) is responsible for the
costs and expenses of PBOP Plan benefits with respect to its employees and former employees that exceed the
participants' share of contributions. A participating employer may terminate the PBOP Plan benefits with respect to its
employees and former employees, as may SCE (as PBOP Plan sponsor), and, accordingly, the participants' PBOP Plan
benefits are not vested benefits.
The expected contributions (substantially all of which are expected to be made by SCE) for PBOP benefits are
$8 million for the year ended December 31, 2023. Annual contributions related to SCE employees made to SCE plans
are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum,
equal to the total annual expense for these plans.
SCE has three voluntary employees' beneficiary association trusts ("VEBA Trusts") that can only be used to pay for
retiree health care benefits of SCE and its subsidiaries. Once funded into the VEBA Trusts, neither SCE nor Edison
International can subsequently recover remaining amounts in the VEBA Trusts. Participants of the PBOP Plan do not
have a beneficial interest in the VEBA Trusts. The VEBA Trust assets are sensitive to changes in market conditions.
Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts
established to fund Edison International's other postretirement benefits are affected by movements in the equity and bond
markets. Due to SCE's regulatory recovery treatment, the funded status is offset by a regulatory liability.
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Table of Contents
Information on PBOP Plan assets and benefit obligations is shown below:
(in millions)
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain
Plan participants' contributions
Benefits paid
Benefit obligation at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on assets
Employer contributions
Plan participants' contributions
Benefits paid
Fair value of plan assets at end of year
Funded status at end of year
Amounts recognized in the consolidated balance sheets consist of:
Long-term assets
Current liabilities
Long-term liabilities
Amounts recognized in accumulated other comprehensive loss consist
of:
Net (gain)/loss
Amounts recognized as a regulatory liability
Weighted average assumptions used to determine obligations at end of
year:
Discount rate
Assumed health care cost trend rates:
Rate assumed for following year
Ultimate rate
Year ultimate rate reached
Edison International
SCE
Years ended December 31,
2022
2021
2022
2021
$ 1,904
34
56
(598)
29
(94)
$ 1,331
$ 2,772
(527)
7
29
(94)
2,187
$ 856
$ 871
(8)
(7)
$ 856
$
(2)
(867)
$ 2,073
40
52
(190)
29
(100)
$ 1,904
$ 2,717
119
7
29
(100)
2,772
868
$
$ 1,895
34
55
(596)
29
(94)
$ 1,323
$ 2,772
(527)
7
29
(94)
2,187
864
$
885
(8)
(9)
868
$
$
871
(7)
—
864
$
$
$
$ 2,064
40
52
(190)
29
(100)
$ 1,895
$ 2,717
119
7
29
(100)
2,772
877
$
$
$
885
(8)
—
877
1
(886)
$ —
(867)
$ —
(886)
5.43 %
2.95 %
5.43 %
2.95 %
6.75 %
5.00 %
2029
6.25 %
5.00 %
2029
6.75 %
5.00 %
2029
6.25 %
5.00 %
2029
For Edison International and SCE, the 2022 actuarial gains are primarily related to $546 million and $543 million in
gains from an increase in the discount rate (from 2.95% as of December 31, 2021 to 5.43% as of December 31, 2022),
respectively. For both Edison International and SCE, the 2021 actuarial gains are primarily related to $113 million in
gains from valuation and experience and $83 million in gains from an increase in the discount rate (from 2.67% as of
December 31, 2020 to 2.95% as of December 31, 2021).
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Table of Contents
Net periodic PBOP expense components are:
(in millions)
Service cost
Non-service cost (benefit)
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of net gain
Regulatory adjustment
Total non-service benefit1
Total expense
Edison International
2022
2021
2020
2022
Years ended December 31,
SCE
2021
$
34
$
40
$
38
$
34
$
40
2020
37
$
56
(97)
(2)
(45)
55
(33)
1
$
52
(106)
(1)
(35)
51
(39)
1
$
63
(119)
(1)
(29)
49
(37)
1
$
55
(97)
(2)
(45)
55
(34)
63
(119)
(1)
(29)
49
(37)
$ — $ — $ —
52
(106)
(1)
(36)
51
(40)
1
Included in "Other income" on Edison International's and SCE's consolidated income statements. For further details, see Note 16.
In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities
instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans
that are recoverable in utility rates.
Edison International and SCE used the following weighted average assumptions to determine PBOP expense:
Discount rate
Expected long-term return on plan assets
Assumed health care cost trend rates:
Current year
Ultimate rate
Year ultimate rate reached
2022
Years ended December 31,
2021
2.67 %
4.00 %
2.95 %
3.50 %
2020
3.32 %
4.90 %
6.25 %
5.00 %
2029
6.50 %
5.00 %
2029
6.50 %
5.00 %
2029
The following benefit payments (net of plan participants' contributions) are expected to be paid:
(in millions)
2023
2024
2025
2026
2027
2028 – 2032
Plan Assets
Edison
International
78
$
81
82
84
86
450
$
SCE
78
80
82
84
85
447
Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies
The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a
combination of asset classes and may have active and passive investment strategies within asset classes. Target
allocations for 2022 pension plan assets were 19.1% for U.S. equities, 10.9% for non-U.S. equities, 55% for fixed
income and 15% for opportunistic and/or alternative investments. Target allocations for 2022 PBOP plan assets (except
for Represented VEBA which is 95% for fixed income and 5% for U.S. and non-U.S. equities) are 44% for U.S. and
non-U.S. equities, 50% for fixed income and 6% for opportunistic and/or alternative investments. Edison International
employs multiple investment management firms. Investment managers within each asset class cover a range of
108
Table of Contents
investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers,
styles and securities. Plan asset classes and individual manager performances are measured against targets. Edison
International also monitors the stability of its investment managers' organizations.
Allowable investment types under CPUC investment guidelines include:
•
• United States equities: common and preferred stocks of large, medium, and small companies which are
predominantly United States-based.
•
• Non-United States equities: equity securities issued by companies domiciled outside the United States and in
depository receipts which represent ownership of securities of non-United States companies.
•
• Fixed income: fixed income securities issued or guaranteed by the United States government, non-United States
governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities
and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below
investment grade.
•
• Opportunistic, alternative and other investments: Opportunistic investments in short to intermediate term market
opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid.
Alternative investments are limited partnerships that invest in non-publicly traded entities. Other investments are
diversified among multiple asset classes such as global equity, fixed income currency and commodities markets.
Investments are made in liquid or illiquid instruments within and across markets. The investment returns are
expected to approximate the plans' expected investment returns.
Asset class portfolio weights are permitted to range within plus or minus 5%. Where approved by the fiduciary
investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions.
Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures
contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient
exposure to markets. Derivatives are not used to leverage the plans or any portfolios.
Determination of the Expected Long-Term Rate of Return on Assets
The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for
plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns is
subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis.
Capital Markets Return Forecasts
SCE's capital markets return forecast methodologies primarily use a combination of historical market data, current
market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts and a
building block approach. The forecasts are developed using variables such as real risk-free interest, inflation and asset
class specific risk premiums. For equities, the risk premium is based on an assumed average equity risk premium of 5%
over cash. The forecasted return on private equity and opportunistic investments are estimated at a 4% premium above
public equity, reflecting a premium for higher volatility and lower liquidity. For fixed income, the risk premium is based
on a comprehensive modeling of credit spreads.
Fair Value of Plan Assets
The PBOP Plan and the Southern California Edison Company Retirement Plan Trust assets include investments in equity
securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other
investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S.
treasury securities, mutual and money market funds are classified as Level 1 as fair value is determined by observable,
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Table of Contents
unadjusted quoted market prices in active or highly liquid and transparent markets. The fair value of the underlying
investments in equity mutual funds are based on stock-exchange prices. The fair value of the underlying investments in
fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices
that reflect significant observable market information such as reported trades, actual trade information of similar
securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Foreign
exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are
not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. No investment
is classified as Level 3 as of December 31, 2022 and 2021. Common/collective funds and partnerships are measured at
fair value using the net asset value per share ("NAV") and have not been classified in the fair value hierarchy. Other
investment entities are valued similarly to common/collective funds and are therefore classified as NAV. The Level 1
registered investment companies are either mutual or money market funds. The remaining funds in this category are
readily redeemable and classified as NAV and are discussed further at note 8 to the pension plan trust investments table
below.
Edison International reviews the process/procedures of both the pricing services and the trustee to gain an understanding
of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and Edison
International's validation procedures for pension and PBOP equity and fixed income securities are the same as the
nuclear decommissioning trusts. For further discussion, see Note 4. The values of Level 1 mutual and money market
funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund
managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's
investment managers corroborate the trustee fair values.
Pension Plan
The following table sets forth the investments for Edison International and SCE that were accounted for at fair value as
of December 31, 2022 and December 31, 2021, respectively, by asset class and level within the fair value hierarchy:
Level 1
281
227
—
—
—
—
206
14
—
728
$
$
$
December 31, 2022
NAV1
Level 2
$ —
293
—
3
—
973
658
—
613
—
63
—
159
—
—
—
48
7
$ 1,500
$ 1,317
Total
$
574
230
973
658
613
63
365
14
55
$ 3,545
(83)
3,462
$ 3,275
(in millions)
U.S. government and agency securities2
Corporate stocks3
Corporate bonds4
Common/collective funds5
Partnerships/joint ventures6
Other investment entities7
Registered investment companies8
Interest-bearing cash
Other
Total
Receivables and payables, net
Combined net plan assets available for benefits
SCE's share of net plan assets
110
Table of Contents
(in millions)
U.S. government and agency securities2
Corporate stocks3
Corporate bonds4
Common/collective funds5
Partnerships/joint ventures6
Other investment entities7
Registered investment companies8
Interest-bearing cash
Other
Total
Receivables and payables, net
Combined net plan assets available for benefits
SCE's share of net plan assets
Level 1
217
466
—
—
—
—
57
8
—
748
$
$
$
December 31, 2021
NAV1
Level 2
$ —
918
—
4
815
—
964
—
688
—
110
—
31
—
—
—
45
—
$ 1,793
$ 1,782
Total
$ 1,135
470
815
964
688
110
88
8
45
$ 4,323
(27)
4,296
$ 4,061
1
2
3
4
5
6
7
8
These investments are measured at fair value using the net asset value per share practical expedient and have not been classified
in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value
hierarchy to the net plan assets available for benefits.
Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation.
Corporate stocks are diversified. At December 31, 2022 and 2021, respectively, performance for actively managed separate
accounts is primarily benchmarked against the Russell Indexes (36% and 44%) and Morgan Stanley Capital International (MSCI)
index (64% and 56%).
Corporate bonds are diversified. At December 31, 2022 and 2021, respectively, this category includes $67 million and
$61 million for collateralized mortgage obligations and other asset backed securities.
The common/collective assets are invested in equity index funds that seek to track performance of the Standard and Poor's 500
Index (41% at both December 31, 2022 and 2021). 10% are invested on Russell 1000 indexes at December 31, 2021. In addition,
at December 31, 2022 and 2021, respectively, 46% and 38% of the assets in this category are in index funds which seek to track
performance in the MSCI All Country World Index ex-US and 11% and 9% of this category are in non-index U.S. equity fund,
which is actively managed.
At December 31, 2022 and 2021, respectively, 76% and 62% are invested in private equity funds with investment strategies that
include branded consumer products and clean technology companies, 18% and 17% are invested in ABS including distressed
mortgages and commercial and residential loans, 2% and 3% are invested in a broad range of financial assets in all global
markets. 15% are invested in publicly traded fixed income securities at December 31, 2021.
At December 31, 2022, 64% are invested in domestic mortgage backed securities and 36% in high yield debt securities,
respectively. At December 31, 2021, 71% are invested in emerging market equity securities and 20% in domestic mortgage
backed securities, respectively.
At December 31, 2022, 56% are invested in Level 1 corporate bond fund, 21% in fixed income fund used for cash management
and 22% in US equity fund, respectively. At December 31, 2021, 63% were invested in Level 1 registered investment companies
that primarily consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index and 35%
on fixed income fund used for cash management.
At December 31, 2022 and 2021, respectively, approximately 61% and 62% of the publicly traded equity investments,
including equities in the common/collective funds, were located in the United States.
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Table of Contents
Postretirement Benefits Other than Pensions
The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair
value as of December 31, 2022 and December 31, 2021, respectively, by asset class and level within the fair value
hierarchy:
Level 1
222
103
—
—
—
55
—
—
380
$
$
$
December 31, 2022
NAV1
Level 2
$ —
304
—
2
—
860
413
—
119
—
—
—
—
56
—
59
532
$ 1,281
$
Total
$
526
105
860
413
119
55
56
59
$ 2,193
(6)
2,187
$ 2,187
(in millions)
U.S. government and agency securities2
Corporate stocks3
Corporate notes and bonds4
Common/collective funds5
Partnerships6
Registered investment companies7
Interest bearing cash
Other8
Total
Receivables and payables, net
Combined net plan assets available for benefits
SCE's share of net plan assets
112
Table of Contents
(in millions)
U.S. government and agency securities2
Corporate stocks3
Corporate notes and bonds4
Common/collective funds5
Partnerships6
Registered investment companies7
Interest bearing cash
Other8
Total
Receivables and payables, net
Combined net plan assets available for benefits
SCE's share of net plan assets
$
Level 1
813
145
—
—
—
44
—
—
$ 1,002
$
December 31, 2021
NAV1
Level 2
$ —
10
—
3
997
—
544
—
107
—
—
—
—
51
—
59
651
$ 1,120
$
Total
$
823
148
997
544
107
44
51
59
$ 2,773
(1)
$ 2,772
$ 2,772
1
2
3
4
5
6
7
8
These investments are measured at fair value using the net asset value per share practical expedient and have not been classified
in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value
hierarchy to the net plan assets available for benefits.
Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home
Loan Mortgage Corporation and the Federal National Mortgage Association.
Corporate stock performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes
(73%) and the MSCI All Country World Index (27%) for both 2022 and 2021.
Corporate notes and bonds are diversified and include approximately $150 million for commercial collateralized mortgage
obligations and other asset backed securities at both December 31, 2022 and 2021.
At December 31, 2022 and 2021, respectively, 53% and 65% of the common/collective assets are invested in index funds which
seek to track performance in the MSCI All Country World Index Investable Market Index. 27% and 25% are invested in a non-
index U.S. equity fund which is actively managed. The remaining assets in this category are primarily invested in fixed income
fund and emerging market fund.
At December 31, 2022 and 2021, respectively, 63% and 54% of the partnerships are invested in private equity and venture
capital funds. Investment strategies for these funds include branded consumer products, clean and information technology and
healthcare. Of the remaining partnerships category, 31% and 35% are invested in asset backed securities including distressed
mortgages, distressed companies and commercial and residential loans and debt and equity of banks, 6% and 11% are invested in
a broad range of financial assets in all global markets.
At December 31, 2022 and 2021, respectively, registered investment companies were primarily invested in a money market fund
(75% and 61%) and exchange rate trade funds which seek to track performance of MSCI Emerging Market Index, Russell 2000
Index and international small cap equities (25% and 39%)
Other includes $53 million and $44 million of municipal securities at December 31, 2022 and 2021, respectively.
At December 31, 2022 and 2021, respectively, approximately 70% and 68% of the publicly traded equity investments,
including equities in the common/collective funds, were located in the United States.
Stock-Based Compensation
Edison International maintains a shareholder-approved incentive plan (the "2007 Performance Incentive Plan") that
includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized
to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended, is approximately
71 million shares. As of December 31, 2022, Edison International had approximately 16 million shares remaining
available for new award grants under its stock-based compensation plans.
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The following table summarizes total expense and tax benefits associated with stock-based compensation:
(in millions)
Stock-based compensation expense1:
Stock options
Performance shares
Restricted stock units
Other
Total stock-based compensation expense
Income tax benefits related to stock-based
compensation expense
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$
$
$
13
13
14
2
42
9
$
$
$
16
9
12
2
39
4
$
$
$
15
5
8
1
29
$
$
7
6
9
—
22
4
$
5
$
$
$
8
4
8
—
20
3
$
$
$
7
2
4
—
13
3
1
Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income.
Stock Options
Under the 2007 Performance Incentive Plan, Edison International has granted stock options at exercise prices equal to
the closing price at the grant date. Edison International may grant stock options and other awards related to, or with a
value derived from, its common stock to directors and certain employees. Options generally expire 10 years after the
grant date and vest over a period of three or four years of continuous service in equal annual increments, except for
awards granted to retirement-eligible participants, which vest on an accelerated basis.
The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model.
The Black-Scholes option-pricing model requires various assumptions noted in the following table:
Expected terms (in years)
Risk-free interest rate
Expected dividend yield
Weighted average expected dividend yield
Expected volatility
Weighted average volatility
2022
5.0
1.6% - 4.1%
4.0% - 5.0%
4.0%
Years ended December 31,
2021
5.4
1.1% - 1.3%
4.1% - 4.8%
4.5%
27.8% - 28.6% 26.9% - 27.1% 24.9% - 26.9%
26.9%
2020
5.2
0.4% - 0.6%
4.2% - 5.0%
4.7%
25.0%
27.8%
The expected term represents the period of time for which the options are expected to be outstanding and is primarily
based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate
for periods within the contractual life of the option is based on a zero-coupon U.S. Treasury STRIPS (separate trading of
registered interest and principal of securities) whose maturity corresponds to the option's expected term on the
measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the
length of the option's expected term for 2022. The volatility period used was 60 months, 64 months and 63 months at
December 31, 2022, 2021 and 2020, respectively.
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The following is a summary of the status of Edison International's stock options:
Edison International:
Outstanding at December 31, 2021
Granted
Forfeited or expired
Exercised1
Outstanding at December 31, 2022
Vested and expected to vest at December 31, 2022
Exercisable at December 31, 2022
SCE:
Outstanding at December 31, 2021
Granted
Forfeited or expired
Exercised1
Affiliate transfers, net
Outstanding at December 31, 2022
Vested and expected to vest at December 31, 2022
Exercisable at December 31, 2022
Weighted Average
Remaining
Exercise Contractual
Term (years)
Price
Aggregate
Intrinsic Value
(in millions)
$ 62.78
63.67
64.89
54.16
63.64
63.73
$ 64.94
$ 62.03
63.51
64.83
53.78
66.09
63.31
63.40
$ 64.64
5.43
5.35
4.31
$
$
5.45
5.38
4.28
$
$
30
17
17
9
Shares
12,354,826
909,504
(223,836)
(1,156,938)
11,883,556
11,538,210
8,074,165
6,180,154
470,852
(143,235)
(810,294)
100,155
5,797,632
5,620,440
3,849,057
1
Edison International and SCE recognized tax benefits of $5 million and $3 million, respectively, from stock options exercised in
2022.
At December 31, 2022, total unrecognized compensation cost related to stock options and the weighted average period
the cost is expected to be recognized are as follows:
Unrecognized compensation cost, net of expected forfeitures (in millions)
Weighted average period (in years)
The following is a summary of supplemental data on stock options:
Edison International
12
$
1.8
$
SCE
6
1.8
(in millions, except per award amounts)
2022
2021
2020
2022
Edison International
Years ended December 31,
SCE
2021
2020
Weighted average grant date fair value per
option granted
Fair value of options vested
Value of options exercised
$
$
9.92
8
17
$
7.26
3
8
$
8.18
2
9
9.92
5
12
$
$
7.30
3
6
8.16
2
7
Performance Shares
A target number of contingent performance shares were awarded to executives in 2022, 2021 and 2020 and vest as of
December 31, 2024, 2023 and 2022, respectively. The vesting of the grants is dependent upon market and financial
performance and service conditions as defined in the grants for each of the years. The number of performance shares
earned from each year's grants could range from zero to twice the target number (plus additional units credited as
dividend equivalents).
The fair value of market condition performance shares is determined using a Monte Carlo simulation valuation model
for the total shareholder return. The fair value of financial performance condition performance shares is determined (i) at
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grant as the target number of shares (which Edison International determined to be the probable outcome) valued at the
closing price on the grant date of Edison International common stock and (ii) subsequently using Edison International's
earnings per share compared to pre-established targets.
The following is a summary of the status of Edison International's nonvested performance shares:
Edison International:
Nonvested at December 31, 2021
Granted
Forfeited
Vested
Nonvested at December 31, 2022
SCE:
Nonvested at December 31, 2021
Granted
Forfeited
Vested
Affiliate transfers, net
Nonvested at December 31, 2022
Restricted Stock Units
Equity Awards
Shares
Weighted Average
Fair Value
262,808
265,916
(17,643)
(108,251)
402,830
137,807
138,254
(12,565)
(54,487)
1,064
210,073
$
$
$
$
61.92
67.88
64.68
67.55
64.22
61.50
67.74
65.60
67.37
59.25
63.93
Restricted stock units were awarded to executives in 2022, 2021 and 2020 and vest and become payable on
January 2, 2025, January 2, 2024 and January 3, 2023, respectively. Each restricted stock unit awarded includes a
dividend equivalent feature and is a contractual right to receive one share of Edison International common stock, if
vesting requirements are satisfied. The vesting of Edison International's restricted stock units is dependent upon
continuous service through the end of the vesting period, except for awards granted to retirement-eligible participants,
which vest on an accelerated basis.
The following is a summary of the status of Edison International's nonvested restricted stock units:
Nonvested at December 31, 2021
Granted
Forfeited
Vested
Affiliate transfers, net
Nonvested at December 31, 2022
Edison International
Weighted Average
Grant Date
Fair Value
SCE
Weighted Average
Grant Date
Fair Value
$
$
58.45
63.58
60.37
62.91
57.64
60.13
Shares
344,932
218,721
(19,073)
(62,034)
5,789
488,335
59.44
63.58
60.42
62.76
—
60.60
Shares
546,155 $
298,558
(24,780)
(121,751)
—
698,182 $
The fair value for each restricted stock unit awarded is determined as the closing price of Edison International common
stock on the grant date.
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Note 10. Investments
Nuclear Decommissioning Trusts
Future decommissioning costs related to SCE's nuclear assets are expected to be funded from independent
decommissioning trusts.
The following table sets forth amortized cost and fair value of the trust investments (see Note 4 for a discussion of fair
value of the trust investments):
(in millions)
Municipal bonds
Government and agency securities
Corporate bonds
Short-term investments and
receivables/payables1
Total debt securities and other
Equity securities
Total
Longest
Maturity Date
2061
2072
2070
One-year
Amortized Costs
Fair Value
December 31, December 31, December 31, December 31,
2022
2021
2022
2021
$
$
672
1,025
351
110
2,158
$
875 $
754 $
1,095
386
199
2,555
$
1,091
377
116
2,338
1,610
3,948 $
$
1,033
1,212
446
207
2,898
1,972
4,870
1
Short-term investments include $41 million and $37 million of repurchase agreements payable by financial institutions which
earn interest, were 97% and fully secured by U.S. Treasury securities and mature by January 3, 2023 and January 3, 2022 as of
December 31, 2022 and 2021, respectively.
Trust fund earnings (based on specific identification) increase the trust fund balance and the ARO regulatory liability.
Unrealized holding gains, net of losses, were $1.6 billion and $2.1 billion at December 31, 2022 and 2021, respectively.
Trust assets are used to pay income taxes arising from trust investing activity. Deferred tax liabilities related to net
unrealized gains were $321 million and $517 million at December 31, 2022 and 2021, respectively. Accordingly, the fair
value of trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled $3.6 billion and
$4.4 billion at December 31, 2022 and 2021, respectively.
The following table summarizes the gains and losses for the trust investments:
(in millions)
Gross realized gains
Gross realized losses
Net unrealized (losses)/gains for equity securities
Years ended December 31,
2021
2022
2020
$
$
150
(127)
(369)
$
339
(24)
103
255
(6)
176
Due to regulatory mechanisms, changes in assets of the trusts from income or loss items do not materially affect
earnings.
Edison International Parent and Other's Investments
Edison International Parent and Other hold strategic investments in companies focused on developing electric
technologies and services. As of December 31, 2022 and December 31, 2021, these investments consist of $5 million
and $12 million of marketable securities, respectively, and $12 million and $3 million of equity investments without
readily determinable fair values (included as "Other investments" on Edison International's consolidated balance sheets),
respectively. For further information of fair value of marketable securities, see Note 4. The equity investments without
readily determinable fair values balances included cumulative upward adjustments of $9 million and $1 million as of
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December 31, 2022 and December 31, 2021, respectively. The cumulative upward adjustments resulted primarily from
values determined by additional capital infusions.
The following table summarizes unrealized gains/(losses) for equity investments held at the reporting date, recorded as
"Other income" on Edison International's consolidated statements of income.
