SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~March 31,~~September 30, 2017
o	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	Exact Name of Registrant as specified in its charter	State or Other Jurisdiction of Incorporation or Organization	IRS Employer Identification Number
1-9936	EDISON INTERNATIONAL	California	95-4137452
1-2313	SOUTHERN CALIFORNIA EDISON COMPANY	California	95-1240335



EDISON INTERNATIONAL		SOUTHERN CALIFORNIA EDISON COMPANY
2244 Walnut Grove Avenue (P.O. Box 976) Rosemead, California 91770 (Address of principal executive offices)		2244 Walnut Grove Avenue (P.O. Box 800) Rosemead, California 91770 (Address of principal executive offices)
(626) 302-2222 (Registrant's telephone number, including area code)		(626) 302-1212 (Registrant's telephone number, including area code)

Large Accelerated Filer þ

Accelerated Filer ¨

Non-accelerated Filer ¨

Smaller Reporting Company ¨

Emerging growth company ¨

Large Accelerated Filer ¨

Accelerated Filer ¨

Non-accelerated Filer þ

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	¨



Common Stock outstanding as of ~~April 28,~~October 27, 2017:
Edison International		325,811,206 shares
Southern California Edison Company		434,888,104 shares

This is a combined Form 10-Q 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.

The following terms and abbreviations appearing in the text of this report have the meanings indicated below.



2016 Form 10-K		Edison International's and SCE's combined Annual Report on Form 10-K for the year-ended December 31, 2016
AFUDC		allowance for funds used during construction
ALJ		administrative law judge
ARO(s)		asset retirement obligation(s)
Bcf		billion cubic feet
Bonus Depreciation		Current federal tax deduction of a percentage of the qualifying property placed in service during periods permitted under tax laws
BRRBA		Base Revenue Requirement Balancing Account
CAISO		California Independent System Operator
CPUC		California Public Utilities Commission
DERs		distributed energy resources
DOE		U.S. Department of Energy
DRP		Distributed Resources Plan
Edison Energy		Edison Energy, LLC, a wholly-owned subsidiary of Edison Energy Group that advises and provides energy solutions to large energy users
Edison Energy Group		Edison Energy Group, Inc., the holding company for subsidiaries engaged in competitive businesses focused on providing energy services, ~~including~~managed portfolio solutions, and distributed ~~generation, and/or storage~~solar solutions to commercial and industrial customers
EME		Edison Mission Energy
EMG		Edison Mission Group Inc., a wholly owned subsidiary of Edison International and the parent company of EME and Edison Capital
ERRA		energy resource recovery account
FERC		Federal Energy Regulatory Commission
GAAP		generally accepted accounting principles used in the United States
GHG		greenhouse gas
GRC		general rate case
GWh		gigawatt-hours
HLBV		hypothetical liquidation at book value
IRS		Internal Revenue Service
Joint Proxy Statement		Edison International's and SCE's definitive Proxy Statement filed with the SEC in connection with Edison International's and SCE's Annual Shareholders' Meeting held on April 27, 2017
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations in this report
MHI		Mitsubishi Heavy Industries, Inc. and related companies
MW		megawatts
MWdc		megawatts measured for solar projects representing the accumulated peak capacity of all the solar modules
NEIL		Nuclear Electric Insurance Limited
NEM		net energy metering
NERC		North American Electric Reliability Corporation
NRC		Nuclear Regulatory Commission
ORA		CPUC's Office of Ratepayers Advocates
OII		Order Instituting Investigation
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)
QF(s)		qualifying facility(ies)



ROE		return on common equity
S&P		Standard & Poor's Ratings Services
San Onofre		retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
San Onofre OII Settlement Agreement		Settlement Agreement by and among SCE, TURN, ORA, SDG&E, the Coalition of California Utility Employees, and Friends of the Earth, dated November 20, 2014
SCE		Southern California Edison Company
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SED		Safety and Enforcement Division of the CPUC, formerly known as the Consumer Protection and Safety Division or CPSD
SoCalGas		Southern California Gas Company
SoCore Energy		SoCore Energy LLC, a subsidiary of Edison Energy Group that provides solar energy and energy storage solutions
TURN		The Utility Reform Network
US EPA		U.S. Environmental Protection Agency

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q 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," 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:

Additional information about risks and uncertainties, including more detail about the factors described in this report, is contained throughout this report and in the 2016 Form 10-K, including the "Risk Factors" section. Readers are urged to read this entire report, including information incorporated by reference, as well as the 2016 Form 10-K, 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 provide direct links to SCE's regulatory filings with the CPUC and the FERC and material agency rulings in open proceedings most important to investors at www.edisoninvestor.com (SCE Regulatory Highlights) so that such filings are available to all investors upon SCE filing with the relevant agency. Edison International and SCE also routinely post or provide direct links to presentations, documents and other information that may be of interest to investors at www.edisoninvestor.com (Events and Presentations) in order to publicly disseminate such information.

The MD&A for the ~~three~~nine months ended ~~March 31,~~September 30, 2017 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, 2016, and as compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2016. This discussion presumes that the reader has read or has access to Edison International's and SCE's MD&A for the calendar year 2016 (the "year-ended 2016 MD&A"), which was included in the 2016 Form 10-K.

Except when otherwise stated, references to each of Edison International, SCE, EMG, Edison Energy Group, EME or Edison Capital mean each such company with its subsidiaries on a consolidated basis. References to "Edison International Parent and Other" mean Edison International Parent and its consolidated competitive subsidiaries.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Highlights of Operating Results

Edison International is the parent holding company of SCE. SCE is a public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison International is also the parent company of Edison Energy Group, a holding company for subsidiaries engaged in ~~pursing~~pursuing competitive business opportunities across energy services, managed portfolio solutions, and distributed solar solutions to commercial and industrial customers. Such business activities are currently not material to report as a separate business segment. 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. Unless otherwise described, all of the information contained in this report relates to both filers.

Edison International's earnings are prepared in accordance with GAAP. Management uses core earnings 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, income resulting from allocation of losses to tax equity investors under the HLBV accounting method, and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as exit activities, including sale of certain assets and other activities that are no longer continuing, write downs, asset impairments and other gains and losses related to certain tax, regulatory, or legal settlements or proceedings.

Edison International's ~~first~~third quarter 2017 earnings increased ~~$81~~$49 million from the ~~first~~third quarter of 2016, comprised of an increase in SCE's earnings of ~~$54~~$30 million ~~an increase~~and a decrease in Edison International Parent and ~~Other~~Other's losses of $19 million. The increase in earnings at SCE was primarily due to the escalation mechanism set forth in the 2015 GRC decision.

Edison International's earnings for the nine months ended September 30, 2017 increased $128 million from the nine months ended September 30, 2016, comprised of an increase in SCE's earnings of ~~$28~~$73 million, a decrease in Edison International Parent and Other's losses of $54 million, and a decrease in ~~income~~losses from discontinued operations of $1 million. ~~SCE's~~The increase in earnings at SCE was ~~due~~primarily related to an increase in revenue from the escalation mechanism set forth in the 2015 GRC decision and lower operation and maintenance expenses, partially offset by a reduction in CPUC revenue related to prior overcollections and higher net financing costs.

Edison International Parent and Other's decrease in losses for the three and nine months ended September 30, 2017 was due to lower core losses of $19 million and $58 million, respectively, and lower non-core earnings of $4 million for the nine months ended September 30, 2017. The decrease in core losses for the quarter was due to higher income tax benefits ~~partially offset by higher~~resulting from net ~~financing costs. Edison International Parent and Other increase~~operating loss carrybacks from the filing of the 2016 tax returns in ~~net income was due to higher core earnings of $30 million and $2 million of lower non-core earnings.~~2017. The ~~increase in core earnings was due to~~year-to-date decrease also reflects higher income tax benefits related to stock option ~~exercises.~~exercises and the 2017 settlement of federal income tax audits for 2007 – 2012.

