UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(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, ~~2018~~2019
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)

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 Yes þ No o Southern California Edison Company Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Edison International Yes þ No o Southern California Edison Company Yes þ 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	Large Accelerated Filer þ	Accelerated Filer ¨	Non-accelerated Filer ¨	Smaller Reporting Company ¨	Emerging growth company ¨
Southern California Edison 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 o 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 þ Southern California Edison Company Yes ¨ No þ



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 April ~~27, 2018:~~26, 2019:
Edison International		325,811,206 shares
Southern California Edison Company		434,888,104 shares

TABLE OF CONTENTS



					SEC Form 10-Q Reference Number
GLOSSARY				~~iii~~iv
FORWARD-LOOKING STATEMENTS				1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS				3	Part I, Item 2
	MANAGEMENT OVERVIEW			3
		Highlights of Operating Results		3
		~~Southern California Wildfires~~2018 General Rate Case		4
		~~Montecito Mudslides~~		5
		~~Permanent Retirement of San Onofre~~		5
		Capital Program		64
		~~2018 General Rate Case~~Southern California Wildfires and Mudslides		65
	RESULTS OF OPERATIONS			67
	Southern California Edison Company			67
		Three months ended March 31, ~~2018~~2019 versus March 31, ~~2017~~2018		7
			Earning Activities	78
			Cost-Recovery Activities	8
	Supplemental Operating Revenue Information			8
	Income Taxes			89
	Edison International Parent and Other			9
		~~Strategic Review of Edison Energy Group Competitive Businesses~~		9
		Income from Continuing Operations		9
	LIQUIDITY AND CAPITAL RESOURCES			9
	Southern California Edison Company			9
		Available Liquidity		910
		Capital Investment Plan		10
		~~Dividend Restrictions~~Regulatory Proceedings		10
		SCE Dividends		11
		Margin and Collateral Deposits		1112
	Edison International Parent and Other			1112
	Historical Cash Flows			1213
		Southern California Edison Company		1213
		Edison International Parent and Other		1516
	Contingencies			1516
	MARKET RISK EXPOSURES			1516
	Commodity Price Risk			1516
	Credit Risk			1617



	CRITICAL ACCOUNTING ESTIMATES AND POLICIES	1617
	NEW ACCOUNTING GUIDANCE	1617
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		1617	Part I, Item 3
FINANCIAL STATEMENTS		18	Part I, Item 1
	Edison International Consolidated Statements of Income	18
	Edison International Consolidated Statements of Comprehensive Income	19



	Edison International Consolidated Balance Sheets		20
	Edison International Consolidated Statements of Cash Flows		22
	SCE Consolidated Statements of Income		23
	SCE Consolidated Statements of Comprehensive Income		23
	SCE Consolidated Balance Sheets		24
	SCE Consolidated Statements of Cash Flows		26
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		27
		Note 1. Summary of Significant Accounting Policies	27
		Note 2. Consolidated Statements of Changes in Equity	31
		Note 3. Variable Interest Entities	3233
		Note 4. Fair Value Measurements	34
		Note 5. Debt and Credit Agreements	37
		Note 6. Derivative Instruments	38
		Note 7. Revenue	40
		Note 8. Income Taxes	4341
		Note 9. Compensation and Benefit Plans	4442
		Note 10. Investments	4543
		Note 11. Regulatory Assets and Liabilities	4744
		Note 12. Commitments and Contingencies	4846
		Note 13. ~~Accumulated Other Comprehensive Loss~~Leases	5453
		Note 14. Accumulated Other ~~Income and Expenses~~Comprehensive Loss	5556
		Note 15. Other Income and Expenses	56
		Note 16. Supplemental Cash Flows Information	5557
		Note 17. Related-Party Transactions	57
CONTROLS AND PROCEDURES			5658	Part I, Item 4
	Disclosure Controls and Procedures		5658
	Changes in Internal Control Over Financial Reporting		5658
	Jointly Owned Utility Plant		5658
LEGAL PROCEEDINGS			5658	Part II, Item 1
	~~December 2017 Wildfires~~Thomas Fire and Koenigstein Fire Litigation		5658



	Montecito Mudslides Litigation	5658
	Woolsey Fire Litigation	59
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		5759	Part II, Item 2
	Purchases of Equity Securities by Edison International and Affiliated Purchasers	5759
OTHER INFORMATION		59	Part II, Item 5
EXHIBITS		5860	Part II, Item 6
SIGNATURES		5961

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.~~

iiiii

GLOSSARY

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



~~2017~~2017/2018 Wildfire/Mudslide Events		the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire, collectively
2018 Form 10-K		Edison International's and SCE's combined Annual Report on Form 10-K for the ~~year-ended~~year ended December 31, ~~2017~~2018
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~~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
Cal ~~Fire~~Advocates		CPUC's Public Advocates Office (formerly known as the Office of Ratepayer Advocates or ORA)
CAL FIRE		California Department of Forestry and Fire Protection
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
Commission on Catastrophic Wildfire Cost and Recovery		Commission on Catastrophic Wildfire Cost and Recovery established by the California Governor’s Office of Planning and Research as required by California Senate Bill 901
CPUC		California Public Utilities Commission
~~DOE~~December 2017 Wildfires		~~U.S. Department~~several wind-driven wildfires, including the Thomas Fire and the Koenigstein Fire, that occurred in December 2017 and impacted portions of ~~Energy~~SCE's service territory
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~~a wholly-owned subsidiary of Edison International, is a holding company for subsidiaries engaged in competitive businesses ~~focused on providing~~that provide energy services ~~including distributed generation and/or storage,~~ to commercial and industrial customers
EME		Edison Mission Energy
EME Settlement Agreement		Settlement Agreement by and among Edison Mission Energy, Edison International and the Consenting Noteholders identified therein, dated February 18, 2014
Electric Service Provider		an entity that offers electric power and ancillary services to customers that take final delivery of electric power and do not resell the power
ERRA		Energy Resource Recovery Account
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
Fitch		Fitch Ratings, Inc.
GAAP		generally accepted accounting principles
GHG		greenhouse gas
GRC		general rate case
GS&RP		Grid Safety and Resiliency Program
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 ~~26, 2018~~25, 2019
Koenigstein Fire		a wind-driven fire that originated near Koenigstein Road in the City of Santa Paula in Ventura County on December 4, 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
Montecito Mudslides		the mudslides and flooding in Montecito, Santa Barbara County, that occurred in January 2018
Moody's		Moody's Investors Service, Inc.
MW		megawatts
MWdc		megawatts measured for solar projects representing the accumulated peak capacity of all the solar modules
NDCTP		Nuclear Decommissioning Cost Triennial Proceeding
NEIL		Nuclear Electric Insurance Limited
NEM		net energy metering
NERC		North American Electric Reliability Corporation
NOL		net operating loss

~~iii~~



NRC		Nuclear Regulatory Commission
~~ORA~~		~~CPUC's Office of Ratepayers Advocates~~
OII		Order Instituting Investigation
OII Parties		SCE, SDG&E, The Alliance for Nuclear Responsibility, The California Large Energy Consumers Association, California State University, Citizens Oversight dba Coalition to Decommission San Onofre, the Coalition of California Utility Employees, the Direct Access Customer Coalition, Ruth Henricks, ~~ORA,~~Cal Advocates, TURN, and Women's Energy Matters, all of whom are parties to the Revised San Onofre Settlement Agreement
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
Prior San Onofre Settlement Agreement		San Onofre OII Settlement Agreement by and among TURN, ~~ORA,~~Cal Advocates, SDG&E, the Coalition of California Utility Employees, and Friends of the Earth, dated November 20, 2014
Revised San Onofre Settlement Agreement		Revised San Onofre OII Settlement Agreement among OII Parties, dated January 30, 2018 and modified on August 2, 2018
ROE		return on common equity
S&P		Standard & Poor's ~~Ratings~~Financial Services LLC
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, a wholly-owned subsidiary of Edison International
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SED		Safety and Enforcement Division of the CPUC
SoCalGas		Southern California Gas Company
SoCore Energy		SoCore Energy LLC, a former subsidiary of Edison Energy Group that was sold in April 2018
TAMA		Tax Accounting Memorandum Account
Tax Reform		Tax Cuts and Jobs Act signed into law on December 22, 2017
Thomas Fire		a wind-driven fire that originated in the Anlauf Canyon area Ventura County on December 4, 2017
TOU		Time-Of-Use
TURN		The Utility Reform Network



US EPA		U.S. Environmental Protection Agency
VCFD		The Ventura County Fire Department
WMP		a wildfire mitigation plan required to be filed annually under California Senate Bill 901 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
Woolsey Fire		a wind-driven fire that originated in Ventura County in November 2018

ivvi

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:

ability of SCE to recover its costs ~~in a timely manner from its customers~~ through regulated rates, including costs related to uninsured wildfire-related and mudslide-related liabilities ~~spending on grid modernization~~ and ~~other~~ capital spending incurred prior to ~~explicit~~formal regulatory approval;

ability to obtain sufficient insurance at a reasonable cost, including insurance relating to SCE's nuclear facilities and wildfire-related ~~and mudslide-related exposure,~~claims, and to recover the costs of such insurance or, in the ~~absence of insurance,~~event liabilities exceed insured amounts, the ability to recover uninsured ~~losses;~~losses from customers or other parties;

actions, or inaction, of the state of California with respect to achieving a timely and comprehensive solution mitigating 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;

decisions and other actions by the CPUC, the FERC, the NRC and other regulatory authorities, including determinations of authorized rates of return or return on equity, the 2018 GRC, the GS&RP application, the 2019 WMP, the recoverability of wildfire-related and mudslide-related costs, and delays in regulatory actions;

ability of Edison International or SCE to borrow funds and access the bank and capital markets on reasonable terms;

actions by credit rating agencies to downgrade Edison International or SCE's credit ratings or to place those ratings on negative watch or outlook;

risks associated with the decommissioning of San Onofre, including those related to public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel, delays, contractual disputes, and cost overruns;

extreme weather-related incidents and other natural disasters ~~including~~(including earthquakes and events caused, or exacerbated, by climate change, such as ~~wildfires;~~wildfires), which could cause, among other things, public safety issues, property damage and operational issues;

risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure ~~due to CCAs;~~for other electricity providers such as CCAs and Electric Service Providers;

risks inherent in SCE's transmission and distribution infrastructure investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there is insufficient transmission to enable acceptance of power delivery), changes in the CAISO's transmission plans, and governmental approvals;

risks associated with the operation of transmission and distribution assets and power generating facilities, including public and employee 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;

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;

ability of Edison International to develop competitive businesses, manage new business risks, and recover and earn a return on its investment in newly developed or acquired businesses;

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 and effective tax rate;

changes in the fair value of investments and other assets;

changes in interest rates and rates of inflation, including escalation rates (which may be adjusted by public utility regulators);

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 Council, and similar regulatory bodies in adjoining ~~regions;~~

regions, and changes in California's environmental priorities that lessen the importance the state places on GHG reduction;

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;

cost and availability of labor, equipment and materials;

potential for penalties or disallowance for non-compliance with applicable laws and regulations; 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.

Additional information about risks and uncertainties, including more detail about the factors described in this report, is contained throughout this report and in the ~~2017~~2018 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 ~~2017~~2018 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 certain SCE and other parties' regulatory filings and documents with the CPUC and the FERC and certain agency rulings and notices in open proceedings at www.edisoninvestor.com (SCE Regulatory Highlights) so that such filings, rulings and notices are available to all investors. Edison International and SCE post or provide direct links to certain documents and information related to Southern California wildfires which may be of interest to investors at www.edisoninvestor.com (Southern California Wildfires) in order to publicly disseminate such information. 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 months ended March 31, ~~2018~~2019 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, ~~2017,~~2018 and as compared to the three months ended March 31, ~~2017.~~2018. This discussion presumes that the reader has read or has access to Edison International's and SCE's MD&A for the calendar year ~~2017~~2018 (the "year-ended ~~2017~~2018 MD&A"), which was included in the ~~2017~~2018 Form 10-K.

Except when otherwise stated, references to each of Edison International, SCE, or Edison Energy Group 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 and "Edison International Parent" mean Edison International on a stand-alone basis, not consolidated with its subsidiaries.

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

MANAGEMENT OVERVIEW

Highlights of Operating Results

Edison International is the parent holding company of SCE and 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 a holding company for ~~subsidiaries~~Edison Energy which is engaged in ~~pursuing~~the competitive business ~~opportunities across~~of providing energy services ~~and managed portfolio solutions~~ to commercial and industrial customers. Edison ~~Energy Group's~~Energy's 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 the information contained in this report relates to both filers.


		Three months ended March 31,									Three months ended March 31,
(in millions)		2018			2017		Change				2019			2018			Change
Net income (loss) attributable to Edison International	Net income (loss) attributable to Edison International									Net income (loss) attributable to Edison International
Continuing operations
SCE		$	286		$	349	$	(63	)		$	293		$	286		$	7
Edison International Parent and Other		(68		)	13		(81		)		(15		)	(68		)	53
Edison International		218			362		(144		)		278			218			60
Less: Non-core items
SCE		—			—		—				72			—			72
Edison International Parent and Other		(44		)	—		(44		)		—			(44		)	44
Total non-core items		(44		)	—		(44		)		72			(44		)	116
Core earnings (losses)
SCE		286			349		(63		)		221			286			(65		)
Edison International Parent and Other		(24		)	13		(37		)		(15		)	(24		)	9
Edison International		$	262		$	362	$	(100	)		$	206		$	262		$	(56	)

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 ~~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 write downs, asset impairments and other gains and losses related to certain tax, regulatory or legal settlements or proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing.

Edison International's first quarter ~~2018~~2019 earnings ~~decreased $144~~increased $60 million from the first quarter of ~~2017, comprised of a decline in SCE's earnings of $63 million and~~2018, resulting from an increase in Edison International Parent and Other's ~~losses~~earnings of ~~$81~~$53 million and an increase in SCE's earnings of $7 million. SCE's earnings consisted of $72 million of higher non-core income and $65 million of lower core earnings. The decrease in core earnings ~~resulted from the impact of the July 2017 cost of capital decision on GRC revenue, higher operation and maintenance~~was primarily due to wildfire mitigation expenses and higher net financing ~~costs.~~costs, partially offset by a 2018 refund to customers for prior overcollections.

Edison International Parent and Other's increase in ~~losses~~earnings for the three months ended March 31, ~~2018~~2019 was primarily due to ~~higher~~lower core losses of ~~$37~~$9 million and ~~higher~~lower non-core losses of $44 million. The ~~increase in~~lower core losses ~~was~~were mainly due to lower ~~income tax benefits related to stock option exercises~~corporate expenses and decreased losses at the ~~impact of Tax Reform on pre-tax losses.~~competitive businesses under Edison Energy Group.

Consolidated non-core items for the first quarter of 2019 and 2018 ~~and 2017~~primarily included:

~~Impairment~~Income tax benefits of $69 million recorded in 2019 for SCE related to changes in the allocation of deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution issued in February 2019. The resolution determined that customers are only entitled to excess deferred taxes which were included when setting rates and other ~~charges~~deferred tax re-measurement belongs to shareholders.