(in millions)
Marketable securities
Equity investments without readily determinable fair values - upward
adjustments
Total unrealized gains
Note 11. Regulatory Assets and Liabilities
Years ended December 31,
2021
2022
2020
$
$
(6) $
3
$
8
2
$
1
4
$
—
—
—
Included in SCE's regulatory assets and liabilities are regulatory balancing accounts. CPUC-authorized balancing
account mechanisms require SCE to refund or recover any differences between forecasted and actual costs. The CPUC
has authorized balancing accounts for specified costs or programs such as fuel, purchased power, demand-side
management programs, wildfire related costs, nuclear decommissioning and public purpose programs. Certain of these
balancing accounts include a return on rate base of 7.68% in both 2022 and 2021. The CPUC authorizes the use of a
balancing account to recover from or refund to customers differences in revenue resulting from actual and forecasted
electricity sales.
Amounts included in regulatory assets and liabilities are generally recorded with corresponding offsets to the applicable
income statement accounts.
Regulatory Assets
SCE's regulatory assets included on the consolidated balance sheets are:
(in millions)
Current:
Regulatory balancing and memorandum accounts
Power contracts
Other
Total current
Long-term:
Deferred income taxes, net of liabilities
Power contracts
Unamortized investments, net of accumulated amortization
Unamortized loss on reacquired debt
Regulatory balancing and memorandum accounts
Environmental remediation
Recovery assets
Other
Total long-term
Total regulatory assets
December 31,
2022
2021
$
$
2,400
71
26
2,497
5,178
—
113
109
1,589
241
834
117
8,181
10,678
$
$
1,591
168
19
1,778
4,770
71
114
121
1,897
242
325
120
7,660
9,438
In accordance with the accounting standards applicable to rate-regulated enterprises, SCE defers costs as regulatory
assets that are probable of future recovery from customers and has recorded regulatory assets for these incremental costs
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at December 31, 2022. While SCE believes such costs are probable of future recovery, there is no assurance that SCE
will collect all amounts currently deferred as regulatory assets.
SCE's regulatory assets related to power contracts primarily represent derivative contracts that were designated as
normal purchases and normal sales contracts. The liabilities for these power contracts are amortized over the remaining
contract terms, approximately 1 to 4 years. For further information, see Note 1.
SCE's regulatory assets related to deferred income taxes represent tax benefits passed through to customers. The CPUC
requires SCE to flow through certain deferred income tax benefits to customers by reducing electricity rates, thereby
deferring recovery of such amounts to future periods. Based on current regulatory ratemaking and income tax laws, SCE
expects to recover its regulatory assets related to deferred income taxes over the life of the assets that give rise to the
accumulated deferred income taxes, approximately from 1 to 60 years. For further information, see Note 8.
SCE has long-term unamortized investments which include nuclear assets related to Palo Verde and the beyond the
meter program. Nuclear assets related to Palo Verde and the beyond the meter program are expected to be recovered by
2046 and 2031, respectively, and both earned returns of 7.68% in 2022 and 2021.
SCE's net regulatory asset related to its unamortized loss on reacquired debt will be recovered over the original
amortization period of the reacquired debt over periods ranging from 10 to 40 years or the life of the new issuance if the
debt is refunded or refinanced.
SCE's regulatory assets related to environmental remediation represent a portion of the costs incurred at certain sites that
SCE is allowed to recover through customer rates. See "Environmental Remediation" discussed in Note 12.
Recovery assets represent the balance associated with the AB 1054 Excluded Capital Expenditures Related Recovery
Properties and prudently incurred financing costs securitized with issuance of the associated bond. The recovery period
is until 2046, when the bonds and interest are paid in full. For further details, see Note 3.
Regulatory Liabilities
SCE's regulatory liabilities included on the consolidated balance sheets are:
(in millions)
Current:
Regulatory balancing and memorandum accounts
Energy derivatives
Other
Total current
Long-term:
Costs of removal
Re-measurement of deferred taxes
Recoveries in excess of ARO liabilities
Regulatory balancing and memorandum accounts
Pension and other postretirement benefits
Other
Total long-term
Total regulatory liabilities
December 31,
2022
2021
$
$
$
584
338
42
964
2,589
2,250
1,231
1,116
1,007
18
8,211
9,175
$
553
25
25
603
2,552
2,315
2,155
648
1,281
30
8,981
9,584
SCE's regulatory liabilities related to energy derivatives are primarily an offset to unrealized gains on derivatives.
SCE's regulatory liabilities related to costs of removal represent differences between asset removal costs recorded and
amounts collected in rates for those costs.
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SCE's regulatory liabilities include excess deferred income taxes resulting from statutory income tax rate changes. The
regulatory liabilities are generally expected to be refunded to customers over the lives of the assets and liabilities that
gave rise to the deferred income taxes.
SCE's regulatory liabilities related to recoveries in excess of ARO liabilities represents the cumulative differences
between ARO expenses and amounts collected in rates primarily for the decommissioning of the SCE's nuclear
generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning
trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear
decommissioning trust investments. See Note 10 for further discussion.
SCE's regulatory liabilities related to pension and other post-retirement plans represent the overfunded net gains and
prior service costs of the plans. This amount will be refunded through rates over time to customers. See "Pension Plans
and Postretirement Benefits Other than Pensions" discussion in Note 9.
Net Regulatory Balancing and Memorandum Accounts
Balancing accounts track amounts that the CPUC or FERC have authorized for recovery. Balancing account over and
under collections represent differences between cash collected in current rates for specified forecasted costs and such
costs that are actually incurred. Undercollections are recorded as regulatory balancing account assets. Overcollections
are recorded as regulatory balancing account liabilities. With some exceptions, SCE seeks to adjust rates on an annual
basis or at other designated times to recover or refund the balances recorded in its balancing accounts. Memorandum
accounts are authorized to track costs for potential future recovery.
Regulatory balancing and memorandum accounts that SCE does not expect to collect or refund in the next 12 months are
reflected in the long-term section of the consolidated balance sheets. Regulatory balancing and memorandum accounts
that do not have the right of offset are presented gross in the consolidated balance sheets. Under and over collections in
balancing accounts and amounts recorded in memorandum accounts typically accrue interest based on a three-month
commercial paper rate published by the Federal Reserve.
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The following table summarizes the significant components of regulatory balancing and memorandum accounts included
in the above tables of regulatory assets and liabilities:
(in millions)
Asset (liability)
Energy resource recovery account
Portfolio allocation balancing account
New system generation balancing account
Public purpose programs and energy efficiency programs
Base revenue requirement balancing account
GRC wildfire mitigation balancing accounts1
Greenhouse gas auction revenue and low carbon fuel standard revenue
FERC balancing accounts
Wildfire and drought restoration accounts2
Wildfire-related memorandum accounts3
COVID-19-related memorandum accounts
Customer service re-platform memorandum account
Tax accounting memorandum account and pole loading balancing account
Excess bond and power charge balancing account
Other
Asset
December 31,
2022
2021
1,580
(73)
(63)
(1,577)
1,108
67
(289)
(123)
352
1,168
67
64
90
(56)
(26)
2,289
$
$
759
(183)
73
(1,066)
849
12
(298)
55
299
1,456
94
128
171
—
(62)
2,287
$
$
1
2
3
The 2021 GRC decision approved the establishment of the vegetation management balancing account ("VMBA") to track
vegetation management expenses up to 115% of amounts authorized, the Wildfire Risk Mitigation balancing account
("WRMBA") to track the costs of SCE's Wildfire Covered Conductor Program up to 110% of amounts authorized and the risk
management balancing account to track the authorized costs of wildfire insurance. The amount recorded to these balancing
accounts represents the difference between costs tracked in the balancing accounts and authorized revenues for those costs
recorded to the base revenue requirement balancing account. If spending is less than authorized, SCE will refund those amounts
to customers. If spending is within the specified threshold, if any, for each balancing account, SCE will recover those costs from
customers. Amounts above the specified threshold, or above amounts authorized if a higher threshold was not established, for
each balancing account may be eligible for deferral to wildfire-related memorandum accounts.
The wildfire and drought restoration accounts regulatory assets represent restoration costs that are recorded in a Catastrophic
Event Memorandum Account ("CEMA").
The wildfire-related memorandum accounts regulatory assets represent wildfire-related costs that are probable of future recovery
from customers, subject to a reasonableness review. The Fire Hazard Prevention Memorandum Account ("FHPMA") was used to
track costs related to fire safety and to implement fire prevention corrective action measures in extreme and very high fire threat
areas. The Wildfire Expense Memorandum Account ("WEMA") is used to track incremental wildfire insurance costs and
uninsured wildfire-related financing, legal and claims costs related to the post-2018 wildfires that SCE believes are probable of
recovery. See Note 12 for further details. The Wildfire Mitigation Plan Memorandum Account ("WMPMA") is used to track
costs incurred to implement SCE's wildfire mitigation plan that are not currently reflected in SCE's revenue requirements. The
Fire Risk Mitigation Memorandum Account ("FRMMA") is used to track costs related to the reduction of fire risk that are
incremental to costs approved for recovery in SCE's GRCs that are not tracked in any other wildfire-related memorandum
account. The balance also includes vegetation management spending in excess of the 115% threshold for the VMBA described
above.
Note 12. Commitments and Contingencies
Power Purchase Agreements
SCE entered into various agreements to purchase power, electric capacity and other energy products. At December 31,
2022, the undiscounted future expected minimum payments for the SCE PPAs (primarily related to renewable energy
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contracts), which were approved by the CPUC and met other critical contract provisions (including completion of major
milestones for construction), were as follows:
(in millions)
2023
2024
2025
2026
2027
Thereafter
Total future commitments1
Total
3,106
2,596
2,409
2,401
2,221
18,000
30,733
$
$
1
Certain power purchase agreements are treated as operating leases. For further discussion, see Note 13.
Additionally, as of December 31, 2022, SCE has executed contracts (including capacity reduction contracts) that have
not met the critical contract provisions that would increase contractual obligations by $29 million in 2023, $123 million
in 2024, $171 million in 2025, $182 million in 2026, $186 million in 2027 and $1,864 million thereafter, if all critical
contract provisions are completed. These obligations include long-term lease contracts commencing in 2023 with total
future minimum lease payments of $393 million.
Costs incurred for PPAs were $5.1 billion in 2022, $4.7 billion in 2021 and $3.8 billion in 2020, which include costs
associated with contracts with terms of less than one year.
Other Commitments
The following summarizes the estimated minimum future commitments for SCE's other commitments:
(in millions)
Other contractual obligations
2023
2024
2025
2026
2027
$
46 $
52 $
50 $
46 $
35 $
Thereafter
Total
203 $ 432
Costs incurred for other commitments were $58 million in 2022, $62 million in 2021 and $80 million in 2020. Other
commitments include fuel supply contracts for Palo Verde which require payment only if the fuel is made available for
purchase. Also included are commitments related to maintaining reliability and expanding SCE's transmission and
distribution system.
The table above does not include asset retirement obligations, which are discussed in Note 1.
Indemnities
Edison International and SCE have various financial and performance guarantees and indemnity agreements which are
issued in the normal course of business.
Edison International and SCE have agreed to provide indemnifications through contracts entered into in the normal
course of business. These are primarily indemnifications against adverse litigation outcomes in connection with
underwriting agreements, indemnities for specified environmental liabilities and income taxes with respect to assets sold
or other contractual arrangements. Edison International's and SCE's obligations under these agreements may or may not
be limited in terms of time and/or amount, and in some instances Edison International and SCE may have recourse
against third parties. Edison International and SCE have not recorded a liability related to these indemnities. The overall
maximum amount of the obligations under these indemnifications cannot be reasonably estimated.
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Contingencies
In addition to the matters disclosed in these Notes, Edison International and SCE are involved in other legal, tax, and
regulatory proceedings before various courts and governmental agencies regarding matters arising in the ordinary course
of business. Edison International and SCE believe the outcome of each of these other proceedings will not materially
affect its financial position, results of operations and cash flows.
Southern California Wildfires and Mudslides
California has experienced unprecedented weather conditions in recent years due to climate change and wildfires in
SCE's territory, including those where SCE's equipment may be alleged to be associated with the fire's ignition, have
caused loss of life and substantial damage in recent years. SCE's service territory remains susceptible to additional
wildfire activity.
Numerous claims related to wildfire events have been initiated against SCE and Edison International. Edison
International and SCE have incurred material losses in connection with the 2017/2018 Wildfire/Mudslide Events
(defined below), which are described below. In addition, SCE's equipment has been, and may further be, alleged to be
associated with wildfires that have originated in Southern California subsequent to 2018.
Liability Overview
The extent of legal liability for wildfire-related damages in actions against utilities depends on a number of factors,
including whether the utility substantially caused or contributed to the damages and whether parties seeking recovery of
damages will be required to show negligence in addition to causation. California courts have previously found utilities to
be strictly liable for property damage along with associated interest and attorneys' fees, regardless of fault, by applying
the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that
caused the property damage. If inverse condemnation is held to be inapplicable to SCE in connection with a wildfire,
SCE still could be held liable for property damages and associated interest if the property damages were found to have
been proximately caused by SCE's negligence. If SCE were to be found negligent, SCE could also be held liable for,
among other things, fire suppression costs, business interruption losses, evacuation costs, clean-up costs, medical
expenses, and personal injury/wrongful death claims. Additionally, SCE could potentially be subject to fines and
penalties for alleged violations of CPUC rules and state laws investigated in connection with the ignition of a wildfire.
Final determinations of legal liability for wildfire events, including determinations of whether SCE was negligent, would
only be made during lengthy and complex litigation processes and settlements may be reached before determinations of
legal liability are ever made. Even when investigations are still pending or legal liability is disputed, an assessment of
likely outcomes, including through future settlement of disputed claims, may require estimated losses to be accrued
under accounting standards. Each reporting period, management reviews its loss estimates for remaining alleged and
potential claims related to wildfire events. The process for estimating losses associated with alleged and potential
wildfire related claims requires management to exercise significant judgment based on a number of assumptions and
subjective factors, including, but not limited to: estimates of known and expected claims by third parties based on
currently available information, opinions of counsel regarding litigation risk, the status of and developments in the
course of litigation, and prior experience litigating and settling wildfire litigation claims. As additional information
becomes available, management's estimates and assumptions regarding the causes and financial impact of wildfire events
may change. Actual losses incurred may be higher or lower than estimated based on several factors, including the
uncertainty in estimating damages that have been or may be alleged.
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2017/2018 Wildfire/Mudslide Events
Wildfires in SCE's territory in December 2017 and November 2018 caused loss of life, substantial damage to both
residential and business properties, and service outages for SCE customers. The investigating government agencies, the
Ventura County Fire Department ("VCFD") and California Department of Forestry and Fire Protection ("CAL FIRE"),
have determined that the largest of the 2017 fires in SCE's territory originated on December 4, 2017, in the Anlauf
Canyon area of Ventura County (the investigating agencies refer to this fire as the "Thomas Fire"), followed shortly
thereafter by a second fire that originated near Koenigstein Road in the City of Santa Paula (the "Koenigstein Fire"). The
December 4, 2017 fires eventually burned substantial acreage in both Ventura and Santa Barbara Counties. According to
CAL FIRE, the Thomas and Koenigstein Fires, collectively, burned over 280,000 acres, destroyed or damaged an
estimated 1,343 structures and resulted in two confirmed fatalities. The largest of the November 2018 fires in SCE's
territory, known as the "Woolsey Fire," originated in Ventura County and burned acreage in both Ventura and Los
Angeles Counties. According to CAL FIRE, the Woolsey Fire burned almost 100,000 acres, destroyed an estimated
1,643 structures, damaged an estimated 364 structures and resulted in three confirmed fatalities. Four additional fatalities
are alleged to have been associated with the Woolsey Fire.
As described below, multiple lawsuits related to the Thomas and Koenigstein Fires and the Woolsey Fire have been
initiated against SCE and Edison International. Some of the Thomas and Koenigstein Fires lawsuits claim that SCE and
Edison International have responsibility for the damages caused by debris flows and flooding in Montecito and
surrounding areas in January 2018 (the "Montecito Mudslides") based on a theory alleging that SCE has responsibility
for the Thomas and/or Koenigstein Fires and further alleging that the Thomas and/or Koenigstein Fires proximately
caused the Montecito Mudslides. According to Santa Barbara County initial reports, the Montecito Mudslides destroyed
an estimated 135 structures, damaged an estimated 324 structures, and resulted in 21 confirmed fatalities, with two
additional fatalities presumed. One of the presumed fatalities has been confirmed.
The Thomas Fire, the Koenigstein Fire, the Montecito Mudslides (defined below) and the Woolsey Fire are each referred
to as a "2017/2018 Wildfire/Mudslide Event," and, collectively, referred to as the "2017/2018 Wildfire/Mudslide
Events."
In 2022, SCE accrued estimated losses of $1.3 billion for claims related to the 2017/2018 Wildfire/Mudslide Events,
against which SCE has recorded expected recoveries through FERC electric rates of $76 million. The resulting net
charge to earnings was $1.2 billion ($879 million after-tax).
As of December 31, 2022, SCE had paid $7.6 billion under executed settlements, had $185 million to be paid under
executed settlements, including $120 million to be paid under the SED Agreement (as defined below), and had
$934 million of estimated losses for remaining alleged and potential claims reflected on their consolidated balance sheets
related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had assets for expected recoveries through
FERC electric rates of $142 million on their consolidated balance sheets and had exhausted expected insurance
recoveries related to the 2017/2018 Wildfire/Mudslide Events.
The estimated losses for the 2017/2018 Wildfire/Mudslide Events do not include an estimate of potential losses related
to certain alleged and potential claims made by the California Governor's Office of Emergency Service ("Cal OES")
seeking recovery on behalf of itself and 30 state and local government entities that did not pursue their own suits against
SCE, but sustained damage in the 2017/2018 Wildfire/Mudslide Events and received funding through the Federal
Emergency Management Agency ("FEMA") that was dispersed by the Cal OES. As of the filing of this report SCE has
not concluded that losses related to FEMA funds disbursed by Cal OES are probable.
Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining
alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. Due to the number of uncertainties and
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possible outcomes related to the 2017/2018 Wildfire/Mudslide Events litigation, Edison International and SCE cannot
estimate the upper end of the range of reasonably possible losses that may be incurred.
Estimated losses for the 2017/2018 Wildfire/Mudslide Events litigation are based on a number of assumptions and are
subject to change as additional information becomes available. Actual losses incurred may be higher or lower than
estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged.
For instance, SCE will receive additional information with respect to damages claimed as the claims mediation processes
progress. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to
reach settlements and the outcomes of settlements reached through the ongoing claims mediation processes, uncertainties
related to the sufficiency of insurance held by plaintiffs, uncertainties related to the litigation processes, including
whether plaintiffs will ultimately pursue claims, uncertainty as to the legal and factual determinations to be made during
litigation, including uncertainty as to the contributing causes of the 2017/2018 Wildfire/Mudslide Events, the
complexities associated with fires that merge and whether inverse condemnation will be held applicable to SCE with
respect to damages caused by the Montecito Mudslides, and the uncertainty as to how these factors impact future
settlements.
The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such
losses were not reasonably or prudently incurred. SCE will seek rate recovery of prudently incurred losses and related
costs realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance, other than
for any obligations under the SED Agreement (as defined below). See "Loss Estimates for Third Party Claims and
Potential Recoveries from Insurance and through Electric Rates" below for additional information.
External Investigations and Internal Review
The VCFD and CAL FIRE have jointly issued reports concerning their findings regarding the causes of the Thomas Fire
and the Koenigstein Fire. The reports did not address the causes of the Montecito Mudslides. SCE has also received a
non-final redacted draft of a report from the VCFD regarding Woolsey Fire (the "Redacted Woolsey Report"). SCE
cannot predict when the VCFD will release its final report regarding the Woolsey Fire. The VCFD and CAL FIRE
findings do not determine legal causation of or assign legal liability for the Thomas, Koenigstein or Woolsey Fires; final
determinations of legal causation and liability would only be made during lengthy and complex litigation.
The CPUC's Safety and Enforcement Division ("SED") conducted investigations to assess SCE's compliance with
applicable rules and regulations in areas impacted by the Thomas, Koenigstein and Woolsey Fires. As discussed below,
in October 2021, SCE and the SED executed the SED Agreement (as defined below) to resolve the SED's investigations
into the 2017/2018 Wildfire/Mudslide Events.
The California Attorney General's Office has completed its investigation of the Thomas Fire and the Woolsey Fire
without pursuing criminal charges.
SCE's internal review into the facts and circumstances of each of the 2017/2018 Wildfire/Mudslide Events is complex
and time consuming. SCE expects to obtain and review additional information and materials in the possession of third
parties during the course of its internal reviews and the litigation processes.
Thomas Fire
On March 13, 2019, the VCFD and CAL FIRE jointly issued a report concluding, after ruling out other possible causes,
that the Thomas Fire was started by SCE power lines coming into contact during high winds, resulting in molten metal
falling to the ground. However, the report does not state that their investigation found molten metal on the ground. At
this time, based on available information, SCE has not determined whether its equipment caused the Thomas Fire. Based
on publicly available radar data showing a smoke plume in the Anlauf Canyon area emerging in advance of the report's
indicated start time, SCE believes that the Thomas Fire started at least 12 minutes prior to any issue involving SCE's
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system and at least 15 minutes prior to the start time indicated in the report. SCE is continuing to assess the extent of
damages that may be attributable to the Thomas Fire.
Koenigstein Fire
On March 20, 2019, the VCFD and CAL FIRE jointly issued a report finding that the Koenigstein Fire was caused when
an energized SCE electrical wire separated and fell to the ground along with molten metal particles and ignited the dry
vegetation below. SCE believes that its equipment was associated with the ignition of the Koenigstein Fire. SCE is
continuing to assess the extent of damages that may be attributable to the Koenigstein Fire.
Montecito Mudslides
SCE's internal review includes inquiry into whether the Thomas and/or Koenigstein Fires proximately caused or
contributed to the Montecito Mudslides, whether, and to what extent, the Thomas and/or Koenigstein Fires were
responsible for the damages in the Montecito area and other factors that potentially contributed to the losses that resulted
from the Montecito Mudslides. Many other factors, including, but not limited to, weather conditions and insufficiently or
improperly designed and maintained debris basins, roads, bridges and other channel crossings, could have proximately
caused, contributed to or exacerbated the losses that resulted from the Montecito Mudslides.
At this time, based on available information, SCE has not been able to determine whether the Thomas Fire or the
Koenigstein Fire, or both, were responsible for the damages in the Montecito area. In the event that SCE is determined to
have caused the fire that spread to the Montecito area, SCE cannot predict whether, if fully litigated, the courts would
conclude that the Montecito Mudslides were caused or contributed to by the Thomas and/or Koenigstein Fires or that
SCE would be liable for some or all of the damages caused by the Montecito Mudslides.
Woolsey Fire
SCE's internal review into the facts and circumstances of the Woolsey Fire is ongoing. SCE has reported to the CPUC
that there was an outage on SCE's electric system in the vicinity of where the Woolsey Fire reportedly began on
November 8, 2018. SCE is aware of witnesses who saw fire in the vicinity of SCE's equipment at the time the fire was
first reported. While SCE did not find evidence of downed electrical wires on the ground in the suspected area of origin,
it observed a pole support wire in proximity to an electrical wire that was energized prior to the outage.
The Redacted Woolsey Report states that the VCFD investigation team determined that electrical equipment owned and
operated by SCE was the cause of the Woolsey Fire. Absent additional evidence, SCE believes that it is likely that its
equipment was associated with the ignition of the Woolsey Fire. SCE expects to obtain and review additional
information and materials in the possession of CAL FIRE and others during the course of its internal review and the
Woolsey Fire litigation process, including SCE equipment that has been retained by CAL FIRE.
Litigation
Multiple lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed by
three categories of plaintiffs: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. A number of the
lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions.
The litigation could take a number of years to be resolved because of the complexity of the matters and number of
plaintiffs.
On October 4, 2018, the Los Angeles Superior Court denied Edison International's and SCE's challenge to the
application of inverse condemnation to SCE with respect to the Thomas and Koenigstein Fires and, on February 26,
2019, the California Supreme Court denied SCE's petition to review the Superior Court's decision. In April 2022,
following a stipulated judgment entered against SCE in the TKM litigation, SCE filed an appeal related to inverse
condemnation in the California Court of Appeal.
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In January 2019, SCE filed a cross-complaint against certain local public entities alleging that failures by these entities,
such as failure to adequately plan for flood hazards and build and maintain adequate debris basins, roads, bridges and
other channel crossings, among other things, caused, contributed to or exacerbated the losses that resulted from the
Montecito Mudslides. These cross-claims in the Montecito Mudslides litigation were not released as part of the Local
Public Entity Settlements (as defined below).