Capital Program

~~Total~~SCE's capital expenditures ~~(including accruals) were $647 million and $729 million~~forecast for the ~~first three months~~2017 – 2020 period has been revised since the filing of ~~2017 and~~the 2016 ~~respectively. In~~Form 10-K, as indicated in the ~~year-ended 2016 MD&A, SCE projected~~table below. The update also reflects SCE's revised requested capital expenditures for 2018 – 2020 resulting from SCE's 2018 GRC rebuttal testimony, filed in June 2017.

The 2017 capital program had originally included expenditures of ~~approximately $4.2 billion. Those expenditures included~~ $182 million offor grid modernization capital ~~spending that will promote increased safety and reliability and will also allow for a timely ramp-up of grid modernization capital expenditures in subsequent years.~~spending. SCE has requested CPUC approval of a memorandum account to facilitate recovery in rates of such expenditures. The memorandum account has not yet been approved by the ~~CPUC.~~CPUC and may not be approved. Certain of the grid modernization capital expenditures promote safety and reliability as well as facilitate integration of distributed energy resources and are the focus of SCE's reduced grid modernization capital expenditures in 2017. These expenditures are included in traditional distribution capital expenditures for 2017 in the table below.

Traditional capital expenditures for 2017 reflect SCE's forecast capital expenditures for CPUC and FERC capital projects. Traditional capital expenditures for 2018 – 2020 reflect the amounts requested in the 2018 GRC filing and subsequently updated in SCE's rebuttal testimony as well as the expected spending for FERC capital projects. Recovery for 2017 – 2020 planned expenditures for traditional capital projects under FERC jurisdiction will be pursued through FERC-authorized mechanisms. The CPUC has approved 81%, 89%, and 92% of the traditional capital expenditures requested in the 2009, 2012, and 2015 GRC decisions, respectively. While SCE ~~may~~cannot predict the level of traditional capital spending that will be approved in the 2018 GRC decision, management is not aware of factors that would cause the percentage of SCE's request that is ultimately approved to be materially different from what has been approved in recent GRC decisions. SCE does not have prior approval experience with grid modernization capital expenditures and, therefore, is unable to predict an expected outcome. Forecasted expenditures for FERC capital projects are subject to change due to timeliness of permitting, licensing and regulatory approvals. For further information regarding updates for large transmission and substation projects, see "Liquidity and Capital Resources—SCE—Capital Investment Plan."

It is unlikely that SCE will receive ~~further~~a 2018 GRC decision in 2017. It is also uncertain whether SCE will receive firm guidance on grid modernization spending ~~from the CPUC~~ as part of the DRP proceeding during 2017. SCE is currently developing an approach for 2018 capital spending, based on these contingencies, which will allow SCE to ramp up its capital spending program to meet the rate base ultimately authorized in the ~~second half~~2018 GRC decision while minimizing the associated risk of ~~2017. SCE currently projects 2017~~unauthorized spending. A component of this approach will be to focus initial 2018 grid modernization spending on capital that provides safety and reliability benefits while deferring most spending that is primarily focused on integration of distributed energy resources.

Total capital expenditures (including accruals) were $2.3 billion and $2.4 billion for the first nine months of ~~$4.0 billion, reflecting the lack~~2017 and 2016, respectively. The following table sets forth a summary of ~~approval of a grid modernization memorandum account and minor delays~~forecasted capital expenditures for 2017 – 2020 on the ~~start of construction~~basis described above:



(in millions)	2017		2018		2019		2020		Total 2017 – 2020
Traditional capital expenditures¹
Distribution²	$	2,975	$	3,174	$	3,119	$	3,048	$	12,316
Transmission	500		956		1,003		1,046		3,505
Generation	205		220		212		201		838
Total requested traditional capital expenditures^{1, 3}	$	3,680	$	4,350	$	4,334	$	4,295	$	16,659
Grid modernization capital expenditures²	$	—	$	538	$	649	$	608	$	1,795
Total capital expenditures	$	3,680	$	4,888	$	4,983	$	4,903	$	18,454


¹	Includes Energy Storage of $60 million in the 2017 – 2020 period. Also, includes $12 million Charge Ready Pilot in 2017.


²	2017 capital expenditures related to grid modernization are included in traditional distribution capital expenditures.


³	Capital expenditures for 2017 reflect management's expectations based on the 2015 GRC decision.

SCE's estimated weighted average annual rate base for 2017 – 2020 using the ~~Mesa Substation Project. Actual~~ capital ~~spending~~expenditures set forth in the table above is as follows:



(in millions)	2017		2018		2019		2020
Rate base for requested traditional capital expenditures	$	26,133	$	28,947	$	31,040	$	33,076
Rate base for requested grid modernization capital expenditures	—		261		695		1,195
Total rate base	$	26,133	$	29,208	$	31,735	$	34,271

The rate base above does not reflect reductions from the amounts requested in the 2018 GRC that may be ~~affected by: changes~~included in regulatory, environmental and engineering design requirements; permitting and project delays; cost and availability of labor, equipment, and materials; and other factors. For further information regarding the capital program see "Liquidity and Capital Resources—Capital Investment Plan" and the year-ended 2016 MD&A, "Management Overview—Capital Program."a final decision.

Regulatory Proceedings

2018 General Rate Case

~~As discussed in the year-ended 2016 MD&A, in~~In September 2016, SCE filed its 2018 GRC application for the three-year period 2018 – 2020, which requested a 2018 revenue requirement of $5.885 billion, an increase of $222 million over the projected 2017 GRC authorized revenue requirement. In June 2017 in its rebuttal testimony, SCE revised its requested 2018 revenue requirement to $5.859 billion, which would be a $196 million increase. The rebuttal testimony also proposed post-test year increases in 2019 and 2020 of $480 million and $556 million, respectively.

In April 2017, the ORA recommended that SCE's original requested 2018 base revenue requirement be decreased by approximately $208 million, comprised of approximately $164 million in operations and maintenance expense reductions and approximately $44 million in capital-related revenue requirement reductions largely related to the proposed reduction of 100% of grid modernization capital spending. To the extent any spending is authorized, the ORA proposed capturing grid modernization spending in a memorandum account for review in the 2021 ~~GRC if any spending is authorized by the CPUC. Testimony from other parties~~GRC. TURN recommended reductions of 78% of grid modernization capital expenditures in 2018 and initially recommended adjustments to rate base for historical capital expenditures, including a reduction of $700 million, primarily related to certain distribution infrastructure replacement programs. In a September 2017 filing, TURN reduced their recommended rate base adjustment to approximately $550 million. The impact of TURN's updated recommendations would decrease SCE's original requested 2018 ~~GRC application is~~base revenue requirement by approximately $114 million.

Public participation hearings are scheduled in mid-November and update filings are due in ~~May 2017.~~

early December. While SCE requested that the CPUC issue a final decision by the end of ~~2017.~~2017, it is unlikely that such timing will be achieved. If the schedule for a final decision is delayed, SCE will request the CPUC to issue an order directing that the authorized revenue requirement changes be effective January 1, 2018. SCE cannot predict the revenue requirement the CPUC will ultimately authorize for 2018 through 2020 or forecast the timing of a final decision.

Permanent Retirement of San Onofre

Replacement steam generators were installed at San Onofre in 2010 and 2011. On January 31, 2012, a leak suddenly occurred in one of the heat transfer tubes in San Onofre's Unit 3 steam generators. The Unit was safely taken off-line and subsequent inspections revealed excessive tube wear. Unit 2 was off-line for a planned outage when areas of unexpected tube wear were also discovered. On June 6, 2013, SCE decided to permanently retire Units 2 and 3.