An impairment charge of $66 million ($48 million ~~after tax)~~after-tax) recorded in 2018 for Edison International Parent and Other resulting from an agreement to sell SoCore Energy.

2018 General Rate Case

In February 2018, SCE updated its 2018 GRC application for the impact of Tax Reform resulting in a requested 2018 base rate revenue requirement of $5.534 billion, a decrease of $106 million over the 2017 GRC authorized revenue requirement.

In April 2019, the CPUC issued a 2018 GRC proposed decision, which if adopted, would result in a base rate revenue requirement of $5.102 billion in 2018, a decrease of $432 million from SCE's requested revenue requirement, primarily related to a reduction in authorized rate base, depreciation and operation and maintenance expenses. The proposed decision also identifies changes to certain balancing accounts, including the expansion of the TAMA to include the impacts of all differences between forecast and recorded tax expense. The proposed decision would also disallow certain historical spending, largely related to certain infrastructure replacement programs and corporate real estate.

The CPUC did not issue a decision on the 2018 GRC application during 2018 or during the first quarter of 2019, therefore SCE recognized revenue based on the 2017 authorized revenue requirement, adjusted for items SCE has determined to be probable of occurring, primarily the July 2017 cost of capital decision and Tax Reform. The CPUC has approved the establishment of a GRC memorandum account and the 2018 ~~resulting from~~and 2019 revenue requirements ultimately adopted by the CPUC will be effective as of January 1, 2018 and January 1, 2019, respectively. The proposed decision, if adopted as drafted, would have a significant impact on SCE and Edison ~~International's agreement~~International’s reported results, including a non-core impairment of utility property, plant and equipment of up to sell SoCore Energy to a third party. The net assets of SoCore Energy have been recorded at fair value, less expected transaction costs (see "Results of Operations—Edison International Parent and Other—Strategic Review of Edison Energy Group Competitive Business—Sale of SoCore Energy").

~~Income of $6~~$257 million ($4185 million after-tax) related to disallowed historical capital expenditures and ~~less than $1~~an increase to core earnings of approximately $130 million from application of the decision to revenue, depreciation and income tax expense retroactively for 2018 and the first quarter of 2019.

The proposed decision would allow a post-test year rate making mechanism that escalates capital additions by 2.49% for both 2019 and 2020. It would also allow operation and maintenance expenses to be escalated for 2019 and 2020 through the use of various escalation factors for labor, non-labor and medical expenses. The methodology set forth in the proposed decision would, if adopted by the CPUC, result in a revenue requirement of $5.422 billion in 2019 and $5.823 billion in 2020.

SCE will file comments on the proposed decision in May 2019 and SCE cannot predict when a final decision will be issued. A final decision could result in material changes to the proposed decision.

Capital Program

Total capital expenditures (including accruals) were $856 million and $853 million for the first ~~quarter~~three months of 2019 and 2018, respectively.

SCE's capital expenditure forecast for 2020 has been updated since the filing of the 2018 Form 10-K to reflect planned CPUC jurisdictional spending as informed by the 2018 GRC proposed decision and ~~2017, respectively,~~spending associated with SCE's wildfire mitigation-related capital expenditures under the GS&RP and WMP. The table below includes $346 million and a range of $500 million to $700 million of capital expenditures related to ~~losses (net~~wildfire mitigation for 2019 and 2020, respectively. The CPUC has authorized tracking of ~~distributions) allocated~~costs related to ~~tax equity investors under~~ the ~~HLBV accounting method. Edison International core earnings reflected~~GS&RP and WMP through memorandum accounts. SCE has also proposed a balancing account for its GS&RP spending. If SCE's proposed balancing account in its GS&RP application is approved, forecasted costs for the ~~operating results of~~GS&RP will be included in rates with a subsequent reasonableness review through the ~~solar projects, related financings~~annual ERRA proceeding. On April 29, 2018, the CPUC issued a proposed decision that, if adopted, would approve SCE's 2019 WMP and, among other things, would require SCE to meet certain reporting requirements. SCE continues to evaluate wildfire mitigation spending and anticipates that in 2019 the CPUC will issue decisions on the GS&RP and 2019 WMP. SCE expects to file its 2020 WMP by early 2020. SCE anticipates that wildfire mitigation spending not addressed in balancing accounts will be addressed in future GRC applications or through other regulatory proceedings.

SCE forecasts capital expenditures for 2019 – 2020 to be approximately $8,896 million to $9,096 million. SCE's 2019 – 2020 forecast for major capital expenditures are set forth in the table below:



(in millions)	2019		2020		Total 2019 – 2020
Distribution	$	3,219	$	2,898	$	6,117
Transmission	701		786		1,487
Generation	211		235		446
Subtotal	4,131		3,919		8,050
Estimated wildfire mitigation-related capital expenditures	346		500 – 700		846 – 1,046
Total estimated capital expenditures	$	4,477	$4,419 – $4,619		$8,896 – $9,096

SCE's authorized CPUC-jurisdictional rate base is determined through the GRC and other regulatory proceedings. Differences between actual and CPUC authorized capital expenditures are addressed in subsequent GRC or other regulatory proceedings. FERC-jurisdictional rate base is generally determined based on actual capital expenditures.

Reflected below is SCE's weighted average annual rate base for 2018 – 2020 assuming the CPUC capital expenditures authorized in the 2018 GRC proposed decision are adopted as drafted and the ~~priority return~~expected FERC capital expenditures. The table below does not reflect rate base associated with spending for the GS&RP or other programs which have not yet been approved by the CPUC.



(in millions)	2018		2019		2020
Rate base for expected capital expenditures	$	28,382	$	30,682	$	33,120

A final CPUC decision could result in material changes to the ~~tax equity investor. The losses allocated to~~proposed decision, including the tax equity investor under HLBV accounting method results in income allocated to subsidiaries of Edison International, neither of which is due to the operating performance of the projects but rather due to the allocation of income tax attributes under the tax equity financing. Accordingly, Edison International has included the non-operating allocation of income as a non-core item. For further information on HLBV, see Note 1 of "Notes to Consolidated Financial Statements" includedweighted average annual rate base for 2018 – 2020 set forth in the ~~2017 Form 10-K.~~table above.

Southern California Wildfires and Mudslides

Approximately 35% of SCE's service territory is in areas identified as high fire risk by SCE. Multiple factors have contributed to increased wildfires, faster progression of wildfires and the increased damage from wildfires across SCE's service territory and throughout 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, 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.

In March 2019, the ~~most recent California Department of Forestry~~VCFD and ~~Fire Protection ("Cal Fire") incident information~~CAL FIRE issued separate reports finding that the Thomas Fire ~~burned over 280,000 acres, destroyed an estimated 1,063 structures, damaged an estimated 280 structures~~ and ~~resulted~~the Koenigstein Fire were each caused by SCE equipment. 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 ~~one fatality.~~the Anlauf Canyon area emerging in advance of the start time of the Thomas Fire indicated in the Thomas Fire report, SCE believes that the Thomas Fire started at least 12 minutes prior to any issue involving SCE's system and at least 15 minutes prior to the start time indicated in the report. SCE has previously disclosed that SCE believed its equipment was associated with the ignition of the Koenigstein Fire. SCE is continuing to assess the progression of the Thomas and Koenigstein Fires and the extent of damages that may be attributable to each fire.

~~Determining wildfire origin~~Multiple lawsuits related to the Thomas and ~~cause is often~~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 the Montecito Mudslides based on a ~~complex~~theory that SCE has responsibility for the

Thomas and/or Koenigstein Fires and ~~time-consuming process, and several investigations~~that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides.

SCE's internal review into the facts and circumstances of each of the 2017/2018 Wildfire/Mudslide Events is ongoing, and SCE expects to obtain and review additional information and materials in the possession of third parties during the course ofits internal reviews and the litigation processes. Final determinations of liability for the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire (each a "2017/2018 Wildfire/Mudslide Event," and, collectively, the "2017/2018 Wildfire/Mudslide Events"), including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes.

Even when investigations are ~~believed~~still pending or liability is disputed, an assessment of likely outcomes, including through future settlement of disputed claims, may require a liability to be ~~ongoing.~~accrued under accounting standards. Based on information available to SCE ~~has been advised that the origins~~ and ~~causes~~consideration of the ~~fire are being investigated by Cal Fire and the Ventura County Fire Department. In connection~~risks associated with its investigation of the Thomas Fire, Cal Fire has removed and retained certain of SCE's equipment that was located near suspected ignition points of the fire. The CPUC's SED is also conducting an investigation to assess the compliance of SCE and its facilities with applicable rules and regulations in areas impacted by the Thomas Fire. In addition, as it does in all wildfire matters in which its facilities may or are alleged to be involved, SCE is conducting its own investigation of the Thomas Fire. At this time, SCE cannot predict when its own investigation, or the investigations of Cal Fire, the Ventura County Fire Department or the SED, will be completed.

SCE is aware of multiple lawsuits filed related to the Thomas Fire naming SCE as a defendant. Several of the lawsuits also name Edison International as a defendant. Certain 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 utilities’ facilities were determined to be a substantial cause of a wildfire that caused property damage. Any potential liability for December 2017 Wildfire-related damages will depend on a number of factors, including whether SCE substantially caused, or contributed to, the damages and whether parties seeking recovery of damages will be required to show negligence in addition to causation.

~~Given the preliminary stages of the investigations and the uncertainty as to the causes of the Thomas Fire, and the extent and magnitude of potential damages,~~litigation, Edison International and SCE ~~are currently unable~~expect to ~~predict~~incur a material loss in connection with the ~~outcome~~2017/2018 Wildfire/Mudslide Events and accrued a liability of $4.7 billion in the fourth quarter of 2018. This liability corresponds to the lower end of the ~~claims made against SCE and Edison International or~~ reasonably ~~estimate a~~estimated range of expected potential losses that may be ~~incurred. SCE~~incurred in connection with the 2017/2018 Wildfire/Mudslide Events and ~~Edison International’s potential liability related to the Thomas Fire could be substantial.~~

~~SCE has approximately $1 billion of wildfire-specific insurance coverage,~~is subject to ~~a self-insured retention of $10 million per occurrence, for wildfire-related claims for the period ending on May 31, 2018. SCE also has approximately $300 million of~~change as additional insurance coverage for wildfire-related occurrences for the period from December 31, 2017 to December 31, 2018, which may be used in addition to the $1 billion in wildfire insurance for wildfire events occurring on or after December 31, 2017 and on or before May 31, 2018, and would be available for new wildfire events, if any, occurring after May 31, 2018 and on or before December 30, 2018. Various coverage limitations within the policies that make up SCE's wildfire insurance coverage could result in material self-insured costs in the event of multiple wildfire occurrences during a policy period. Should responsibility for a significant portion of the damages related to the December 2017 Wildfires be attributed to SCE, SCE's insurance may not be sufficient to cover all such damages. In addition, SCE may not be authorized to recover its uninsured damages through electric service rates if, for example, the CPUC finds that the damages were incurred because SCE was not a prudent manager of its facilities.

information becomes available.

Edison International and SCE will seek to offset any actual losses realized in connection with the 2017/2018 Wildfire/Mudslide Events with recoveries from insurance policies in place at the time of the events and, to the extent actual losses exceed insurance, through electric rates. In the fourth quarter of 2018, Edison International and SCE also recorded expected recoveries from insurance of $2.0 billion and expected recoveries through FERC electric rates of $135 million, which is the FERC portion of the $4.7 billion liability it accrued. 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 future wildfire cost-recovery proceedings. 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 CPUC-jurisdictional wildfire-related costs are ~~pursuing~~probable of recovery through electric rates.

Edison International and SCE continue to pursue legislative, regulatory and legal strategies to address the application of a strict liability standard to wildfire-related damages without the ability to recover resulting ~~damages~~costs in electric rates. In April 2019, a strike force formed by California Governor Gavin Newsom released a report entitled Wildfires and Climate Change: California's Energy Future, which sets forth, among other things, guiding principles for potential reform to California policies regarding wildfire liability. While this report recommended that the Commission on Catastrophic Wildfire Cost and Recovery, the California legislature and the strike force continue working to develop a solution for consideration by the Governor and the legislature, Edison International and SCE cannot predict whether or when there will be a comprehensive solution mitigating the significant risk faced by a California investor-owned ~~utility~~utilities related to ~~wildfires will be achieved.~~wildfires.

In April 2019, in addition to other requested increases in CPUC and FERC ROE, SCE requested from both the CPUC and FERC an additional 6% ROE to compensate investors for current wildfire risk. SCE would seek to reduce or remove this additional ROE if there is a material reduction in its wildfire cost recovery risk due to regulatory or legislative reform. For further details, see "Liquidity and Capital Resources—SCE—Regulatory Proceedings—2020 Cost of Capital Application" and "Liquidity and Capital Resources—SCE—Regulatory Proceedings—FERC Formula Rate—2019 FERC Formula Rate."

For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California ~~Wildfires"~~Wildfires and ~~"Legal Proceedings—December 2017 Wildfire Litigation."~~

~~Montecito Mudslides~~

In January 2018, torrential rains in Santa Barbara County produced mudslides and flooding in Montecito and surrounding areas (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 at least 21 fatalities, with two additional fatalities presumed.

Of the lawsuits mentioned above, several allege that SCE has responsibility for the Thomas Fire and that the Thomas Fire proximately caused the Montecito Mudslides, resulting in the plaintiffs' claimed damages. Some of the Montecito Mudslides lawsuits also name Edison International as a defendant. Edison International and SCE are currently unable to predict the outcome of the claims made against SCE and Edison International or reasonably estimate a range of losses that may be incurred. SCE and Edison International's potential liability related to the Montecito Mudslides could be substantial, SCE's insurance may not be sufficient to cover such damages, and SCE may not be authorized to recover any uninsured damages in rates.

~~For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Montecito~~ Mudslides" and "Legal ~~Proceedings—Montecito Mudslides Litigation.~~Proceedings."

~~Permanent Retirement of San Onofre~~

~~Entry into Revised Settlement and Utility Shareholder Agreements~~

As discussed in the year-ended 2017 MD&A, on January 30, 2018, the OII Parties entered into a Revised San Onofre Settlement Agreement in the CPUC OII proceeding regarding the steam generator replacement project at San Onofre and the related outages and subsequent shutdown of San Onofre. If approved by the CPUC, the Revised San Onofre Settlement Agreement will resolve all issues under consideration in the San Onofre OII and will modify the Prior San Onofre Settlement Agreement. If approved by the CPUC, the Revised San Onofre Settlement Agreement will also result in the dismissal of a federal lawsuit currently pending in the Ninth Circuit Court of Appeals challenging the CPUC's authority to permit rate recovery of San Onofre costs. The Revised San Onofre Settlement Agreement was the result of multiple mediation sessions in 2017 and January 2018 and was signed on January 30, 2018 following a settlement conference in the OII, as required under CPUC rules.

Implementation of the terms of the Revised San Onofre Settlement Agreement is subject to the approval of the CPUC, as to which there is no assurance. The OII Parties have agreed to exercise their best efforts to obtain CPUC approval, but there can be no certainty of when or what the CPUC will actually decide.