Settlements
In the fourth quarter of 2019, SCE paid $360 million to a number of local public entities to resolve those parties'
collective claims arising from the 2017/2018 Wildfire/Mudslide Events (the "Local Public Entity Settlements").
In the third quarter of 2020, Edison International and SCE entered into an agreement (the "TKM Subrogation
Settlement") under which all of the insurance subrogation plaintiffs' in the Thomas Fire, Koenigstein Fire and Montecito
Mudslides litigation (the "TKM Subrogation Plaintiffs") collective claims arising from the Thomas Fire, Koenigstein
Fire or Montecito Mudslides have been resolved. Under the TKM Subrogation Settlement, SCE paid the TKM
Subrogation Plaintiffs an aggregate of $1.2 billion in October 2020 and also agreed to pay $0.555 for each dollar in
claims to be paid by the TKM Subrogation Plaintiffs to their policy holders on or before July 15, 2023, up to an agreed
upon cap.
In January 2021, Edison International and SCE entered into an agreement (the "Woolsey Subrogation Settlement") under
which all of the insurance subrogation plaintiffs' in the Woolsey Fire litigation (the "Woolsey Subrogation Plaintiffs")
collective claims arising from the Woolsey Fire have been resolved. Under the Woolsey Subrogation Settlement, SCE
paid the Woolsey Subrogation Plaintiffs an aggregate of $2.2 billion in March and April 2021. SCE has also agreed to
pay $0.67 for each dollar in claims to be paid by the Woolsey Subrogation Plaintiffs to their policy holders on or before
July 15, 2023, up to an agreed upon cap.
As of December 31, 2022, SCE has also entered into settlements with approximately 9,500 individual plaintiffs in the
2017/2018 Wildfire/Mudslide Events litigation. In 2020, 2021 and 2022, SCE entered into settlements with individual
plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation under which it agreed to pay an aggregate of
approximately $300 million, $1.7 billion and $1.7 billion, respectively, to those individual plaintiffs. In the first, second,
third and fourth quarters of 2022 SCE entered into settlements with individual plaintiffs in the 2017/2018
Wildfire/Mudslide Events litigation under which it agreed to pay an aggregate of approximately $700 million,
$400 million, $350 million and $280 million, respectively, to those individual plaintiffs. The statutes of limitations for
individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events have expired.
Edison International and SCE did not admit wrongdoing or liability as part of any of the settlements described above.
Other claims and potential claims related to the 2017/2018 Wildfire/Mudslide Events remain. SCE continues to explore
reasonable settlement opportunities with other plaintiffs in the outstanding 2017/2018 Wildfire/Mudslide Events
litigation.
SED Agreement
In October 2021, SCE and the SED executed an agreement (the "SED Agreement") to resolve the SED's investigations
into the 2017/2018 Wildfire/Mudslide Events and three other 2017 wildfires for, among other things, aggregate costs of
$550 million. The $550 million in costs comprised of a $110 million fine to be paid to the State of California General
Fund, $65 million of shareholder-funded safety measures, and an agreement by SCE to waive its right to seek cost
recovery in CPUC-jurisdictional rates for $375 million of third-party uninsured claims payments. The SED Agreement
provides that SCE may, on a permanent basis, exclude from its ratemaking capital structure any after-tax charges to
equity or debt borrowed to finance costs incurred under the SED Agreement. The SED Agreement also imposes other
obligations on SCE, including reporting requirements and safety-focused studies. SCE's obligations under the SED
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Agreement commenced on August 15, 2022, when CPUC approval of the SED Agreement became final and non-
appealable. SCE did not admit imprudence, negligence or liability with respect to the 2017/2018 Wildfire/Mudslide
Events in the SED Agreement.
Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates
At December 31, 2022 and December 31, 2021, Edison International's and SCE's balance sheets include fixed payments
to be made under executed settlement agreements and accrued estimated losses of $1.1 billion and $1.7 billion,
respectively, for the 2017/2018 Wildfire/Mudslide Events. The following table presents changes in estimated losses
since December 31, 2021:
(in millions)
Balance at December 31, 20211
Increase in accrued estimated losses
Amounts paid
Balance at December 31, 20222
$
$
1,734
1,296
(1,911)
1,119
1
2
At December 31, 2021, $131 million in current liabilities, wildfire-related claims, on Edison International's and SCE's
consolidated balance sheets consists of settlements executed in connection with the 2017/2018 Wildfire/Mudslide Events. At
December 31, 2021, the $1,733 million included in deferred credits and other liabilities, wildfire-related claims, on Edison
International's and SCE's consolidated balance sheets includes Edison International's and SCE's best estimate of expected losses
for the 2017/2018 Wildfire/Mudslide Events of $1,603 million and other wildfire-related claims estimates of $130 million.
At December 31, 2022, $121 million in current liabilities, wildfire-related claims, on Edison International's and SCE's
consolidated balance sheets consists of $65 million of settlements executed and $56 million of a short term payables under the
SED Agreement in connection with the 2017/2018 Wildfire/Mudslide Events. At December 31, 2022, the $1,687 million
included in deferred credits and other liabilities, wildfire-related claims, on Edison International's and SCE's consolidated
balance sheets includes Edison International's and SCE's best estimate of expected losses for remaining alleged and potential
claims related to the 2017/2018 Wildfire/Mudslide Events of $934 million, $64 million of a long term payables under the SED
Agreement and other wildfire-related claims estimates of $689 million.
For the years-ended December 31, 2022 and 2021, Edison International’s and SCE’s income statements include charges
for the estimated losses, net of expected recoveries from insurance and FERC customers, related to the 2017/2018
Wildfire/Mudslide Events as follows:
(in millions)
Charge for wildfire-related claims
Expected revenue from FERC customers
Total pre-tax charge
Income tax benefit
Total after-tax charge
Years ended December 31,
2022
1,296
(76)
1,220
(341)
879
$
$
$
$
2021
1,265
(67)
1,198
(304)
894
For events that occurred in 2017 and early 2018, principally the Thomas and Koenigstein Fires and Montecito
Mudslides, SCE had $1.0 billion of wildfire-specific insurance coverage, subject to a self-insured retention of
$10 million per occurrence. For the Woolsey Fire, SCE had an additional $1.0 billion of wildfire-specific insurance
coverage, subject to a self-insured retention of $10 million per occurrence.
In total, through December 31, 2022, SCE has accrued estimated losses of $8.8 billion, has paid or is obligated to pay
approximately $7.8 billion in settlements, including $120 million to be paid under the SED Agreement, and has
recovered $2.0 billion from its insurance carriers in relation to the 2017/2018 Wildfire/Mudslide Events.
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Recovery of SCE's losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available
insurance is subject to approval by regulators. Under accounting standards for rate-regulated enterprises, SCE defers
costs as regulatory assets when it concludes that such costs are probable of future recovery in electric rates. SCE utilizes
objectively determinable evidence to form its view on probability of future recovery. The only directly comparable
precedent in which a California investor-owned utility has sought recovery for uninsured wildfire-related costs is San
Diego Gas & Electric's ("SDG&E") requests for cost recovery related to 2007 wildfire activity, where the FERC allowed
recovery of all FERC-jurisdictional wildfire-related costs while the CPUC rejected recovery of all CPUC-jurisdictional
wildfire-related costs based on a determination that SDG&E did not meet the CPUC's prudency standard. As a result,
while SCE does not agree with the CPUC's decision, it believes that the CPUC's interpretation and application of the
prudency standard to SDG&E creates substantial uncertainty regarding how that standard will be applied to an investor-
owned utility in wildfire cost-recovery proceedings for fires ignited prior to July 12, 2019. SCE will continue to evaluate
the probability of recovery based on available evidence, including judicial, legislative and regulatory decisions,
including any CPUC decisions illustrating the interpretation and/or application of the prudency standard when making
determinations regarding recovery of uninsured wildfire-related costs. While the CPUC has not made a determination
regarding SCE's prudency relative to any of the 2017/2018 Wildfire/Mudslide Events, SCE is unable to conclude, at this
time, that uninsured CPUC-jurisdictional wildfire-related costs are probable of recovery through electric rates. SCE
would record a regulatory asset at the time it obtains sufficient information to support a conclusion that recovery is
probable.
Through the operation of its FERC Formula Rate, and based upon the precedent established in SDG&E's recovery of
FERC-jurisdictional wildfire-related costs, SCE believes it is probable it will recover its FERC-jurisdictional wildfire
and mudslide related costs and has recorded total expected recoveries of $376 million within the FERC balancing
account. This was the FERC portion of the total estimated losses accrued. As of December 31, 2022, collections have
reduced the regulatory assets remaining in the FERC balancing account to $142 million.
In July 2019, SCE filed a CEMA application with the CPUC to seek recovery of, among other things, approximately
$60 million of capital expenditures and capital related expenses incurred to restore service to customers and to repair,
replace and restore buildings and SCE's facilities damaged or destroyed as a result of six 2017 fires, primarily the
Thomas and Koenigstein Fires. In August 2021, the CPUC issued a final decision which denied without prejudice SCE's
application to recover a revenue requirement of $8 million for all six 2017 wildfires on the basis that SCE did not
demonstrate that it was prudent in relation to the Thomas and Rye fires and had failed to segregate the costs attributable
to the other four fires. Of the $8 million revenue requirement that was denied, $6 million was for the Thomas and Rye
fires. CAL FIRE has determined that the Thomas and Rye fires were caused by SCE equipment. The decision allows
SCE to submit additional applications with the CPUC to recover the costs associated with the Thomas and Rye fires,
does not specify a deadline for any such applications, and directs that SCE must prove it was prudent in relation to the
Thomas and/or Rye fires, as applicable, in any such future applications. As required by the final decision with respect to
the other four fires, SCE filed supplemental testimony in November 2021 segregating the restoration costs attributable to
each such fire. In June 2022, the CPUC approved SCE's entire request with respect to the other four fires. As of
December 31, 2022, SCE has $177 million in assets recorded in property, plant and equipment in relation to restoration
costs related to the 2017/2018 Wildfire/Mudslide Events which may not be recoverable. These assets would be impaired
if the restoration costs are permanently disallowed by the CPUC in future cost recovery proceedings. SCE expects to
seek to recover costs incurred for reconstructing its system and restoring service to structures that were damaged or
destroyed by the Thomas, Koenigstein and Woolsey Fires in future applications with the CPUC.
Post-2018 Wildfires
Several wildfires have significantly impacted portions of SCE's service territory after 2018 (the wildfires that originated
in Southern California after 2018 where SCE's equipment may be alleged to be associated with the fire's ignition are
referred to collectively as the "Post-2018 Wildfires").
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In 2022, SCE accrued estimated losses of $572 million for claims related to the Post-2018 Wildfires, against which SCE
has recorded expected recoveries from insurance of $399 million and expected recoveries through electric rates of
$162 million. The resulting net charge to earnings was $11 million ($8 million after-tax).
Through December 31, 2022, SCE has recorded total estimated losses (established at the lower end of the estimated
range of reasonably possible losses) of $696 million, and expected recoveries from insurance of $473 million and
expected recoveries through electric rates of $166 million related to the Post-2018 Wildfires. The after-tax net charges to
earnings recorded through December 31, 2022 have been $41 million. Expected recoveries from insurance recorded for
the Post-2018 Wildfires are supported by SCE’s insurance coverage for multiple policy years.
As of December 31, 2022, SCE had paid $13 million under executed settlements related to the Post-2018 Wildfires.
After giving effect to all payment obligations under settlements entered into through December 31, 2022, Edison
International's and SCE's estimated losses (established at the lower end of the estimated range of reasonably possible
losses) for remaining alleged and potential claims related to the Post-2018 Wildfires was $682 million. As of the same
date, SCE had assets for expected recoveries through insurance of $473 million and through electric rates of
$166 million on their consolidated balance sheets related to the Post-2018 Wildfires.
Expected recoveries from insurance recorded for the Post-2018 Wildfires are supported by SCE's insurance coverage for
multiple policy years. While Edison International and SCE may incur material losses in excess of the amounts accrued
for certain of the Post-2018 Wildfires, Edison International and SCE expect that any losses incurred in connection with
any such fire will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such
losses after expected recoveries from insurance and through electric rates will not be material.
2019 Saddle Ridge Fire
The "Saddle Ridge Fire," originated in Los Angeles County in October 2019 and burned approximately 9,000 acres,
destroyed an estimated 19 structures, damaged an estimated 88 structures, and resulted in one fatality and injuries to 8
fire fighters. In an unsigned and undated report that SCE received in December 2022, the Los Angeles Fire Department
stated with respect to the Saddle Ridge Fire that the cause of ignition was unintentional, the form of heat was
undetermined, the item first ignited was undetermined and the material type first ignited was undetermined. The Los
Angeles Fire Department report noted that no other competent ignition sources other than SCE’s transmission lines were
found in the specific origin area of the Saddle Ridge Fire. SCE has been advised that the Los Angeles Fire Department
investigation of the Saddle Ridge Fire remains open. Based on pending litigation and without considering insurance
recoveries, it is reasonably possible that SCE will incur a material loss in connection with the Saddle Ridge Fire, but the
range of reasonably possible losses that could be incurred cannot be estimated at this time. SCE has not accrued a charge
for potential losses relating to the Saddle Ridge Fire.
2020 Bobcat Fire
The "Bobcat Fire" was reported in the vicinity of Cogswell Dam in Los Angeles County in September 2020. The United
States Forest Service ("USFS") has reported that the Bobcat Fire burned approximately 116,000 acres in Los Angeles
County, destroyed an estimated 87 homes, 1 commercial property and 83 minor structures, damaged an estimated 28
homes and 19 minor structures, and resulted in injuries to 6 firefighters. In addition, fire authorities have estimated
suppression costs at $80 million. While SCE’s investigation remains ongoing, SCE’s information reflects that a camera
in the vicinity of Cogswell Dam captured the initial stages of a fire with the first observed smoke approximately six
minutes before a SCE circuit in the area experienced an anomaly (a relay). An investigation into the cause of the Bobcat
Fire is being led by the USFS, and the USFS has taken a specific section of an SCE overhead conductor in the vicinity of
Cogswell Dam into possession as part of its investigation. SCE understands that the USFS has also taken three tree
branches in the area into possession. The SED is also conducting an investigation of the Bobcat Fire. SCE expects to
obtain and review additional information and materials in the possession of third parties during the course of its internal
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reviews and the litigation process. SCE has accrued material charges for potential losses relating to the Bobcat Fire. The
accrued charges correspond to the lower end of the estimated range of reasonably possible losses that may be incurred in
connection with the Bobcat Fire and is subject to change as additional information becomes available. While Edison
International and SCE may incur a material loss in excess of the amount accrued, they cannot estimate the upper end of
the range of reasonably possible losses that may be incurred.
2022 Coastal Fire
The "Coastal Fire" originated in Orange County in May 2022 and burned approximately 200 acres. The Orange County
Fire Authority ("OCFA") has reported that the Coastal Fire destroyed 20 residential structures and damaged 11
residential structures. Two firefighters also reportedly sustained minor injuries. In addition, fire authorities have
estimated suppression costs at approximately $3 million. While SCE's investigation remains ongoing, SCE's information
reflects that a SCE circuit in the area experienced an anomaly (a relay) approximately 2 minutes prior to the reported
time of the fire. An investigation into the cause of the Coastal Fire is being led by the OCFA. The OCFA has retained
SCE equipment in connection with its investigation. SCE expects to obtain and review additional information and
materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has
accrued material charges for potential losses relating to the Coastal Fire. The accrued charges correspond to the lower
end of the estimated range of reasonably possible losses that may be incurred in connection with the Coastal Fire and is
subject to change as additional information becomes available. While Edison International and SCE may incur a material
loss in excess of the amount accrued, they cannot estimate the upper end of the range of reasonably possible losses that
may be incurred.
2022 Fairview Fire
The "Fairview Fire" originated in Riverside County in September 2022 and burned approximately 28,000 acres. CAL
FIRE has reported that the Fairview Fire destroyed 22 residential structures, damaged 5 residential structures, and
destroyed or damaged 17 minor structures. CAL FIRE also reported 2 civilian fatalities, 1 civilian injury and 2 injuries to
responding fire personnel. In addition, fire authorities have estimated suppression costs at $39 million. While SCE's
investigation remains ongoing, SCE's information reflects that a SCE circuit in the area experienced an anomaly (relay)
approximately 8 minutes prior to the reported start time of the fire. An investigation into the cause of the Fairview Fire is
being led by the CAL FIRE. CAL FIRE has retained SCE equipment in connection with its investigation. SCE expects to
obtain and review additional information and materials in the possession of third parties during the course of its internal
reviews and the litigation process. SCE has accrued material charges for potential losses relating to the Fairview Fire.
The accrued charges correspond to the lower end of the estimated range of reasonably possible losses that may be
incurred in connection with the Fairview Fire and is subject to change as additional information becomes available.
While Edison International and SCE may incur a material loss in excess of the amount accrued, they cannot estimate the
upper end of the range of reasonably possible losses that may be incurred.
Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates
At December 31, 2022 and December 31, 2021, Edison International's and SCE's consolidated balance sheets include
accrued estimated losses of $682 million and $123 million, respectively, for the Post-2018 Wildfires.
The following table presents changes in estimated losses since December 31, 2021:
(in millions)
Balance at December 31, 2021
Increase in accrued estimated losses
Amounts paid
Balance at December 31, 2022
$
$
123
572
(13)
682
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For the years-ended December 31, 2022 and 2021, Edison International's and SCE's income statements include charges
for the estimated losses, net of expected recoveries from insurance and customers, related to the Post-2018 Wildfires as
follows, respectively:
(in millions)
Edison International:
Charge for wildfire-related claims1
Expected insurance recoveries2
Expected revenue from CPUC and FERC customers
Total pre-tax charge
Income tax benefit
Total after-tax charge
(in millions)
SCE:
Charge for wildfire-related claims1
Expected insurance recoveries
Expected revenue from CPUC and FERC customers
Total pre-tax charge
Income tax benefit
Total after-tax charge
Years ended December 31,
2022
2021
$
$
572
(390)
(162)
20
(6)
14
$
$
7
—
—
7
(2)
5
Years ended December 31,
2022
2021
$
$
572
(399)
(162)
11
(3)
8
$
$
7
—
—
7
(2)
5
1
2
Includes estimated co-insurance payments recorded as operations and maintenance expense.
In the third quarter of 2022. Edison Insurance Services, Inc. ("EIS"), a wholly-owned subsidiary of Edison International, paid
$9 million insurance, which was included in the insurance recovery of SCE but was excluded in Edison International.
Recovery of SCE's losses realized in connection with the Post-2018 Wildfires in excess of available insurance is subject
to approval by regulators. The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if
it is determined that such losses were not reasonably or prudently incurred. Under accounting standards for rate-
regulated enterprises, SCE defers costs as regulatory assets when it concludes that such costs are probable of future
recovery in electric rates. SCE utilizes objectively determinable evidence to form its view on probability of future
recovery. As discussed above, there is evidence of a California investor-owned utility seeking recovery for uninsured
wildfire-related costs and FERC allowing recovery of all FERC-jurisdictional wildfire-related costs while the CPUC
rejected recovery of all CPUC-jurisdictional wildfire-related costs based on a determination that the utility did not meet
the CPUC's prudency standard. This evidence was prior to the adoption of AB 1054 on July 12, 2019, after which date
AB 1054 clarified that the CPUC must find a utility to be prudent if the utility's conduct related to the ignition was
consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the
relevant point in time, and based on the information available at that time. Further, utilities with a valid safety
certification at the time of the relevant wildfire will be presumed to have acted prudently related to a wildfire ignition
unless a party in the cost recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at
which time, the burden shifts back to the utility to prove its conduct was prudent. Each of the Post-2018 Wildfires was
ignited after July 12, 2019, and SCE has held a valid safety certificate since July 15, 2019. While a California investor-
owned utility has not yet sought recovery for uninsured claims and other costs related to wildfires ignited after the
adoption of AB 1054, SCE believes that for fires ignited after July 12, 2019, and investor-owned utilities holding a
safety certificate at the time of the fire, the CPUC will apply a standard of review similar to that applied by the FERC
which presumes all costs requested by an investor-owned utility are reasonable and prudent unless serious doubt as to
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the reasonableness of the utility’s conduct is raised. As such, SCE has concluded, at this time, that both uninsured
CPUC-jurisdictional and uninsured FERC-jurisdictional wildfire-related costs related to the Post-2018 Wildfires, other
than for those already authorized for inclusion in electric rates, are probable of recovery through electric rates. As of
December 31, 2022, SCE has recorded total expected recoveries related to the Post-2018 Wildfires of $152 million
within the WEMA and risk management balancing account and $14 million within the FERC balancing account. SCE
will continue to evaluate the probability of recovery based on available evidence, including regulatory decisions,
including any CPUC decisions illustrating the interpretation and/or application of the prudency standard under AB 1054,
and, for each applicable fire, evidence that could cast serious doubt as to the reasonableness of SCE's conduct relative to
that fire.
Wildfire Insurance Coverage
SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that may occur during the period
July 1, 2022 through June 30, 2023, subject to up to $100 million of self-insured retention and co-insurance per fire,
which results in aggregate net coverage of approximately $937 million. Of this coverage, approximately $102 million is
provided by EIS and approximately $835 million is provided by other commercial insurance carriers (commercial
insurance carriers other than EIS are referred to herein as "Third-Party Commercial Insurers"). SCE has approximately
$1.0 billion of wildfire-specific insurance coverage for events that occurred during the period July 1, 2021 through
June 30, 2022, subject to up to $100 million of self-insured retention and co-insurance per fire, as well as additional co-
insurance of up to $63 million for the policy year, which resulted in net coverage of approximately $875 million
provided by Third-Party Commercial Insurers and $28 million provided by EIS for part of the policy year.
SCE believes that its insurance coverage for the July 1, 2022 through June 30, 2023 period meets its obligation to
maintain reasonable insurance coverage under AB 1054. Edison International and SCE record a receivable for insurance
recoveries when recovery of a recorded loss is determined to be probable.
SCE's wildfire insurance expense for the July 1, 2022 through June 30, 2023 policy period will be approximately
$450 million, of which $357 million is paid to Third-Party Commercial Insurers. SCE's wildfire insurance expense for
the July 1, 2021 through June 30, 2022 policy period was approximately $437 million, of which $413 million was paid
to Third-Party Commercial Insurers. The difference between the Third-Party Commercial Insurer cost and total cost in
both policy years was paid in premiums to EIS. Wildfire insurance premiums paid for the July 1, 2021 through June 30,
2022 and July 1, 2022 through June 30, 2023 policy periods are being recovered through customer rates. See Note 18 for
further information.
While SCE's cost of obtaining wildfire insurance coverage from Third-Party Commercial Insurers was lower in 2022
compared to 2021, SCE's cost of obtaining wildfire insurance coverage in recent years is significantly higher than costs
incurred prior to the 2017/2018 Wildfire/Mudslide Events due to, among other things, the number of significant wildfire
events throughout California and the application of inverse condemnation to investor-owned utilities. While SCE is
required to maintain reasonable insurance coverage under AB 1054, SCE may not be able to obtain a reasonable amount
of wildfire insurance, at a reasonable cost, from Third-Party Commercial Insurers for future policy periods.
Environmental Remediation
SCE records its environmental remediation liabilities when site assessments and/or remedial actions are probable and a
range of reasonably likely cleanup costs can be estimated. SCE reviews its sites and measures the liability quarterly, by
assessing a range of reasonably likely costs for each identified site using currently available information, including
existing technology, presently enacted laws and regulations, experience gained at similar sites, and the probable level of
involvement and financial condition of other potentially responsible parties. These estimates include costs for site
investigations, remediation, operation and maintenance, monitoring and site closure. Unless there is a single probable
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amount, SCE records the lower end of this reasonably likely range of costs (reflected in "Other long-term liabilities") at
undiscounted amounts as timing of cash flows is uncertain.
At December 31, 2022, SCE's recorded estimated minimum liability to remediate its 26 identified material sites (sites
with a liability balance as of December 31, 2022, in which the upper end of the range of the costs is at least $1 million)
was $256 million, including $164 million related to San Onofre. In addition to these sites, SCE also has 15 immaterial
sites with a liability balance on December 31, 2022 for which the total minimum recorded liability was $3 million. Of
the $259 million total environmental remediation liability for SCE, $241 million has been recorded as a regulatory asset.
SCE expects to recover $37 million through an incentive mechanism that allows SCE to recover 90% of its
environmental remediation costs at certain sites (SCE may request to include additional sites in this mechanism), and
$204 million through proceedings that allow SCE to recover up to 100% of the costs incurred at certain sites through
customer rates. SCE's identified sites include several sites for which there is a lack of currently available information,
including the nature and magnitude of contamination, and the extent, if any, that SCE may be held responsible for
contributing to any costs incurred for remediating these sites. Thus, no reasonable estimate of cleanup costs can be made
for these sites.