San Onofre CPUC Proceedings

As discussed in the year-ended 2016 MD&A, in a December 2016 joint ruling, the Assigned Commissioner and the Assigned ALJ expressed concerns about the extent to which the failure to timely report ex parte communications had impacted the settlement negotiations and directed SCE and SDG&E to meet and confer with the other parties in the San Onofre OII to consider changing the terms of the San Onofre OII Settlement Agreement. In March 2017, SCE and the parties participating in the meet-and-confer process initiated a mediation of the issues identified in the December 2016 joint ruling. On August 15, 2017, SCE notified the CPUC that the parties in the San Onofre OII Settlement Agreement were unable to reach agreement on possible changes to the settlement unanimously approved by the CPUC in 2014. In connection with the termination of the meet-and-confer process, SCE asked the CPUC to affirm that the San Onofre OII Settlement Agreement is fair, reasonable and in the public interest. Other parties to the meet-and-confer process petitioned the CPUC on a broad range of litigation positions, certain of which included substantial additional disallowances.

On October 10, 2017, the Assigned Commissioner and ALJ issued a Ruling ordering additional process to resolve the San Onofre OII. The Ruling did not set aside nor confirm the San Onofre OII Settlement Agreement but stated that the CPUC required an additional record to address the appropriate cost allocation for the premature shutdown of San Onofre Units 2 and 3, in the event the CPUC decides that the settlement does not meet the CPUC's standards for approval of settlements. The Ruling sets an expedited schedule with a status conference on November 7, 2017 and hearings tentatively scheduled to end in March 2018. The CPUC has not announced the expected timing for a decision.

SCE has recorded a regulatory asset of $730 million at September 30, 2017 to reflect the expected recoveries under the San Onofre OII Settlement Agreement. SCE assessed the San Onofre regulatory asset at September 30, 2017 and continues to conclude that the asset is probable, though not certain, of recovery based on SCE's knowledge of facts and judgment in applying the relevant regulatory principles to the issue. Such judgment is subject to uncertainty, and regulatory principles and precedents are not necessarily binding and are subject to interpretation.

MHI Claims

In March 2017, SCE received a decision from the International Chamber of Commerce International Court of Arbitration on claims against MHI regarding failure of the replacement steam generators that MHI supplied for San Onofre. The net recovery awarded to SCE was initially determined to be $52 million. An adjustment to the interest awarded to SCE subsequently reduced the net recovery to $47 million. ~~SCE has determined that it will not appeal the decision.~~ As a result of uncertainty associated with the allocation of the award under the San Onofre OII Settlement Agreement, SCE recorded a regulatory liability for the net recovery.

For more information on the challenges to the settlement of the San Onofre OII, ~~and~~ the arbitration tribunal decision on MHI, and the San Onofre regulatory asset, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies—Contingencies—San Onofre Related Matters."

Cost of Capital

In ~~April~~July 2017, the CPUC issued a ~~proposed~~final decision that ~~would have~~ adopted the petition previously filed by SCE, Pacific Gas & Electric Company, SDG&E, and SoCalGas (collectively, the "Investor-Owned Utilities"), ORA, and TURN to modify the prior CPUC decisions addressing the Investor-Owned Utilities' costs of capital. The decision ~~if adopted by~~extended the ~~CPUC, would have~~deadline for the next Investor-Owned Utilities cost of capital application to April 2019, reset SCE's authorized cost of long-term debt and preferred stock, and established SCE's authorized ROE at 10.30%, both beginning January 1, 2018. ~~Subsequently in April~~In October 2017, the CPUC ~~withdrew the proposed decision from the agenda of its April 27 meeting. Timing for additional action on the settling parties’ petition has not been defined.~~approved SCE's updated debt and preferred rates that SCE filed in September 2017. For more information on the terms of the settling parties' petition, see "Management Overview—Regulatory ~~Proceedings"~~Proceedings—Cost of Capital" in the year-ended 2016 MD&A.

FERC Formula Rates

In October 2017, SCE filed its 2018 annual update with the FERC with rates effective January 1, 2018. The update reflected a decrease in SCE's transmission revenue requirement of $13 million or 1.1% lower than amounts currently authorized in rates due to lower undercollections in previous periods. In addition, SCE filed its new formula rate with the FERC in October 2017 resulting in an additional decrease to the 2018 annual update of $6 million or 0.5%. Once the new formula rate is accepted by the FERC, it will supersede the existing formula rate, including the 2018 annual update, and could become effective as early as January 1, 2018. FERC has the authority and may suspend new rates for up to five months. If the new formula rate is suspended by the FERC, the 2018 transmission revenue requirement rate established in the 2018 annual update will be effective from January 1, 2018 until the end of the suspension of the new formula rate. The new formula rate will be subject to refund from the end of the suspension until it is ultimately approved by the FERC.

Power Charge Indifference Adjustment Rulemaking

In September 2017, the CPUC issued a Scoping Memo for its rulemaking to review, revise, and consider alternatives to the Power Charge Indifference Adjustment ("PCIA"), which is a charge that is applied to departing load customers and is intended to maintain bundled service customer indifference to departing load (including Community Choice Aggregator or CCA formation). The Scoping Memo adopts an overall goal of implementing the existing California statutory requirements regarding customer indifference for the proceeding. The CPUC has adopted a schedule with an expected resolution by the third quarter of 2018.

RESULTS OF OPERATIONS

Southern California Edison Company

SCE's results of operations are derived mainly through two 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 revenues 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. 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), and certain operation and maintenance expenses. SCE earns no return on these activities.

The following table is a summary of SCE's results of operations for the periods indicated.

Three months ended ~~March 31,~~September 30, 2017 versus ~~March 31,~~September 30, 2016


	Three months ended March 31, 2017								Three months ended March 31, 2016								Three months ended September 30, 2017									Three months ended September 30, 2016
(in millions)	Earning Activities			Cost- Recovery Activities		Total Consolidated			Earning Activities			Cost- Recovery Activities		Total Consolidated			Earning Activities			Cost- Recovery Activities			Total Consolidated			Earning Activities			Cost- Recovery Activities			Total Consolidated
Operating revenue	$	1,552		$	904	$	2,456		$	1,522		$	913	$	2,435		$	1,677		$	1,975		$	3,652		$	1,811		$	1,941		$	3,752
Purchased power and fuel	—			784		784			—			794		794			—			1,783			1,783			—			1,719			1,719
Operation and maintenance	451			120		571			484			119		603			489			192			681			481			221			702
Depreciation, decommissioning and amortization	497			—		497			475			—		475
Depreciation and amortization																	521			—			521			519			—			519
Property and other taxes	97			—		97			91			—		91			98			(1		)	97			91			—			91
Other operating income																	(8		)	—			(8		)	—			—			—
Total operating expenses	1,045			904		1,949			1,050			913		1,963			1,100			1,974			3,074			1,091			1,940			3,031
Operating income	507			—		507			472			—		472			577			1			578			720			1			721
Interest expense	(141		)	—		(141		)	(131		)	—		(131		)	(148		)	(1		)	(149		)	(136		)	(1		)	(137		)
Other income and expenses	26			—		26			26			—		26			33			—			33			23			—			23
Income before income taxes	392			—		392			367			—		367			462			—			462			607			—			607
Income tax expense	12			—		12			42			—		42
Income tax (benefit) expense																	(35		)	—			(35		)	141			—			141
Net income	380			—		380			325			—		325			497			—			497			466			—			466
Preferred and preference stock dividend requirements	31			—		31			30			—		30			32			—			32			31			—			31
Net income available for common stock	$	349		$	—	$	349		$	295		$	—	$	295		$	465		$	—		$	465		$	435		$	—		$	435
Net income available for common stock						$	349							$	295								$	465								$	435
Less:
Non-core earnings						—								—									—									—
Core earnings¹						$	349							$	295								$	465								$	435


¹	See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results."