The San Onofre OII Assigned Commissioner and Assigned ALJ have issued joint rulings that, among other things, (i) direct the parties to submit joint testimony to the CPUC in support of the Revised San Onofre Settlement Agreement on April 27, 2018; (ii) direct all parties to submit briefing on whether an attorneys' fees provision in a related settlement agreement pertaining to the dismissal of a federal lawsuit challenging the Prior San Onofre Settlement Agreement impacts the integrity of the CPUC's intervenor compensation program; and (iii) schedule a public participation hearing and a status conference. In lieu of the joint testimony, with the ALJ's consent, the parties submitted a joint stipulation of facts in support of the Revised San Onofre Settlement Agreement on April 27, 2018.

~~Capital Program~~

Total capital expenditures (including accruals) were $853 million and $647 million for the first three months of 2018 and 2017, respectively. SCE's first quarter capital spending was consistent with its 2018 plan and SCE continues to project 2018 capital expenditures of approximately $4.2 billion for 2018. As discussed in the year-ended 2017 MD&A in the absence of a 2018 GRC decision, SCE has developed, and is executing against, a 2018 capital expenditure plan that will allow SCE to ramp up its capital spending program over the three-year GRC period to meet what is ultimately authorized in the 2018 GRC decision while minimizing the associated risk of unauthorized spending. Forecasted expenditures for capital projects are subject to change due to, among other things, timeliness of permitting, licensing, regulatory approvals, and contractor bids. For further information regarding the capital program see "Liquidity and Capital Resources—SCE—Capital Investment Plan" and the year-ended 2017 MD&A, "Management Overview—Capital Program."

~~Distribution Grid Development~~

~~Transportation Electrification Plan~~

In January 2017, SCE filed a transportation electrification plan with the CPUC to accelerate the adoption of electric transportation, which is critical to California's climate change and GHG reduction objectives. The plan proposes a five-year program to fund medium- and heavy-duty vehicle charging infrastructure that follows the model developed for SCE's Charge Ready program. The proposal has an estimated five-year cost of $554 million ($532 million capital) in 2016 dollars. In March 2018, the CPUC issued a proposed decision granting SCE $208 million in 2016 dollars to install the charging infrastructure at a minimum of 700 sites to support the electrification of at least 6,500 medium-and-heavy-duty electric vehicles. If adopted as proposed, the decision will allow customers the option to own the charging infrastructure, which would reduce the costs it can attribute to capital spending. SCE has filed comments on the proposed decision opposing treating customer-owned charging infrastructure as an expense and advocating to remove minimum site requirements based on incorrect cost estimates. SCE expects a final decision in the second quarter of 2018. SCE plans to propose additional programs and pilots in the future. The capital costs for these proposed projects are not included in SCE's capital spending and rate base forecasts.

~~2018 General Rate Case~~

As discussed in the year-end 2017 MD&A, in December 2017 SCE filed an update in the GRC proceedings for the three-year period 2018 – 2020. SCE updated its 2018 revenue requirement request from $5.885 billion to $5.673 billion, a $33 million increase over the 2017 GRC authorized revenue requirement, and proposed post-test year increases in 2019 and 2020 of $477 million and $554 million, respectively. In February 2018, SCE further updated its request to incorporate the changes associated with Tax Reform, which resulted in a revenue requirement request of $5.534 billion, a decrease of $139 million from the December update filing and a $106 million decrease from the 2017 GRC authorized revenue requirement. SCE proposed post-test year increases in 2019 and 2020 of $292 million and $319 million, respectively, decreases from the December update filing of $185 million and $235 million, respectively.

A final 2018 GRC decision is not expected until later in 2018. Until a GRC decision is issued, SCE is recognizing revenue in 2018 based on the 2017 authorized revenue requirement, adjusted for the July 2017 cost of capital decision and Tax Reform. The CPUC has approved the establishment of a GRC memorandum account, which will make the 2018 revenue requirement adopted by the CPUC effective as of January 1, 2018. SCE cannot predict the revenue requirement the CPUC will authorize or provide assurance on the timing of a final decision.

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~~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. 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, ~~2018~~2019 versus March 31, ~~2017~~2018


	Three months ended March 31, 2018									Three months ended March 31, 2017									Three months ended March 31, 2019									Three months ended March 31, 2018
(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	$	1,513		$	1,041		$	2,554		$	1,552		$	904		$	2,456		$	1,550		$	1,266		$	2,816		$	1,513		$	1,041		$	2,554
Purchased power and fuel	—			926			926			—			784			784			—			1,005			1,005			—			926			926
Operation and maintenance¹	509			142			651			450			130			580
Operation and maintenance																			589			280			869			509			142			651
Depreciation and amortization	459			—			459			497			—			497			480			—			480			459			—			459
Property and other taxes	105			—			105			97			—			97			109			—			109			105			—			105
Impairment and other																			(4		)	—			(4		)	—			—			—
Other operating income	(1		)	—			(1		)	—			—			—			(1		)	—			(1		)	(1		)	—			(1		)
Total operating expenses	1,072			1,068			2,140			1,044			914			1,958			1,173			1,285			2,458			1,072			1,068			2,140
Operating income	441			(27		)	414			508			(10		)	498			377			(19		)	358			441			(27		)	414
Interest expense	(155		)	—			(155		)	(141		)	—			(141		)	(178		)	—			(178		)	(155		)	—			(155		)
Other income and expenses¹	24			27			51			25			10			35
Other income and expense																			19			19			38			24			27			51
Income before income taxes	310			—			310			392			—			392			218			—			218			310			—			310
Income tax expense (benefits)	(6		)	—			(6		)	12			—			12
Income tax benefit																			(105		)	—			(105		)	(6		)	—			(6		)
Net income	316			—			316			380			—			380			323			—			323			316			—			316
Preferred and preference stock dividend requirements	30			—			30			31			—			31			30			—			30			30			—			30
Net income available for common stock	$	286		$	—		$	286		$	349		$	—		$	349		$	293		$	—		$	293		$	286		$	—		$	286
Net income available for common stock							$	286								$	349								$	293								$	286
Less:
Non-core earnings							—									—
Core earnings²							$	286								$	349
Less: Non-core earnings																									72									—
Core earnings¹																									$	221								$	286


¹	Expenses for the three months ended March 31, 2017 were updated to reflect the implementation of the accounting standard update for net periodic benefit costs related to the defined benefit pension and other postretirement plans.~~For further information, see Note 1 in the "Notes to Consolidated Financial Statements."~~


²	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~~Higher operating revenue of ~~$39~~$37 million primarily due to the following:

~~A decrease~~An increase of ~~$36~~$26 million in CPUC revenue primarily related to recognizing revenue based on the 2017 authorized revenue requirement, adjusted for the July 2017 cost of capital decision and the impact of Tax Reform. See "Management Overview—2018 General Rate Case" for further information.

~~A decrease in FERC revenue of $15~~a $16 million ~~primarily due to the reduction in the federal corporate income tax rate resulting from Tax Reform.~~

A decrease in revenue of $10 million related to $18 million resulting from the amortization of excess deferred tax assets as a result of Tax Reform (offset in income taxes below) partially offset by $8 million of lower 2018 incremental tax benefits refundedrefund to customers ~~(offset~~ in ~~income taxes below). See the year-end 2017 MD&A, "Management Overview—Tax Reform"~~2018 for ~~further information.~~

In 2017, revenue related to San Onofre were reduced by $22 million, resulting from a $65 million reduction related to the tax abandonment of San Onofre (offset in income taxes below) partially offset by revenue of $43prior overcollections and $6 million related to the ~~recovery~~incremental return on rate base recorded through the pole loading balancing account.

An increase of ~~amortization of the San Onofre regulatory asset~~$11 million in FERC revenue primarily due to higher operating costs subject to balancing account treatment (offset in operation and ~~authorized return as provided by the Prior San Onofre Settlement Agreement. There is no revenue recorded in 2018 for San Onofre as a result of the Revised San~~

~~Onofre Settlement Agreement (see "Management Overview—Permanent Retirement of San Onofre" for further information)~~maintenance expenses and interest expense below).

Higher operation and maintenance costs of ~~$59~~$80 million primarily due to wildfire mitigation costs, including enhanced overhead inspections, and other preventative maintenance costs.

Higher depreciation and amortization expense of $21 million primarily related to transmission and distribution investments.

Higher interest expense of $23 million primarily due to increased borrowings and higher interest on balancing account overcollections.

Lower other income and expense of $5 million primarily due to lower AFUDC equity income.

Higher income tax benefits of $99 million primarily due to higher ~~insurance premiums associated with additional wildfire insurance coverage entered into in December 2017, higher transmission and distribution costs for line clearing and other maintenance expenses.~~

~~Lower depreciation and amortization expense~~non-core income tax benefits of ~~$38~~$69 million ~~primarily~~ related to changes in the ~~amortization~~allocation of ~~the San Onofre regulatory asset in 2017 (offset in revenue above)~~deferred tax re-measurement between customers and ~~lower intangible plant amortization.~~

~~Higher property~~shareholders and ~~other taxes of $8 million primarily due to higher assessed values for property taxes in 2018.~~

~~Higher interest expense of $14 million primarily due to increased borrowings.~~

~~Lower income tax expense of $18 million primarily due to~~ lower pre-tax income, for the first quarter of 2018 at a lower federal income tax rate partially offset by higher tax benefits in 2017 primarily related to the ratemaking treatment on the San Onofre tax abandonment. In addition, SCE had lower tax benefits refunded to customers in 2018 offset by tax benefits from the amortization of excess deferred tax assets as a result of Tax Reform (offset in revenue above). See the year-end 2017 MD&A, "Management Overview—Tax Reform" for further information.excluding non-core items.

Cost-Recovery Activities

Cost-recovery activities were primarily affected by the following:

Higher purchased power and fuel costs of ~~$142~~$79 million primarily driven by higher power and gas prices, lower congestion revenue right credits and ~~volume experienced in 2018 relative to 2017,~~higher charges from contract amendments, partially offset by lower load related to cooler weather and higher ~~congestion revenue right credits.~~realized gains on hedging activities.

Higher operation and maintenance ~~expense~~costs of ~~$12~~$138 million primarily driven by the authorization to recover 2018 wildfire insurance costs that had been deferred as regulatory assets and higher ~~transmission access charges, partially offset by lower~~ spending on various public purpose ~~programs.~~programs and transmission access charges.

~~Higher~~Lower other income and ~~expenses~~expense of ~~$17~~$8 million primarily driven by ~~higher~~lower net periodic benefit income -related to the non-service cost components ~~in 2018 relative to 2017.~~for SCE's other post-retirement benefit plans. See "Notes to Consolidated Financial Statements—Note 9. Compensation and Benefit Plans" for further information.

Supplemental Operating Revenue Information

SCE's retail billed and unbilled revenue (excluding wholesale sales) was ~~$2.4~~$2.6 billion and ~~$2.3~~$2.4 billion for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

~~Retail billed~~The 2019 revenue increase is primarily related to higher cost-recovery activities related to 2018 wildfire insurance costs and ~~unbilled~~higher purchased power and fuel costs driven by higher power and gas prices, lower congestion revenue right credits and higher charges from contract amendments, partially offset by lower load related to cooler weather. See "—Cost-Recovery Activities" for ~~the three months ended March 31, 2018 was higher compared to the same period in 2017 primarily due to the implementation of the 2018 ERRA rate increase.~~further details.

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 2017 Form 10-K).~~sales.

Income Taxes

SCE's income tax ~~expense decreased~~benefit increased by ~~$18~~$99 million for the three months ended March 31, ~~2018~~2019 compared to the same ~~periods~~period in ~~2017.~~2018.

The effective tax rates were ~~(1.9)~~(48.2)% and ~~3.1%~~(1.9)% for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. SCE's effective tax rate is below the federal statutory rate of 21% ~~and 35% for the three months ended March 31, 2018 and 2017, respectively,~~ 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 ~~for the three months ended March 31, 2018 was~~is primarily due to ~~lower pre-tax income at~~the change in the allocation of excess deferred tax re-measurement between customers and shareholders as a ~~lower federal tax rate partially offset by higher tax benefits~~result of a CPUC resolution issued in ~~2017 primarily related to the ratemaking treatment on the San Onofre tax abandonment.~~February 2019.

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 Edison International subsidiaries that are not significant as a reportable segment, as well as intercompany eliminations.

~~Strategic Review of Edison Energy Group Competitive Businesses~~

~~Sale of SoCore Energy~~

On February 28, 2018, Edison International agreed to sell SoCore Energy LLC ("SoCore Energy"), a then subsidiary of Edison Energy Group, to a third party, subject to the completion of closing conditions, which were subsequently satisfied on April 16, 2018. As a result, Edison International accounted for the assets and liabilities of SoCore Energy as held for sale as of March 31, 2018 and recognized a pre-tax loss of $66 million ($48 million after-tax). See "Notes to Consolidated Financial Statements—Note 10. Investments" for further information.

Income from Continuing Operations

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


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
Edison Energy Group and subsidiaries¹	$	(52	)	$	(6	)
Edison Energy Group and subsidiaries							$	(3	)	$	(52	)
Corporate expenses and other subsidiaries	(16		)	19			(12		)	(16		)
Total Edison International Parent and Other	$	(68	)	$	13		$	(15	)	$	(68	)


¹	~~Includes income~~of $4 million and less than $1 million for the three months ended March 31, 2018 and 2017, respectively, related to losses (net of distributions) allocated to tax equity investors under the HLBV accounting method.

The loss from continuing operations of Edison International Parent and Other ~~was $68~~decreased $53 million for the three months ended March 31, ~~2018~~2019 compared to ~~income of $13 million for~~ the same period in ~~2017. The increase in loss was~~2018 primarily due to ~~a $48 million~~the absence of an after-tax impairment charge ~~that resulted~~of $48 million resulting from ~~the sale of~~an agreement to sell SoCore Energy ~~(as discussed above),~~and lower ~~income tax benefits of $35 million related to stock option exercises, and the impact of Tax Reform on pre-tax losses.~~corporate expenses.

LIQUIDITY AND CAPITAL RESOURCES

~~Southern California Edison Company~~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, ~~and any~~ dividend payments to and equity contributions from Edison International, ~~and~~obligations to preferred and preference shareholders, and the outcome of tax and regulatory matters.

In the next 12 months, SCE expects to fund its cash requirements through operating cash flows, ~~tax benefits, and~~ capital market financings, ~~of debt~~ and ~~preferred~~ equity contributions from Edison International, as needed. SCE also has availability under its credit facility to fund cash requirements.

SCE's long-term issuer credit ratings remain at investment grade levels after downgrade actions taken by the major credit agencies in March 2019. The following table summarizes SCE's current, long-term issuer credit ratings and outlook from the major credit rating agencies:



	Moody's	Fitch	S&P
Credit Rating	Baa2	BBB-	BBB
Outlook	Negative	Watch Negative	Watch Negative

SCE's credit ratings may be further affected by the ultimate outcome of pending enforcement and litigation matters, including the outcome of the uncertainties and potential liabilities associated with the 2017/2018 Wildfire/Mudslide Events, and the reform of policies allocating liability to investor-owned utilities for damages caused by catastrophic wildfires substantially caused by utility equipment. 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 require SCE to pay related liabilities or post additional collateral if SCE's credit rating were to fall below investment grade rating from the major credit rating agencies. Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade is $14 million as of March 31, 2019. In addition, if SCE's credit rating falls below investment grade, it may 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. For further details, see "— Margin and Collateral Deposits."