The ultimate costs to clean up SCE's identified sites may vary from its recorded liability due to numerous uncertainties
inherent in the estimation process, such as: the extent and nature of contamination; the scarcity of reliable data for
identified sites; the varying costs of alternative cleanup methods; developments resulting from investigatory studies; the
possibility of identifying additional sites; and the time periods over which site remediation is expected to occur. SCE
believes that, due to these uncertainties, it is reasonably possible that cleanup costs at the identified material sites and
immaterial sites could exceed its recorded liability by up to $121 million and $9 million, respectively. The upper limit of
this range of costs was estimated using assumptions least favorable to SCE among a range of reasonably possible
outcomes.
SCE expects to clean up and mitigate its identified sites over a period of up to 40 years. Remediation costs for each of
the next 5 years are expected to range from $9 million to $28 million. Costs incurred for years ended December 31,
2022, 2021 and 2020 were $7 million, $9 million and $7 million, respectively, and were included in the "Operation and
maintenance" expense on the consolidated statements of income.
Based upon the CPUC's regulatory treatment of environmental remediation costs incurred at SCE, SCE believes that
costs ultimately recorded will not materially affect its results of operations, financial position or cash flows. There can be
no assurance, however, that future developments, including additional information about existing sites or the
identification of new sites, will not require material revisions to estimates.
Nuclear Insurance
Federal law limits public offsite liability claims for bodily injury and property damage from a nuclear incident to the
amount of available financial protection, which is currently approximately $13.7 billion for Palo Verde and $560 million
for San Onofre. As of January 1, 2021, SCE and other owners of San Onofre and Palo Verde have purchased the
maximum private primary insurance available ($450 million) through a Facility Form issued by American Nuclear
Insurers ("ANI"). In the case of San Onofre, the balance is covered by a US Government indemnity. In the case of Palo
Verde, the balance is covered by a loss sharing program among nuclear reactor licensees. If a nuclear incident at any
licensed reactor in the United States, which is participating in the loss sharing program, results in claims and/or costs
which exceed the primary insurance at that plant site, all participating nuclear reactor licensees could be required to
contribute their share of the liability in the form of a deferred premium.
The ANI Facility Form coverage includes broad liability protection for bodily injury or offsite property damage caused
by the nuclear energy hazard at San Onofre or Palo Verde, or while radioactive material is in transit to or from San
Onofre or Palo Verde. The Facility Form, however, includes several exclusions. First, it excludes onsite property damage
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to the nuclear facility itself and onsite cleanup costs, but as discussed below SCE maintains separate Nuclear Electric
Insurance Limited ("NEIL") property damage coverage for such events. Second, tort claims of onsite workers are
excluded, but SCE also maintains an ANI Master Worker Form policy that provides coverage for non-licensee workers.
This program provides a shared industry aggregate limit of $450 million. Industry losses covered by this program could
reduce limits available to SCE. Third, offsite environmental costs arising out of government orders or directives,
including those issued under the Comprehensive Environmental Response, Compensation and Liability Act, also known
as CERCLA, are excluded, with minor exceptions from clearly identifiable accidents.
SCE withdrew from participation in the secondary insurance pool for San Onofre for offsite liability insurance effective
January 5, 2018. Based on its ownership interests in Palo Verde, SCE could be required to pay a maximum of
approximately $65 million per nuclear incident for future incidents. However, it would have to pay no more than
approximately $10 million per future incident in any one year. SCE could be required to pay a maximum of
approximately $255 million per nuclear incident and a maximum of $38 million per year per incident for liabilities
arising from events prior to January 5, 2018, although SCE is not aware of any such events. If the public liability limit
above is insufficient, federal law contemplates that additional funds may be appropriated by Congress. This could
include an additional assessment on all licensed reactor operators as a measure for raising further federal revenue.
SCE is a member of NEIL, a mutual insurance company owned by entities with nuclear facilities. NEIL provides
insurance for nuclear property damage, including damages caused by acts of terrorism up to specified limits, and for
accidental outages for active facilities. The amount of nuclear property damage insurance purchased for San Onofre and
Palo Verde exceeds the minimum federal requirement of $50 million and $1.1 billion, respectively. These policies
include coverage for decontamination liability. Additional outage insurance covers part of replacement power expenses
during an accident-related nuclear unit outage. The accidental outage insurance at San Onofre has been canceled as a
result of the permanent retirement, but that insurance continues to be in effect at Palo Verde.
If NEIL losses at any nuclear facility covered by the arrangement were to exceed the accumulated funds for these
insurance programs, SCE could be assessed retrospective premium adjustments of up to approximately $30 million
per year. Insurance premiums are charged to operating expense.
Note 13.Leases
Leases as Lessee
SCE enters into various agreements to purchase power, electric capacity and other energy products that may be
accounted for as leases when SCE has dispatch rights that determine when and how a plant runs. SCE also leases
property and equipment primarily related to vehicles, office space and other equipment. The terms of the lease contracts
included in the table below are primarily 2 to 20 years for PPA leases, 3 to 72 years for office leases, and 5 to 13 years
for the remaining other operating leases. Finance leases are immaterial to the periods presented.
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The following table summarizes SCE's future lease payments for operating leases as of December 31, 2022:
(in millions)
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Amount representing interest
Lease liabilities
PPA Operating Other Operating
Leases1
Leases2
$
$
493
82
73
70
65
633
1,416
227
1,189
$
$
49
42
38
35
31
117
312
68
244
1
2
Excludes expected purchases from most renewable energy contracts, which do not meet the definition of a lease payment since
renewable power generation is contingent on external factors.
Excludes escalation clauses based on consumer price or other indices and residual value guarantees that are not considered
probable at the commencement date of the lease.
The timing of SCE's recognition of the lease expense conforms to ratemaking treatment for SCE's recovery of the cost of
electricity and is included in purchased power for operating leases. The following table summarizes the components of
SCE's lease expense:
(in millions)
PPA leases:
Operating lease cost
Variable lease cost1
Short term lease cost
Total PPA lease cost
Other operating leases cost
Total lease cost
Years ended December 31,
2021
2022
2020
$
$
580
2,661
—
3,241
52
3,293
$
$
305 $
2,098
539
2,942
47
2,989 $
111
1,918
—
2,029
47
2,076
1
Includes lease costs from renewable energy contracts where payments are based on contingent external factors such as wind,
hydro and solar power generation.
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Other information related to leases was as follows:
(in millions, except lease term and discount rate)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from:
PPA operating leases
Other operating leases
ROU assets obtained in exchange for lease obligations:
PPA operating leases
Other operating leases
Weighted average remaining lease term (in years):
PPA operating leases
Other operating leases
Weighted average discount rate:
PPA operating leases
Other operating leases
Leases as Lessor
Years ended December 31,
2021
2020
2022
$
$
$
$
580
50
20
76
9.42
10.38
$
$
305
45
1,084
71
8.16
11.14
111
44
463
58
9.75
12.13
2.95 %
3.78 %
2.43 %
3.34 %
3.12 %
3.63 %
SCE also enters into operating leases to rent certain land and facilities as a lessor. These leases primarily have terms that
range from 15 to 65 years. During the years ended December 31, 2022, 2021 and 2020, SCE recognized lease income of
$18 million, $16 million and $17 million, respectively, which is included in operating revenue on the consolidated
statements of income. At December 31, 2022, the undiscounted cash flow expected to be received from lease payments
for the remaining years is as follows:
(in millions)
2023
2024
2025
2026
2027
Thereafter
Total
Note 14. Equity
Common Stock Issuances
$
$
13
12
11
6
6
120
168
Edison International continued to settle its ongoing common stock requirements of various internal programs through
issuance of new common stock. During the twelve months ended December 31, 2022, 1,253,049 shares of common
stock were issued as stock compensation awards for net cash receipts of $57 million, 273,642 shares of new common
stock were issued in lieu of distributing $18 million to shareholders opting to receive dividend payments in the form of
additional common stock, 157,000 shares of common stock were purchased by employees through the 401(k) defined
contribution savings plan for net cash receipts of $10 million as dividend payments, 109,750 shares of common stock
were issued related to optional cash investments of $7 million and 36,912 shares of common stock were issued to
employees through the ESPP for net cash receipts of $2 million.
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During the twelve months ended December 31, 2021, 629,092 shares of common stock were issued as stock
compensation awards for net cash receipts of $25 million, 522,400 shares of common stock were purchased by
employees through the 401(k) defined contribution savings plan for net cash receipts of $30 million, 293,031 shares of
new common stock were issued in lieu of distributing $17 million to shareholders opting to receive dividend payments in
the form of additional common stock and 26,475 shares of common stock were issued related to optional cash
investments of $2 million. Starting July 2021, the 401(k) defined contribution savings plan no longer offered Edison
International's stock as an investment option to employees. Subsequent to the change, stock issued through the
401(k) defined contribution savings plan were dividend payments made in the form of additional common stock.
At-the-Market Program
In the third quarter of 2022, Edison International filed a prospectus supplement and executed several distribution
agreements with certain sales agents to establish an "at-the-market"("ATM") program under which it may sell shares of
its common stock having an aggregate sales price of up to $500 million. As of December 31, 2022, no sales had occurred
and Edison International has no obligation to sell the remaining shares available under the ATM program.
Preferred Stock Issuances
In 2021, Edison International issued 1,250,000 shares of 5.375% Fixed-Rate Reset Cumulative Perpetual Preferred
Stock, Series A, and 750,000 shares of its 5.00% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series B, each
with a liquidation value of $1,000 per share. The dividends are payable on a semi-annual basis, commencing
September 15, 2021 and March 15, 2022, respectively. The dividend rate will be reset every five years beginning on
March 15, 2026 and March 15, 2027, respectively, to equal the then-current five-year U.S. Treasury rate plus a spread of
4.698% and 3.901%, respectively. The net proceeds of $2.0 billion were used to repay commercial paper borrowings and
for general corporate purposes, including making a total of $900 million equity contributions to SCE.
Edison International may, at its option, redeem its preferred stock in whole or in part during certain periods of time prior
to each of the dividend reset dates at a price equal to $1,000 per share plus any accumulated and unpaid dividends.
Edison International may also, at its option, redeem the preferred stocks in whole but not in part at a price equal to
$1,020 per share plus any accumulated and unpaid dividends within a certain period of time following any change in the
criteria rating agencies use that would have adverse effects on the equity credit attributed by rating agencies to the
preferred stocks.
The preferred stocks rank senior to Edison International's common stock with respect to dividends rights and distribution
rights upon liquidation. The preferred stocks are not subject to any mandatory sinking fund, retirement fund, purchase
fund or other similar provisions. Holders of the shares of the preferred stocks do not have the right to require Edison
International to repurchase or redeem shares of the preferred stocks.
Preferred and Preference Stock of Utility
SCE's authorized shares are: $100 cumulative preferred – 12 million shares, $25 cumulative preferred – 24 million
shares and preference with no par value – 50 million shares. There are no dividends in arrears for the preferred or
preference shares.
During 2020, SCE redeemed $120 million of cumulative preferred stock consisting of all of the outstanding shares of the
4.32% Series, 4.08% Series, 4.24% Series and the 4.78% Series at a price of $28.75, $25.50, $25.80 and $25.80,
respectively. SCE recorded a $9 million loss on the redemption of the preferred stock as an adjustment to net income
available to common stockholders. No preferred shares were issued or redeemed in the years ended December 31, 2022
and 2021. There is no sinking fund requirement for redemptions or repurchases of preferred shares.
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Shares of SCE's preference stock rank senior to SCE’s common stock with respect to dividend rights and distribution
rights upon liquidation. Shares of SCE's preference stock are not convertible into shares of any other class or series of
SCE's capital stock or any other security. SCE's outstanding preference shares are not subject to mandatory redemption
and there is no sinking fund requirement for redemptions or repurchases of preference shares.
Preference stocks are:
(in millions, except shares and per share amounts)
No par value:
3-month LIBOR + 4.199% Series E (cumulative)
5.10% Series G (cumulative)
5.75% Series H (cumulative)
5.375% Series J (cumulative)
5.45% Series K (cumulative)
5.00% Series L (cumulative)
SCE's preference stock
Less issuance costs
Edison International's preference stock of utility
Shares
Outstanding
Redemption Dividends
Declared
per Share
Price
per Share
December 31,
2022
2021
2,500.00
2,500.00
2,500.00
2,500.00
2,500.00
350,000 $ 1,000.00 $ 65.110 $ 350 $ 350
220
88,004
275
110,004
325
130,004
300
120,004
475
190,004
1,945
(44)
$ 1,901 $ 1,901
220
275
325
300
475
1,945
(44)
127.500
143.750
134.375
136.250
125.000
Shares of Series E preference stock issued in 2012 may be redeemed at par, in whole or in part, on or after February 1,
2022. Dividends are payable at a floating rate from and including February 1, 2022. Shares of Series G, H, J, K and L
preference stock, issued in 2013, 2014, 2015, 2016 and 2017, respectively, may be redeemed at par, in whole, but not in
part, at any time prior to March 15, 2018, March 15, 2024, September 15, 2025, March 15, 2026 and June 26, 2022,
respectively, if certain changes in tax or investment company law or interpretation (or applicable rating agency equity
credit criteria for Series L only) occur and certain other conditions are satisfied. On or after March 15, 2018, March 15,
2024, September 15, 2025, March 15, 2026 and June 26, 2022, SCE may redeem the Series G, H, J, K and L shares,
respectively, at par, in whole or in part. For shares of Series H, J and K preference stock, distributions will accrue and be
payable at a floating rate from and including March 15, 2024, September 15, 2025 and March 15, 2026, respectively.
Shares of Series G, H, J, K and L preference stock were issued to SCE Trust II, SCE Trust III, SCE Trust IV, SCE Trust
V and SCE Trust VI, respectively, special purpose entities formed to issue trust securities as discussed in Note 3. During
2020, SCE redeemed $180 million of the outstanding shares of the Series G preference stock. SCE recorded a $6 million
loss on the redemption of the preference stock as an adjustment to net income available to common stockholders. No
preference stocks were issued or redeemed in the years ended December 31, 2022 and 2021.
Note 15.Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, consist of:
(in millions)
Beginning balance
Pension and PBOP:
Other comprehensive income before reclassifications
Reclassified from accumulated other comprehensive loss1
Change
Ending Balance
Edison International
SCE
Years ended December 31,
2022
2021
2022
2021
$
(54) $
(69) $
(32) $
(41)
35
8
43
(11) $
7
8
15
(54) $
17
7
24
(8) $
4
5
9
(32)
$
1 These items are included in the computation of net periodic pension and PBOP expenses, including amortization of net loss and
settlement costs. See Note 9 for additional information.
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Note 16.Other Income
Other income net of expenses is as follows:
(in millions)
SCE other income (expense):
Equity allowance for funds used during construction
Increase in cash surrender value of life insurance policies and life insurance
benefits
Interest income
Net periodic benefit income – non-service components
Civic, political and related activities and donations
Other
Total SCE other income
Other income (expense) of Edison International Parent and Other:
Interest income
Net periodic benefit costs – non-service components
Other
Total Edison International other income
Note 17. Supplemental Cash Flows Information
Supplemental cash flows information is:
Years ended December 31,
2021
2022
2020
$
137
$
118
$
121
42
80
136
(42)
(16)
337
9
(2)
4
348
$
40
3
123
(39)
(12)
233
—
(2)
6
237
$
66
20
102
(42)
(12)
255
—
(2)
(2)
251
$
(in millions)
Cash payments (receipts):
Interest, net of amounts capitalized
Income taxes, net
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock
Preference stock of SCE
Edison International
SCE
Years ended December 31,
2022
2021
2020
2022
2021
2020
$ 1,001
(49)
$ 887 $ 836 $ 864 $ 760
(88)
(88)
(49)
(34)
$ 713
(50)
282
8
266
11
251
11
350
8
325
11
—
11
SCE's accrued capital expenditures at December 31, 2022, 2021 and 2020 were $652 million, $668 million and
$730 million, respectively. Accrued capital expenditures will be included as an investing activity in the consolidated
statements of cash flow in the period paid.
Note 18. Related-Party Transactions
Edison International and SCE provide and receive various services to and from its subsidiaries and affiliates. Services
provided to Edison International by SCE are priced at fully loaded cost (i.e., direct cost of good or service and allocation
of overhead cost). Specified administrative services performed by Edison International or SCE employees, such as
payroll and employee benefit programs, are shared among all affiliates of Edison International. Costs are allocated based
on one of the following formulas: percentage of time worked, equity in investment and advances, number of employees,
or multi-factor (operating revenue, operating expenses, total assets and number of employees). Edison International
allocates various corporate administrative and general costs to SCE and other subsidiaries using established allocation
factors.
For the years ended December 31, 2022, 2021, and 2020, SCE purchased wildfire liability insurance for premiums of
$273 million, $185 million, and $176 million respectively, from Edison Insurance Services, Inc. ("EIS"), a wholly-
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owned subsidiary of Edison International. EIS fully reinsured the exposure for these policies through the commercial
reinsurance market, with reinsurance limits and premiums equal to those of the insurance purchased by SCE, except for
a contract for a premium of $93 million for the 12 months ending June 30, 2023 under which EIS provided insurance
protection to SCE. SCE recorded the premium as insurance expense and recorded an equal amount of revenue due to
customer funding through regulatory cost recovery mechanisms, therefore there was no earnings impact on SCE's
consolidated statements of income. EIS recorded the premium as insurance revenue. On the Edison International
consolidated statements of income, the EIS insurance revenue is eliminated with SCE's insurance expense, therefore the
SCE customer revenues increased the earnings of Edison International.
The related-party transactions included in SCE's consolidated balance sheets for wildfire-related insurance purchased
from EIS and related expected insurance recoveries were as follows:
(in millions)
Prepaid insurance1
Long-term insurance receivable due from affiliate
1
Reflected in "Prepaid expenses" on SCE's consolidated balance sheets.
December 31,
2022
2021
$
106
334
$
52
—
The expense for wildfire-related insurance premiums paid to EIS were $213 million, $192 million, and $189 million for
the years ended December 31, 2022, 2021, and 2020, respectively.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Based on an evaluation of Edison International's and SCE's disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of
December 31, 2022, Edison International's and SCE's respective principal executive officers and principal financial
officers have concluded that such controls and procedures are effective to ensure that information required to be
disclosed by Edison International and SCE in reports that the companies file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms. In addition,
Edison International's and SCE's respective principal executive officers and principal financial officers have concluded
that such controls and procedures were effective in ensuring that information required to be disclosed by Edison
International and SCE in the reports that Edison International and SCE file or submit under the Exchange Act is
accumulated and communicated to Edison International's and SCE's management, including Edison International's and
SCE's respective principal executive officers and principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Edison International's and SCE's respective management are responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for
Edison International and its subsidiaries and SCE, respectively. Under the supervision and with the participation of their
respective principal executive officer and principal financial officer, Edison International's and SCE's management
conducted an evaluation of the effectiveness of their respective internal controls over financial reporting based on the
framework set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on their evaluations under the COSO framework, Edison
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International's and SCE's respective management concluded that Edison International's and SCE's respective internal
controls over financial reporting were effective as of December 31, 2022. Edison International's internal control over
financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report included in this filing, which is incorporated herein by this
reference. This annual report does not include an attestation report of SCE's independent registered public accounting
firm regarding internal control over financial reporting. Management's report for SCE is not subject to attestation by the
independent registered public accounting firm.
Changes in Internal Control Over Financial Reporting
There were no changes in Edison International's or SCE's internal control over financial reporting during the fourth
quarter of 2022 that have materially affected, or are reasonably likely to materially affect, Edison International's or
SCE's internal control over financial reporting.
Jointly Owned Utility Plant
Edison International's and SCE's respective scope of evaluation of internal control over financial reporting includes their
Jointly Owned Utility Projects.
BUSINESS
CORPORATE STRUCTURE, INDUSTRY AND OTHER INFORMATION
Edison International was incorporated in 1987 as the parent holding company of SCE, a California public utility
incorporated in 1909. Edison International also owns Edison Energy which is engaged in the competitive business of
providing decarbonization and energy solutions to commercial, institutional and industrial customers in North America
and Europe.
The principal executive office of Edison International is located at 2244 Walnut Grove Avenue, P.O. Box 976,
Rosemead, California 91770, and Edison International’s telephone numbers is (626) 302-2222. The principal executive
office of SCE is located at 2244 Walnut Grove Avenue, P.O. Box 800, Rosemead, California 91770, and SCE’s
telephone numbers is (626) 302-1212.
This is a combined Annual Report on Form 10-K for Edison International and SCE. Edison International and SCE make
available at www.edisoninvestor.com: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act, as soon as reasonably practicable after Edison International and SCE electronically file
such material with, or furnishes it to, the SEC. Such reports are also available on the SEC's internet website at
www.sec.gov. The information contained on, or connected to, the Edison investor website is not incorporated by
reference into this report.
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Subsidiaries of Edison International
SCE – Public Utility
SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity through
SCE's electrical infrastructure to an approximately 50,000 square-mile area of southern California. SCE serves
approximately 5 million customers in its service area. SCE's total number of customers by class were as follows:
(in thousands)
Residential
Commercial
Industrial
Public authorities
Agricultural and other
Total
2022
4,541
609
6
69
19
5,244
2021
4,499
605
7
70
20
5,201
2020
4,531
577
9
46
20
5,183
In 2022, SCE's total operating revenue of $17.2 billion was derived as follows: 41.9% commercial customers, 39.9%
residential customers, 4.0% public authorities, 3.0% industrial customers, 4.0% agricultural and other, and 7.2% other
operating revenue.
CPUC and FERC rates decouple authorized revenue from the volume of electricity sales and the price of energy
procured so that SCE has the opportunity to receive revenue equal to amounts authorized by the relevant regulatory
agencies. As a result, the volume of electricity sold to customers does not have a direct impact on SCE's financial results.
See "SCE—Overview of Ratemaking Process—CPUC" and "—FERC" for further information.
Edison Energy – Energy Service Provider
Edison Energy which is engaged in the competitive business of providing decarbonization and energy solutions to
commercial, institutional and industrial customers in North America and Europe. Edison Energy aims to provide energy
solutions that address cost, carbon and complex choices for their customers. To date, investments in Edison Energy are
not material to be reported as a business segment.
Regulation of Edison International as a Holding Company
As a public utility holding company, Edison International is subject to the Public Utility Holding Company Act. The
Public Utility Holding Company Act primarily obligates Edison International and its utility subsidiaries to provide
access to their books and records to the FERC and the CPUC for ratemaking purposes.
Edison International is not a public utility and its capital structure is not regulated by the CPUC. The 1988 CPUC
decision authorizing SCE to reorganize into a holding company structure, however, imposed certain obligations on
Edison International and its affiliates. These obligations include a requirement that SCE's dividend policy continue to be
established by SCE's Board of Directors as though SCE were a stand-alone utility company, and that the capital
requirements of SCE, as deemed to be necessary to meet SCE's electricity service obligations, shall receive first priority
from the Boards of Directors of Edison International and SCE. The CPUC has also promulgated Affiliate Transaction
Rules, which, among other requirements, prohibit holding companies from (1) being used as a conduit to provide non-
public information to a utility's affiliates and (2) causing or abetting a utility's violation of the rules, including providing
preferential treatment to its affiliates.
Human Capital
At December 31, 2022, Edison International had an aggregate of 13,388 employees (excluding interns and employees on
leaves of absence), of which 12,831 were full-time employees of SCE or its subsidiaries. In addition to employees,
SCE's workforce includes a significant number of contract workers who support SCE's operations. Among these contract
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workers are Safety Tier 1 Contractors. SCE estimates, based on contractors' self-reported hours worked and a 2,080-hour
work year, that there were approximately 10,000 full-time equivalent Safety Tier 1 Contractors supporting SCE
operations (other than for decommissioning activities at San Onofre) during 2022. All Safety Tier 1 Contractors engaged
in decommissioning activities at San Onofre are managed by the DGC. In addition to Safety Tier 1 Contractors, SCE
also uses other contract workers to support its transmission and distribution, vegetation management, information
technology and customer service activities.
Approximately 3,900 of SCE's employees are covered by collective bargaining agreements with the International
Brotherhood of Electrical Workers ("IBEW"). In February 2023, the IBEW membership ratified new collective
bargaining agreements for the period January 1, 2023 through December 31, 2025. In addition, a substantial number of
SCE's contract workers are also unionized.
Edison International focuses on various human capital measures and objectives in managing its business, including
measures and objectives related to safety, diversity, equity and inclusion and workforce continuity.