Earning Activities

Earning activities were primarily affected by the following:

~~Higher~~Lower operating revenue of ~~$30~~$134 million primarily due to the following:

A decrease in revenue of $227 million related to incremental tax benefits refunded to customers (offset in taxes below). The decrease in revenue resulted from $109 million of higher incremental tax repair benefits and $118 million of benefits recognized for tax accounting method changes.

An increase in CPUC revenue of approximately ~~$59~~$63 million primarily due to the escalation mechanism as set forth in the 2015 GRC ~~decision.~~

~~An increase in revenue~~decision and $10 million of ~~approximately $31 million resulting from lower 2017 incremental tax benefits recognized through the tax accounting memorandum account ("TAMA") and the pole loading~~higher operating costs subject to balancing account ~~(offset~~treatment (primarily offset in ~~income taxes as discussed~~depreciation expense below). These increases were partially offset by $9 million of lower revenue related to the extension of bonus depreciation.

The receipt of the MHI arbitration decision triggered a tax deduction for the abandonment of San Onofre. As a result, SCE recorded a decrease in CPUC revenue of approximately $65 million (offset in income taxes as discussed below) which will be credited to customers. See "Notes to Consolidated Financial Statements—Note 7. Income Taxes" for further information.

~~Lower~~Higher operation and maintenance costs of ~~$33~~$8 million primarily due to transmission and distribution costs for line clearing and maintenance and higher information technology costs partially offset by the impact of SCE's operational and service excellence ~~initiatives as well as lower storm-related activities.~~initiatives.

Higher ~~depreciation, decommissioning,~~property and ~~amortization expense~~other taxes of ~~$22~~$7 million primarily ~~related~~due to ~~depreciation on transmission and distribution investments.~~a higher property assessed value in 2017.

Higher other operating income of $8 million due to the sale of utility property.

Higher interest expense of $12 million primarily due to increased borrowings.

Higher other income and expense of $10 million primarily due to ~~increased borrowings.~~higher AFUDC equity income.

Lower income taxes of ~~$30~~$176 million primarily due to the following:

Higher income tax benefits in 2017 of ~~$39~~$134 million related to aflow through of incremental tax ~~deduction~~repair benefits and for ~~the abandonment of San Onofre~~tax accounting method changes (offset ~~with~~in revenue above).

Lower ~~tax expense of $10 million related to the settlement of open tax positions with the IRS for taxable years 2007 through 2012.~~

~~Lower income tax benefits of $18 million related to incremental tax benefits for TAMA and the pole loading balancing accounts (offset in revenue above) partially offset by higher~~net income tax benefits in 2017 onof $18 million for other property-related items, including cost of removal and depreciation deductions.

~~Higher~~Lower pre-tax income for the ~~first~~third quarter of 2017, as discussed above.

Cost-Recovery Activities

Cost-recovery activities were primarily affected by the following:

~~Lower~~Higher purchased power and fuel costs of ~~$10~~$64 million primarily driven ~~by lower realized losses on hedging activities ($2 million in 2017 compared to $27 million in 2016) partially offset~~ by higher power and gas prices experienced in 2017 relative to ~~2016.~~2016, partially offset by lower capacity costs.

Lower operation and maintenance expense of $29 million primarily driven by lower employee benefit and other labor costs and lower spending on various public purpose programs.

The following table is a summary of SCE's results of operations for the periods indicated.

Nine months ended September 30, 2017 versus September 30, 2016



	Nine months ended September 30, 2017									Nine months ended September 30, 2016
(in millions)	Earning Activities			Cost- Recovery Activities			Total Consolidated			Earning Activities			Cost- Recovery Activities			Total Consolidated
Operating revenue	$	4,813		$	4,248		$	9,061		$	4,842		$	4,114		$	8,956
Purchased power and fuel	—			3,742			3,742			—			3,576			3,576
Operation and maintenance	1,413			505			1,918			1,456			537			1,993
Depreciation and amortization	1,528			—			1,528			1,497			—			1,497
Property and other taxes	279			—			279			268			—			268
Other operating income	(8		)	—			(8		)	—			—			—
Total operating expenses	3,212			4,247			7,459			3,221			4,113			7,334
Operating income	1,601			1			1,602			1,621			1			1,622
Interest expense	(435		)	(1		)	(436		)	(401		)	(1		)	(402		)
Other income and expenses	83			—			83			71			—			71
Income before income taxes	1,249			—			1,249			1,291			—			1,291
Income tax expense	34			—			34			151			—			151
Net income	1,215			—			1,215			1,140			—			1,140
Preferred and preference stock dividend requirements	94			—			94			92			—			92
Net income available for common stock	$	1,121		$	—		$	1,121		$	1,048		$	—		$	1,048
Net income available for common stock							$	1,121								$	1,048
Less:
Non-core earnings							—									—
Core earnings¹							$	1,121								$	1,048


¹	See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results."

Earning Activities

Earning activities were primarily affected by the following:

Lower operating revenue of $29 million primarily due to the following:

An increase in CPUC revenue of approximately $181 million primarily due to the escalation mechanism as set forth in the 2015 GRC decision and $28 million of higher operating costs subject to balancing account treatment (primarily offset in depreciation expense below). These increases were partially offset by $24 million of lower revenue related to the extension of bonus depreciation and a $17 million revenue reduction for the expected refund to customers of prior overcollections identified in the second quarter of 2017.

A decrease in revenue of $185 million related to tax benefits refunded to customers (offset in income taxes below). The decrease in revenue resulted from $135 million of higher year-over-year incremental tax repair benefits recognized, $118 million of benefits recognized for tax accounting method changes, and a $65 million revenue reduction related to the tax abandonment of San Onofre. These decreases were partially offset by a 2016 revenue refund to customers of $133 million related to 2012 – 2014 incremental income tax deductions.

A decrease in FERC-related revenue of $31 million primarily related to higher operating costs in 2016 including amortization of the regulatory asset associated with the Coolwater-Lugo transmission project (offset in depreciation below) and a $7 million reduction to FERC revenue due to a change in estimate under the FERC formula rate mechanism.

Lower operation and maintenance costs of $43 million primarily due to the impact of SCE's operational and service excellence initiatives, lower storm-related activities and lower legal costs partially offset by higher transmission and distribution costs for line clearing and maintenance and information technology costs.

Higher depreciation and amortization expense of $31 million primarily related to depreciation on transmission and distribution investments partially offset by amortization of the regulatory asset related to Coolwater-Lugo plant recorded in 2016.

Higher property and other taxes of $11 million primarily due to a higher property assessed value in 2017.

Higher other operating income of $8 million due to the sale of utility property.

Higher interest expense of $34 million primarily due to increased borrowings and higher interest on balancing account overcollections in 2017.

Higher other income and expenses of $12 million primarily due to higher insurance benefits and higher AFUDC equity income.

Lower income taxes of $117 million primarily due to the following:

Higher income tax benefits of $109 million due to $149 million related to flow through of incremental tax repair benefits and for tax accounting method changes (offset in revenue above) and $39 million related to a tax deduction for the abandonment of San Onofre, partially offset by $79 million flow-through of 2012 – 2014 incremental income tax benefits in 2016.

Lower net income tax benefits in 2017 for other property-related items, including cost of removal and depreciation deductions.

Lower pre-tax income for the nine months ended September 30, 2017, as discussed above.

Cost-Recovery Activities

Cost-recovery activities were primarily affected by the following:

Higher purchased power and fuel costs of $166 million primarily driven by higher power and gas prices experienced in 2017 relative to 2016, partially offset by lower realized losses on hedging activities ($8 million in 2017 compared to $53 million in 2016) and lower capacity costs.

Lower operation and maintenance expense of $32 million primarily driven by lower employee benefit and other labor costs and lower spending on various public purpose programs.