Available Liquidity

At March 31, ~~2018,~~2019, SCE had approximately ~~$2.58~~$2.8 billion available under its ~~$2.75~~$3.0 billion credit facility. The credit facility is available for borrowing needs until ~~July 2022. In March 2018,~~May 2023 and contains two 1-year extension options. SCE borrowed $750 million under a term loan in February 2019 and issued ~~$1.25~~$1.1 billion of first and refunding mortgage ~~bonds.~~bonds in March 2019. The proceeds from ~~these bonds~~the term loan and the March 2019 bond issuances were used to repay commercial paper borrowings and for general corporate purposes. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

In April 2019, Edison International contributed $750 million to SCE, which SCE used to repay its February 2019 term loan discussed above.

SCE may finance balancing account undercollections and working capital requirements to support operations and capital expenditures with commercial paper, its credit facility or other borrowings, subject to availability in the bank and capital markets. As necessary, SCE will utilize its available liquidity, capital market financings, ~~of debt and preferred equity~~other borrowings or parent company contributions to SCE equity in order to meet its obligations as they become due, including any potential costs related to the ~~December 2017 Wildfires and Montecito Mudslides~~2017/2018 Wildfire/Mudslide Events (see "Management Overview—Southern California ~~Wildfires"~~Wildfires and ~~"—Montecito~~ Mudslides" for further information).

Debt Covenant

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, ~~2018,~~2019, SCE's debt to total capitalization ratio was ~~0.45~~0.52 to 1.

At March 31, ~~2018,~~2019, 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 2017 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 2017 MD&A.

Major Transmission Projects

~~Alberhill System~~Eldorado-Lugo-Mohave Upgrade

The Alberhill System Project would consist 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 unincorporated and incorporated portions of western Riverside County. The Project was designed to meet long-term forecasted electrical demand in the proposed Alberhill Project area and to increase electrical system reliability. In April ~~2018, the CPUC issued a proposed decision denying SCE’s request~~2019, SCE filed an amended application for a certificate of public convenience and necessity ~~based~~with the CPUC, which included total project costs of $257 million, an increase of $24 million to the previous estimate.

Regulatory Proceedings

2020 Cost of Capital Application

In April 2019, SCE filed its application with the CPUC for authority to establish its authorized cost of capital for utility operations for a three-year term, beginning January 1, 2020. In its application, SCE seeks a return on common equity of 10.60% for 2020 ("CPUC Base ROE"), compared to its current CPUC ROE of 10.30%. In addition to this CPUC Base ROE, SCE seeks an additional ROE of 6% to compensate investors for current wildfire risk ("CPUC Wildfire Risk ROE"). SCE would seek to reduce or remove this CPUC Wildfire Risk ROE if there is a material reduction in its wildfire cost recovery risk due to regulatory or legislative reform.

SCE also seeks to modify its current capital structure to increase the ~~presiding administrative law judge's conclusion that the Alberhill System Project~~common equity component of its capital structure from its current authorized level of 48% to 52% in 2020 and correspondingly reduce its preferred equity from 9% to 5%. If this change is not ~~needed.~~approved, SCE ~~continues~~seeks a higher CPUC Base ROE of 10.9% to ~~believe~~account for the ~~Alberhill System Project is needed~~increased leverage. SCE does not propose to ~~serve forecasted local area demand~~change its currently authorized level of long-term debt of 43%. In the application, SCE projects a cost of long-term debt of 4.74% and ~~to increase operating flexibility. SCE has filed comments requesting~~an embedded cost of preferred equity of 5.70% and requests that the CPUC ~~deny~~authorize these costs for 2020. Based on the capital structure and cost factors discussed above, SCE proposes a weighted average return on rate base of 10.96% for 2020.

SCE proposes to maintain the current Cost of Capital Mechanism ("CCM"), which provides for an automatic modification of ROE, long-term debt and preferred equity costs in intervening years based on fluctuations in interest rates. In its application, SCE proposes to change the CCM so that it only applies to CPUC Base ROE, not to the CPUC Wildfire Risk ROE.

Assuming that the revenue requirement in SCE's pending 2018 GRC request, including the proposed ~~decision~~post-test year ratemaking mechanism, is adopted, SCE's proposed cost of capital and capital structure will result in a projected revenue requirement increase in 2020 of approximately $1.2 billion from revenue currently included in electric rates of $11.1 billion.

FERC Formula Rate

2018 Formula Rate

The formula rate that SCE filed in 2017, with a January 1, 2018 effective date, is still pending resolution and is currently in settlement discussions. As a result, SCE's 2018 FERC rates remain subject to refund.

2019 Formula Rate

In April 2019, SCE filed an application with FERC to amend the formula rate associated with its transmission facilities in 2019. In the revised formula rate, SCE seeks a base return on equity of 17.12% ("FERC Base ROE"), compared to its proposed base ROE of 10.30% for its 2018 formula rate. The requested FERC Base ROE reflects a conventional ROE of 11.12% and an additional ROE of 6% to compensate investors for current wildfire risk. SCE would seek to reduce or remove the additional wildfire risk ROE if there is a material reduction in its wildfire cost recovery risk due to regulatory or legislative reform. SCE's total ROE request, inclusive of project incentives and a 0.5% incentive for CAISO participation, is approximately 18.4%.

If the new formula rate is accepted by FERC, it will supersede the existing formula rate, including the 2019 annual update, and could become effective as ~~currently proposed~~early as 60 days from the filing date. FERC has the authority to, and ~~instead grant~~may, suspend new rates for up to five months. If the ~~certificate of public convenience and necessity for~~new formula rate is suspended by FERC, the ~~Alberhill System Project. A final CPUC decision is anticipated~~2019 transmission revenue requirement rate established in ~~2018. SCE is unable~~the 2019 annual update will continue to ~~predict~~be effective, subject to refund, from January 1, 2019 until the ~~outcome of this matter.~~

~~Approximately 48%~~end of the ~~Alberhill System Project costs spent to date~~suspension of the new formula rate. The new formula rate would likely be subject to ~~recovery through CPUC revenue and 52% through FERC revenue. In October 2017, SCE obtained approval~~refund 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 $39 million of capital expenditures, including overhead costs, as of March 31, 2018, of which $29 million may not be recoverable if the project is cancelled. SCE's total capital expenditures for the Alberhill System Project are estimated to be $486 million, of which approximately $175 million is included in the 2018 – 2020 capital program period.

~~Riverside Transmission Reliability~~

~~The Riverside Transmission Reliability Project is a joint project between SCE and Riverside Public Utilities (RPU), the municipal utility department~~end of the ~~City of Riverside. While RPU would be responsible for constructing some of~~suspension until it is ultimately approved by FERC.

If the ~~Project's facilities within Riverside,~~revised formula rate becomes effective on June 12, 2019 (the effective date requested by SCE), SCE's ~~portion of the Project consists of constructing upgrades~~proposed revisions to its ~~system, including~~formula rate will result in a ~~new 230-kV Substation; certain interconnection and telecommunication facilities and~~projected increase in its retail base transmission ~~lines~~revenue requirement in 2019 of approximately $290 million from the ~~cities~~currently effective retail base transmission revenue requirement of Riverside, Jurupa Valley and Norco and in portions of unincorporated Riverside County. The purpose of the Project is to provide RPU and its customers with adequate transmission capacity to serve existing and projected load, to provide for long-term system capacity for load growth, and to provide needed system reliability. 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. In April 2018, the CPUC issued a subsequent environmental impact report which included a new route alternative, different from SCE’s proposed project, as the environmentally preferred project and proposed an additional 220-kV underground power line. SCE is assessing the potential cost impacts of the new route alternative and underground power line. SCE expects a CPUC decision in late 2018 or early 2019.approximately $1 billion.

~~Dividend Restrictions~~SCE Dividends

~~On January 31, 2018,~~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 ~~paid~~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 ~~a dividend of $212 million that was declared during~~and SCE. In addition, the ~~fourth quarter of 2017. On February 22, 2018, SCE declared a dividend to Edison International of $212 million that will be paid in the second quarter of 2018.~~

~~The~~ CPUC regulates SCE's capital structure which limits the dividends it may pay ~~Edison International.~~to its shareholders. Under SCE's interpretation of CPUC regulations, ~~SCE may make distributions to Edison International as long as~~ the common equity component of SCE's capital structure ~~remains~~must remain at or above 48% on a ~~13-month~~ weighted average basis ~~or otherwise satisfies~~over the 37-month period that SCE's capital structure is in effect for ratemaking purposes.

Under SCE's interpretation of the CPUC's capital structure decisions, SCE is required to file an application for a waiver of the 48% equity ratio condition discussed above if an adverse financial event reduces its spot equity ratio below 47%. On February 28, 2019, SCE submitted an application to the CPUC ~~requirements. If~~for waiver of compliance with this equity ratio

requirement, describing that while the ~~Revised San Onofre Settlement Agreement~~charge accrued in connection with the 2017/2018 Wildfire/Mudslide Events caused its equity ratio to fall below 47% on a spot basis as of December 31, 2018, SCE remains in compliance with the 48% equity ratio over the applicable 37-month average basis. In its application, SCE requested a limited waiver to exclude wildfire-related charges and wildfire-related debt issuances from its equity ratio calculations until a determination regarding cost recovery is ~~approved by~~made. Under the ~~CPUC,~~CPUC's rules, SCE ~~may exclude the $448 million after-tax charge~~

~~resulting from the implementation~~will not be deemed to be in violation of the ~~Revised San Onofre Settlement Agreement from its ratemaking capital structure (see~~equity ratio requirement, and therefore may continue to issue debt and dividends, while the waiver application is pending resolution. For further information, see "Notes to Consolidated Financial Statements—Note 12. ~~Commitment~~Commitments and ~~Contingencies" for further information on the Revised San Onofre Settlement Agreement).~~Contingencies—Contingencies—Southern California Wildfires and Mudslides." At March 31, ~~2018,~~2019, without excluding the ~~$448 million~~$1.8 billion after-tax wildfire related charge incurred in 2018, SCE's ~~13-month~~37-month average common equity component of total capitalization was ~~49.7%~~49.3% and the maximum additional dividend that SCE could pay to Edison International under this limitation was ~~approximately $446~~$356 million, resulting in a restriction on net assets of approximately ~~$14.3~~$13.5 billion. If the ~~Revised San Onofre Settlement Agreement~~waiver had been approved by ~~the~~ CPUC at March 31, ~~2018,~~

2019, SCE's 37-month average common equity component of total capitalization would have been 49.7%. In its 2020 cost of capital application filed in April 2019, SCE seeks to modify its current capital structure to increase the common equity component of ~~SCE's~~its capital structure ~~would have been 50.0% on a 13-month average basis.~~from its current authorized level of 48% to 52% in 2020. For further details, see "—Regulatory Proceedings—2020 Cost of Capital Application" above.

As a California corporation, SCE's ability to pay dividends is also governed by ~~its obligations under~~ 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 that the California law requirements for the declarations are met.

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 the ~~December 2017 Wildfires or the Montecito Mudslides~~2017/2018 Wildfire/Mudslide Events and is unable to recover such costs through insurance or from customers or access capital markets on reasonable terms, SCE may be limited in its ability to pay future dividends to Edison international and its preferred and preference shareholders.

Margin and Collateral Deposits

Certain derivative instruments, power 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 March 31, ~~2018,~~2019 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~~obligations, and the impact of ~~the power procurement 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~~ratings falling below investment ~~grade, SCE may be required to pay the liability or post additional collateral.~~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 March 31, ~~2018.~~2019.

(in millions)
Collateral posted as of March 31, 2018¹
$ 106
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade 36
Incremental collateral requirements for power procurement contracts resulting from adverse market price movement²
1
Posted and potential collateral requirements $ 143



(in millions)
Collateral posted¹	$	222
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade²	14
Incremental collateral requirements for power procurement contracts resulting from adverse market price movement³	10
Posted and potential collateral requirements	$	246

¹Net collateral provided to counterparties and other brokers consisted of ~~$105~~$211 million in letters of credit and surety bonds and $1$11 million of ~~cash.~~cash reflected in "Other current assets" on the consolidated balance sheets.


²	If SCE's credit rating falls below investment grade, it 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.


³	Incremental collateral requirements were based on potential changes in SCE's forward positions as of March 31, ~~2018~~2019 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

In the next 12 months, Edison International expects to fund its net cash requirements through ~~operating cash flows, tax benefits~~capital market and bank financings, including by issuing additional debt and ~~capital market financings,~~equity, as needed.

In April 2019, Edison International registered additional shares of its common stock with the SEC. Edison International anticipates issuing up to $1.5 billion of registered shares of common stock, including through designated broker-dealers at prevailing market prices (an at-the-market offering), and anticipates using the proceeds for equity contributions to SCE and for general corporate and working capital purposes. Also, in April 2019, Edison International entered into a $1.0 billion term loan. Of the proceeds of the term loan, $750 million was contributed to SCE and the remainder of the proceeds will be used for general corporate and working capital purposes. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements." Edison International believes that these contributions will enable SCE to increase the

common equity component of its capital structure to 52% in 2020 as proposed in SCE's Cost of Capital application filed with the CPUC in April 2019.

Edison International also has availability under its credit facility. At March 31, 2019, Edison International Parent had approximately $1.3 billion available under its $1.5 billion credit facility. The credit facility is available for borrowing needs until May 2023 and contains two 1-year extension options. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

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 ~~access to the bank and capital markets. In addition to having sufficient liquidity, Edison International's~~ ability to ~~pay dividends is dependent upon meeting~~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—~~Dividend Restrictions.~~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 may ~~also~~ finance common stock dividends, working capital

requirements, payment of obligations, and capital investments, including capital contributions to subsidiaries, ~~and any common stock dividends~~ with short-term or other financings, subject to availability in the bank and capital markets.

As a result of the expected sale of SoCore Energy, Edison Energy Group made several distributions to Edison International Parent including dividend payments of $55 million in the first quarter of 2018 and dividend payments of $46 million in April 2018. For further information, see "Notes to Consolidated Financial Statements—Note 10. Investments."

At March 31, 2018, Edison International Parent had approximately $58 million of cash and cash equivalents and $1.25 billion available of net borrowing capacity under its $1.25 billion multi-year revolving credit facility. The credit facility is available for borrowing needs until July 2022. In January 2018, Edison International Parent issued a $500 million term loan. In March 2018, Edison International Parent issued $550 million of 4.125% senior notes. The proceeds from the March 2018 issuance were used to repay the $500 million term loan discussed above and for general corporate purposes. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

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~~0.70 to 1. At March 31, ~~2018,~~2019, Edison International Parent's consolidated debt to total capitalization ratio was ~~0.50~~0.57 to 1.

At March 31, ~~2018,~~2019, Edison International Parent was ~~also~~ in compliance with all ~~other~~ financial covenants that affect access to capital.