Safety
Safety is the first of Edison International's core values. Edison International is committed to building and maintaining a
safe environment for its employees, contract workers, customers and the public. Over the past several years, Edison
International's efforts to improve workforce safety have included increased focus on, and investment in, maturing a
culture of safety ownership among its workforce that empowers employees and contract workers to own their safety,
support their team members' safety and contribute to a safe work environment.
Edison International makes efforts to eliminate fatalities and serious injuries and reduce all injuries. For instance, all full-
time employees are provided with regular safety-related training, particularly for those who work in proximity to high-
voltage electrical equipment and other high-risk activities. SCE implemented more safety requirements for both prime
contractors and subcontractors in 2021 and continues to prioritize safety.
Edison International uses employee safety culture assessments to measure its progress relative to improving its safety
culture. Edison International also uses various measures to assess safety performance, including, without limitation,
fatalities and serious injury rates for employees and contract workers. The following represents data for 2022:
Employee work-related fatalities1
Employee EEI Serious Injuries1
Employee EEI SIF Rate1,2
Employee DART Rate1,3
Safety Tier 1 Contractor work-related fatalities4
Safety Tier 1 Contractor EEI Serious Injuries4
Safety Tier 1 Contractor EEI SIF Rate2,4
Safety Tier 1 Contractor DART Rate3,4
0
11
0.087
1.16
0
6
0.06
0.25
1
2
3
Excludes employees of Alfa Energy Ltd., an entity acquired by Edison Energy in October 2022.
EEI SIF Rate is calculated by multiplying the total number of 2022 EEI SIF incidents (classified by SCE on or before January 13,
2023) by 200,000 and then dividing by the total number of reported hours worked.
DART Rate is calculated by multiplying the number of 2022 DARTs (reported to SCE on or before January 10, 2023 for Safety
Tier 1 Contractors and classified as a DART by SCE on or before January 13, 2023 for employees) by 200,000 and then dividing
by the total number of reported hours worked. The 2022 DART Rates will change based on information received by SCE after
January 10, 2023 for Safety Tier 1 Contractors and after January 13, 2023 for employees.
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4
Excludes contractors managed by the DGC engaged by SCE to undertake a significant scope of decommissioning activities at
San Onofre.
Diversity, Equity and Inclusion
Edison International is committed to developing a team that reflects the broad diversity of the customers and
communities it serves. At Edison International, on average, employees in the same role receive equal pay for equal work.
Similar to broader society, when looking at gender or race/ethnicity-specific groups across Edison International without
regard to role, female employees and Black and Hispanic employees do not receive comparable pay to male and White
employees, respectively, due to lower representation of female, Black and Hispanic employees in higher paying jobs.
Edison International is committed to working towards increasing diversity in its higher paying jobs.
The table below provides Edison International's employee diversity data1 as of December 31, 2022:
Females
Racially/ethnically diverse
Racially/ethnically or gender diverse
Employees2
Leaders3
Executives4
32 %
63 %
71 %
27 %
53 %
63 %
37%
36 %
61 %
1
2
3
4
Calculated using the guidelines SCE uses to calculate the diversity data it reports to the United States Equal Employment
Opportunity Commission. Excludes employees of Alfa Energy Ltd., an entity acquired by Edison Energy in October 2022.
Excludes interns and employees on a leave of absence.
"Leaders" represents all non-executive manager and supervisor level employees.
"Executives" represents all officers and all director level employees.
To support Edison International's diversity, equity and inclusion efforts, Executives and Leaders are offered training and
tools to promote diverse representation throughout their teams. In addition, Edison International evaluates whether hiring
processes include diverse candidates and diverse sets of decision makers. In addition to measuring diversity, Edison
International also uses various other measures to assess success of diversity, equity and inclusion initiatives, including
without limitation, monitoring hiring, promotion and turnover rates for diverse employees.
Workforce Continuity
Edison International is committed to identifying and developing the talents of its workforce and takes a variety of steps
to increase employee engagement and provide employees opportunities for growth. Employees are provided with
training opportunities, including an onboarding program, technical training, required ethics and compliance training and
optional trainings to support career development. SCE estimates that over 95% of active SCE employees completed all
assigned training required to be completed in 2022 as part of SCE's enterprise-wide training program. Employees may
also be required to take additional trainings based on their job function.
Employees receive competitive compensation packages which include a wide selection of health plans, a 401(k) savings
plan with a company match, wellness programs and initiatives, tuition reimbursement, competitive vacation/holiday
program, professional development, volunteer programs, employee assistance program, and a philanthropy and matching
contribution program.
Edison International uses various measures to assess employee engagement and satisfaction, including, without
limitation, conducting regular employee engagement surveys and monitoring turnover. Edison International Parent and
SCE's combined Turnover Rate was 7.6% and 7.5% in 2022 and 2021, respectively.
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Executives engage in succession planning for leadership positions within the organization. Edison International's and
SCE's Boards of Directors also engage in succession planning and talent development discussions for senior officers.
Edison International's Diversity, Equity and Inclusion Report and Sustainability Report are available at
http://www.edison.com/sustainability. The reports and any other information contained on, or connected to, this website
are not deemed part of, and are not incorporated by reference into, this Annual Report on Form 10-K.
Insurance
Edison International maintains a property and casualty insurance program for itself and its subsidiaries and excess
liability insurance covering liabilities to third parties for bodily injury or property damage resulting from operations.
These policies are subject to specific retentions, sub-limits and deductibles, which are comparable to those carried by
other utility companies of similar size. Catastrophic events, such as hurricanes and storms, that do not impact Edison
directly have had an impact, and can have future impacts, on insurance markets overall.
While SCE maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and
may be insufficient to offset any losses, costs or damage experienced.
SCE also has separate insurance programs for nuclear property and liability, workers compensation and wildfires. For
further information on nuclear and wildfire insurance, see "Notes to Consolidated Financial Statements—Note 12.
Commitments and Contingencies—Contingencies."
SCE
Regulation
CPUC
The CPUC has the authority to regulate, among other things, retail rates, utility distribution-level equipment and assets,
energy purchases on behalf of retail customers, SCE capital structure, rate of return, issuance of securities, disposition of
utility assets and facilities, oversight of nuclear decommissioning funding and costs, and aspects of the transmission
system planning, site identification and construction, including safety and environmental mitigation. The CPUC can
assess penalties on any public utility that violates or fails to comply with its rules and requirements, of up to
$100,000, for each offense, which could be assessed daily for a continuing violation. In November 2020, the CPUC
adopted a new Enforcement Policy authorizing the staff of the CPUC to draft proposed Administrative Consent Orders
and Administrative Enforcement Orders, both of which can include fines and serve as alternatives to issuance of a
citation or formal investigation proceeding, for CPUC consideration and approval.
FERC
The FERC has the authority to regulate wholesale rates as well as other matters, including unbundled transmission
service pricing, rate of return, accounting practices, and licensing of hydroelectric projects. The FERC also has
jurisdiction over a portion of the retail rates and associated rate design.
CAISO
The CAISO operates a wholesale energy market primarily in California through which competing electricity generators
offer their electricity output to market participants, including electricity retailers. SCE has placed its transmission system
under the operational control of the CAISO.
Major transmission projects required for reliability, economic and other policy reasons are identified and approved
through the CAISO's annual transmission planning process. Depending on the nature of the project identified, it may be
assigned to SCE or set for competitive bid.
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The CAISO is conducting transmission planning studies to identify transmission needed to meet a 46 million metric ton
GHG emissions target by 2030 set by the CPUC for California's electricity sector to support California's target of
reducing overall GHG emissions statewide by 40 percent below 1990 levels by 2030.
NERC
The FERC assigned administrative responsibility to the NERC to establish and enforce reliability standards and critical
infrastructure protection standards, which protect the bulk power system against potential disruptions from cyber and
physical security breaches. The critical infrastructure protection standards focus on controlling access to critical physical
and cyber security assets, including supervisory control and data acquisition systems for the electric grid. The reliability
standards define the requirements for planning and operating the bulk power system. Compliance with these standards is
mandatory. As of the date of this filing, the maximum penalty that may be levied for violating a NERC reliability or
critical infrastructure protection standard is approximately $1.5 million per violation, per day.
SCE has formal cyber security and physical security programs that cover SCE's information technology and operational
technology systems, including customer data. Program staff is engaged with industry groups as well as public-private
initiatives to reduce risk and to strengthen the security and reliability of SCE's systems and infrastructure.
OEIS
Effective July 1, 2021, the OEIS became the successor to the CPUC's Wildfire Safety Division ("WSD"), and was vested
with the powers, duties, and responsibilities of the WSD, as well as other statutory authority. OEIS is responsible for,
among other things, approving and overseeing compliance with WMPs. As part of overseeing WMP compliance, OEIS
can issue notices of violation and recommend that the Commission pursue an enforcement action against an electrical
corporation for noncompliance with its approved WMP. Other OEIS tasks include conducting safety culture
assessments, approving executive compensation structures, and issuing safety certifications.
Nuclear Power Plant Regulation
The NRC has jurisdiction with respect to the safety of San Onofre and Palo Verde Nuclear Generating Stations. The
NRC regulates commercial nuclear power plants through licensing, oversight and inspection, performance assessment,
and enforcement of its requirements. In June 2013, SCE decided to permanently retire and decommission San Onofre.
The NRC regulates the decommissioning of San Onofre. For further information, see "Liquidity and Capital
Resources—SCE—Decommissioning of San Onofre" in the MD&A.
Other Regulatory Agencies
The construction, planning and project site identification of SCE's transmission lines and substation facilities require the
compliance with various laws and approval of many governmental agencies in addition to the CPUC and FERC. These
include various state regulatory agencies depending on the project location; the CAISO; the U.S. Environmental
Protection Agency and other environmental, land management and resource agencies such as the Bureau of Land
Management, the U.S. Forest Service, the California Department of Fish and Wildlife, and the California Coastal
Commission; and the State Water Resources Control Board. In addition, to the extent that SCE transmission line projects
pass through lands owned or controlled by Native American tribes, consent and approval from the affected tribes and the
Bureau of Indian Affairs are also necessary for the project to proceed.
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Compliance with Government Regulations
SCE incurs significant costs to comply with government regulations. These costs, which include operation and
maintenance expenses and capital expenses, including without limitation: costs incurred to maintain wildfire insurance
coverage required under AB 1054; comply with environmental regulations, including licensing requirements, regulations
governing California's renewable energy standards and regulations governing the decommissioning of SONGS; land use
and construction regulations; privacy and cybersecurity regulations; and Occupational Safety and Health Administration
regulations. SCE also incurs operation and maintenance expenses and capital expenses to comply with requirements set
forth in various regulatory decisions, including, costs incurred to implement its approved capital projects and safety
programs such as its WMPs.
Most costs incurred by SCE to comply with government regulations are authorized in its CPUC and FERC general rate
cases and, are therefore, recovered through electric rates. To the extent SCE incurs costs to comply with government
regulations above those that are authorized, or prior to obtaining authorization, for recovery through rates (for instance
certain costs incurred in line with SCE's obligations under its WMPs and tracked in wildfire mitigation-related
memorandum accounts), SCE will seek recovery of such costs through electric rates. There is no assurance that SCE will
be allowed to fully recover these costs. For further information on wildfire mitigation and wildfire insurance costs, see
"Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire Related Regulatory Proceedings."
SCE earns a rate of return on its authorized capital expenditures included in its rate base. Approximately $1.6 billion of
spending by SCE on wildfire risk mitigation capital expenditures made after August 1, 2019 are not included in rate base
under the terms of AB 1054.
Overview of Ratemaking Process
CPUC
Revenue authorized by the CPUC through GRC proceedings is intended to provide SCE a reasonable opportunity to
recover its costs and earn a return on its net investments in generation and distribution assets and general plant (also
referred to as "rate base") on a forecast basis. Revenue is authorized through quadrennial GRC proceedings where the
CPUC sets an annual revenue requirement for the base year which is made up of the operation and maintenance costs,
depreciation, taxes and a return consistent with the authorized cost of capital (discussed below). In the GRC proceedings,
the CPUC also generally approves the level of capital spending on a forecast basis. Following the base year, the revenue
requirements for the remaining three years will be set by a methodology established in the GRC proceeding, which has
generally, among other items, included annual allowances for escalation in operation and maintenance costs and
additional changes in capital-related investments.
SCE's 2021 GRC has authorized revenue requirements for 2021, 2022 and 2023 of $6.9 billion, $7.3 billion and
$7.7 billion. In 2022, SCE made additional filings in the 2021 GRC proceeding seeking a revenue requirement of
$8.6 billion for 2024. For further discussion of the 2021 GRC, see "Liquidity and Capital Resources— SCE—
Regulatory Proceedings— 2021 General Rate Case Track 4" in the MD&A. SCE expects to file its 2025 GRC
application with the CPUC in May 2023, for the four-year period of 2025 – 2028.
By May 15 in the year preceding each GRC application filing date, SCE is required to file a Risk Assessment and
Mitigation Phase ("RAMP") application with the CPUC to provide information about SCE's assessment of its key safety
risks and its proposed programs and spending for mitigating those risks. SCE filed its RAMP application for the 2025
GRC in May 2022.The information developed during the RAMP informs SCE's proposed projects and funding requests
in the subsequent phase of the GRC.
The CPUC regulates SCE's cost of capital, including its capital structure and authorized rates of return. SCE's currently
authorized capital structure is 43% long-term debt, 5% preferred equity and 52% common equity. SCE's currently
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authorized cost of capital for 2023, 2024 and 2025 consists of: cost of long-term debt of 4.39%, cost of preferred equity
of 6.50% and ROE of 10.05% and includes an adjustment mechanism set by the CPUC that could adjust authorized cost
of capital between SCE's cost of capital proceedings. Based on the capital structure and cost factors discussed above,
SCE's weighted average return on rate base will be 7.44% for 2023. The CPUC also continued the cost of capital
adjustment mechanism for 2023, 2024, and 2025, but opened a second phase in the proceeding to consider proposed
changes to the mechanism. The benchmark value for the mechanism for SCE beginning in 2023 is the 12-month,
October 1, 2021 through September 30, 2022, average Moody’s Baa utility bond yield of 4.37%. Under the cost of
capital adjustment mechanism, if the difference between the benchmark and the average of the same index for the
12-month period to September 30, 2023 exceeds 100-basis points, SCE's CPUC-authorized ROE would be adjusted by
half the amount of the difference (up or down) and SCE's costs of long-term debt and preferred equity would also be
adjusted to reflect the then current embedded costs and projected interest rates effective January 1, 2024. For further
information see "Management Overview—Cost of Capital Applications."
CPUC rates decouple authorized revenue from the volume of electricity sales so that SCE receives revenue equal to
amounts authorized. Differences between amounts collected and authorized levels are either collected from or refunded
to customers, and, therefore, such differences do not impact operating revenue. Accordingly, SCE is neither benefited
nor burdened by the volume of retail electricity sales.
Cost-recovery balancing accounts track the difference between actual expenditures associated with the account, revenue
authorized for recovery by the CPUC (authorized revenue requirement), and the actual revenues collected within
customer rates to cover those specific expenditures. These balancing accounts are used to track and recover, among other
things, SCE's decoupled costs of fuel and purchased power, as well as certain operation and maintenance expenses. SCE
earns no return on these activities and although differences between forecasted and actual costs do not impact earnings,
such differences do impact cash flows and can change rapidly. SCE also has capital-related balancing accounts on which
it earns a return, such as the pole loading balancing account. Costs tracked in balancing accounts are not subject to after-
the-fact reasonableness review unless the balancing accounts are one-way balancing accounts or otherwise subject to a
cost cap. SCE uses balancing accounts for cost recovery of authorized wildfire insurance expenses, WCCP expenditures
up to 110% of authorized WCCP amounts and up to 115% of authorized vegetation management expenses. SCE also has
memorandum accounts, which track costs above authorized levels eligible for cost recovery upon a future
reasonableness review. Under the 2021 GRC final decision SCE can seek recovery of wildfire insurance expenses above
authorized levels, WCCP amounts above 110% of authorized levels and vegetation management expenses above 115%
of authorized levels through reasonableness review applications. These incremental amounts are tracked in
memorandum accounts.
SCE's cost-recovery mechanism for its fuel and purchased power-related costs is facilitated in three main balancing
accounts, the ERRA, the PABA, and the NSGBA. For all three accounts, SCE sets rates based on an annual forecast of
the costs that it expects to incur during the subsequent year. In addition, the CPUC has established a "trigger"
mechanism for the ERRA and the PABA. The trigger mechanism requires SCE to request an expeditious rate change if
the sum of the ERRA balance and the bundled service customers' pro-rata share of the PABA balance exceeds 4% of
SCE's prior year generation rate revenue and SCE does not expect the aggregate overcollection or undercollection to fall
below 5% of SCE's prior year generation rate revenue within 120 days. For 2023, SCE estimates the 4% and 5% trigger
amounts to be approximately $216 million and $270 million, respectively.
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For 2022, the 4% and 5% trigger amounts were approximately $200 million and $250 million, respectively. See
"Liquidity and Capital Resources—SCE—Regulatory Proceedings—ERRA Proceeding" for information regarding SCE
filing an application to advice the CPUC that SCE’s undercollections had exceeded the trigger amount as of
September 30, 2022.
The majority of fuel and purchased power procurement-related costs eligible for recovery through cost-recovery rates are
pre-approved by the CPUC through specific decisions and a procurement plan with predefined standards that establish
the eligibility for cost-recovery. If such costs are subsequently found to be non-compliant with this procurement plan,
then this could negatively impact SCE's earnings and cash flows. In addition, the CPUC retrospectively reviews outages
associated with utility-owned generation and SCE's power procurement contract administration activities through the
annual ERRA review proceeding. A CPUC finding that SCE was unreasonable or imprudent with respect to its utility-
owned generation outages and contract administration activities, could negatively impact SCE's earnings and cash flows.
The ERRA review proceeding is also used as a venue to review costs in various memorandum and balancing accounts
including the Pole Loading and Deteriorated Pole Programs Balancing Account.
A California law adopted in 2022 has directed the CPUC to develop a definition of energy affordability and to use
energy affordability metrics to guide the development of any protections, incentives, discounts, or new programs to
assist residential customers facing hardships or disconnections due to electricity or gas bills and to assess the impact of
proposed rate increases on different types of residential customers.
FERC
Transmission capital and operating costs that are prudently incurred, including a return on its net investment in
transmission assets, are recovered through revenue authorized by the FERC. Since 2012, SCE has used a formula rate to
determine SCE's FERC transmission revenue requirement, including its construction work in progress (CWIP) revenue
requirement. Under operation of the formula rate, transmission revenue will be updated to actual cost of service
annually. The transmission revenue requirement and rates are updated each December, to reflect a forecast of costs for
the upcoming rate period, as well as a true up of the transmission revenue to actual costs incurred by SCE in the prior
calendar year on its formula rate.
The FERC ROE is currently 10.3%. For further information on the FERC formula rates, related transmission revenue
requirements and rate changes, see "Liquidity and Capital Resources—SCE—Regulatory Proceedings—2023 FERC
Formula Rate Annual Update" in the MD&A.
Retail Rates Structure and Residential Rate Design
To develop retail rates, the authorized revenue requirements are allocated among all customer classes (residential,
commercial, industrial, agricultural and street lighting) on a functional basis (i.e., generation, distribution, transmission,
etc.). Specific rate components are designed to recover the authorized revenue allocated to each customer class.
SCE has a two-tier residential rate structure. The first tier is priced at below-average cost and is intended to cover the
customer's essential electricity needs. The second tier is priced at 25% more than the first tier. The CPUC has ordered a
transition from tiered to time-of-use ("TOU") rates for most residential customers unless they opt to stay on the tiered
rate structure. Under a TOU rate structure, rates are based on the time of day and the season. TOU rates are typically
lower early in the day, overnight, and on the weekends when energy resources are less in demand. SCE completed a
multi-year transition of most customers to TOU rates in June 2022, and, as of December 31, 2022, approximately 60
percent of residential customers are on TOU rates. To recover a portion of the fixed costs of serving no- or low-usage
residential customers, SCE assesses both fixed charges of less than $1 per month, and a minimum charge of $10 per
month ($5 for low-income customers). There is currently an open proceeding pending at the CPUC where the CPUC is
considering establishing an income-graduated fixed charge for residential rates for customers of all investor-owned
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electric utilities. For information on residential rates for customers with renewable generation systems, see "—
Competition" below.
Purchased Power and Fuel Supply
SCE obtains the power, energy, and local grid support needed to serve its customers primarily from purchases from
external parties. SCE estimates that approximately 20% of power delivered to SCE's customers in 2022 came from
SCE's own generating facilities.
Natural Gas Supply
SCE requires natural gas to meet contractual obligations for power tolling agreements (power contracts in which SCE
has agreed to provide or pay for the natural gas used to generate electricity) and to fuel its Mountainview and peaker
plants, which are generation units that operate in response to wholesale market signals related to power prices and
reliability needs. The physical natural gas purchased by SCE is sourced in competitive interstate markets at trading
points on the SoCalGas local distribution company system and the El Paso pipeline. SoCalGas is the primary provider of
intrastate pipeline transportation service to the gas-fueled generation stations that SCE controls. In 2015 – 2016,
SoCalGas experienced a significant natural gas fuel leak at its Aliso Canyon underground gas storage facility. As a
result, there continue to be limitations on the use and capability of the facility, and the current available inventory at the
Aliso Canyon facility is limited to 60% of maximum capacity. To date, SCE has found that gas storage-use restrictions
combined with SoCalGas pipeline maintenance constraints contributed to increased electricity costs for customers but
did not impact grid reliability. However, there is no certainty that these restrictions or pipeline constraints will not
impact grid reliability in the future. Price increases faced by customers would not affect SCE's earnings because SCE
expects recovery of these costs through the ERRA balancing account or other CPUC approved procurement plans.
However, these higher prices may impact cash flow due to the timing of those recoveries. For more information on cost-
recovery mechanisms, see "—Overview of Ratemaking Process" above. SCE is actively monitoring legislative and
regulatory processes that are addressing pipeline and electric grid operations impacted by the Aliso Canyon leak,
including an Order Instituting Investigation issued by the CPUC in February 2017 to consider the feasibility of
minimizing or eliminating the use of the Aliso Canyon facility. SCE has also made additional procurement efforts to
alleviate the impact of the partial closure of Aliso Canyon, including accelerating existing contracts for new capacity,
procuring energy storage from third-parties, contracting for design, build, and transfer of utility-owned storage,
procuring additional demand response and contracting for firm gas transportation capacity.
CAISO Wholesale Energy Market
The CAISO operates a wholesale energy market primarily in California through which competing electricity generators
offer their electricity output to market participants, including electricity retailers. The CAISO schedules power in hourly
increments with hourly prices through a day-ahead market in California and schedules power in fifteen-minute and five-
minute increments with fifteen-minute and five-minute prices through two real-time markets that cover California and
portions of six neighboring states through the Energy Imbalance Market. Both markets optimize energy procurement,
ancillary service procurement, unit commitment and congestion management. SCE participates in the day-ahead and
real-time markets for the sale of its own generation and generation under contract purchases for its load requirements. In
February 2023 the CAISO Board and the Western Energy Imbalance Market ("Western EIM") Governing Body
approved a proposal for an Extended Day-Ahead Market ("EDAM") which, if approved by the FERC, will give utilities
in the Western EIM the option of joining a centralized day-ahead market run by the CAISO. The EDAM, if adopted, will
give utilities an opportunity to lock in energy prices a day in advance, and thereby substantially avoid volatility in the
real-time energy market.
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The CPUC's Resource Adequacy program imposes resource adequacy requirements on load-serving entities like SCE
that are designed to provide sufficient resources to the CAISO to ensure the safe and reliable operation of the grid in real
time. The CPUC has adopted a central procurement structure in SCE's distribution service area for local resource
adequacy that transfers the responsibility for procuring local resource adequacy from other local load-serving entities to
SCE, as a central procurement entity ("CPE") for its distribution service area, starting with the 2023 resource adequacy
compliance year. Under this structure, while SCE will procure local resource adequacy to meet the local resource
adequacy requirement for its distribution service area, other load-serving entities can also procure their own local
resources. Load-serving entities that procure their own local resources can: (i) sell the capacity to SCE, (ii) utilize the
resources, or (iii) voluntarily show the resources to meet their own needs, thereby reducing the amount of local resource
adequacy the CPE will need to procure and reducing the total CPE procurement costs shared by all load-serving entities
in that distribution service area. In June 2022, the CPUC reformed the resource adequacy framework by adopting SCE's
proposed "24-hour slice of day" structure, which addresses the large variations in renewable generation that result in
costly over procurement if utilities assess resource need based on periods longer than one hour.