Supplemental Operating Revenue Information

SCE's retail billed and unbilled revenue (excluding wholesale sales and balancing account overcollections/undercollections) was ~~$2.4~~$4.0 billion and $9.0 billion for ~~both~~ the three and nine months ended ~~March 31,~~September 30, 2017, respectively, compared to $3.7 billion and $8.6 billion for the respective periods in 2016.

Retail billed and unbilled revenue for the three months ended ~~March 31,~~September 30, 2017 ~~reflects~~was higher compared to the same period in 2016 due to a rate increase of ~~$113~~$225 million and a sales volume ~~decrease~~increase of ~~$79~~$85 million. The rate increase was due to implementation of the 2017 ERRA rate increase. The sales volume ~~decrease~~increase was primarily due to ~~unseasonably warm~~warmer weather experienced in the ~~first~~third quarter of 2017 compared to the same period in 2016. Retail billed and unbilled revenue for the nine months ended September 30, 2017 was higher compared to the same period in 2016 primarily due to the implementation of the 2017 ERRA rate increase.

As a result of the CPUC-authorized decoupling mechanism, SCE earnings are not affected by changes in retail electricity sales (see "Business—SCE—Overview of Ratemaking Process" in the 2016 Form 10-K).

Income Taxes

SCE's income tax expense decreased by ~~$30~~$176 million and $117 million for the three and nine months ended ~~March 31,~~September 30, 2017 compared to the same ~~period~~periods in 2016.

The effective tax rates were ~~3.1%~~(7.6)% and ~~11.4%~~23.2% for the three months ended ~~March 31,~~September 30, 2017 and 2016, respectively. The effective tax rates were 2.7% and 11.7% for the nine months ended September 30, 2017 and 2016, respectively. SCE's effective tax rate is lower than the statutory rate primarily due to CPUC's ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences, which reverse 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. The effective tax rate decrease isfor the three and nine months ended September 30, 2017 was primarily due to higher incremental repair tax benefits and benefits recognized for tax accounting method changes, all of which will be refunded to customers. The change in the effective tax rate for the nine months ended September 30, 2017 also included higher tax benefits related to the ratemaking treatment on the San Onofre tax ~~abandonment.~~abandonment recorded in 2017 and lower tax benefits for the $133 million revenue refund to customers that was recorded in 2016.

See "Notes to Consolidated Financial Statements—Note 7. Income Taxes" for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.

Edison International Parent and Other

Results of operations for Edison International Parent and Other include amounts from other Edison International subsidiaries that are not significant as a reportable segment, as well as intercompany eliminations.

Strategic Review of Edison Energy Group Competitive Businesses

During the third quarter of 2017, Edison International completed a strategic review of Edison Energy Group's competitive businesses. The competitive businesses are undertaken through Edison Energy Group and include energy services provided by Edison Energy and distributed solar solutions provided by SoCore Energy. Edison International has concluded that it will evaluate strategic options, including potential sale opportunities for SoCore Energy and consolidate management across Edison Energy Group. Edison Energy will continue to pursue a proof of concept of its existing energy services and managed portfolio solutions practice for large energy users in the United States. Under the proof of concept, Edison Energy will seek to achieve a breakeven earnings run rate and 5% target customer penetration by the end of 2019.

In connection with the strategic review, Edison International evaluated the recoverability of goodwill and recorded an impairment of SoCore Energy's goodwill totaling $16.5 million ($10 million after-tax) in the second quarter of 2017. In light of the decision to evaluate sale opportunities for SoCore Energy, Edison International considered the application of held for sale accounting treatment under the applicable accounting guidance. However, Edison International concluded that, as of September 30, 2017, it was not probable that the investment in SoCore Energy would be sold within one year, therefore the long-lived assets of SoCore Energy were not subject to held for sale accounting treatment. Under held for sale accounting treatment, the net assets of SoCore Energy ($228 million at September 30, 2017) would be recorded at the lower of book value or as net realizable value, including transaction costs.

Income from Continuing Operations

The following table summarizes the results of Edison International Parent and Other:


	Three months ended March 31,						Three months ended September 30,					Nine months ended September 30,
(in millions)	2017			2016			2017		2016			2017			2016
Edison Energy Group and subsidiaries¹	$	(6	)	$	(6	)	$	3	$	(5	)	$	(20	)	$	(28	)
Edison Mission Group and subsidiaries	(1		)	—			—		—			(2		)	(4		)
Corporate expenses and other²	20			(9		)	2		(9		)	11			(33		)
Total Edison International Parent and Other	$	13		$	(15	)	$	5	$	(14	)	$	(11	)	$	(65	)


¹	Includes income of less than $1 million and $2$1 million for the three and nine months ended ~~March 31,~~September 30, 2017, respectively, compared to income of less than $1 million and $5 million for the same periods in 2016, respectively, related to losses (net of distributions) allocated to tax equity investors under the HLBV accounting method.


²	Includes interest expense (pre-tax) of ~~$10~~$12 million and $8$10 million for the three months ended ~~March 31,~~September 30, 2017 and 2016, respectively, and $34 million and $27 million for the nine months ended September 30, 2017 and 2016, respectively.

The ~~income~~loss from continuing operations of Edison International Parent and Other ~~was $13~~decreased $19 million and $54 million for the three and nine months ended ~~March 31,~~September 30, 2017, respectively, compared to ~~a loss of $15 million for~~ the same ~~period~~periods in ~~2016. The increase in income for the first three months of 2017 was~~2016 primarily due ~~to higher~~to:

Higher income tax benefits related to stock option exercises ~~($35~~of $1 million and $2$34 million for the three and nine months ended ~~March 31,~~September 30, 2017, respectively, $17 million of tax benefits recorded during the third quarter of 2017 from net operating loss carrybacks that resulted from the filing of the 2016 tax returns and ~~2016, respectively).~~$6 million of tax benefits recorded in the second quarter of 2017 related to settlements with the IRS for taxable years 2007 – 2012.

~~Strategic Review~~In the second quarter of 2017, Edison Energy Group ~~Competitive Businesses~~

~~Edison International is performing~~recorded a ~~strategic review~~$10 million after-tax charge from a goodwill impairment on the SoCore Energy reporting unit and a $13 million after-tax charge during the second quarter of 2016 from a buy-out of an earn-out provision contained in one of the competitive businesses pursued by subsidiaries of Edison Energy Group. Competitive businesses include energy services provided by Edison Energy and distributed solar solutions provided by SoCore Energy. The outcome of the strategic review may affect Edison International's ability to fully recover its investments in these businesses. Edison International's investments in SoCore Energy and Edison Energy were $195 million and $103 million, respectively, as of March 31, 2017.2015 acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

Southern California Edison Company

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 and dividend payments to Edison International, and the outcome of tax and regulatory matters.

In the next 12 months, SCE expects to fund its obligations, capital expenditures, and dividends through operating cash flows, tax benefits, and capital market financings, as needed. SCE also has availability under its credit facilities to fund liquidity requirements.

Available Liquidity

At ~~March 31,~~September 30, 2017, SCE had approximately ~~$2.66~~$2.15 billion available under its $2.75 billion multi-year revolving credit facility. In ~~January 2017, SCE borrowed $300 million under a Term Loan Agreement and reissued $135 million of pollution control bonds. In March 2017,~~addition, SCE issued ~~$700 million of first~~debt and ~~refunding mortgage bonds.~~preference stock in 2017. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit ~~Agreements.~~Agreements" and "—Note 12. Preferred and Preference Stock of SCE."

Debt Covenant

~~The~~A debt covenant in SCE's credit facility limits its debt to total capitalization ratio to less than or equal to 0.65 to 1. At ~~March 31,~~September 30, 2017, SCE's debt to total capitalization ratio was ~~0.44~~0.43 to 1.