Edison International Parent's long-term issuer credit ratings remain at investment grade levels after downgrade actions taken by the major credit rating agencies in March 2019. The following table summarizes Edison International Parent's current long-term issuer credit ratings and outlook from the major credit rating agencies:



	Moody's	Fitch	S&P
Credit Rating	Baa3	BBB-	BBB
Outlook	Negative	Watch Negative	Watch Negative

Edison International Parent's credit ratings may be further affected by the ultimate outcome of pending enforcement and litigation matters, including the outcome of the uncertainties and potential liabilities associated with the 2017/2018 Wildfire/Mudslide Events, and the reform of policies allocating liability to investor-owned utilities for damages caused by catastrophic wildfires substantially caused by utility equipment. 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.

Historical Cash Flows

~~Southern California Edison Company~~SCE


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017¹			2019			2018
Net cash provided by operating activities	$	801		$	936		$	247		$	801
Net cash (used in) provided by financing activities	(216		)	56
Net cash provided by (used in) financing activities							1,063			(216		)
Net cash used in investing activities	(1,085		)	(931		)	(986		)	(1,085		)
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(500	)	$	61
Net increase (decrease) in cash, cash equivalents and restricted cash							$	324		$	(500	)


¹	~~Net cash for the three months ended March 31, 2017 was updated to reflect the implementation of the accounting standards updates for cash flows related to cash receipts and restricted cash.~~

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 months ended March 31, ~~2018~~2019 and ~~2017.~~2018.


	Three months ended March 31,						Change in cash flows			Three months ended March 31,						Change in cash flows
(in millions)	2018			2017⁴			2018/2017			2019			2018			2019/2018
Net income	$	316		$	380					$	323		$	316
Non-cash items¹	465			728						370			465
Subtotal	$	781		$	1,108		$	(327	)	$	693		$	781		$	(88	)
Changes in cash flow resulting from working capital²	(354		)	(165		)	(189		)	(271		)	(354		)	83
Regulatory assets and liabilities	405			129			276			(96		)	405			(501		)
Other noncurrent assets and liabilities³	(31		)	(136		)	105			(79		)	(31		)	(48		)
Net cash provided by operating activities	$	801		$	936		$	(135	)	$	247		$	801		$	(554	)


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


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

³Includes the nuclear decommissioning trusts. See "Nuclear Decommissioning Activities" below for further information.


⁴	~~Cash flow for the three months ended March 31, 2017 was updated to reflect the implementation of the accounting standards updates for cash flows related to cash receipts and restricted cash.~~

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

Net income and non-cash items decreased in ~~2018~~2019 by ~~$64~~$88 million primarily due to ~~the impact of the July 2017 cost of capital decision on GRC revenue, higher operation and maintenance~~wildfire mitigation expenses and higher net financing ~~costs. During the first three months of~~costs, partially offset by a 2018 ~~the amounts billed~~refund to customers ~~was based on the 2017 authorized GRC revenue requirement and therefore, a regulatory liability (see below) has been established to record any associated adjustments.~~for prior overcollections.

Net cash for working capital was ~~$(354)~~$(271) million and ~~$(165)~~$(354) million during the three months ended March 31, 2019 and 2018, ~~and 2017,~~ respectively. Net cash for working capital in 2019 was primarily impacted by insurance premium payments of $413 million for wildfire-related coverage. The net cash for each period was primarily related to the reductions of payables (including payments for payroll-related costs and purchased power) of $235 million and $230 million during the first quarters of 2018 and 2017, respectively, andalso impacted by changes in receivables from customers of $32 million and $(222) million in 2019 and 2018, ~~and $133 million in 2017.~~respectively.

Net cash provided by regulatory assets and liabilities, including changes in ~~over (under) collections~~overcollections of balancing accounts was ~~$405~~$(96) million and ~~$129~~$405 million during the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, 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:

2019

BRRBA overcollections decreased by $346 million primarily due to a $163 million reclassification from the pole loading balancing account to BRRBA to recover 2017 undercollections, authorization to recover $107 million of premiums related to a wildfire insurance policy purchased in 2017, lower sales than forecasted in rates and a refund of prior TAMA overcollections.

Net undercollections for ERRA and the new system generation program were $831 million and $741 million at March 31, 2019 and December 31, 2018, respectively. Net undercollections increased $90 million primarily due to higher than forecasted power and gas prices experienced in 2019, partially offset by an increase in cash due to recovery of prior ERRA undercollections.

Net overcollections for TAMA and pole loading balancing account were $128 million at March 31, 2019 compared to net undercollections of $28 million at December 31, 2018. Net overcollections increased by $156 million primarily due to a $163 million reclassification from the pole loading balancing account to BRRBA as discussed above.

Higher cash due to $104 million of overcollections for the public purpose and energy efficiency programs resulting from lower program spending.

Higher cash from increased regulatory liabilities of approximately $90 million primarily due to the delay in the 2018 GRC decision. Amounts billed to customers during first three months of 2019 were based on the 2017 authorized GRC revenue requirement, however, the amount of revenue recognized has been adjusted mainly for the July 2017 cost of capital decision and Tax Reform pending the outcome of the 2018 GRC and therefore, a regulatory liability has been established to record any associated adjustments.

2018

Higher cash due to $143 million of overcollections for the public purpose and energy efficiency programs resulting from lower program spending.

BRRBA overcollections increased by $122 million during the first three months of 2018 primarily due to the timing of revenue, partially offset by ~~the~~a refund of 2016 ~~TAMA overcollections.~~incremental tax benefits.

Higher cash of $42 million due to cash collected for San Onofre under the Prior San Onofre Settlement Agreement. ~~For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Permanent Retirement of San Onofre."~~

Higher cash reflected in regulatory liabilities of approximately $90 million primarily due to the delay in the 2018 GRC decision. ~~Until a final 2018 GRC decision is issued, SCE recognized revenue for the first quarter of 2018 largely based on the 2017 authorized revenue requirement (see discussion above).~~

~~2017~~

Higher cash due to $64 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.

Higher cash due to realization of $47 million in proceeds from the MHI arbitration. For further information on the MHI claims, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Permanent Retirement of San Onofre."

BRRBA overcollections decreased by $66 million during the first three months of 2017 primarily due to the refund of 2015 overcollections resulting from the implementation of the 2015 GRC decision, which was authorized to be refunded to customers over a two-year period.

Higher cash of approximately $84 million primarily due to lower spending for the new system generation program, which records the benefits and costs of power purchase agreements and SCE-owned peaker generation units associated with new generation resources.

Cash flows used in other noncurrent assets and liabilities were primarily related to net earnings from nuclear decommissioning trust investments ($3027 million and ~~$27~~$30 million in ~~2018~~2019 and ~~2017,~~2018, respectively) and SCE's payments of decommissioning costs ($4173 million and ~~$45~~$41 million in ~~2018~~2019 and ~~2017,~~2018, respectively). See "Nuclear Decommissioning Activities" below for further discussion.

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

The following table summarizes cash provided by (used in) financing activities for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018. Issuances of debt ~~and preference stock~~ are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit ~~Agreements—Long-Term Debt.~~Agreements."


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
Issuances of first and refunding mortgage bonds, net of discount and issuance costs	$	1,239		$	692		$	1,087		$	1,239
Issuance of term loan	—			300			750			—
Remarketing of pollution control bonds, net of issuance costs	—			134
Long-term debt matured or repurchased	(40		)	(40		)
Long-term debt matured							(40		)	(40		)
Short-term debt repayments, net of borrowings and discount	(1,168		)	(769		)	(691		)	(1,168		)
Payments of common stock dividends to Edison International	(212		)	(191		)	—			(212		)
Payments of preferred and preference stock dividends	(36		)	(36		)	(36		)	(36		)
Other	1			(34		)	(7		)	1
Net cash (used in) provided by financing activities	$	(216	)	$	56
Net cash provided by (used in) financing activities							$	1,063		$	(216	)

Net Cash Used in Investing Activities

Cash flows used in investing activities are primarily due to capital expenditures related to transmission and distribution investments ($1.1 billion ~~and $934 million~~ for each of the three ~~months~~month periods ended March 31, ~~2018~~2019 and ~~2017, respectively)~~2018). In addition, ~~during the first three months of 2018,~~ SCE had a net redemption of nuclear decommissioning trust investments of $73 million and $24 ~~million.~~million during the first three months ended March 31, 2019 and 2018, respectively. See "Nuclear Decommissioning Activities" below for further discussion.

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,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
Net cash used in operating activities: Net earnings from nuclear decommissioning trust investments	$	30		$	27		$	27		$	30
SCE's decommissioning costs	(41		)	(45		)	(73		)	(41		)
Net cash provided by investing activities: Proceeds from sale of investments	931			1,718			1,208			931
Purchases of investments	(907		)	(1,719		)	(1,135		)	(907		)
Net cash impact	$	13		$	(19	)	$	27		$	13

Net cash used in operating activities ~~relate~~relates to interest and dividends less administrative expenses, taxes, and SCE's decommissioning costs. See "Notes to Consolidated Financial Statements—Note 10. 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 ($4173 million and ~~$45~~$41 million in ~~2018~~2019 and ~~2017,~~2018, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($54100 million and ~~$26~~$54 million in ~~2018~~2019 and ~~2017,~~2018, respectively).

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,						Three months ended March 31,
(in millions)	2018			2017¹			2019			2018
Net cash provided by (used in) operating activities	$	58		$	(52	)
Net cash (used in) provided by financing activities	(529		)	56
Net cash (used in) provided by operating activities							$	(37	)	$	58
Net cash used in financing activities							(54		)	(529		)
Net cash used in investing activities	(12		)	(10		)	—			(12		)
Net decrease in cash and cash equivalents	$	(483	)	$	(6	)	$	(91	)	$	(483	)


¹	~~Net cash for the three months ended March 31, 2017 was updated to reflect the implementation of the accounting standards updates for cash flows related to cash receipts and restricted cash.~~

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

Net cash (used in) provided by ~~(used in)~~ operating activities was impacted by the following:

$75 million cash inflow from income tax refunds in 2018.

$1737 million and ~~$52~~$17 million cash outflow from operating activities in ~~2018~~2019 and ~~2017,~~2018, respectively, primarily due to payments relating to interest and operating costs.

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

Net cash ~~(used in) provided by~~used in financing activities was as follows:


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
Dividends paid to Edison International common shareholders	$	(197	)	$	(177	)	$	(200	)	$	(197	)
Dividends received from SCE	212			191			—			212
Payment for stock-based compensation, net of receipt from stock option exercises	(6		)	(116		)	(7		)	(6		)
Issuance of long-term debt, net of discount and issuance costs	544			398			—			544
Short-term debt repayments, net of borrowings and discount	(1,093		)	(244		)
Other¹	11			4
Net cash (used in) provided by financing activities	$	(529	)	$	56
Short-term debt borrowings, net of (repayments) and discount							153			(1,093		)
Other							—			11
Net cash used in financing activities							$	(54	)	$	(529	)


¹	~~During the three months ended March 31, 2018, Edison International Parent received dividend payments of $55 million from Edison Energy Group.~~

Contingencies

SCE has contingencies related to ~~San Onofre Related Matters, Nuclear Insurance, December 2017 Wildfires,~~the 2017/2018 Wildfire/Mudslide Events, wildfire insurance, Montecito Mudslides, Environmental Remediation, Nuclear Insurance and Spent Nuclear Fuel, which are discussed in "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies."

MARKET RISK EXPOSURES

Edison International's and SCE's primary market risks are described in the ~~2017~~2018 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

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 fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was reflected as a net asset of ~~$94~~$110 million and ~~$109~~$167 million on SCE's consolidated balance sheets at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. 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, 2018, the~~The amount of balance sheet exposure as described above broken down by the credit ratings of SCE's counterparties, was as follows:


	March 31, 2018						March 31, 2019
(in millions)	Exposure²		Collateral		Net Exposure		Exposure²		Collateral		Net Exposure
S&P Credit Rating¹
A or higher³	$	95	$	—	$	95
A or higher							$	98	$	—	$	98
A-, BBB + and BBB							12		—		12
							$	110	$	—	$	110


¹	SCE assigns a credit rating based on the lower of a counterparty's S&P 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 credit ratings from S&P or Moody's.


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.


³	~~Exposure to companies with S&P Credit Rating below A is immaterial.~~

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 ~~2017~~2018 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.

~~(This page has been left blank intentionally.)~~

FINANCIAL STATEMENTS


Consolidated Statements of Income	Edison International						Edison International

	Three months ended March 31,							Three months ended March 31,
(in millions, except per-share amounts, unaudited)	2018			2017				2019			2018
Total operating revenue	$	2,564		$	2,463			$	2,824		$	2,564
Purchased power and fuel	926			784				1,005			926
Operation and maintenance	675			604				882			675
Depreciation and amortization	462			499				480			462
Property and other taxes	107			100				110			107
Impairment and other charges	66			5
Impairment and other								(4		)	66
Other operating income	(2		)	—				(1		)	(2		)
Total operating expenses	2,234			1,992				2,472			2,234
Operating income	330			471				352			330
Interest expense	(170		)	(152		)		(194		)	(170		)
Other income and expenses	51			33
Other income and expense								38			51
Income from continuing operations before income taxes	211			352				196			211
Income tax benefit	(31		)	(40		)		(112		)	(31		)
Income from continuing operations	242			392				308			242
Net income	242			392				308			242
Preferred and preference stock dividend requirements of SCE	30			31				30			30
Other noncontrolling interests	(6		)	(1		)		—			(6		)
Net income attributable to Edison International common shareholders	$	218		$	362			$	278		$	218
Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax	$	218		$	362			$	278		$	218
Net income attributable to Edison International common shareholders	$	218		$	362			$	278		$	218
Basic earnings per common share attributable to Edison International common shareholders:
Basic earnings per share:
Weighted-average shares of common stock outstanding	326			326				326			326
Continuing operations	$	0.67		$	1.11			$	0.85		$	0.67
Total	$	0.67		$	1.11
Diluted earnings per common share attributable to Edison International common shareholders:
Basic earnings per common share attributable to Edison International common shareholders								$	0.85		$	0.67
Diluted earnings per share:
Weighted-average shares of common stock outstanding, including effect of dilutive securities	327			329				327			327
Continuing operations	$	0.67		$	1.10			$	0.85		$	0.67
Total	$	0.67		$	1.10
Dividends declared per common share	$	0.6050		$	0.5425
Diluted earnings per common share attributable to Edison International common shareholders								$	0.85		$	0.67

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Statements of Comprehensive Income	Edison International					Edison International

	Three months ended March 31,					Three months ended March 31,
(in millions, unaudited)	2018			2017		2019		2018
Net income	$	242		$	392	$	308	$	242
Other comprehensive income (loss), net of tax:
Pension and postretirement benefits other than pensions:
Net gain or loss arising during the period plus amortization included in net income	2			2
Amortization of net loss included in net income						2		2
Other	(5		)	2		—		(5		)
Other comprehensive (loss) income, net of tax	(3		)	4
Other comprehensive income (loss), net of tax						2		(3		)
Comprehensive income	239			396		310		239
Less: Comprehensive income attributable to noncontrolling interests	24			30		30		24
Comprehensive income attributable to Edison International	$	215		$	366	$	280	$	215