Following state-wide rotating outages in August 2020 that impacted a significant number of SCE's customers, the CPUC
has taken action towards ensuring reliable electric service in the event that an extreme heat events occur during summer.
In June 2021, the CPUC issued a decision requiring at least an aggregate of 11,500 MW of additional net qualifying
renewable or zero-emitting capacity to be procured collectively by all of the load-serving entities subject to CAISO. The
aggregate additional capacity is required by 2026, with 2,000 MW required by 2023, an additional 6,000 MW required
by 2024, an additional 1,500 MW required by 2025, and an additional 2,000 MW required by 2026. SCE's allocation of
the requirements is 705 MW by 2023, 2,114 MW by 2024, 529 MW by 2025 and 705 MW by 2026, for a total of 4,052
MW. In January 2023, the CPUC issued a Proposed Decision which, if adopted, would require all of the load-serving
entities subject to CAISO to collectively procure an additional 4,000 MW of net qualifying renewable or zero-emitting
capacity by 2028. SCE's allocation of the addition 4,000 MW is 1,410 MW. SCE continues to actively pursue and
execute various actions to procure addition capacity. For instance, in January 2023, the CPUC approved SCE entering
into four lithium-ion battery storage contracts with a total capacity of approximately 619 MW, which are expected to
provide approximately 562 MW of capacity towards SCE’s allocation of the 11,500 MW requirement. The contracts
range from 10-15 years and the projects are expected to be in service in 2023 and 2024.
In July 2021, California's Governor issued an Emergency Proclamation related to accelerating construction of new
resources ahead of possible summer 2022 shortfalls. Subsequently, the CPUC opened a Phase 2 of its emergency
reliability rulemaking proceeding to ensure there is adequate supply and demand management to achieve electrical
system reliability in 2022 and 2023. In October 2021, SCE contracted for the construction of utility owned storage at
three sites in SCE's service territory with an aggregate capacity of 537.5 MW, which SCE has been advised will be in-
service prior to June 2023. See "Management Overview—Capital Program—Utility Owned Storage Projects" in the
MD&A. In December 2021, the CPUC issued a final decision in Phase 2 of its emergency reliability rulemaking
proceeding adopting several supply- and demand-side measures to help provide contingency resources with the goal of
ensuring that there is adequate electric power in the event of an extreme weather event in the summers of 2022 or 2023,
including directing the investor-owned utilities to continue their procurement efforts and endeavor to achieve an
effective 20 to 22.5% planning reserve margin for the summers of 2022 and 2023.
Competition
SCE faces retail competition in the sale of electricity to the extent that federal and California laws permit other sources
to provide electricity and related services to retail customers within SCE's service area. While retail competition impacts
customer rates it does not impact SCE's earnings activities because the volume of electricity sales is decoupled from
authorized revenue. The increased retail competition is from governmental entities formed by cities, counties, and
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certain other public agencies to generate and/or purchase electricity for their local residents and businesses, known as
CCAs. While California law provides only limited opportunities for customers in SCE's service area to choose to
purchase power directly from an Electric Service Provider, a limited, phased-in expansion of customer choice ("Direct
Access") for nonresidential customers was authorized beginning in 2009, and an additional limited expansion of Direct
Access was authorized in 2018. When a customer who had previously taken bundled service from SCE converts to
taking retail electricity service from an Electric Service Provider or a CCA, SCE remains that customer's transmission
and distribution provider. Other forms of departing load include customer generation, and load that departs SCE service
entirely to take electricity service from a publicly owned utility or a tribal utility.
California law requires bundled service customers remain financially indifferent to departing load customers and to the
mass return of departing load customers in the event of an Electric Service Provider or CCA's failure or other service
termination. The CPUC has issued a series of decisions designed to avoid cost shifting in the context of departing load,
including revising the PCIA methodology to effectively address the cost shifts to bundled service customers.
Investor-owned utilities serve as the default providers of last resort in their respective service areas and can be
significantly impacted by the Electric Service Providers or CCAs failing or otherwise exiting the market. In March 2021,
the CPUC initiated a rulemaking to examine the risks of catastrophic failures by Electric Service Providers or CCAs on
investor-owned utilities and the need for any changes in the regulatory framework to increase consumer protections and
financial security requirements, among other measures.
As of year-end 2022, SCE had twelve CCAs serving customers in its service territory that represented approximately
27% of SCE's total service load. While one CCA deregistered and exited, two new CCAs implemented and two CCAs
expanded in SCE's service territory in 2022. Two expanded CCAs have been approved by the CPUC to serve customers
in SCE's service territory in 2023, however one of the implementations is likely to be deregistered. Based on recent load
statistics, SCE anticipates that Direct Access and CCA load will be approximately 44% of its total service load by the
end of 2023.
Customer-owned power generation and storage alternatives, such as rooftop solar facilities and battery systems, are
increasingly used by SCE's customers as a result of technological developments, federal and state subsidies, and
declining costs of such alternatives. Beginning in 2020, and subject to certain exceptions, all newly built homes in
California are required to have solar installations.
California legislation passed in 1995 encouraged private residential and commercial investment in renewable energy
resources by requiring SCE and other investor-owned utilities to offer a NEM billing option to customers who install
eligible power generation systems to supply all or part of their energy needs. NEM customers are interconnected to
SCE's grid and credited for the net difference between the electricity SCE supplied to them through the grid and the
electricity the customer exported to SCE over a 12-month period. SCE is required to credit the NEM customer for most
of the power they sell back to SCE at the retail rate. Through the credit they receive, NEM customers effectively avoid
paying certain grid-related costs. NEM customers are also exempted from some non-bypassable, standby and departing
load charges and interconnection fees. Electric Service Providers and CCAs are not required by law to offer NEM rates.
In January 2016, the CPUC issued a decision adopting a new standard NEM tariff for customers with renewable
generation systems. The changes that the CPUC decision made to the existing NEM tariff did not significantly impact
the NEM subsidy. Specifically, the decision required customers that take service on SCE's NEM tariff after June 2017 to
continue to be compensated at the retail rate, minus certain non-bypassable charges. NEM customers also continued to
be exempted from standby and departing load charges but were required to pay a $75 interconnection fee and to select a
time-of-use retail rate.
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The effect of these types of competition on SCE generally is to reduce the amount of electricity purchased from SCE by
retail customers. Customers who use alternative electricity sources typically continue to utilize and pay for SCE's
transmission and distribution services, however, current NEM customers utilize, but do not pay the full cost for, those
services. While changes in volume or rates generally do not impact SCE's earnings activities, decreased retail electricity
sales by SCE has the effect of increasing utility rates because the costs of the distribution grid are not currently borne by
all customers that benefit from its use. See "Risk Factors—Risks Relating to Southern California Edison Company—
Competitive and Market Risks."
In August 2020, the CPUC initiated a rulemaking to develop a successor to the NEM tariffs. In December 2022, the
CPUC issued final decision reducing the current NEM subsidy by decoupling export compensation from the retail rate.
Under the final decision, the CPUC deferred consideration of whether to assess a grid participation charge to address the
costs participating customers avoid by reducing the electricity they purchase from SCE and whether to adopt other
mechanisms that would allow SCE to recover its cost of service and the costs of many public policy programs to another
pending proceeding. The final decision also provides an enhanced subsidy for lower income customers and customers
who pair rooftop solar with energy storage systems. The final decision does not apply to existing NEM customers until
after they have completed twenty years on their existing NEM tariff, at which time they will move to the new, reduced
tariff.
In the area of transmission infrastructure, SCE has experienced increased competition from independent transmission
providers under the FERC's transmission planning requirements rules, effective in 2011, that removed the incumbent
public utility transmission owners' federally-based right of first refusal to construct certain new transmission facilities
and mandated regional and interregional transmission planning. Regional entities, such as independent system operators,
have processes for regional and interregional transmission planning and the competitive solicitation and selection of
developers (including incumbent utilities) to build and own certain types of new transmission projects. The CAISO has
held competitive solicitations pursuant to these rules and independent service providers were selected.
Properties
SCE supplies electricity to its customers through extensive transmission and distribution networks. Its transmission
facilities, which are located primarily in California but also in Nevada and Arizona, deliver power from generating
sources to the distribution network and consist of approximately 13,000 circuit-miles of lines ranging from 55 kV to
500 kV and approximately 80 transmission substations. SCE's distribution system, which takes power from distribution
substations to customers, consists of approximately 38,000 circuit-miles of overhead lines, approximately 31,000 circuit-
miles of underground lines and approximately 730 distribution substations.
At December 31, 2022, SCE had ownership interests in generating and energy storage facilities, primarily located in
California, with approximately 7,000 MW of net physical capacity, of which SCE's pro-rata share is approximately
3,000 MW. SCE's pro rata share includes approximately 73 MW of capacity from facilities that were not operational or
out of service at December 31, 2022, other than for routine maintenance purposes, and excludes retired facilities. In
addition to its current facilities, in October 2021, SCE contracted for the construction of utility owned storage at three
sites in SCE's service territory with an aggregate capacity of 537.5 MW, which SCE has been advised will be in-service
prior to June 2023. See "Management Overview—Capital Program—Utility Owned Storage Projects " in the MD&A.
Certain of SCE's substations, and portions of its transmission, distribution and communication systems are located on
lands owned by the federal, state or local governments under licenses, permits, easements or leases, or on public streets
or highways pursuant to franchises. Certain of the documents evidencing such rights obligate SCE, under specified
circumstances and at its expense, to relocate such transmission, distribution, and communication facilities located on
lands owned or controlled by federal, state, or local governments.
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SCE owns and operates hydroelectric plants and related reservoirs, the majority of which are located in whole or in part
on U.S.-owned lands and are subject to FERC licenses. Slightly over half of these plants have FERC licenses that expire
at various times through 2046. FERC licenses impose numerous restrictions and obligations on SCE, including the right
of the United States to acquire projects upon payment of specified compensation. When existing licenses expire, the
FERC has the authority to issue new licenses to third parties that have filed competing license applications, but only if
their license application is superior to SCE's and then only upon payment of specified compensation to SCE. New
licenses issued to SCE are expected to contain more restrictions and obligations than the expired licenses because laws
enacted since the existing licenses were issued require the FERC to give environmental objectives greater consideration
in the licensing process. In addition, SCE expects additional opposition to new licenses by environmental stakeholder
groups. If, in the future, SCE decides to, or is forced to, decommission one or more hydroelectric projects, the costs
related to the decommissioning will be substantial. The CPUC approved SCE recovering a portion of estimated of
decommissioning costs for hydroelectric projects in the 2021 GRC.
Substantially all of SCE's properties are subject to the lien of a trust indenture securing first and refunding mortgage
bonds. See "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Seasonality
Due to warm weather during the summer months and SCE's rate design, operating revenue during the third quarter of
each year is generally higher than the other quarters. However, as discussed above, SCE earnings are not affected by
changes in retail electricity sales. See "Overview of Ratemaking Process" above.
SOUTHERN CALIFORNIA WILDFIRES
Wildfires in SCE's territory, including those where SCE's equipment may be alleged to be associated with the fire's
ignition, have caused loss of life and substantial damage in recent years. Multiple factors have contributed to increased
wildfire activity and faster progression of wildfires across SCE's service territory and in other areas of California. These
include the buildup of dry vegetation in areas severely impacted by years of historic drought, lack of adequate clearing
of hazardous fuels by responsible parties, higher temperatures, lower humidity, increased incidence of dry lightning, and
strong Santa Ana winds. At the same time that wildfire risk has been increasing in Southern California, residential and
commercial development has occurred and is occurring in some of the highest-risk areas. Such factors can increase the
likelihood and extent of wildfires. SCE has determined that approximately 27% of its service territory is in areas
identified as high fire risk.
California has experienced unprecedented weather conditions in recent years due to climate change, and SCE's service
territory remains susceptible to additional wildfire activity in 2023 and beyond. The worsening weather and fuel
conditions across California increase the likelihood of wildfires, including those where SCE's equipment may be alleged
to be associated with the fire's ignition. In response to worsening conditions and increased wildfire activity over the past
several years, SCE has been focused on developing and implementing plans aimed at reducing the risk of SCE
equipment contributing to the ignition of wildfires, from its 2018 Gris Safety and Resiliency Program to its WMPs. In
addition, California has increased its investment in wildfire prevention and fire suppression capabilities.
Multiple lawsuits related to wildfire events have been initiated against SCE and Edison International. For further
information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—
Contingencies—Southern California Wildfires and Mudslides," "Risk Factors" and "Management Overview—Southern
California Wildfires and Mudslides" in the MD&A.
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Recovery of Wildfire-Related Costs
Pre-AB 1054 Cost Recovery
California courts have previously found investor-owned utilities to be strictly liable for property damage, regardless of
fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause
of a wildfire that caused the property damage. The rationale stated by these courts for applying this theory to investor-
owned utilities is that property damages resulting from a public improvement, such as the distribution of electricity, can
be spread across the larger community that benefited from such improvement through recovery of uninsured wildfire-
related costs in electric rates. However, in November 2017, the CPUC issued a decision denying SDG&E's request to
include in its rates uninsured wildfire-related costs arising from several 2007 wildfires, finding that SDG&E did not
meet the prudency standard because it did not prudently manage and operate its facilities prior to or at the outset of the
2007 wildfires. In July 2018, the CPUC denied both SDG&E's application for rehearing on its cost recovery request and
a joint application for rehearing filed by SCE and PG&E limited to the applicability of inverse condemnation principles
in the same proceeding. The California Court of Appeal, the California Supreme Court and the United States Supreme
Court have denied SDG&E's petitions for review of the CPUC's denial of SDG&E's application.
2019 Wildfire Legislation
In July 2019, AB 1054 was signed by the Governor of California and became effective immediately. The summary of
the wildfire legislation below is based on SCE's interpretation of AB 1054.
AB 1054 Prudency Standard
Under AB 1054, the CPUC must apply a revised standard when assessing the prudency of a utility in connection with a
request for recovery of wildfire costs for wildfires ignited after July 12, 2019. Under AB 1054, the CPUC is required to
find a utility to be prudent if the utility's conduct related to the ignition was consistent with actions that a reasonable
utility would have undertaken under similar circumstances, at the relevant point in time, and based on the information
available at that time. Prudent conduct under the AB 1054 standard is not limited to the optimum practice, method, or act
to the exclusion of others, but rather encompasses a spectrum of possible practices, methods, or acts consistent with
utility system needs, the interest of the ratepayers, and the requirements of governmental agencies. AB 1054 also
clarifies that the CPUC may determine that wildfire costs may be recoverable, in whole or in part, by taking into account
factors within and outside the utility's control, including humidity, temperature, and winds. Further, utilities with a valid
safety certification will be presumed to have acted prudently related to a wildfire ignition unless a party in the cost
recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at which time, the burden
shifts back to the utility to prove its conduct was prudent. If a utility does not have a valid safety certification, it will
have the burden to prove, based on a preponderance of evidence, that its conduct was prudent. The new prudency
standard will survive the termination of the Wildfire Insurance Fund.
Utilities participating in the Wildfire Insurance Fund that are found to be prudent are not required to reimburse the fund
for amounts withdrawn from the fund and can recover wildfire costs through electric rates if the fund has been
exhausted.
Wildfire Insurance Fund
AB 1054 provided for the Wildfire Insurance Fund to reimburse a utility for payment of third-party damage claims
arising from certain wildfires that exceed, in aggregate in a calendar year, the greater of $1.0 billion or the insurance
coverage required to be maintained under AB 1054. The Wildfire Insurance Fund was established in September 2019
and is available for claims related to wildfires ignited after July 12, 2019 that are determined by the responsible
government investigatory agency to have been caused by a utility.
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SCE and SDG&E collectively made their initial contributions totaling approximately $2.7 billion (SCE share is
$2.4 billion) to the Wildfire Insurance Fund in September 2019. Upon its emergence from bankruptcy, on July 1, 2020,
PG&E made its initial contribution of approximately $4.8 billion to the Wildfire Insurance Fund. PG&E, SCE and
SDG&E are also collectively expected to make aggregate contributions of approximately $3.0 billion (SCE share is
$950 million) to the Wildfire Insurance Fund through annual contributions to the fund over a 10-year period by no later
than January 1 of each year, of which they have made three annual contributions totaling approximately $1.2 billion
(SCE share is approximately $380 million). In addition to PG&E's, SCE's and SDG&E's contributions to the Wildfire
Insurance Fund, PG&E, SCE and SDG&E are expected to collect $6.1 billion, $6.1 billion and $1.3 billion, respectively,
from their customers over a 15-year period through a dedicated rate component. The amount collected from customers
may be directly contributed to the Wildfire Insurance Fund or used to support the issuance of up to $10.5 billion in
bonds by the California Department of Water Resources, the proceeds of which would be contributed to the fund. In
addition to funding contributions to the Wildfire Insurance Fund, the amount collected from utility customers will pay
for, among other things, any interest and financing costs related to any bonds that are issued by the California
Department of Water Resources to support the contributions to the Wildfire Insurance Fund.
SCE's contributions to the Wildfire Insurance Fund will not be recoverable through electric rates and will be excluded
from the measurement of SCE's CPUC-jurisdictional authorized capital structure. SCE will also not be entitled to cost
recovery for any borrowing costs incurred in connection with its contributions to the Wildfire Insurance Fund. For
information on the accounting impact of SCE's contributions to the Wildfire Insurance Fund see "Notes to Consolidated
Financial Statements—Note 1. Summary of Significant Accounting Policies—Initial and annual contributions to the
wildfire insurance fund established pursuant to California Assembly Bill 1054 " in this report.
Reimbursement from Wildfire Insurance Fund and AB 1054 Liability Cap
Participating investor-owned utilities will be reimbursed from the Wildfire Insurance Fund for eligible claims, subject to
the fund administrator's review. SCE will reimburse the fund for any withdrawn amounts if SCE receives payment of
such amounts under an indemnification agreement or from an insurance provider or other third-party. SCE will also be
required to reimburse the fund for withdrawn amounts that the CPUC disallows, subject to the AB 1054 Liability Cap. If
the utility has maintained a valid safety certification and its actions or inactions that resulted in the wildfire are not found
to constitute conscious or willful disregard of the rights and safety of others, the aggregate requirement to reimburse the
fund over a trailing three calendar year period is capped at 20% of the equity portion of the utility's transmission and
distribution rate base in the year of the prudency determination. Based on SCE's forecasted weighted-average 2023
transmission and distribution rate base, excluding general plant and intangibles, and using the equity portion of SCE's
CPUC authorized capital structure of 52%, SCE's requirement to reimburse the Wildfire Insurance Fund for eligible
claims disallowed in 2023 would be capped at approximately $3.8 billion.
SCE will not be allowed to recover borrowing costs incurred to reimburse the fund for amounts that the CPUC
disallows. The Wildfire Insurance Fund and, consequently, the AB 1054 Liability Cap will terminate when the
administrator determines that the fund has been exhausted.
Safety Certification and Wildfire Mitigation Plan
Under AB 1054, SCE can obtain an annual safety certification upon the submission by September 14th of each year of
certain required safety information, including an approved WMP. Under AB 1054, SCE is also required to submit a
comprehensive WMP to the CPUC at least once every three years for review and approval. Each such comprehensive
plan is now required to cover at least a three-year period. In addition, SCE anticipates updating its comprehensive three-
year plans annually in the intervening years.
SCE submitted its 2020 – 2022 WMP in February 2020 and most recently submitted updates to its plan in February 2022
to, among other things, report on implementation of its plan, describe new and ongoing wildfire mitigation activities and
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report on its progress on remedying issues identified in an action statement issued by the OEIS in August 2021. In
July 2022, the OEIS approved SCE's 2022 updates to its 2020 – 2022 WMP and the CPUC ratified the OEIS approval in
August 2022.
On December 13, 2022, SCE obtained a safety certification that will be valid for 12 months. Notwithstanding its
12-month term, if SCE requested a new safety certification by September 14, 2023, then its current safety certification
would remain valid until OEIS acts on SCE's request for a new safety certification.
SCE expects to file its 2023 – 2025 WMP in March 2023.
Public Safety Power Shutoffs
In addition to the investments SCE is making as part of its WMP, SCE also uses Public Safety Power Shutoffs ("PSPS")
to proactively de-energize power lines as a last resort to mitigate the risk of catastrophic wildfires during extreme
weather events. SCE initiated PSPS 12 times in 2020 as part of its wildfire mitigation efforts resulting in an aggregate of
approximately 268 million customer minutes interrupted. On a risk informed basis, SCE made efforts to reduce the
frequency and impacts of PSPS in 2021 as compared to 2020. SCE initiated PSPS ten times in 2021 resulting in
approximately 222 million customer minutes interrupted. The 2021 events include a January 2021 event that resulted in
approximately 118 million customer minutes interrupted. While SCE's wildfire mitigation efforts contributed to the
reduction in use and impact of PSPS in 2021, the use of PSPS also depends on weather and fuel conditions. SCE
initiated PSPS six times in 2022 resulting in approximately seven million customer minutes interrupted. As of
February 16, 2023, SCE had not initiated any PSPS events in 2023.
In January 2021, the President of the CPUC sent SCE a letter expressing her concern regarding SCE's execution of PSPS
in 2020 and notifying SCE that it must implement a PSPS action plan to reduce the impacts of PSPS on the customers
and communities it serves. SCE has one item left to implement on its PSPS action plan. In June 2021, the CPUC issued a
final decision which, among other things, will reduce future authorized revenue for the volumetric reductions in
electricity sales resulting from PSPS events initiated after June 2021 until the CPUC determines that improvements in
the PSPS program have been made.
In June 2022, the SED issued an Administrative Enforcement Order ("AEO") against SCE proposing penalties of $10
million for alleged noncompliance with customer notification requirements related to PSPS events in 2020. In
October 2022, the SED and SCE reached a settlement agreement under which SCE agreed to pay $7 million and
complete certain corrective actions to resolve the AEO. SCE did not admit wrongdoing or liability as part of the
settlement. SCE's obligations under the settlement agreement will commence after CPUC approval of the agreement is
final and non-appealable. SCE has made and continues to make significant investments and progress in improving its
PSPS protocols, including through increased automation of customer notifications.
ENVIRONMENTAL CONSIDERATIONS
Greenhouse Gas Regulation
Edison International recognizes that its industry and the global economy are in the midst of a profound transformation
toward a low-carbon future as a response to climate change. SCE plans to be a key enabler of the adoption of new energy
technologies that benefit customers of the electric grid. See "Management Overview—Electricity Industry Trends" in the
MD&A.
Approximately 66% of SCE's sources of utility-owned generation were carbon-free in 2022. SCE estimates that
approximately 20% of power delivered to SCE's customers in 2022 came from SCE's own generating facilities, with
approximately 9% nuclear, 3% large hydroelectric, less than 1% small hydroelectric, and less than 1% solar generation.
Approximately 7% were natural gas sources. Since 2010, SCE has reported its annual GHG emissions from
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utility-owned generation each year to the U.S Environmental Protection Agency by March 31 of the following year.
SCE's 2022 GHG emissions from utility-owned generation are estimated to be approximately 1,500,000 metric tons.
California is committed to reducing its GHG emissions, improving local air quality and supporting continued economic
growth. California's major initiatives for reducing GHG emissions include a law that targets the reduction of GHG
emissions across the entire state economy to 40% below 1990 levels by 2030 and a California cap-and-trade program
established by the California Air Resources Board ("CARB"). Other major policy measures include the Low Carbon
Fuel Standard program established by CARB. In 2022, the California Climate Crisis Act declared the policy of the state
to achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045, to achieve and maintain net
negative greenhouse gas emissions thereafter, and to ensure that by 2045, statewide anthropogenic greenhouse gas
emissions are reduced to at least 85% below the 1990 levels. Edison International is committed to achieving net-zero
GHG emissions by 2045, in alignment with economywide climate actions planned by California. This commitment
covers the power SCE delivers to customers and Edison International's enterprise-wide operations.
In the California cap-and-trade program, all covered GHG emitters, including SCE, are subject to an annually declining
program "cap" on emissions designed to encourage entities to reduce emissions from their operations. Covered entities
must remit a compliance instrument for each ton of carbon dioxide equivalent gas emitted and can do so buying state-
issued emission allowances at auction or purchasing them in the secondary allowance market. From 2013 to 2020, GHG
emitters could have met up to 8% of their cap-and-trade obligations by procuring GHG offset credits from verified offset
programs, such as reforestation, that have recognized effects on reducing atmospheric GHGs. The offset usage limit has
decreased to 4% for 2021 – 2025 emissions and will then increase to 6% for 2026 – 2030 emissions. Starting with 2021
emissions, no more than one-half of the quantitative offset usage limit may be sourced from projects that do not provide
direct environmental benefits in California.