At ~~March 31,~~September 30, 2017, SCE was in compliance with all other financial covenants that affect access to capital.

Capital Investment Plan

Below are updates for large transmission and substation projects since the filing of the 2016 Form 10-K. SCE is currently evaluating the timing of its major construction projects. For further information on these projects, see "Liquidity and Capital Resources—SCE—Capital Investment Plan—Major Transmission Projects" in the year-end 2016 MD&A.

Major Transmission Projects

West of Devers

In March 2017, the CPUC issued a decision denying ORA's September 2016 Application for Rehearing regarding the West of Devers Upgrade Project which sought additional project modifications and environmental mitigation measures. This action confirmed SCE's proposed project, which is ~~on track~~expected to be placed in service in ~~2021.~~2021, although there is potential of a delay. SCE is evaluating the competitive bids received for transmission construction and expects to award the contract for the Project by the end of 2017, which may result in a change to the expected cost of the Project.

Mesa Substation

In February 2017, the CPUC issued a final decision approving the Mesa Substation Project largely consistent with SCE's proposed project and rejected alternative project configurations proposed by CPUC staff. ~~Timing~~SCE expects the Mesa Substation project to go into service in 2022. Competitive bids for the 220kV substation construction are under evaluation, and the remainder (550kV substation) will be put out for bid in 2018. SCE expects to award the bid for the 220kV substation construction by the end of 2017, which may result in a change to the ~~CPUC approval and preconstruction~~expected cost. Preconstruction requirements for ~~obtaining~~ other permits and approvals have ~~delayed the start of construction. As a result, SCE has revised the projected in-service date to 2022.~~been obtained and construction began in October 2017.

Alberhill System

In April 2017, the CPUC issued a final environmental impact report for the Alberhill ~~System.~~System Project. This report rejected different alternatives recommended by CPUC staff and intervenors, selecting SCE's proposed project as the environmentally superior project. A final CPUC decision to approve the Project for construction is anticipated byduring 2018. As SCE prepares for the ~~end~~commencement of ~~2017.~~construction, updated annual capital spending will be incorporated into the capital program forecast.

Riverside Transmission Reliability

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. Due to changed circumstances since the time the Project was originally developed, SCE informed the CPUC in August 2016 that it supports revisions to the proposed Project. The CPUC continues to collect information regarding the revised Project or other proposed revisions in support of a supplemental environmental review. Impacts from the potential revisions to the Project have not been reflected in the expected costs or scheduled in-service date of 2021.

Eldorado-Lugo-Mohave Upgrade

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. SCE has proposed an expedited schedule and a non-standard review process with the regulatory permitting agencies in order to meet the current in-service date. SCE recently awarded the competitive bid for the Project and has not yet incorporated the contract into the capital forecast.

Coolwater-Lugo

In ~~February~~the first quarter of 2017, the FERC approved a settlement allowing SCE to recover 100% of the requested $37.1 million of costs incurred by SCE related to the cancelled Coolwater-Lugo transmission project.

Dividend Restrictions

The CPUC regulates SCE's capital structure which limits the dividends it may pay Edison International. SCE may make distributions to Edison International as long as the common equity component of SCE's capital structure remains at or above 48% on a 13-month weighted average basis. At ~~March 31,~~September 30, 2017, SCE's 13-month weighted-average common equity component of total capitalization was ~~50.4%~~50.2% and the maximum additional dividend that SCE could pay to Edison International under this limitation was approximately ~~$603~~$554 million, resulting in a restriction on net assets of approximately ~~$14.0~~$14.4 billion.

In the ~~first~~third quarter of 2017, SCE declared ~~and paid~~ a dividend to Edison International of $191 million. Future dividend amounts and timing of distributions are dependent on a number of factors including the level of capital expenditures, operating cash flows and earnings.

Margin and Collateral Deposits

Certain derivative instruments, power contracts and other contractual arrangements contain collateral requirements. Future collateral requirements may differ from the requirements at ~~March 31,~~September 30, 2017, due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, and the impact of changes in wholesale power and natural gas prices on SCE's contractual obligations.

Some of the power contracts contain provisions that require SCE to maintain an investment grade credit rating from the major credit rating agencies. If SCE's credit rating were to fall below investment grade, SCE may be required to pay the liability or post additional collateral.

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 ~~March 31,~~September 30, 2017.


(in millions)
Collateral posted as of March 31, 2017¹	$	93
Collateral posted as of September 30, 2017¹			$	274
Incremental collateral requirements for power contracts resulting from a potential downgrade of SCE's credit rating to below investment grade	22		33
Incremental collateral requirements for power contracts resulting from adverse market price movement²	3		2
Posted and potential collateral requirements	$	118	$	309


¹	~~Net collateral is~~Collateral provided to counterparties and other brokers consisted of $269 million in ~~the form of~~ letters of credit and surety ~~bonds.~~bonds and $5 million of cash.


²	Incremental collateral requirements were based on potential changes in SCE's forward positions as of ~~March 31,~~September 30, 2017 due to adverse market price movements over the remaining lives of the existing power contracts using a 95% confidence level.

Edison International Parent and Other

Edison International Parent and Other's liquidity and its ability to pay operating expenses and pay dividends to common shareholders are dependent on dividends from SCE, realization of tax benefits, and access to bank and capital markets. Edison International may also finance working capital requirements, payment of obligations, and capital investments, including capital contributions to subsidiaries, ~~to fund new businesses,~~ with commercial paper or other borrowings, subject to availability in the bank and capital markets.

At ~~March 31,~~September 30, 2017, Edison International Parent had ~~$955~~$677 million available under its $1.25 billion multi-year revolving credit facility. In ~~March 2017,~~addition, Edison International issued ~~$400 million of senior notes.~~debt in 2017. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

~~The~~A debt covenant in Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the credit agreement of less than or equal to 0.65 to 1. At ~~March 31,~~September 30, 2017, Edison International Parent's consolidated debt to total capitalization ratio was ~~0.48~~0.47 to 1.

At ~~March 31,~~September 30, 2017, Edison International Parent was also in compliance with all other financial covenants that affect access to capital.

Historical Cash Flows

Southern California Edison Company


	Three months ended March 31,						Nine months ended September 30,
(in millions)	2017			2016			2017			2016
Net cash provided by operating activities	$	931		$	884		$	2,793		$	2,838
Net cash provided by (used in) financing activities	56			(57		)
Net cash used in financing activities							(339		)	(382		)
Net cash used in investing activities	(926		)	(832		)	(2,432		)	(2,443		)
Net increase (decrease) in cash and cash equivalents	$	61		$	(5	)
Net increase in cash and cash equivalents							$	22		$	13

Net Cash Provided by Operating Activities

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 the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and 2016.


	Three months ended March 31,						Change in cash flows			Nine months ended September 30,						Change in cash flows
(in millions)	2017			2016			2017/2016			2017			2016			2017/2016
Net income	$	380		$	325					$	1,215		$	1,140
Non-cash items¹	724			531						1,853			1,597
Subtotal	$	1,104		$	856		$	248		$	3,068		$	2,737		$	331
Changes in cash flow resulting from working capital²	(155		)	(35		)	(120		)	(553		)	(32		)	(521		)
Derivative assets and liabilities	(12		)	5			(17		)	(24		)	15			(39		)
Regulatory assets and liabilities	129			119			10			560			189			371
Other noncurrent assets and liabilities³	(135		)	(61		)	(74		)	(258		)	(71		)	(187		)
Net cash provided by operating activities	$	931		$	884		$	47		$	2,793		$	2,838		$	(45	)


¹	Non-cash items include depreciation ~~decommissioning~~ and amortization, allowance for equity during construction, deferred income taxes and investment tax credits, and other.


²	Changes in working capital items include receivables, inventory, accounts payable, prepaid and accrued taxes, and other current assets and liabilities.