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Balance Sheets	Edison International				Edison International

(in millions, unaudited)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	105	$	1,091	$	328	$	144
Receivables, less allowances of $53 and $54 for uncollectible accounts at respective dates	628		717
Receivables, less allowances of $49 and $52 for uncollectible accounts at respective dates					716		730
Accrued unbilled revenue	511		212		459		482
Inventory	247		242		312		282
Income tax receivables	132		224		192		191
Prepaid expenses	164		233		465		148
Derivative assets	92		105		101		171
Regulatory assets	678		703		1,286		1,133
Other current assets	165		202		140		78
Assets of business held for sale	270		—
Total current assets	2,992		3,729		3,999		3,359
Nuclear decommissioning trusts	4,334		4,440		4,291		4,120
Other investments	81		73		76		63
Total investments	4,415		4,513		4,367		4,183
Utility property, plant and equipment, less accumulated depreciation and amortization of $9,254 and $9,355 at respective dates	39,152		38,708
Nonutility property, plant and equipment, less accumulated depreciation of $74 and $114 at respective dates	83		342
Utility property, plant and equipment, less accumulated depreciation and amortization of $9,671 and $9,566 at respective dates					41,678		41,269
Nonutility property, plant and equipment, less accumulated depreciation of $82 at both dates					86		79
Total property, plant and equipment	39,235		39,050		41,764		41,348
Regulatory assets	4,932		4,914		5,268		5,380
Operating lease right-of-use assets					933		—
Other long-term assets	369		374		2,462		2,445
Total long-term assets	5,301		5,288		8,663		7,825






Total assets	$	51,943	$	52,580	$	58,793	$	56,715

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Balance Sheets	Edison International						Edison International

(in millions, except share amounts, unaudited)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
LIABILITIES AND EQUITY
Short-term debt	$	70		$	2,393		$	932		$	720
Current portion of long-term debt	479			481			79			79
Accounts payable	1,033			1,503			1,366			1,511
Accrued taxes	92			23			104			21
Customer deposits	287			281			303			299
Regulatory liabilities	1,347			1,121			1,295			1,532
Current portion of operating lease liabilities							157			—
Other current liabilities	1,197			1,266			1,139			1,233
Liabilities of business held for sale	142			—
Total current liabilities	4,647			7,068			5,375			5,395
Long-term debt	13,367			11,642			15,683			14,632
Deferred income taxes and credits	4,685			4,567			4,685			4,576
Pensions and benefits	909			943			869			869
Asset retirement obligations	2,878			2,908			2,999			3,031
Regulatory liabilities	8,683			8,614			8,588			8,329
Operating lease liabilities							776			—
Wildfire-related claims							4,669			4,669
Other deferred credits and other long-term liabilities	2,885			2,953			2,430			2,562
Total deferred credits and other liabilities	20,040			19,985			25,016			24,036
Total liabilities	38,054			38,695			46,074			44,063
Commitments and contingencies (Note 12)
Redeemable noncontrolling interest	—			19
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at respective dates)	2,531			2,526			2,550			2,545
Accumulated other comprehensive loss	(46		)	(43		)	(58		)	(50		)
Retained earnings	9,211			9,188			8,034			7,964
Total Edison International's common shareholders' equity	11,696			11,671			10,526			10,459
Noncontrolling interests – preferred and preference stock of SCE	2,193			2,193			2,193			2,193
Other noncontrolling interests	—			2
Total Equity	13,889			13,866
Total equity							12,719			12,652





Total liabilities and equity	$	51,943		$	52,580		$	58,793		$	56,715

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Statements of Cash Flows	Edison International						Edison International

	Three months ended March 31,						Three months ended March 31,
(in millions, unaudited)	2018			2017			2019			2018
Cash flows from operating activities:
Net income	$	242		$	392		$	308		$	242
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	479			520			498			479
Allowance for equity during construction	(22		)	(19		)	(17		)	(22		)
Impairment and other charges	66			5
Impairment and other							(4		)	66
Deferred income taxes and investment tax credits	4			(13		)	(114		)	4
Other	17			9			5			17
Nuclear decommissioning trusts	(24		)	1			(73		)	(24		)
Changes in operating assets and liabilities:
Receivables	77			27			9			77
Inventory	(7		)	2			(30		)	(7		)
Accounts payable	(216		)	(226		)	31			(216		)
Tax receivables and payables	162			34			82			162
Other current assets and liabilities	(277		)	39			(381		)	(277		)
Regulatory assets and liabilities, net	405			129			(96		)	405
Other noncurrent assets and liabilities	(47		)	(16		)	(8		)	(47		)
Net cash provided by operating activities	859			884			210			859
Cash flows from financing activities:
Long-term debt issued or remarketed, net of discount and issuance costs of $17 and $11 for respective periods	1,783			1,524
Long-term debt issued, net of discount and issuance costs of $13 and $17 for the respective periods							1,087			1,783
Term loan issued							750			—
Long-term debt matured	(41		)	(40		)	(40		)	(41		)
Short-term debt financing, net	(2,261		)	(1,013		)	(538		)	(2,261		)
Payments for stock-based compensation	(10		)	(313		)	(41		)	(10		)
Receipt from stock option exercises	2			174
Dividends and distribution to noncontrolling interests	(36		)	(37		)
Receipts from stock option exercises							22			2
Dividends to noncontrolling interests							(36		)	(36		)
Dividends paid	(197		)	(177		)	(200		)	(197		)
Other	15			(6		)	5			15
Net cash (used in) provided by financing activities	(745		)	112
Net cash provided by (used in) financing activities							1,009			(745		)
Cash flows from investing activities:
Capital expenditures	(1,137		)	(944		)	(1,074		)	(1,137		)
Proceeds from sale of nuclear decommissioning trust investments	931			1,718			1,208			931
Purchases of nuclear decommissioning trust investments	(907		)	(1,719		)	(1,135		)	(907		)
Other	16			4			15			16
Net cash used in investing activities	(1,097		)	(941		)	(986		)	(1,097		)
Net (decrease) increase in cash, cash equivalents and restricted cash including cash held for sale	(983		)	55
Net increase (decrease) in cash, cash equivalents and restricted cash including cash held for sale							233			(983		)
Less: Net increase in cash held for sale	43			—			—			43
Net (decrease) increase in cash, cash equivalents and restricted cash	(1,026		)	55
Net increase (decrease) in cash, cash equivalent and restricted cash							233			(1,026		)
Cash, cash equivalents and restricted cash at beginning of period	1,132			114			152			1,132
Cash, cash equivalents and restricted cash at end of period	$	106		$	169		$	385		$	106

The accompanying notes are an integral part of these consolidated financial statements.


Consolidated Statements of Income	Southern California Edison Company							Southern California Edison Company

		Three months ended March 31,						Three months ended March 31,
(in millions, unaudited)		2018			2017			2019			2018
Operating revenue		$	2,554		$	2,456		$	2,816		$	2,554
Purchased power and fuel		926			784			1,005			926
Operation and maintenance		651			580			869			651
Depreciation and amortization		459			497			480			459
Property and other taxes		105			97			109			105
Impairment and other								(4		)	—
Other operating income		(1		)	—			(1		)	(1		)
Total operating expenses		2,140			1,958			2,458			2,140
Operating income		414			498			358			414
Interest expense		(155		)	(141		)	(178		)	(155		)
Other income and expenses		51			35
Other income and expense								38			51
Income before income taxes		310			392			218			310
Income tax (benefit) expense		(6		)	12
Income tax benefit								(105		)	(6		)
Net income		316			380			323			316
Less: Preferred and preference stock dividend requirements		30			31			30			30
Net income available for common stock		$	286		$	349		$	293		$	286


Consolidated Statements of Comprehensive Income	Southern California Edison Company					Southern California Edison Company

	Three months ended March 31,						Three months ended March 31,
(in millions, unaudited)	2018			2017			2019		2018
Net income	$	316		$	380		$	323	$	316
Other comprehensive income (loss), net of tax:
Pension and postretirement benefits other than pensions:
Net loss arising during the period plus amortization included in net income	2			1
Amortization of net loss included in net income							1		2
Other	(5		)	1			—		(5		)
Other comprehensive (loss) income, net of tax	(3		)	2
Other comprehensive income (loss), net of tax							1		(3		)
Comprehensive income	$	313		$	382		$	324	$	313

The accompanying notes are an integral part of these consolidated financial statements.



Consolidated Balance Sheets	Southern California Edison Company


(in millions, unaudited)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	15	$	515	$	297	$	21
Receivables, less allowances of $53 for uncollectible accounts at both dates	617		693
Receivables, less allowances of $49 and $51 for uncollectible accounts at respective dates					702		711
Accrued unbilled revenue	510		212		459		482
Inventory	246		242		312		282
Income tax receivables	218		229		311		312
Prepaid expenses	164		228		464		144
Derivative assets	92		105		101		171
Regulatory assets	678		703		1,286		1,133
Other current assets	162		160		130		69
Total current assets	2,702		3,087		4,062		3,325
Nuclear decommissioning trusts	4,334		4,440		4,291		4,120
Other investments	61		52		58		45
Total investments	4,395		4,492		4,349		4,165
Utility property, plant and equipment, less accumulated depreciation and amortization of $9,254 and $9,355 at respective dates	39,152		38,708
Nonutility property, plant and equipment, less accumulated depreciation of $71 and $97 at respective dates	76		77
Utility property, plant and equipment, less accumulated depreciation and amortization of $9,671 and $9,566 at respective dates					41,678		41,269
Nonutility property, plant and equipment, less accumulated depreciation of $77 at both dates					81		75
Total property, plant and equipment	39,228		38,785		41,759		41,344
Regulatory assets	4,932		4,914		5,268		5,380
Operating lease right-of-use assets					928		—
Long-term insurance receivable due from affiliate					1,000		1,000
Other long-term assets	243		237		1,378		1,360
Total long-term assets	5,175		5,151		8,574		7,740










Total assets	$	51,500	$	51,515	$	58,744	$	56,574

The accompanying notes are an integral part of these consolidated financial statements.



Consolidated Balance Sheets	Southern California Edison Company


(in millions, except share amounts, unaudited)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
LIABILITIES AND EQUITY
Short-term debt	$	70		$	1,238		$	779		$	720
Current portion of long-term debt	479			479			79			79
Accounts payable	1,036			1,519			1,381			1,519
Accrued taxes	94			24			105			22
Customer deposits	287			281			303			299
Regulatory liabilities	1,347			1,121			1,295			1,532
Current portion of operating lease liabilities							156			—
Other current liabilities	1,181			1,225			1,097			975
Total current liabilities	4,494			5,887			5,195			5,146
Long-term debt	11,629			10,428			13,942			12,892
Deferred income taxes and credits	6,005			5,890			6,011			5,898
Pensions and benefits	453			483			434			433
Asset retirement obligations	2,878			2,892			2,999			3,031
Regulatory liabilities	8,683			8,614			8,588			8,329
Operating lease liabilities							772			—
Wildfire-related claims							4,669			4,669
Other deferred credits and other long-term liabilities	2,610			2,649			2,264			2,391
Total deferred credits and other liabilities	20,629			20,528			25,737			24,751
Total liabilities	36,752			36,843			44,874			42,789
Commitments and contingencies (Note 12)
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at each date)	2,168			2,168
Preferred and preference stock							2,245			2,245
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at respective dates)							2,168			2,168
Additional paid-in capital	673			671			683			680
Accumulated other comprehensive loss	(22		)	(19		)	(27		)	(23		)
Retained earnings	9,684			9,607			8,801			8,715
Total common shareholder's equity	12,503			12,427
Preferred and preference stock	2,245			2,245
Total equity	14,748			14,672			13,870			13,785






Total liabilities and equity	$	51,500		$	51,515		$	58,744		$	56,574

The accompanying notes are an integral part of these consolidated financial statements.



Consolidated Statements of Cash Flows	Southern California Edison Company


	Three months ended March 31,						Three months ended March 31,
(in millions, unaudited)	2018			2017			2019			2018
Cash flows from operating activities:
Net income	$	316		$	380		$	323		$	316
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	475			517			497			475
Allowance for equity during construction	(22		)	(19		)	(17		)	(22		)
Impairment and other							(4		)	—
Deferred income taxes and investment tax credits	(3		)	223			(109		)	(3		)
Other	15			7			3			15
Nuclear decommissioning trusts	(24		)	1			(73		)	(24		)
Changes in operating assets and liabilities:
Receivables	70			29			5			70
Inventory	(7		)	5			(30		)	(7		)
Accounts payable	(230		)	(226		)	37			(230		)
Tax receivables and payables	81			(33		)	83			81
Other current assets and liabilities	(268		)	60			(366		)	(268		)
Regulatory assets and liabilities, net	405			129			(96		)	405
Other noncurrent assets and liabilities	(7		)	(137		)	(6		)	(7		)
Net cash provided by operating activities	801			936			247			801
Cash flows from financing activities:
Long-term debt issued or remarketed, net of discount and issuance costs of $11 and $9 for the respective periods	1,239			1,126
Long-term debt matured or repurchased	(40		)	(40		)
Long-term debt issued, net of discount and issuance costs of $13 and $11 for the respective periods							1,087			1,239
Term loan issued							750			—
Long-term debt matured							(40		)	(40		)
Short-term debt financing, net	(1,168		)	(769		)	(691		)	(1,168		)
Payments for stock-based compensation	(3		)	(56		)	(26		)	(3		)
Receipt from stock option exercises	1			33
Receipts from stock option exercises							14			1
Dividends paid	(248		)	(227		)	(36		)	(248		)
Other	3			(11		)	5			3
Net cash (used in) provided by financing activities	(216		)	56
Net cash provided by (used in) financing activities							1,063			(216		)
Cash flows from investing activities:
Capital expenditures	(1,124		)	(934		)	(1,074		)	(1,124		)
Proceeds from sale of nuclear decommissioning trust investments	931			1,718			1,208			931
Purchases of nuclear decommissioning trust investments	(907		)	(1,719		)	(1,135		)	(907		)
Other	15			4			15			15
Net cash used in investing activities	(1,085		)	(931		)	(986		)	(1,085		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(500		)	61
Net increase (decrease) in cash, cash equivalents and restricted cash							324			(500		)
Cash, cash equivalents and restricted cash at beginning of period	515			40			22			515
Cash, cash equivalents and restricted cash at end of period	$	15		$	101		$	346		$	15

The accompanying notes are an integral part of these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Organization and Basis of Presentation

Edison International is the parent holding company of Southern California Edison Company ("SCE") and Edison Energy Group, Inc. ("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 a holding company for ~~subsidiaries, including~~ Edison Energy, LLC ("Edison Energy"), which is engaged in ~~pursuing~~the competitive business ~~opportunities across~~of providing energy services ~~and managed portfolio solutions for~~to commercial and industrial customers. ~~Such~~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~~"Edison International Parent and ~~Other~~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 and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated from the consolidated financial statements.

Edison International's and SCE's significant accounting policies were described in ~~Note 1 of~~the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the ~~year-ended~~year ended December 31, ~~2017~~2018 (the ~~"2017~~"2018 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the ~~2017~~2018 Form 10-K.