California has adopted RPS targets that require California retail sellers of electricity to provide certain percentages of
energy sales from renewable resources defined in the statute, including 33% of retail sales by December 2020; 44% of
retail sales by December 2024, 52% of retail sales by December 2027, and 60% of retail sales by December 2030.
Approximately 35% of SCE's supply portfolio in 2020 came from renewable sources eligible under California's RPS, of
which 32% was delivered to customers and 3% was sold for resale. As such, SCE met California's 2020 RPS target.
Approximately 39% of SCE's supply portfolio in 2022 came from renewable sources eligible under California's RPS, of
which 36% was delivered to customers and 3% was sold for resale. SCE's climate change objectives align with
California's requirements, and SCE remains well-positioned to meet California’s 2030 and 2045 RPS targets.
Separate from RPS targets, California requires the following percentages of retail sales of electricity to California end-
use customers must be from carbon-free resources by the following deadlines: 90% by December 31, 2035, 95% by
December 31, 2040, and 100% by December 31, 2045. California also requires each state agency to ensure that carbon
free resources supply 100% of electricity procured on its behalf by December 31, 2035. SCE plans to propose for CPUC
approval new programs to help state agency customers meet their accelerated 100% clear power needs. SCE estimates
that approximately 48% of SCE's customer deliveries in 2022 came from carbon-free resources. SCE believes that it is
well-positioned to meet California’s carbon-free requirements.
Additionally, the CPUC and the California Energy Commission adopted GHG emission performance standards that
apply to California investor-owned and publicly owned utilities' long-term arrangements for the purchase of electricity.
The standards prohibit these entities, including SCE, from owning or entering into long-term financial commitments
with generators, such as coal plants, that emit more GHG than a combined-cycle natural gas turbine generator. California
also supports climate action to meet the December 2015 Paris Agreement.
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Edison International supports these California environmental initiatives and has undertaken analysis which, consistent
with third-party analysis, shows that electrification across multiple sectors, including transportation and industrial
sectors, is among the most cost-effective ways to achieve California's requirements and goals. Edison International and
SCE believe that these initiatives will lead to increased electrification across the economy and SCE is investing in grid
technologies and charging infrastructure to support California's goals.
Environmental Risks
Climate change has, and continues to, impact California. Southern California has warmed 3 degrees Fahrenheit in the
last century, snowpack has declined, and the Western United States and Northern Mexico are experiencing their driest
period in at least 1,200 years. Severe droughts and windstorms contributed to the devastating wildfires that swept
through parts of California in recent years, demonstrating the serious threat that weather extremes caused by climate
change pose to California's communities and the environment. See "Management Overview—Southern California
Wildfires and Mudslides" in the MD&A and "Business—Southern California Wildfires."
Severe weather events, including drought, increasingly severe windstorms and rising sea-levels, pose risks to SCE's
infrastructure and SCE and Edison International are investing in building a more resilient grid to reduce climate- and
weather-related vulnerabilities. See " Liquidity and Capital Resources—SCE—Regulatory Proceedings—Wildfire
Related Regulatory Proceedings" in the MD&A.
In May 2022, SCE provided its climate adaptability vulnerability assessment (“CAVA”) to the CPUC. The CAVA
addresses the projected climate impacts of temperature, sea level, precipitation, wildfire, and cascading impacts (such as
rain on snow or debris flow) on SCE in the 2030, 2050, and 2070 timeframes. SCE’s CAVA will inform planning related
to SCE assets, operations, and services, with the goal of maintaining a resilient electric grid in the face of climate change
and will inform future investment in the grid.
For more information on risks related to climate change, environmental regulation and SCE's business strategy, see
"Risk Factors—Risks Relating to Southern California Edison Company—Operating Risks."
UNRESOLVED STAFF COMMENTS
None.
PROPERTIES
As a holding company, Edison International does not directly own any significant properties other than the stock of its
subsidiaries. The principal properties of SCE are described above under "Business—SCE—Properties."
LEGAL PROCEEDINGS
2017/2018 Wildfire/Mudslide Events
Multiple lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed by
three categories of plaintiffs: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. A number of the
lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions.
The litigation could take a number of years to be resolved because of the complexity of the matters and number of
plaintiffs.
As of February 16, 2023, SCE was aware of approximately 120 currently pending lawsuits, representing approximately
1,000 plaintiffs, related to the Thomas and Koenigstein Fires naming SCE as a defendant. Approximately 95 of the
approximately 120 pending lawsuits also name Edison International as a defendant based on its ownership and alleged
control of SCE. One of the lawsuits was filed as a purported class action. The lawsuits, which have been filed in the
superior courts of Ventura, Santa Barbara and Los Angeles Counties allege, among other things, negligence, inverse
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condemnation, trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and
certain of the individual plaintiffs in the Thomas and Koenigstein Fire litigation have been pursuing settlements of
claims under a mediation program adopted to promote an efficient and orderly settlement process. Some individual
plaintiffs have opted to pursue trial outside of the settlement program.
Approximately 30 of the approximately 120 pending lawsuits mentioned in the paragraph above allege that SCE has
responsibility for the Thomas and/or Koenigstein Fires and that the Thomas and/or Koenigstein Fires proximately caused
the Montecito Mudslides, resulting in the plaintiffs' claimed damages. Many of the Montecito Mudslides lawsuits also
name Edison International as a defendant based on its ownership and alleged control of SCE. In addition to other causes
of action, some of the Montecito Mudslides lawsuits also allege personal injury and wrongful death. A bellwether jury
trial previously scheduled for October 12, 2020 was vacated due to the wide-spread disruption caused by the COVID-19
pandemic.
As of February 16, 2023, SCE was aware of approximately 370 currently pending lawsuits, representing approximately
3,000 plaintiffs, related to the Woolsey Fire naming SCE as a defendant. Approximately 110 of the 370 lawsuits also
name Edison International as a defendant based on its ownership and alleged control of SCE. At least one of the lawsuits
was filed as a purported class action. The lawsuits, which have been filed in the superior courts of Ventura and Los
Angeles Counties allege, among other things, negligence, inverse condemnation, personal injury, wrongful death,
trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and certain of the
individual plaintiffs in the Woolsey Fire litigation have been pursuing settlements of claims under a mediation program
adopted to promote an efficient and orderly settlement process. Some individual plaintiffs may opt to pursue trial outside
of the settlement program.
The Thomas and Koenigstein Fires and Montecito Mudslides lawsuits are being coordinated in the Los Angeles Superior
Court. The Woolsey Fire lawsuits have also been coordinated in the Los Angeles Superior Court.
For further information, including regarding settlement activity related to the 2017/2018 Wildfire/Mudslide Events, see
"Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern
California Wildfires and Mudslides."
Environmental Proceedings
Each of Edison International and SCE have elected to disclose environmental proceedings described in Item
103(c)(3)(iii) of Regulation SK unless it reasonably believes that such proceeding will result in no monetary sanctions,
or in monetary sanctions, exclusive of interest and costs, of less than $1,000,000.
Mission Canyon
SCE performed 1.6 miles of access road grading and vegetation clearing in the Mission Canyon area of Santa Barbara
County in December 2019, resulting in debris moving downslope into a creek bed and other impacts in the area (the
"Mission Canyon Incident"). Several state and federal environmental agencies and the County and City of Santa Barbara
have investigated the unpermitted grading and discharges to the creek, and SCE has received Notices of Violation from
the Army Corps of Engineers, the County of Santa Barbara, the California Department of Fish & Wildlife and the
Regional Water Quality Control Board. In December 2020, SCE and the Santa Barbara County District Attorney entered
into a settlement regarding alleged criminal and civil violations related to the Mission Canyon Incident. Under the
settlement, SCE pled no contest to a single misdemeanor charge for violation of the California Water Code and agreed to
pay a $10,000 fine. SCE also agreed to pay a civil penalty of $3.5 million and is subject to an injunction compelling it to
complete planned remediation work related to the Mission Canyon Incident and not commit similar violations for five
years. It is presently unknown whether any regulatory agencies will impose additional fines or penalties on SCE with
respect to the Mission Canyon Incident and, if so, in what amounts. SCE does not expect fines or penalties that are
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imposed in connection with the Mission Canyon Incident to be material.
MINE SAFETY DISCLOSURE
Not applicable.
CERTAIN INFORMATION ABOUT EDISON INTERNATIONAL
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Executive Officer
Pedro J. Pizarro
Maria Rigatti
Adam S. Umanoff
Caroline Choi
J. Andrew Murphy
Natalie K. Schilling
Steven D. Powell
Jill C. Anderson
Age at
February 23, 2023
57
59
63
54
62
63
44
42
Company Position
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Executive Vice President and General Counsel
Senior Vice President, Corporate Affairs
Senior Vice President, Strategy and Corporate Development
Senior Vice President, Human Resources
President and Chief Executive Officer, SCE
Executive Vice President, Operations, SCE
As set forth in Article IV of Edison International's Bylaws, the elected officers of Edison International are chosen
annually by, and serve at the pleasure of, Edison International's Board of Directors and hold their respective offices until
their resignation, removal, other disqualification from service, or until their respective successors are elected. All of the
officers of Edison International have been actively engaged in the business of Edison International and its subsidiaries
for more than five years, except for Ms. Schilling, and have served in their present positions for the periods stated below.
Additionally, those officers who have had other or additional principal positions in the past five years had the following
business experience during that period:
Executive Officers
Pedro J. Pizarro
Company Position
Chief Executive Officer, Edison International
Effective Dates
October 2016 to present
Maria Rigatti
Executive Vice President and Chief Financial Officer, Edison International
October 2016 to present
Adam S. Umanoff
Executive Vice President and General Counsel, Edison International
January 2015 to present
Caroline Choi
Senior Vice President, Corporate Affairs, Edison International and SCE
Senior Vice President, Regulatory Affairs, SCE
February 2019 to present
June 2016 to February 2019
J. Andrew Murphy
Senior Vice President, Strategy and Corporate Development, Edison
International
September 2015 to present
Natalie K. Schilling
Senior Vice President, Human Resources Edison International and SCE
Vice President, Human Resources, Edison International and SCE
Chief Human Resources Officer, Aerojet Rocketdyne Holdings, Inc.1
March 2022 to present
April 2020 to February 2022
April 2018 to January 2020
Steven D. Powell
Jill C. Anderson
President and Chief Executive Officer, SCE
Executive Vice President, Operations, SCE
Senior Vice President, Strategy, Planning and Operational Performance, SCE
Vice President, Strategy & Integrated Planning, SCE
December 2021 to present
September 2019 to December 2021
August 2018 to September 2019
February 2016 to August 2018
Executive Vice President, Operations, SCE
Senior Vice President, Customer Service, SCE
Senior Vice President, Strategic Planning and Power Supply, SCE
Vice President, Customer Programs and Services, SCE
December 2021 to present
March 2020 to December 2021
September 2019 to March 2020
January 2018 to September 2019
1
Aerojet Rocketdyne Holdings, Inc. is an aerospace and defense firm, and is not a parent, affiliate or subsidiary of Edison
International
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning executive officers of Edison International is set forth above under "Information about our
Executive Officers." Other information responding to this section will appear in the Edison International Proxy
Statement under the headings "Our Director Nominees," "Experience, Skills and Attributes on the Board," "Director
Biographies," and "Delinquent Section 16(a) Reports" and is incorporated herein by this reference.
The Edison International Employee Code of Conduct is applicable to all officers and employees of Edison International
and its subsidiaries. The Code is available on Edison International's Internet website at www.edisoninvestor.com at
"Corporate Governance." Any amendments or waivers of Code provisions for the Company's principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions, will be
posted on Edison International's Internet website at www.edisoninvestor.com.
EXECUTIVE COMPENSATION
Information responding to this section will appear in the Edison International Proxy Statement under the headings
"Compensation Discussion and Analysis," "Executive Compensation" (other than "—Pay Versus Performance”) and
"Director Compensation" and is incorporated herein by this reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information responding to this section will appear in the Edison International Proxy Statement under the heading "Stock
Ownership" and is incorporated herein by this reference.
Equity Compensation Plan Information
All of Edison International's equity compensation plans that were in effect as of December 31, 2022 have been approved
by security holders. The following table sets forth, for each of Edison International's equity compensation plans, the
number of shares of Edison International Common Stock subject to outstanding options, warrants and rights to acquire
such stock, the weighted average exercise price of those outstanding options, warrants and rights, and the number of
shares remaining available for future award grants as of December 31, 2022.
Plan Category
Equity compensation plans approved by
security holders
Number of securities to Weighted average Number of securities remaining for
be issued upon exercise
of outstanding options, outstanding options,
warrants and rights
(b)
future issuance under equity
compensation plans (excluding
securities reflected in column
(a)(c)
warrants and rights
(a)
exercise price of
13,355,067 1
$ 63.64
16,244,934 2
1 This amount includes 11,883,556 shares covered by outstanding stock options, 753,174 shares covered by outstanding restricted
stock unit awards, 167,836 shares covered by outstanding deferred stock unit awards, and 550,501 shares covered by outstanding
performance share awards (calculated at 100% of the target number of shares subject to each performance share award; the actual
payout for each award will be zero to twice the target number of shares for the award, depending on performance), with the
outstanding shares covered by outstanding restricted stock unit, deferred stock unit, and performance share awards including the
crediting of dividend equivalents through December 31, 2022. The weighted average exercise price of awards outstanding under
equity compensation plans approved by security holders reflected in column (b) above is calculated based on the outstanding stock
options under these plans as the other forms of awards outstanding have no exercise price. Awards payable solely in cash are not
reflected in this table.
2 This amount is the aggregate number of shares available for new awards under the Edison International 2007 Performance
Incentive Plan and the Edison International Employee Stock Purchase Plan as of December 31, 2022. The maximum number of
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shares of Edison International Common Stock that may be issued or transferred pursuant to awards under the Edison International
2007 Performance Incentive Plan is 71,031,524. Shares available under the Edison International 2007 Performance Incentive Plan
may generally, subject to certain limits set forth in the plan, be used for any type of award authorized under that plan, including
stock options, restricted stock, performance shares, restricted or deferred units, and stock bonuses. The maximum number of
shares of Edison International Common Stock that may be acquired under the Edison International Employee Stock Purchase Plan
is 3,000,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information responding to this section will appear in the Edison International Proxy Statement under the headings
"Governance Structure and Processes—Certain Relationships and Related Party Transactions," and "Governance
Structure and Processes—Director Independence," and is incorporated herein by this reference.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP ("PwC") served as Edison International's and SCE's principal accountant in 2022.
Information responding to this section for Edison International will appear in the Edison International Proxy Statement
under the heading "Independent Auditor Fees," and is incorporated herein by this reference.
The following table sets forth the aggregate fees billed by PwC to SCE for the fiscal years ended December 31, 2022 and
December 31, 2021:
Type of Fee
Audit Fees(1)(5)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees(4)
Total(5)
SCE ($000)
2022
2021
$
$
5,385 $
—
225
229
5,839 $
5,994
130
287
777
7,188
(1) Represent fees for professional services provided in connection with the audit of SCE's annual financial statements and reviews
of SCE's quarterly financial statements and for services regularly provided by PwC in connection with regulatory filings or
engagements.
(2) Represent fees for assurance and related services related to the performance of the audit or review of the financial statements and
not reported under "Audit Fees" above, including assessments of new accounting pronouncements.
(3) Represent fees for tax-related compliance and other tax-related services to support compliance with federal and state tax
reporting and payment requirements, including tax return review and review of tax laws, regulations or case precedent.
(4) Represent fees for miscellaneous services. "All Other Fees" includes fees for attestation services related to securitizations for the
year ended December 31, 2022 and fees for a CSRP assessment and a CPUC required attestation report on wildfire memorandum
accounts for the year ended December 31, 2021.
(5) "Audit Fees" for the year ended December 31, 2021 includes $228,000 of fees, for services performed in connection with
regulatory reports, inadvertently excluded from the 2021 Annual Report on Form 10-K.
The SCE Audit and Finance Committee annually approves all proposed audit fees in executive session without PwC
present, considering several factors, including a breakdown of the services to be provided, proposed staffing and hourly
rates, and changes in SCE and industry from the prior year. The audit fees are the culmination of a process which
included a comparison of the prior year's proposed fees to actual fees incurred and fee proposals for known and
anticipated 2022 services in the audit, audit-related, tax and other categories. The committee's deliberations consider
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balancing the design of an audit scope that will achieve a high-quality audit with driving efficiencies from both SCE and
PwC while compensating PwC fairly.
The SCE Audit and Finance Committee is required to pre-approve all audit and permitted non-audit services performed
by PwC to ensure these services will not impair the firm's independence. The SCE Audit and Finance Committee has
delegated to the Committee Chair the authority to pre-approve services between committee meetings, provided that any
pre-approval decisions are presented to the committee at its next meeting. PwC must assure that all audit and non-audit
services provided to SCE have been approved by the SCE Audit and Finance Committee.
During the fiscal year ended December 31, 2022, all services performed by PwC were pre-approved by the SCE Audit
and Finance Committee, irrespective of whether the services required pre-approval under the Securities Exchange Act of
1934.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Edison International
Edison International Common Stock is traded on the New York Stock Exchange under the symbol "EIX."
There are restrictions on the ability of SCE to transfer funds to Edison International that materially limit the ability of
Edison International to pay cash dividends. Such restrictions are discussed in the MD&A under the heading "Liquidity
and Capital Resources—SCE—SCE Dividends," and in "Notes to Consolidated Financial Statements—Note 1.
Summary of Significant Accounting Policies—SCE Dividends." The number of common stockholders of record of
Edison International was 25,645 on February 16, 2023. In addition, Edison International cannot pay dividends if it does
not meet California law requirements on retained earnings and solvency.
Southern California Edison Company
As a result of the formation of a holding company described under the heading "Business" above, all of the issued and
outstanding common stock of SCE is owned by Edison International and there is no market for such stock. There are
restrictions on SCE's ability to pay dividends to Edison International and to its preference shareholders. Such restrictions
are discussed in the MD&A under the heading "Liquidity and Capital Resources—SCE—SCE Dividends," and in
"Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—SCE Dividends."
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Comparison of Five-Year Cumulative Total Return
$250
$200
$150
$100
$50
2017
2018
2019
2020
2021
2022
Edison International
S&P 500 Index
Philadelphia Utility Index
Edison International
S & P 500 Index
Philadelphia Utility Index
2017
2018
At December 31,
2020
2019
2021
2022
$ 100 $
93 $ 128 $ 112 $ 127 $ 124
96 $ 126 $ 149 $ 191 $ 157
$ 100 $
$ 100 $ 104 $ 131 $ 135 $ 159 $ 160
Note: Assumes $100 invested on December 31, 2017 in stock or index including reinvestment of dividends. Performance
of the Philadelphia Utility Index is regularly reviewed by management and the Board of Directors in understanding
Edison International's relative performance and is used in conjunction with elements of Edison International's
compensation program.
FORM 10-K SUMMARY
None.
OTHER INFORMATION
None.
PART II, ITEM 6. Reserved.
This item no longer requires disclosure.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements
See Consolidated Financial Statements listed in the Table of Contents of this report.
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(a) (2) Report of Independent Registered Public Accounting Firm and Schedules Supplementing Financial
Statements
Edison International
The following documents may be found in this report at the indicated page numbers under the headings "Financial
Statements and Supplementary Data—Reports of Independent Registered Accounting Firm" and "Exhibits and Financial
Statement Schedules—Schedules Supplementing Financial Statements" in the Table of Contents of this report.
Report of Independent Registered Public Accounting Firm - Edison International
Schedule I – Condensed Financial Information of Edison International Parent
Schedules II through V, inclusive, for Edison International are omitted as not required or not applicable.
Southern California Edison Company
The following documents may be found in this report at the indicated page numbers under the headings "Financial
Statements and Supplementary Data—Reports of Independent Registered Accounting Firm" and "Exhibits and Financial
Statement Schedules—Schedules Supplementing Financial Statements" in the Table of Contents of this report.
Report of Independent Registered Public Accounting Firm - SCE
Schedules I through V, inclusive, for SCE are omitted as not required or not applicable.
(a) (3) Exhibits
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Table of Contents
EXHIBIT INDEX
Exhibit
Number
Description
Edison International
3.1
3.2
Certificate of Restated Articles of Incorporation of Edison International, effective December 19,
2006, together with all Certificates of Determination of Preference of Preferred Stock issued since
December 19, 2006 (File No. 1-9936, filed as Exhibit 3.1 to Edison International’s Form 10-K for
the year ended December 31, 2021)*
Bylaws of Edison International, as amended effective, December 8, 2022 (File No. 1-9936, filed as
Exhibit No. 3.1 to Edison International's Form 8-K dated December 8, 2022 and filed December 9,
2022)*
Southern California Edison Company
3.3
3.4
Restated Articles of Incorporation of Southern California Edison Company, effective March 2, 2006,
together with all Certificates of Determination of Preference Stock issued since March 2, 2006 (File
No. 1-2313 filed as Exhibit 3.1 to SCE's Form 10-Q for the quarter ended June 30, 2017)*
Bylaws of Southern California Edison Company, as amended effective December 8, 2022 (File
No. 1-2313, filed as Exhibit No. 3.2 to SCE’s Form 8-K dated December 8, 2022 and filed
December 9, 2022)*
Edison International
4.1
4.2
4.3
4.4
Edison International - Description of Registered Securities (File No. 1-9936, filed as Exhibit 4.1 to
Edison International's Form 10-K for the year ended December 31, 2019)*
Senior Indenture, dated September 10, 2010 (File No. 1-9936, filed as Exhibit 4.1 to Edison
International's Form 10-Q for the quarter ended September 30, 2010)*
Form of Certificate representing Series A Preferred Stock (included as Exhibit A to Certificate of
Determination of the 5.375% Fixed Rate Reset Cumulative Perpetual Preferred Stock Series A) (File
No. 1-9936, filed as Exhibit 3.1 to Edison International’s Form 10-K for the year ended
December 31, 2021)*
Form of Certificate representing Series B Preferred Stock (included as Exhibit A to Certificate of
Determination of the 5.00% Fixed Rate Reset Cumulative Perpetual Preferred Stock Series B) (File
No. 1-9936, filed as Exhibit 3.1 to Edison International’s Form 10-K for the year ended
December 31, 2021)*
Southern California Edison Company
4.5
Southern California Edison Company First Mortgage Bond Trust Indenture, dated as of October 1,
1923 (File No. 1-2313, filed as Exhibit 4.2 to SCE's Form 10-K for the year ended December 31,
2010)*
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Exhibit
Number
4.6
Description
Southern California Edison Company Indenture, dated as of January 15, 1993 (File No. 1-2313, filed
as Exhibit 4.3 to SCE's Form 10-K for the year ended December 31, 2017)*
Edison International and Southern California Edison Company
10.1**
10.2**
10.3**
10.4**
Edison International 2008 Director Deferred Compensation Plan, as amended and restated effective
January 1, 2021 (File No. 1-9936, filed as Exhibit No. 10.2 to Edison International's Form 10-Q for
the quarter ended September 30, 2020)*
Edison International Executive Deferred Compensation Plan, as amended and restated effective
June 19, 2014 (as amended) (File No. 1-9936, filed as Exhibit No. 10.7 to Edison International's
Form 10-Q for the quarter ended March 31, 2018)*
Edison International 2008 Executive Deferred Compensation Plan, as amended and restated
effective January 1, 2021 (File No. 1-9936, filed as Exhibit No. 10.3 to Edison International’s
Form 10-Q for the quarter ended September 30, 2020)*
Southern California Edison Company Executive Retirement Plan, as amended effective June 19,
2014 (File No. 1-9936, filed as Exhibit 10.7 to Edison International and SCE's Form 10-Q for the
quarter ended June 30, 2014)*
10.4.1**
Edison International 2008 Executive Retirement Plan, as amended and restated effective
December 8, 2021 (File No. 1-9936, filed as Exhibit 10.5.1 to Edison International’s Form 10-K for
the year ended December 31, 2021)*
10.5**
10.6**
10.7**
Edison International Executive Incentive Compensation Plan, as amended and restated effective
January 1, 2022 (File No. 1-9936, filed as Exhibit 10.6 to Edison International’s Form 10-K for the
year ended December 31, 2021)*
Edison International 2008 Executive Disability Plan, as amended and restated effective April 2, 2018
(File No. 1-9936, filed as Exhibit No. 10.4 to Edison International and SCE's Form 10-Q for the
quarter ended March 31, 2018)*
Edison International 2007 Performance Incentive Plan as amended and restated effective May 2,
2016 (File No. 1-9936, filed as Exhibit 10.1 to Edison International's Form 8-K dated April 28, 2016
and filed April 29, 2016)*
10.7.1**
Edison International 2012 Long-Term Incentives Terms and Conditions (File No. 1-9936, filed as
Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended March 31, 2012)*
10.7.2**
Edison International 2013 Long-Term Incentives Terms and Conditions (File No. 1-9936, filed as
Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended March 31, 2013)*
10.7.3**
Edison International 2014 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.3 to Edison International's Form 10-Q for the quarter ended March 31, 2014)*
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Table of Contents
Exhibit
Number
10.7.4**
10.7.5**
10.7.6**
10.7.7**
10.7.8**
10.7.9**
Description
Edison International 2015 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended March 31, 2015)*
Edison International 2016 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.4 to Edison International's Form 10-Q for the quarter ended March 31, 2016)*
Edison International 2017 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended March 31, 2017)*
Edison International 2018 Long-Term Incentives Terms and Conditions (File. No. 1-9936, filed as
Exhibit 10.3 to Edison International's Form 10-Q for the quarter ended March 31, 2018)*
Edison International 2019 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.3 to Edison International's Form 10-Q for the quarter ended March 31, 2019)*
Edison International 2020 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.4 to Edison International's Form 10-Q for the quarter ended March 31, 2020)*
10.7.10**
Edison International 2021 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.1 to Edison International's Form 10-Q for the quarter ended March 31, 2021)*
10.7.11**
Edison International 2022 Long-Term Incentives Terms and Conditions (File, No. 1-9936, filed as
Exhibit 10.1 to Edison International’s Form 10-Q for the quarter ended March 31, 2022)*
10.8**
10.9**
10.10**
10.11
10.12
Edison International 2008 Executive Severance Plan, as amended and restated effective January 1,
2022 (File No. 1-9936, filed as Exhibit 10.9 to Edison International’s Form 10-K for the year ended
December 31, 2021)*
Edison International and Southern California Edison Company Director Compensation Schedule, as
adopted August 25, 2022 (File No. 1-9936, filed as Exhibit 10.1 to Edison International and SCE's
Form 10-Q for the quarter ended September 30, 2022)**
Edison International Director Matching Gifts Program, as revised effective January 1, 2019 (File
No. 1-9936, filed as Exhibit 10.1 to Edison International's Form 10-Q for the quarter ended
September 30, 2019)*
Amended and Restated Agreement for the Allocation of Income Tax Liabilities and Benefits among
Edison International, Southern California Edison Company and The Mission Group dated
September 10, 1996 (File No. 1-9936, filed as Exhibit 10.3 to Edison International's Form 10-Q for
the quarter ended September 30, 2002)*
Amended and Restated Tax-Allocation Agreement among The Mission Group and its first-tier
subsidiaries dated September 10, 1996 (File No. 1-9936, filed as Exhibit 10.3.1 to Edison
International's Form 10-Q for the quarter ended September 30, 2002)*
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Exhibit
Number
10.12.1
10.12.2
10.12.3
10.13**
10.14
10.15
10.16
10.17
10.18
Description
Amended and Restated Tax-Allocation Agreement between Mission Energy Holding Company and
Edison Mission Energy dated February 13, 2012 (File No. 333-68630, filed as Exhibit 10.11 to
Edison Mission Energy's Form 10-K for the year ended December 31, 2011)*
Modification No. 1 to the Amended and Restated Tax-Allocation Agreement between Mission
Energy Holding Company and Edison Mission Energy dated February 13, 2012 (File
No. 333-68630, filed as Exhibit 10.1 to Edison Mission Energy's Form 8-K dated November 15,
2012 and filed November 21, 2012)*
Amended and Restated Administrative Agreement Re Tax Allocation Payments, dated February 13,
2012, among Edison International and subsidiary parties. (File No. 333-68630, filed as Exhibit 10.12
to Edison Mission Energy's Form 10-K for the year ended December 31, 2011)*
Form of Indemnity Agreement between Edison International and its Directors and any officer,
employee or other agent designated by the Board of Directors (File No. 1-9936, filed as Exhibit 10.5
to Edison International's Form 10-Q for the quarter ended June 30, 2005)*
Second Amended and Restated Credit Agreement dated as of May 17, 2018 among Edison
International, the several banks and other financial institutions from time to time parties thereto, the
several agents parties thereto and JPMorgan Chase Bank, N.A., as administrative agent for the
lenders. (File No. 1-9936, filed as Exhibit 10.1 to Edison International's Form 8-K dated and filed
May 18, 2018)*
First Amendment, dated as of April 30, 2021, to the Second Amended and Restated Credit
Agreement, dated as of May 17, 2018, by and among Edison International, the several banks and
other financial institutions party thereto and JPMorgan Chase bank, N.A., as administrative agent.