³Includes the nuclear decommissioning trusts.

Net cash provided by operating activities was impacted by the following:

Net income increased in 2017 by ~~$55~~$75 million primarily due to higher ~~authorized~~ revenue in 2017 due to the escalation mechanism as set forth in the 2015 GRC decision and lower operation and maintenance expenses, ~~and higher income tax benefits,~~ partially offset by reductions in CPUC revenue related to prior overcollections and higher ~~net~~ financing costs.

Net cash for working capital ~~was $(155) million and $(35) million during~~for the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and 2016 ~~respectively. The net cash for each period~~ was primarily related to the ~~reductions~~increase in receivables from customers ($370 million and $261 million in 2017 and 2016, respectively) and the timing of ~~payables~~disbursements (including payments for payroll-related costs and ~~purchase~~purchased power) ~~of $230 million and $215 million during~~. During the first ~~quarters~~nine months of 2017, ~~and 2016, respectively, partially offset by reductions~~there was an increase in payables of ~~receivables from customers ($130~~$30 million ~~and $170~~compared to $195 million for the same period in 2016. In addition, net cash for working capital included changes in tax payables of $(146) million in 2017 and $111 million in 2016 ~~respectively).~~primarily due to the utilization of net operating losses in 2017.

Net cash provided by regulatory assets and liabilities, including changes in over (under) collections of balancing accounts was ~~$129~~$560 million and ~~$119~~$189 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and 2016, respectively. SCE has a number of balancing 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:

2017

The 2015 GRC decision established the TAMA. As a result of this memorandum account, together with a balancing account for pole loading expenditures, 2015 – 2017 tax benefits or costs associated with certain events are tracked and adjusted annually through customer rates. Overcollections increased by $319 million during the first nine months of 2017 primarily due to higher tax repair deductions than forecasted in rates and $118 million of higher benefits recognized for tax accounting method changes. The overcollections in 2017 are expected to be refunded to customers in January 2018.

Higher cash due to ~~$64~~$186 million of overcollections for the public purpose and energy efficiency programs. Overcollections for public purpose and energy efficiency programs increased due to lower spending for these ~~programs.~~programs and recovery of prior year undercollections.

Higher cash due to $140 million of overcollections related to FERC balancing accounts. Overcollections increased due to recovery of prior FERC undercollections and lower costs than forecasted in the FERC formula rate.

Higher cash due to $94 million of overcollections related to the timing of greenhouse gas auction revenue and climate credit refunds to customers, which are expected to be refunded to customers in the fourth quarter of 2017.

Higher cash due to realization of $47 million in proceeds from the MHI ~~arbitration.~~arbitration and approximately $34 million from the Department of Energy related to spent nuclear fuel. For further information on the MHI claims and spent nuclear fuel, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies—Contingencies—San Onofre Related ~~Matters.~~Matters" and "—Spent Nuclear Fuel."

BRRBA overcollections decreased by ~~$66~~$161 million during the first ~~three~~nine months of 2017 primarily due to the refunds of 2016 overcollections related to TAMA, a revenue refund to customers of $133 million for 2012 – 2014 incremental tax benefits related to repair deductions, and 2015 overcollections resulting from the implementation of the 2015 GRC decision, which was authorized to be refunded to customers over a two year period. The BRRBA tracks the differences between amounts authorized by the CPUC in the GRC proceedings and amounts billed to customers.

~~SCE had an increase in cash of approximately $84 million primarily due to lower spending~~Net undercollections for ERRA and the new system generation program ~~which records~~were $91 million at September 30, 2017 compared to net overcollections of $26 million at December 31, 2016. Net undercollections increased $117 million during the ~~benefits~~first nine months of 2017 primarily due to a refund of prior year overcollections and an increase in costs ~~of power purchase agreements and SCE-owned peaker generation units associated with new generation resources.~~

due to higher load requirements than forecasted in rates.

2016

Higher cash due to an increase in overcollections of ~~$134~~$300 million for the public purpose and energy efficiency programs due to higher funding and lower spending for these programs during the first ~~three~~nine months of 2016.

ERRA overcollections for fuel and purchased power decreased by ~~$75~~$231 million during the first ~~three~~nine months of 2016 primarily due to the implementation of the 2016 ERRA rate decrease in January 2016, partially offset by lower than forecasted power and gas prices experienced in 2016.

~~SCE had an~~An increase in cash of approximately ~~$60~~$122 million ~~primarily~~ due to a refund from the ~~timing~~Department of ~~greenhouse gas auction revenue~~Energy's failure to meet its obligation to begin accepting spent nuclear fuel from San Onofre. See "Notes to Consolidated Financial Statements—Note 11. Commitments and ~~climate credit refunds to customers.~~Contingencies—Contingencies—Spent Nuclear Fuel" for further discussion.

Cash flows used in other noncurrent assets and liabilities were primarily related to net earnings from nuclear decommissioning trust investments ($2747 million and ~~$10~~$33 million in 2017 and 2016, respectively), SCE's payments of decommissioning costs ($170 million and $125 million in 2017 and 2016, respectively) and ~~SCE's payments~~changes in uncertain tax positions due to the utilization of ~~decommissioning costs~~net operating losses ($45(105) million and ~~$41~~$(4) million in 2017 and 2016, respectively). See "Nuclear Decommissioning Activities" below for further discussion.

Net Cash ~~Provided by (Used in)~~Used in Financing Activities

The following table summarizes cash provided by ~~(used in)~~ financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and 2016. Issuances of debt and preference stock are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Long-Term ~~Debt.~~Debt" and "—Note 12. Preferred and Preference Stock of SCE."


	Three months ended March 31,						Nine months ended September 30,
(in millions)	2017			2016			2017			2016
Issuances of first and refunding mortgage bonds, net of discount and issuance costs	$	692		$	—
Issuances of first and refunding mortgage bonds, net of premium (discount) and issuance costs							$	1,011		$	—
Issuance of term loan	300			—			300			—
Remarketing of pollution control bonds, net of issuance costs	134			—			134			—
Long-term debt matured or repurchased	(40		)	(40		)	(781		)	(81		)
Issuances of preference stock, net of issuance costs	—			294			463			294
Redemptions of preference stock	—			(125		)	(475		)	(125		)
Short-term debt (repayments), net of borrowings and discount	(769		)	52			(441		)	189
Payments of common stock dividends to Edison International	(191		)	(170		)	(382		)	(510		)
Payments of preferred and preference stock dividends	(36		)	(35		)	(99		)	(97		)
Other	(34		)	(33		)	(69		)	(52		)
Net cash provided by (used in) financing activities	$	56		$	(57	)
Net cash used in financing activities							$	(339	)	$	(382	)

Net Cash Used in Investing Activities

Cash flows used in investing activities are primarily due to capital expenditures related to transmission and distribution investments ($~~929 million~~2.6 billion and ~~$950 million~~$2.7 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and 2016, respectively). ~~In addition, in~~During the first ~~three~~nine months of 2017 and 2016, SCE had a net redemption of nuclear decommissioning trust investments of ~~$106 million.~~$117 million and $159 million, respectively. See "Nuclear Decommissioning Activities" below for further discussion.

In addition, during the first nine months of 2017 and 2016, SCE received proceeds of $26 million and $140 million, respectively, for loans on the cash surrender value of life insurance policies. The proceeds were used for general corporate purposes.