In the opinion of management, all adjustments, consisting of recurring accruals, have been made that are necessary to fairly state the consolidated financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three-month period ended March 31, ~~2018~~2019 are not necessarily indicative of the operating results for the full year.

The December 31, ~~2017~~2018 financial statement data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Effective January 1, 2018, Edison International and SCE adopted several accounting standards retrospectively. Prior year financial statements have been updated to reflect the retrospective application of these standards as applicable. For further information, see "New Accounting Guidance" below.

~~Sale of SoCore Energy~~

On February 28, 2018, Edison International agreed to sell SoCore Energy LLC ("SoCore Energy"), a then subsidiary of Edison Energy Group, to a third party, subject to the completion of closing conditions, which were satisfied on April 16, 2018. As a result, Edison International accounted for the assets and liabilities of SoCore Energy as held for sale as of March 31, 2018 on the consolidated Edison International balance sheet. See Note 10 for further information.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents ~~includes~~include 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:


	Edison International				SCE				Edison International				SCE
(in millions)	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Money market funds	$	43	$	1,024	$	—	$	483	$	285	$	116	$	266	$	1

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 as follows:


	Edison International				SCE				Edison International				SCE
(in millions)	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Book balances reclassified to accounts payable	$	40	$	64	$	40	$	63	$	38	$	65	$	37	$	65

Edison International's restricted cash at March 31, 2018 and December 31, 2017 was $27 million and $41 million, respectively. Restricted cash primarily relates to funds held by SoCore Energy and its consolidated affiliates pursuant to project financing or purchase agreements, most of which are expected to lapse during 2018. As discussed above, Edison International accounted for the assets and liabilities of SoCore Energy as held for sale as of March 31, 2018 (see Note 10 for further information).

The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:


(in millions)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Edison International:
Cash and cash equivalents	$	105	$	1,091	$	328	$	144
Short-term restricted cash ¹	1		40		57		8
Long-term restricted cash ²	—		1
Total cash, cash equivalents, and restricted cash³	$	106	$	1,132
Total cash, cash equivalents, and restricted cash					$	385	$	152
SCE:
Cash and cash equivalents	$	15	$	515	$	297	$	21
Short-term restricted cash¹					49		1
Total cash, cash equivalents, and restricted cash	$	15	$	515	$	346	$	22


¹	Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.


²	~~Reflected in "Other long-term assets" on Edison International's consolidated balance sheets.~~

~~Excludes SoCore Energy's~~ Restricted cash ~~and cash equivalents of $18 million and short-term and long-term restricted cash of $26 million~~ at March 31, ~~2018, which~~2019 primarily relates to funds held by SCE that were ~~reflected~~used in ~~"Assets of business held~~April 2019 for ~~sale" on Edison International's consolidated balance sheets (see Note 10 for additional information).~~nuclear decommissioning activities at San Onofre.

Revenue Recognition

~~During~~Regulatory Proceedings

2018 General Rate Case

In February 2018, SCE updated its 2018 General Rate Case ("GRC") application for the ~~first three months~~impact of Tax Cuts and Jobs Act ("Tax Reform") resulting in a requested 2018 ~~pending~~base rate revenue requirement of $5.534 billion, a decrease of $106 million over the ~~outcome~~2017 GRC authorized revenue requirement.

The CPUC did not issue a decision on the 2018 GRC ~~decision,~~application during 2018 or during the first quarter of 2019, therefore SCE recognized ~~GRC-related~~ revenue based on the 2017 authorized revenue requirement, adjusted for items SCE has determined to be probable of occurring, primarily the July 2017 cost of capital decision and ~~the impact of~~ Tax Reform. The amounts billed to customers for the first three months of 2018 was also based on the 2017 authorized revenue requirement and a regulatory liability has been established to record any associated adjustments. The CPUC has ~~authorized~~approved the establishment of a GRC memorandum account ~~which will make~~and the 2018 and 2019 revenue ~~requirement~~requirements ultimately adopted by the CPUC will be effective as of January 1, ~~2018.~~2018 and January 1, 2019, respectively. See Note 11 for further details. The proposed decision, if adopted as drafted, would have a significant impact on SCE and Edison International’s reported results, including an impairment of utility property, plant and equipment of up to $257 million ($185 million after-tax) related to disallowed historical capital expenditures and an increase to earnings of approximately $130 million from application of the decision to revenue, depreciation and income tax expense retroactively for 2018 and the first quarter of 2019.

SCE will file comments on the proposed decision in May 2019 and SCE cannot predict ~~the revenue requirement the CPUC will authorize or provide assurance on the timing of~~when a final decision will be issued. A final decision could result in material changes to the proposed decision.

FERC Formula Rate

In October 2017, SCE filed its new formula rate with the FERC. In December 2017, the FERC issued an order setting the effective date of SCE's new FERC formula rate as of January 1, 2018, subject to settlement procedures and refund. In November 2018, SCE filed its 2019 annual update with the FERC with the proposed rates effective January 1, 2019, subject to settlement procedures and refund, and requested a decrease in transmission revenue requirement of $131 million, or 11% from amounts currently authorized in rates. Pending resolution of the FERC formula rate ~~proceeding,~~proceedings, SCE ~~is recognizing~~ recognized

revenue in 2018 and during the first quarter of 2019 based on the FERC formula rate adjusted for the impact of Tax Reform and other adjustments.

If the new formula rate is accepted by FERC, it will supersede the existing formula rate, including the 2019 annual update, and could become effective as early as 60 days from the filing date. FERC has the authority to, and may, suspend new rates for up to five months. If the new formula rate is suspended by FERC, the 2019 transmission revenue requirement rate established in the 2019 annual update will continue to be effective, subject to refund, from January 1, 2019 until the end of the suspension of the new formula rate. The new formula rate would likely be subject to refund from the end of the suspension until it is ultimately approved by FERC.

If the revised formula rate becomes effective on June 12, 2019 (the effective date requested by SCE), SCE's proposed revisions to its formula rate will result in a projected increase in its retail base transmission revenue requirement in 2019 of approximately $290 million from the currently effective retail base transmission revenue requirement of approximately $1 billion.

See Note 7 for further information on SCE's revenue.

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, including restricted stock units, which earn dividend equivalents on an equal basis with common shares once the awards are vested. EPS attributable to Edison International common shareholders was computed as follows:


	Three months ended March 31,				Three months ended March 31,
(in millions, except per-share amounts)	2018		2017		2019		2018
Basic earnings per share – continuing operations:
Income from continuing operations attributable to common shareholders	$	218	$	362	$	278	$	218
Participating securities dividends	—		—		—		—
Income from continuing operations available to common shareholders	$	218	$	362	$	278	$	218
Weighted average common shares outstanding	326		326		326		326
Basic earnings per share – continuing operations	$	0.67	$	1.11	$	0.85	$	0.67
Diluted earnings per share – continuing operations:
Income from continuing operations attributable to common shareholders	$	218	$	362	$	278	$	218
Participating securities dividends	—		—		—		—
Income from continuing operations available to common shareholders	$	218	$	362	$	278	$	218
Income impact of assumed conversions	—		—		—		—
Income from continuing operations available to common shareholders and assumed conversions	$	218	$	362	$	278	$	218
Weighted average common shares outstanding	326		326		326		326
Incremental shares from assumed conversions	1		3		1		1
Adjusted weighted average shares – diluted	327		329		327		327
Diluted earnings per share – continuing operations	$	0.67	$	1.10	$	0.85	$	0.67

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 ~~6,222,294~~7,719,306 and ~~1,355,930~~6,222,294 shares of common stock for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

New Accounting Guidance

Accounting Guidance Adopted

In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on revenue recognition and further amended the standard in 2016 and 2017. Under the new standard, revenue is recognized when a good or service is transferred to the customer and the customer obtains control of the good or service. Some revenue arrangements, such as alternative revenue programs which include balancing account overcollections and undercollections, are excluded from the scope of the new standard and, therefore, will be accounted for and presented separately from revenue recognized from contracts with customers in the disclosures.On January 1, 2019, Edison International and SCE adopted this standard effective January 1, 2018, using the modified retrospective method for contracts that were not completed as of the adoption date. Edison International recognized a cumulative effect adjustment to increase the opening balance of retained earnings by approximately $5 million ($7 million pre-tax) on January 1, 2018. This adjustment is related to variable consideration recognized at Edison Energy which is not subject to potential significant reversal and has no further performance obligations. See Note 7 for further details.

~~In January 2016, the FASB issued an~~ accounting standards ~~update~~updates that ~~amends the guidance~~require lessees to recognize a lease on the ~~classification~~balance sheet as a right-of-use ("ROU") asset and ~~measurement of financial instruments,~~related lease liability and ~~further amended~~classify the ~~guidance in 2018. Under the new guidance, equity investments (excluding those accounted for under the equity method~~lease as either operating or those that result in consolidation) are required to be measured at fair value, with changes in fair value recognized in net income. The new guidance also amends certain disclosure requirements associated with the fair value of financial instruments and requires financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial assets.

finance. Edison International and SCE adopted this guidance ~~effective January 1, 2018. Edison International recognized a cumulative effect adjustment~~using the modified retrospective approach for leases that existed as of the adoption date and elected the optional transition method not to ~~increase the opening balance of retained earnings and accumulated other comprehensive loss by $5 million ($8 million pre-tax) on January 1, 2018. See Note 2 for further details.~~

~~The FASB issued two accounting standards updates related~~restate periods prior to the statement of cash flows. One standard update clarifies the presentation and classification of certain cash receipts and payments in the statement of cash flows and other requires restricted cash to be presented with cash and cash equivalents in the statement of cash flows.adoption date. Edison International and SCE ~~adopted these standards effective January 1, 2018, using~~also elected the ~~retrospective approach. The adoption~~package of ~~these standards did~~practical expedients not ~~have a material impact on Edison International's~~to reassess prior conclusions related to contracts containing leases, lease classification and ~~SCE's consolidated statement of cash flows.~~

~~In March 2017,~~initial direct costs, and the FASB issued an accounting standards update on the presentation of the components of net periodic benefit cost for an entity's defined benefit pension and other postretirement plans. Edison International and SCE adopted this guidance effective January 1, 2018. The adoptionpractical expedient not to reassess existing land easements. Adoption of this standard ~~did not have a material impact~~increased ROU assets and lease liabilities on ~~Edison International's and SCE's~~the consolidated financial statements, but did result in the separate presentation of service costs as an operating expense and non-service costs within other income and expenses and limits the capitalization of benefit costs to the service cost component. The standard was adopted retrospectively with respect to the income statement presentation requirement and prospectively for the capitalization requirement. During the three months ended March 31, 2017, non-service costs (benefits) totaled $(8)balance sheets by $956 million and ~~$(9)~~$951 million as of January 1, 2019 for Edison International and SCE, ~~respectively, which were reclassified from "Operation and maintenance" to "Other~~respectively. The standard did not materiality impact the consolidated statements of income ~~and expenses." See Note 9 and Note 14~~ for ~~further details.~~Edison International or SCE.

~~Accounting Guidance Not Yet Adopted~~

~~In February 2016, the FASB issued an~~Based on accounting standards ~~update related to lease accounting and further amended the standard in 2018. The updated standard is effective~~adopted at January 1, ~~2019. Under the new standard,~~2019, 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. ~~Lessees will need~~This occurs when an entity has the right to ~~recognize leases on~~obtain substantially all of the ~~balance sheet~~economic benefits from and has the right to direct the use of the identified asset. SCE determines if an arrangement is a lease at contract inception, and for all classes of assets, SCE includes both lease and non-lease components as a ~~right-of-use asset~~single component and accounts for it as a ~~related lease liability, and classify the leases as either operating or finance. The liability will be equal to~~lease. Lease liabilities are recognized based on the present value of the lease ~~payments. The asset will be~~payments over the lease term at the commencement date. Lease ROU assets are based on the liability, subject to adjustments, such as ~~initial direct costs. Edison International's~~lease incentives. In measuring lease assets and liabilities, SCE excludes variable lease payments, other than those that depend on an index, a rate or are in substance fixed payments and includes lease payments made at or before the commencement date. SCE's lease terms include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. Operating leases are included in operating lease ROU assets and operating lease liabilities on the consolidated balance sheets. Finance leases ~~will result~~are included in ~~straight-line expense~~property, plant and equipment and other liabilities on the consolidated balance sheets. See Note 13 for further information.

In February 2018, the FASB issued an accounting standards update to provide entities an election to reclassify stranded tax effects resulting from Tax Reform from accumulated other comprehensive income to retained earnings. Stranded tax effects originated in December 2017 when deferred taxes were re-measured at the lower federal corporate tax rate with the impact included in operating income, while ~~finance leases will result in a higher initial expense pattern due to~~ the interest component. SCE, as a regulated entity, is permitted to continue to recognize expense using the timing that conforms to the regulatory rate treatment. Lessees can elect to exclude from the balance sheet short-term contractstax effects of ~~one year or less. This standard requires retrospective application to previously issued financial statements for 2018 and 2017. Although permitted,~~items within accumulated other comprehensive income were not similarly adjusted. Edison International and SCE ~~has elected not~~adopted this guidance on January 1, 2019 and reclassified stranded tax effects of $10 million and $5 million, respectively, from accumulated other comprehensive income to ~~adopt~~retained earnings. See Notes 2 and 14 for further information.

In August 2018, the FASB issued an accounting standards update to remove, modify, and add certain disclosure requirements related to fair value measurement. Edison International and SCE adopted this ~~standard prior to~~guidance effective January 1, 2019. The ~~standard will provide entities with an optional transition method to apply the new requirements in the period~~adoption of ~~adoption without retrospective application to previous periods.~~this guidance did not have a material impact on Edison International and ~~SCE are evaluating whether to elect this optional transition method. The adoption of this standard will increase right-of-use assets and lease liabilities in Edison International's and~~ SCE's consolidated balance sheets. Edison International and SCE are currently implementing a new lease accounting system and are evaluating the impact this standard will have on the consolidated balance sheets and lease disclosures. See Note 4 for further information.

Accounting Guidance Not Yet Adopted

The FASB issued an accounting standards update in June 2016, and further amended the guidance in November 2018, related to the impairment of financial instruments, effective January 1, 2020. The new guidance provides an impairment model, known as the current expected credit loss model, which is based on expected credit losses rather than incurred ~~losses.~~losses over the remaining life of most financial assets measured at amortized cost, including trade and other receivables. The guidance also requires use of an allowance to record estimated credit losses on available-for-sale debt securities. Edison International and SCE are currently evaluating the impact of this new ~~guidance.~~guidance and do not expect the adoption of the guidance will have material impact on Edison International and SCE.

In January 2017, the FASB issued an accounting standards update to simplify the accounting for goodwill ~~impairment. This accounting standards update changes~~impairment by changing the procedural steps ~~in applying~~to apply the goodwill impairment test. AAfter the adoption of this accounting standards update, goodwill impairment will ~~now~~ be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Edison International will apply this guidance to ~~the~~ goodwill impairment ~~test~~tests beginning in 2020.