(File No. 1-9936, filed as Exhibit 10.1 to Edison International's Form 8-K dated April 30, 2021 and
filed May 6, 2021)*
Second Amendment, dated as of May 4, 2022, to the Second Amended and Restated Credit
Agreement, dated as of May 17, 2018, as amended by the First Amendment, dated as of April 30,
2021, by and among Edison International, the several banks and other financial institutions party
thereto and JPMorgan Chase Bank, N.A., as administrative agent (File No. 1-9936, filed as Exhibit
10.1 to Edison International’s Form 8-K dated and filed May 4, 2022)*
Second Amended and Restated Credit Agreement dated as of May 17, 2018 among SCE, the several
banks and other financial institutions from time to time parties thereto, the several agents parties
thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders. (File No. 1-2313,
filed as Exhibit 10.2 to SCE's Form 8-K dated and filed May 18, 2018)*
First Amendment, dated as of April 30, 2021, to the Second Amended and Restated Credit
Agreement, dated as of May 17, 2018, by and among Southern California Edison Company, the
several banks and other financial institutions party thereto and JPMorgan Chase bank, N.A., as
administrative agent. (File No. 1-2313, filed as Exhibit 10.2 to SCE's Form 8-K dated April 30, 2021
and filed May 6, 2021)*
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Exhibit
Number
10.19
10.20
10.21
10.22
10.23
10.24
10.25
21
23.1
23.2
24.1
24.2
Description
Commitment Increase Supplement, by and among Southern California Edison Company and the
lenders named therein, and accepted by JPMorgan Chase Bank, N.A., as administrative agent and the
issuing lenders named therein. (File No. 1-2313, filed as Exhibit 10.3 to SCE's Form 8-K dated
April 30, 2021 and filed May 6, 2021)*
Second Amendment, dated as of May 4, 2022, to the Second Amended and Restated Credit
Agreement, dated as of May 17, 2018, as amended by the First Amendment, dated as of April 30,
2021, as supplemented by the Commitment Increase Supplement, dated as of April 30, 2021, by and
among Southern California Edison Company, the several banks and other financial institutions party
thereto and JPMorgan Chase Bank, N.A., as administrative agent (File No. 1-2313, filed as Exhibit
10.2 to SCE’s Form 8-K dated and filed May 4, 2022)*
Term Loan Credit Agreement dated as of May 10, 2021, among Southern California Edison
Company, the several banks and other financial institutions from time to time parties thereto and
Royal Bank of Canada, as administrative agent and green loan structuring agent. (File No. 1-2313,
filed as Exhibit 10.1 to SCE's Form 8-K dated May 10, 2021 and filed May 11, 2021)*
First Amendment, dated as of May 9, 2022, to the Term Loan Credit Agreement, dated as of
May 10, 2021, among Southern California Edison Company, the several banks and other financial
institutions from time to time parties thereto and Royal Bank of Canada, as administrative agent
(File No. 1-2313, filed as Exhibit 10.1 to SCE’s Form 8-K dated and filed May 9, 2022)*
Term Loan Credit Agreement, dated as of April 8, 2022, among Edison International, the several
banks and other financial institutions from time to time parties thereto (File No. 1-9936, filed as
Exhibit 10.1 to Edison International’s Form 8-K dated and filed April 8, 2022)*
Term Loan Credit Agreement, dated as of November 7, 2022, among Edison International, the
several banks and other financial institutions from time to time party thereto, and PNC Bank,
National Association (File No. 1-9936, filed as Exhibit 10.1 to Edison International’s Form 8-K
dated and filed November 7, 2022)*
Term Loan Credit Agreement, dated as of November 7, 2022, among Southern California Edison
Company, the several banks and other financial institutions from time to time party thereto, and
Truist Bank (File No. 1-2313, filed as Exhibit 10.2 to SCE’s Form 8-K dated and filed on
November 7, 2022)*
Subsidiaries of the Registrants
Consent of Independent Registered Public Accounting Firm (Edison International)
Consent of Independent Registered Public Accounting Firm (Southern California Edison Company)
Powers of Attorney of Edison International and Southern California Edison Company
Certified copies of Resolutions of Boards of Edison International and Southern California Edison
Company Directors Authorizing Execution of SEC Reports
172
Table of Contents
Exhibit
Number
31.1
31.2
32.1
32.2
101.1
101.2
Description
Certifications of the Chief Executive Officer and Chief Financial Officer of Edison International
pursuant to Section 302 of the Sarbanes-Oxley Act
Certifications of the Chief Executive Officer and Chief Financial Officer of Southern California
Edison Company pursuant to Section 302 of the Sarbanes-Oxley Act
Certifications of the Chief Executive Officer and the Chief Financial Officer of Edison International
required by Section 906 of the Sarbanes-Oxley Act
Certifications of the Chief Executive Officer and the Chief Financial Officer of Southern California
Edison Company required by Section 906 of the Sarbanes-Oxley Act
Financial statements from the annual report on Form 10-K of Edison International for the year ended
December 31, 2022, filed on February 23, 2023, formatted in Inline XBRL: (i) the Consolidated
Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the
Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; (v) Consolidated
Statements of Changes in Equity and (vi) the Notes to Consolidated Financial Statements
Financial statements from the annual report on Form 10-K of Southern California Edison Company
for the year ended December 31, 2022, filed on February 23, 2023, formatted in Inline XBRL: (i) the
Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income;
(iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows;
(v) Consolidated Statements of Changes in Equity and (vi) the Notes to Consolidated Financial
Statements
104
The cover page of this report formatted in Inline XBRL (included as Exhibit 101)
* Incorporated by reference pursuant to Rule 12b-32.
** Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)(3).
Edison International and SCE will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written
request and upon payment to Edison International or SCE of their reasonable expenses of furnishing such exhibit, which
shall be limited to photocopying charges and, if mailed to the requesting party, the cost of first-class postage.
173
Table of Contents
SCHEDULES SUPPLEMENTING FINANCIAL STATEMENTS
EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
(in millions)
Assets:
Cash and cash equivalents
Other current assets
Total current assets
Investments in subsidiaries
Deferred income taxes
Other long-term assets
Total assets
Liabilities and equity:
Short-term debt
Current portion of long-term debt
Other current liabilities
Total current liabilities
Long-term debt
Other long-term liabilities
Total equity
Total liabilities and equity
December 31,
2022
2021
$
$
$
$
4
447
451
19,922
626
62
21,061
1,090
400
575
2,065
2,981
394
15,621
21,061
$
$
$
$
52
403
455
18,924
697
68
20,144
—
700
583
1,283
2,438
535
15,888
20,144
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Table of Contents
EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31, 2022, 2021 and 2020
(in millions)
Interest income from affiliates
Operating, interest and other expenses
Loss before equity in earnings of subsidiaries
Equity in earnings of subsidiaries
Income before income taxes
Income tax benefit
Income from continuing operations
Preferred stock dividend requirements of Edison International
Net income
2022
2021
2020
$
$
3
209
(206)
867
661
(56)
717
105
612
$
— $
176
(176)
956
780
(39)
819
60
759
$
$
1
189
(188)
851
663
(76)
739
—
739
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CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2022, 2021 and 2020
(in millions)
Net income
Other comprehensive income, net of tax
Comprehensive income
2022
2021
2020
$
$
717
43
760
$
$
819
15
834
$
$
739
—
739
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EDISON INTERNATIONAL
SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2022, 2021 and 2020
(in millions)
Net cash provided by operating activities
Cash flows from financing activities:
Long-term debt issued
Long-term debt issuance costs
Long-term debt repaid
Short-term debt issued
Short-term debt repaid
Common stock issued
Preferred stock issued
Payable due to affiliates
Commercial paper borrowing (repayments), net
Payments for stock-based compensation
Receipts for stock-based compensation
Common stock dividends paid
Preferred stock dividends paid
Net cash provided by financing activities
Capital contributions to affiliate
Dividends from affiliate
Net cash used in investing activities:
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2022
2021
2020
$
1,133
$
817
$
1,171
945
(6)
(700)
1,000
—
13
—
(14)
89
(8)
72
(1,050)
(99)
242
(1,426)
3
(1,423)
(48)
52
4
$
—
—
—
—
—
32
1,977
(13)
(130)
(3)
31
(988)
(35)
871
(1,639)
—
(1,639)
49
3
52
$
400
(3)
(400)
800
(800)
912
—
135
129
(3)
21
(928)
—
263
(1,446)
—
(1,446)
(12)
15
3
$
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Note 1. Basis of Presentation
The accompanying condensed financial statements of Edison International Parent should be read in conjunction with the
consolidated financial statements and notes thereto of Edison International and subsidiaries ("Registrant") included in
this Form 10-K. Edison International Parent's significant accounting policies are consistent with those of the Registrant,
SCE and other wholly owned and controlled subsidiaries.
Dividends Received
Edison International Parent received cash dividends from SCE of $1.3 billion, $975 million and $1.3 billion in 2022,
2021 and 2020, respectively.
Dividend Restrictions
CPUC holding company rules require that SCE's dividend policy be established by SCE's Board of Directors on the
same basis as if SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be
necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of both
Edison International and SCE. In addition, the CPUC regulates SCE's capital structure which limits the dividends it may
pay to its shareholders.
The common equity component of SCE's CPUC authorized capital structure is 52% on a weighted average basis over the
January 1, 2023 to December 31, 2025 compliance period. This is unchanged from the January 1, 2020 to December 31,
2022 compliance period. The CPUC authorized capital structure differs from the capital structure calculated based on
GAAP due to certain exclusions allowed by CPUC, including the impact of SCE's contributions to the Wildfire
Insurance Fund under AB 1054. For further information, see "Business—SCE—Overview of Ratemaking Process" and
"Business—Southern California Wildfires."
In May 2020, the CPUC issued a decision on SCE's application to the CPUC for waiver of compliance with its equity
ratio requirement, that allows SCE to exclude from its equity ratio calculations (i) net charges accrued in connection with
the 2017/2018 Wildfire/Mudslide Events and (ii) debt issued for the purpose of paying claims related to the 2017/2018
Wildfire/Mudslide Events up to an amount equal to the net charges accrued in connection with the 2017/2018
Wildfire/Mudslide Events. With these exclusions, SCE was in compliance with its authorized capital structure for the
compliance period from January 1, 2020 to December 31, 2022. The temporary exclusion lapsed on May 7, 2022. In
April 2022, SCE filed another application requesting continued waiver of compliance with its equity ratio requirement.
Under the CPUC's rules, SCE will not be deemed to be in violation of the equity ratio requirement while the waiver
application is pending resolution. While the exclusion is in place, SCE is required to notify the CPUC if an adverse
financial event reduces SCE's spot equity ratio by more than one percent from the level most recently filed with the
CPUC in the proceeding. The last spot equity ratio SCE filed with the CPUC in the proceeding did not exclude the then
$1.8 billion net charge and was 45.2% as of December 31, 2018 (at the time the common equity component of SCE's
CPUC authorized capital structure was required to remain at or above 48% on a weighted average basis over the
applicable 37-month period). SCE's spot equity ratio on December 31, 2018 would have been 48.7% had the $1.8 billion
net charge at December 31, 2018 been excluded, therefore SCE will notify the CPUC if its spot ratio drops below 47.7%
in any quarter. For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and
Contingencies—Contingencies—Southern California Wildfires and Mudslides."
Note 2. Debt and Equity Financing
Long-Term Debt
At December 31, 2022, Edison International Parent had, $400 million of 2.95% senior notes due in 2023, $500 million
of 3.55% senior notes due in 2024, $400 million of 4.95% senior notes and $400 million of 4.70% senior notes due in
178
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2025, $600 million of 5.75% senior notes due in 2027, $550 million of 4.125% senior notes due in 2028 and
$550 million 6.95% senior notes due in 2029.
Credit Agreements and Short-Term Debt
The following table summarizes the status of the credit facility at December 31, 2022:
(in millions)
Commitment
Outstanding borrowings
Amount available
$
$
1,500
90
1,410
In May 2022, Edison International Parent amended its revolving credit facility to extend the termination date to
May 2026. The aggregate maximum principal amount under the Edison International Parent revolving credit facility may
be increased up to $2.0 billion, provided that additional lender commitments are obtained.
As of December 31, 2022, Edison International Parent has outstanding term loans of $600 million due in April 2023 and
$400 million due in November 2023, each bearing interest at either an adjusted term SOFR plus 0.70% and 0.95%,
respectively, or a base rate with no applicable margin. Edison International used the proceeds for general corporate
purposes.
The debt covenant in Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio
of less than or equal to 0.70 to 1. At December 31, 2022, Edison International's consolidated debt to total capitalization
ratio was 0.64 to 1.
Equity
In the third quarter of 2022, Edison International filed a prospectus supplement and executed several distribution
agreements with certain sales agents to establish an "at-the-market"("ATM") program, under which it may sell shares of
its common stock having an aggregate sales price of up to $500 million. As of December 31, 2022, no sales had occurred
and Edison International has no obligation to sell the remaining available shares.
Edison International continued to settle its ongoing common stock requirements of various internal programs through
issuance of new common stock. During the twelve months ended December 31, 2022, 1,253,049 shares of common
stock were issued as stock compensation awards for net cash receipts of $57 million, 273,642 shares of new common
stock were issued in lieu of distributing $18 million to shareholders opting to receive dividend payments in the form of
additional common stock, 157,000 shares of common stock were purchased by employees through the 401(k) defined
contribution savings plan for net cash receipts of $10 million as dividend payments, 109,750 shares of common stock
were issued related to optional cash investments of $7 million and 36,912 shares of common stock were issued to
employees through the ESPP for net cash receipts of $2 million.
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During the twelve months ended December 31, 2021, 629,092 shares of common stock were issued as stock
compensation awards for net cash receipts of $25 million, 522,400 shares of common stock were purchased by
employees through the 401(k) defined contribution savings plan for net cash receipts of $30 million, 293,031 shares of
new common stock were issued in lieu of distributing $17 million to shareholders opting to receive dividend payments in
the form of additional common stock and 26,475 shares of common stock related to optional cash investments of
$2 million. Starting July 2021, the 401(k) defined contribution savings plan no longer offers Edison International's stock
as an investment option to employees. Subsequent to the change, stock issued through the 401(k) defined contribution
savings plan were dividend payments made in the form of additional common stock.
Preferred Stock Issuance
In 2021, Edison International issued 1,250,000 shares of 5.375% Fixed-Rate Reset Cumulative Perpetual Preferred
Stock, Series A, and 750,000 shares of its 5.00% Fixed-Rate Reset Cumulative Perpetual Preferred Stock, Series B, each
with a liquidation value of $1,000 per share. The dividends are payable on a semi-annual basis, commencing
September 15, 2021 and March 15, 2022, respectively. The dividend rate will be reset every five years beginning on
March 15, 2026 and March 15, 2027, respectively, to equal the then-current five-year U.S. Treasury rate plus a spread
of 4.698% and 3.901%, respectively. The net proceeds of $2.0 billion were used to repay commercial paper borrowings
and for general corporate purposes, including making a total of $900 million equity contribution to SCE.
Note 3. Related-Party Transactions
Edison International's Parent expense from services provided by SCE was $2 million in 2022, $2 million in 2021 and
$2 million in 2020. Edison International Parent's interest expense from loans due to affiliates was $3 million in 2022,
$5 million in 2021 and $4 million in 2020. Edison International Parent had current related-party receivables of
$389 million and $361 million and current related-party payables of $166 million and $211 million at December 31,
2022 and 2021, respectively. Edison International Parent had long-term related-party receivables of $8 million and
$52 million at December 31, 2022 and 2021, respectively, and long-term related-party payables of $130 million and
$227 million at December 31, 2022 and 2021, respectively.
Note 4. Contingencies
For a discussion of material contingencies see "Notes to Consolidated Financial Statements—Note 8. Income Taxes" and
"—Note 12. Commitments and Contingencies."
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly
caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.
EDISON INTERNATIONAL
SOUTHERN CALIFORNIA EDISON COMPANY
By:
/s/ Kate Sturgess
Kate Sturgess
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
By:
/s/ Kate Sturgess
Kate Sturgess
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: February 23, 2023
Date: February 23, 2023
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrants and in the capacities and on the date indicated.
A. Principal Executive Officers
Signature
Pedro J. Pizarro*
Steven D. Powell*
B. Principal Financial Officers
Maria Rigatti*
Aaron D. Moss*
C. Principal Accounting Officers
/s/ Kate Sturgess
Kate Sturgess
/s/ Kate Sturgess
Kate Sturgess
D. Directors (Edison International and Southern
California Edison Company, unless otherwise
noted)
Jeanne Beliveau-Dunn*
Michael C. Camuñez*
Vanessa C.L. Chang*
James T. Morris*
Timothy T. O'Toole*
Pedro J. Pizarro*
Steven D. Powell (SCE only)*
Marcy L. Reed*
Carey A. Smith*
Linda G. Stuntz*
Peter J. Taylor*
Keith Trent*
Title
President, Chief Executive Officer and Director
(Edison International)
President and Chief Executive Officer and Director
(Southern California Edison Company)
Executive Vice President and Chief Financial Officer
(Edison International)
Senior Vice President and Chief Financial Officer
(Southern California Edison Company)
Vice President and Controller
(Edison International)
Vice President and Controller
(Southern California Edison Company)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chair of the Edison International Board and Director
Director
*By:
/s/ Kate Sturgess
Kate Sturgess
Vice President and Controller
(Attorney-in-fact for EIX Directors and Officers)
*By:
/s/ Kate Sturgess
Kate Sturgess
Vice President and Controller
(Attorney-in-fact for SCE Directors and Officers)
Date: February 23, 2023
Date: February 23, 2023
182
EDISON INTERNATIONAL
Annual Meeting
Transfer Agent and Registrar
Inquiries may also be directed to:
The annual meeting of shareholders will
Equiniti Trust Company (EQ), which
EQ Shareowner Services
be held on Thursday, April 27, 2023,
maintains shareholder records, is
1110 Centre Point Curve, Suite 101
at 9 a.m., Pacific Time, at
the transfer agent and registrar
Mendota Heights, MN 55120-4100
Edison International, 2244 Walnut
for Edison International’s common
Grove Avenue, Rosemead, CA 91770.
stock and Southern California
Fax:
The proxy materials and information on
Edison Company’s preference stock.
(651) 450-4033
how to attend the annual meeting are
Shareholders may contact EQ by email
available on our website at
anytime at shareowneronline.com by
EQ Shareowner Services
www.edison.com/annualmeeting.
selecting “Contact Us” or by calling EQ
www.shareowneronline.com
Shareowner Services, (800) 347-8625,
Corporate Governance Practices
between 7 a.m. and 7 p.m. (Central
Investor Relations
Information about Edison
Time), Monday through Friday, to speak
www.edisoninvestor.com
International’s corporate governance
with a representative (or to use the
Email: invrel@edisonintl.com
practices is available on our website at
interactive voice response unit 24 hours
Phone: (877) 379-9515
www.edison.com/corpgov.
a day, seven days a week) regarding:
Online account information:
www.shareowneronline.com
Stock Listing and Trading
• Stock transfer and name-changes;
Information
• address changes;
Dividend Reinvestment and
Edison International’s common stock is
• direct deposit of dividends;
Direct Stock Purchase Plan
listed on the New York Stock Exchange
• taxpayer identification number
A prospectus and enrollment forms
under the ticker symbol EIX; daily
submissions or changes;
for Edison International’s common
newspapers list the stock as EdisonInt.
• W-8 and W-9 forms;
stock Dividend Reinvestment and
Shares of Southern California Edison
• duplicate 1099 forms;
Company’s preference stock are not
• duplicate statements;
Direct Stock Purchase Plan are
available from EQ Shareowner
listed on an exchange. SCE Trust II, SCE
• notices of, and replacement of,
Services upon request.
Trust III, SCE Trust IV, SCE Trust V and
dividend checks;
SCE Trust VI, subsidiaries of SCE, have
• Edison International’s Dividend
issued Trust Preference Securities,
Reinvestment and Direct
which are listed on the New York
Stock Purchase Plan, including
Stock Exchange.
enrollments, purchases, withdrawals,
terminations, transfers, sales, and
direct debit of optional cash for
dividend reinvestment; and
• requests for access to online account
information.
2244 Walnut Grove Avenue
Rosemead, CA 91770
www.edison.com