Nuclear Decommissioning Activities

SCE's statement of cash flows includes nuclear decommissioning activities, which are reflected in the following line items:


	Three months ended March 31,						Nine months ended September 30,
(in millions)	2017			2016			2017			2016
Net cash used in operating activities: Net earnings from nuclear decommissioning trust investments	$	27		$	10		$	47		$	33
SCE's decommissioning costs	(45		)	(41		)	(170		)	(125		)
Net cash flow from investing activities: Proceeds from sale of investments	1,718			793
Net cash provided by investing activities: Proceeds from sale of investments							3,974			2,075
Purchases of investments	(1,719		)	(687		)	(3,857		)	(1,916		)
Net cash impact	$	(19	)	$	75		$	(6	)	$	67

Net cash used in operating activities relate to interest and dividends less administrative expenses, taxes, and SCE's decommissioning costs. See "Notes to Consolidated Financial Statements—Note 9. Investments" for further information. Investing activities represent the purchase and sale of investments within the nuclear decommissioning trusts, including the reinvestment of earnings from nuclear decommissioning trust investments. The net cash impact reflects timing of decommissioning payments ($45170 million and ~~$41~~$125 million in 2017 and 2016, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($26164 million and ~~$116~~$192 million in 2017 and 2016, respectively). The 2016 net cash impact included reimbursements for 2016 and a portion of 2015, 2014, and 2013 decommissioning costs.

Edison International Parent and Other

The table below sets forth condensed historical cash flow from operations for Edison International Parent and Other.


	Three months ended March 31,						Nine months ended September 30,
(in millions)	2017			2016			2017			2016
Net cash used in operating activities	$	(52	)	$	(29	)	$	(103	)	$	(336	)
Net cash provided by financing activities	56			12			163			280
Net cash used in investing activities	(11		)	(2		)	(61		)	(34		)
Net decrease in cash and cash equivalents	$	(7	)	$	(19	)	$	(1	)	$	(90	)

Net Cash Used in Operating Activities

Net cash used in operating activities ~~increased $23~~was impacted by the following:

$103 million ~~during the first three months of~~cash outflow from operating activities in 2017 compared to $101 million cash outflow in 2016 due to ~~higher interest payments related to long-term debt and the timing of~~ payments and receipts relating to interest and operating costs.

$214 million of cash payment made to the Reorganization Trust in September 2016 related to the EME Settlement Agreement.

$21 million outflow in June 2016 related to the buy-out of an earn-out provision with the former shareholders of a company acquired by Edison Energy in 2015. See "Results of Operations—Edison International Parent and Other—Income from Continuing Operations" for further information.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was as follows:


	Three months ended March 31,						Nine months ended September 30,
(in millions)	2017			2016			2017			2016
Dividends paid to Edison International common shareholders	$	(177	)	$	(156	)	$	(530	)	$	(469	)
Dividends received from SCE	191			170			382			510
Payment for stock-based compensation, net of receipt from stock option exercises	(116		)	(16		)	(129		)	(25		)
Long-term debt issuance, net of discount and issuance costs	398			397			791			397
Short-term debt repayments, net of borrowings and discount	(244		)	(384		)
Long-term debt repayment							(401		)	(2		)
Short-term debt borrowings, net of (repayments) and discount							40			(129		)
Other	4			1			10			(2		)
Net cash provided by financing activities	$	56		$	12		$	163		$	280

Contingencies

SCE has contingencies related to San Onofre Related Matters, Environmental Remediation, Nuclear Insurance, Wildfire Insurance, ~~and~~ Spent Nuclear Fuel and other legal matters, which are discussed in "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies."

MARKET RISK EXPOSURES

Edison International's and SCE's primary market risks are described in the 2016 Form 10-K. For a further discussion of market risk exposures, including commodity price risk, credit risk, and interest rate risk, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "—Note 6. Derivative Instruments."

Commodity Price Risk

The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was a net liability of ~~$1.2 billion and~~ $1.1 billion ~~March 31, 2017 and~~at December 31, ~~2016, respectively.~~ 2016. During the third quarter of 2017, SCE designated certain derivative contracts as normal purchase and normal sale contracts, which resulted in a reclassification of $914 million from derivative liabilities to other liabilities. These liabilities will be amortized over the remaining contract terms. The fair value of the remaining derivative instruments at September 30, 2017 was $35 million.

For further discussion of fair value measurements and the fair value hierarchy, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "— Note 6. Derivative Instruments."

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 setoff. 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 for both rated and non-rated counterparties based on credit ratings using published ratings of counterparties 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.

As of ~~March 31,~~September 30, 2017, the amount of balance sheet exposure as described above broken down by the credit ratings of SCE's counterparties, was as follows:


	March 31, 2017						September 30, 2017
(in millions)	Exposure²		Collateral		Net Exposure		Exposure²		Collateral		Net Exposure
S&P Credit Rating¹
A or higher	$	64	$	—	$	64	$	38	$	—	$	38


¹	SCE assigns a credit rating based on the lower of a counterparty's S&P, Fitch or Moody's rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the three credit ratings.


²	Exposure excludes amounts related to contracts classified as normal purchases and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheets, except for any related net accounts receivable.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

For a complete discussion on Edison International's and SCE's critical accounting policies, see "Critical Accounting Estimates and Policies" in the year-ended 2016 MD&A.

NEW ACCOUNTING GUIDANCE

New accounting guidance is discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information responding to this section is included in the MD&A under the heading "Market Risk Exposures" and is incorporated herein by reference.

FINANCIAL STATEMENTS


Consolidated Statements of Income	Edison International						Edison International

	Three months ended March 31,						Three months ended September 30,						Nine months ended September 30,
(in millions, except per-share amounts, unaudited)	2017			2016			2017			2016			2017			2016
Total operating revenue	$	2,463		$	2,440
Operating revenue							$	3,672		$	3,767		$	9,100		$	8,985
Purchased power and fuel	784			794			1,783			1,719			3,742			3,576
Operation and maintenance	596			629			713			740			2,016			2,090
Depreciation, decommissioning and amortization	499			477
Depreciation and amortization							524			521			1,535			1,504
Property and other taxes	100			92			98			92			284			269
Impairment and other charges	5			—
Impairment charges							—			—			22			—
Other operating (income) and expenses							(7		)	—			(8		)	21
Total operating expenses	1,984			1,992			3,111			3,072			7,591			7,460
Operating income	479			448			561			695			1,509			1,525
Interest and other income	33			31			42			32			111			97
Interest expense	(152		)	(140		)	(162		)	(147		)	(473		)	(431		)
Other expenses	(8		)	(6		)	(9		)	(9		)	(28		)	(29		)
Income from continuing operations before income taxes	352			333			432			571			1,119			1,162
Income tax (benefit) expense	(40		)	28			(69		)	120			(83		)	96
Income from continuing operations	392			305			501			451			1,202			1,066
Income from discontinued operations, net of tax	—			1			—			—			—			(1		)
Net income	392			306			501			451			1,202			1,065
Preferred and preference stock dividend requirements of SCE	31			30			32			31			94			92
Other noncontrolling interests	(1		)	(5		)	(1		)	(1		)	(2		)	(9		)
Net income attributable to Edison International common shareholders	$	362		$	281		$	470		$	421		$	1,110		$	982
Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax	$	362		$	280		$	470		$	421		$	1,110		$	983
Income from discontinued operations, net of tax	—			1			—			—			—			(1		)
Net income attributable to Edison International common shareholders	$	362		$	281		$	470		$	421		$	1,110		$	982
Basic earnings per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding	326			326			326			326			326			326
Continuing operations	$	1.11		$	0.86		$	1.44		$	1.29		$	3.41		$	3.01
Discontinued operations							—			—			—			—
Total	$	1.11		$	0.86		$	1.44		$	1.29		$	3.41		$	3.01
Diluted earnings per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding, including effect of dilutive securities	329			329			328			330			329			330
Continuing operations	$	1.10		$	0.85		$	1.43		$	1.27		$	3.38		$	2.98
Discontinued operations							—			—			—			—
Total	$	1.10		$	0.85		$	1.43		$	1.27		$	3.38		$	2.98
Dividends declared per common share	$	0.5425		$	0.4800		$	0.5425		$	0.4800		$	1.6275		$	1.4400