In ~~February~~August 2018, the FASB issued an accounting standards update ~~related to stranded income tax effects due to~~which aligns the ~~2017 Tax Reform enacted on December 22, 2017. As~~requirement for capitalizing implementation costs incurred in a ~~result of the lower federal corporate tax rate, deferred taxes were re-measured~~hosting arrangement that is a service contract with the ~~impact included in operating income in December 2017.~~requirements for capitalizing costs incurred to develop or obtain internal-use software. The ~~tax effects of items within AOCI were appropriately left unadjusted (i.e. stranded tax effects) and, therefore, are not stated at the revised tax rate. The new accounting~~ guidance ~~provides entities with an election to reclassify from AOCI to retained earnings~~also clarified presentation requirements for ~~stranded income tax effects resulting from the 2017 Tax Reform. The new guidance should be applied either~~reporting implementation costs in the ~~period of adoption or retrospectively to each period(s) in which the effect of the rate change is recognized.~~financial statements. The ~~new~~ guidance is effective January 1, ~~2019~~2020 with early adoption permitted. Edison International and SCE are ~~in the process of~~currently evaluating the ~~new~~impact of the guidance.

In August 2018, the FASB issued an accounting standards update to remove, modify, and add certain disclosure requirements related to employer-sponsored defined benefit pension or other postretirement plans. The guidance is effective January 1, 2021, with early adoption permitted. Edison International and SCE are currently evaluating the impact of the guidance and do not expect the adoption of this standard will materially affect disclosures.

Note 2. Consolidated Statements of Changes in Equity

The following table provides Edison International's changes in equity for the three months ended March 31, ~~2018:~~2019:


	Equity Attributable to Common Shareholders											Noncontrolling Interests									Equity Attributable to Common Shareholders											Noncontrolling Interests
(in millions, except per-share amounts)	Common Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Subtotal			Other			Preferred and Preference Stock			Total Equity			Common Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Subtotal			Preferred and Preference Stock			Total Equity
Balance at December 31, 2017	$	2,526	$	(43	)	$	9,188		$	11,671		$	2		$	2,193		$	13,866
Balance at December 31, 2018																					$	2,545	$	(50	)	$	7,964		$	10,459		$	2,193		$	12,652
Net income	—		—			218			218			(3		)	30			245			—		—			278			278			30			308
Other comprehensive income	—		2			—			2			—			—			2			—		2			—			2			—			2
Cumulative effect of accounting changes¹	—		(5		)	10			5			—			—			5			—		(10		)	10			—			—			—
Common stock dividends declared ($0.6050 per share)	—		—			(197		)	(197		)	—			—			(197		)
Dividends to noncontrolling interests	—		—			—			—			—			(30		)	(30		)
Common stock dividends declared ($0.6125 per share)																					—		—			(200		)	(200		)	—			(200		)
Dividends to noncontrolling interests ($0.255 - $0.299 per share for preferred stock; $15.625 - $35.936 per share for preference stock)																					—		—			—			—			(30		)	(30		)
Stock-based compensation	—		—			(8		)	(8		)	—			—			(8		)	—		—			(18		)	(18		)	—			(18		)
Noncash stock-based compensation	5		—			—			5			—			—			5			5		—			—			5			—			5
Other	—		—			—			—			1			—			1
Balance at March 31, 2018	$	2,531	$	(46	)	$	9,211		$	11,696		$	—		$	2,193		$	13,889
Balance at March 31, 2019																					$	2,550	$	(58	)	$	8,034		$	10,526		$	2,193		$	12,719

Edison International recognized cumulative effect adjustments to the opening balance of retained earnings and accumulated other comprehensive loss on January 1, ~~2018~~2019 related to the adoption of the accounting standards updates on ~~revenue recognition and measurement~~the reclassification of ~~financial instruments, effective January~~stranded tax effects resulting from Tax Reform. See Note 1 ~~2018.~~for further information.

The following table provides Edison International's changes in equity for the three months ended March 31, ~~2017:~~2018:


	Equity Attributable to Common Shareholders											Noncontrolling Interests						Equity Attributable to Common Shareholders											Noncontrolling Interests
(in millions, except per-share amounts)	Common Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Subtotal			Preferred and Preference Stock			Total Equity			Common Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Subtotal			Other			Preferred and Preference Stock			Total Equity
Balance at December 31, 2016	$	2,505	$	(53	)	$	9,544		$	11,996		$	2,191		$	14,187
Balance at December 31, 2017																		$	2,526	$	(43	)	$	9,188		$	11,671		$	2		$	2,193		$	13,866
Net income	—		—			362			362			31			393			—		—			218			218			(3		)	30			245
Other comprehensive income	—		4			—			4			—			4			—		2			—			2			—			—			2
Common stock dividends declared ($0.5425 per share)	—		—			(177		)	(177		)	—			(177		)
Dividends to noncontrolling interests	—		—			—			—			(31		)	(31		)
Cumulative effect of accounting changes¹																		—		(5		)	10			5			—			—			5
Common stock dividends declared ($0.6050 per share)																		—		—			(197		)	(197		)	—			—			(197		)
Dividends to noncontrolling interests ($0.255 - $0.299 per share for preferred stock; $15.625 - $35.936 per share for preference stock)																		—		—			—			—			—			(30		)	(30		)
Stock-based compensation	—		—			(139		)	(139		)	—			(139		)	—		—			(8		)	(8		)	—			—			(8		)
Noncash stock-based compensation	5		—			—			5			—			5			5		—			—			5			—			—			5
Balance at March 31, 2017	$	2,510	$	(49	)	$	9,590		$	12,051		$	2,191		$	14,242
Other																		—		—			—			—			1			—			1
Balance at March 31, 2018																		$	2,531	$	(46	)	$	9,211		$	11,696		$	—		$	2,193		$	13,889


¹	Edison International recognized a cumulative effect adjustment to the opening balance of retained earnings and accumulated other comprehensive loss on January 1, 2018 related to the adoption of the accounting standards update on revenue recognition and the measurement of financial instruments.

The following table provides SCE's changes in equity for the three months ended March 31, 2019:



(in millions)	Preferred and Preference Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total Equity
Balance at December 31, 2018	$	2,245	$	2,168	$	680	$	(23	)	$	8,715		$	13,785
Net income	—		—		—		—			323			323
Other comprehensive income	—		—		—		1			—			1
Cumulative effect of accounting change¹	—		—		—		(5		)	5			—
Dividends declared on common stock ($0.4599 per share)	—		—		—		—			(200		)	(200		)
Dividends declared on preferred and preference stock ($0.255 - $0.299 per share for preferred stock; $15.625 - $35.936 per share for preference stock)	—		—		—		—			(30		)	(30		)
Stock-based compensation	—		—		—		—			(12		)	(12		)
Noncash stock-based compensation	—		—		3		—			—			3
Balance at March 31, 2019	$	2,245	$	2,168	$	683	$	(27	)	$	8,801		$	13,870


¹	SCE recognized a cumulative effect adjustment to the opening balance of retained earnings and accumulated other comprehensive loss on January 1, 2019 related to the adoption of the accounting standards update on the reclassification of stranded tax effects resulting from Tax Reform. See Note 1 for further information.

The following table provides SCE's changes in equity for the three months ended March 31, 2018:


	Equity Attributable to Edison International
(in millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Preferred and Preference Stock			Total Equity			Preferred and Preference Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total Equity
Balance at December 31, 2017	$	2,168	$	671	$	(19	)	$	9,607		$	2,245		$	14,672		$	2,245	$	2,168	$	671	$	(19	)	$	9,607		$	14,672
Net income	—		—		—			316			—			316			—		—		—		—			316			316
Other comprehensive income	—		—		2			—			—			2			—		—		—		2			—			2
Cumulative effect of accounting change¹	—		—		(5		)	5			—			—									(5		)	5			—
Dividends declared on common stock	—		—		—			(212		)	—			(212		)
Dividends declared on preferred and preference stock	—		—		—			(30		)	—		��	(30		)
Dividends declared on common stock ($0.4875 per share)																	—		—		—		—			(212		)	(212		)
Dividends declared on preferred and preference stock ($0.255 - $0.299 per share for preferred stock; $15.625 - $35.936 per share for preference stock)																	—		—		—		—			(30		)	(30		)
Stock-based compensation	—		—		—			(2		)	—			(2		)	—		—		—		—			(2		)	(2		)
Noncash stock-based compensation	—		2		—			—			—			2			—		—		2		—			—			2
Balance at March 31, 2018	$	2,168	$	673	$	(22	)	$	9,684		$	2,245		$	14,748		$	2,245	$	2,168	$	673	$	(22	)	$	9,684		$	14,748


¹	SCE recognized a cumulative effect adjustment to the opening balance of retained earnings and accumulated other comprehensive loss on January 1, 2018 related to the adoption of the accounting standards update on the measurement of financial ~~instruments, effective January 1, 2018.~~instruments.

~~The following table provides SCE's changes in equity for the three months ended March 31, 2017:~~

Equity Attributable to Edison International
(in millions) Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Preferred
and
Preference
Stock Total
Equity
Balance at December 31, 2016 $ 2,168
$ 657
$ (20 ) $ 9,433
$ 2,245
$ 14,483
Net income —
—
—
380
—
380
Other comprehensive income —
—
2
—
—
2
Dividends declared on common stock —
—
—
(191 ) —
(191 )
Dividends declared on preferred and preference stock —
—
—
(31 ) —
(31 )
Stock-based compensation —
—
—
(23 ) —
(23 )
Redemption of preference stock —
3
—
—
—
3
Balance at March 31, 2017 $ 2,168
$ 660
$ (18 ) $ 9,568
$ 2,245
$ 14,623

Note 3. Variable Interest Entities

A ~~VIE~~variable interest entity ("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 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. ~~A subsidiary of Edison International is the primary beneficiary of entities that own solar projects.~~ Commercial and operating activities are generally the factors that most significantly impact the economic performance of such VIEs. Commercial and operating activities include ~~site and equipment selection,~~ construction, operation and maintenance, fuel procurement, dispatch, and compliance with regulatory and contractual requirements.

Variable Interest in VIEs that are not Consolidated

Power Purchase Agreements

SCE has power purchase agreements ("PPAs") that are classified as variable interests in VIEs, including tolling agreements through which SCE provides the natural gas to fuel the plants, ~~and~~ contracts with qualifying facilities that contain variable pricing provisions based on the price of natural ~~gas.~~gas and renewable energy contracts through which SCE absorbs commodity price risk. 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 ~~its~~ involvement with VIEs result from current amounts due under the PPAs. Under these contracts, SCE recovers the costs incurred through demonstration of compliance with its California Public Utilities Commission ("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 11 of the ~~2017~~2018 Form 10-K. As a result, there is no significant potential exposure to loss to SCE from its variable interest in these VIEs. The aggregate contracted capacity dedicated to SCE from these VIE projects was ~~3,454~~4,722 MW and ~~4,928~~3,454 MW at March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, and the amounts that SCE paid to these projects were ~~$143~~$153 million and ~~$140~~$143 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, 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. 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~~Board of ~~directors~~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.

SCE formed Trust I, a VIE, in 2012 for the exclusive purpose of issuing 5.625% trust preference securities. SCE Trust I issued trust securities in the face amounts of $475 million to the public and $10,000 of common stock to SCE. SCE Trust I invested the proceeds of these trust securities in Series F Preference Stock issued by SCE in the principal amount of $475 million. In July 2017, all of the outstanding Series F Preference Stock was redeemed, and accordingly, SCE Trust I redeemed $475 million of trust securities from the public and $10,000 of common stock from SCE. As a result in September 2017, SCE Trust I was terminated.

The Trust II, Trust III, Trust IV, Trust V and Trust VI balance sheets as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, consisted of investments of $400 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, $400 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:

Three months ended March 31,
(in millions) Trust I Trust II Trust III Trust IV Trust V Trust VI
2018
Dividend income *
$ 5
$ 4
$ 4
$ 4
$ 6
Dividend distributions *
5
4
4
4
6
2017
Dividend income $ 7

$ 5

$ 4
$ 4
$ 4
*
Dividend distributions 7

5

4
4
4
*

* Not applicable



	Three months ended March 31,
(in millions)	Trust II		Trust III		Trust IV		Trust V		Trust VI
2019
Dividend income	$	5	$	4	$	4	$	4	$	6
Dividend distributions	5		4		4		4		6
2018
Dividend income	$	5	$	4	$	4	$	4	$	6
Dividend distributions	5		4		4		4		6

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 March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 ~~exchanges (New York Mercantile Exchange and Intercontinental~~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~~an 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.

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:

March 31, 2018
(in millions) Level 1 Level 2 Level 3
Netting
and
Collateral¹
Total
Assets at fair value
Derivative contracts $ —
$ 15
$ 82
$ (2 ) $ 95
Other 12
21
—
—
33
Nuclear decommissioning trusts:
Stocks²
1,520
—
—
—
1,520
Fixed Income³
1,076
1,639
—
—
2,715
Short-term investments, primarily cash equivalents 59
108
—
—
167
Subtotal of nuclear decommissioning trusts⁴
2,655
1,747
—
—
4,402
Total assets 2,667
1,783
82
(2 ) 4,530
Liabilities at fair value
Derivative contracts —
3
1
(3 ) 1
Total liabilities —
3
1
(3 ) 1
Net assets $ 2,667
$ 1,780
$ 81
$ 1
$ 4,529


	December 31, 2017											March 31, 2019
(in millions)	Level 1		Level 2		Level 3		Netting and Collateral¹			Total		Level 1		Level 2		Level 3		Netting and Collateral¹			Total
Assets at fair value
Derivative contracts	$	—	$	9	$	102	$	(1	)	$	110	$	—	$	17	$	95	$	(1	)	$	111
Other	495		—		—		—			495
Money market funds and other												275		21		—		—			296
Nuclear decommissioning trusts:
Stocks²	1,596		—		—		—			1,596		1,550		—		—		—			1,550
Fixed Income³	1,065		1,665		—		—			2,730		889		1,724		—		—			2,613
Short-term investments, primarily cash equivalents	101		72		—		—			173		212		35		—		—			247
Subtotal of nuclear decommissioning trusts⁴	2,762		1,737		—		—			4,499		2,651		1,759		—		—			4,410
Total assets	3,257		1,746		102		(1		)	5,104		2,926		1,797		95		(1		)	4,817
Liabilities at fair value
Derivative contracts	—		2		1		(2		)	1		—		2		—		(1		)	1
Total liabilities	—		2		1		(2		)	1		—		2		—		(1		)	1
Net assets	$	3,257	$	1,744	$	101	$	1		$	5,103	$	2,926	$	1,795	$	95	$	—		$	4,816



	December 31, 2018
(in millions)	Level 1		Level 2		Level 3		Netting and Collateral¹			Total
Assets at fair value
Derivative contracts	$	—	$	32	$	141	$	—		$	173
Other	9		21		—		—			30
Nuclear decommissioning trusts:
Stocks²	1,382		—		—		—			1,382
Fixed Income³	1,001		1,665		—		—			2,666
Short-term investments, primarily cash equivalents	120		95		—		—			215
Subtotal of nuclear decommissioning trusts⁴	2,503		1,760		—		—			4,263
Total assets	2,512		1,813		141		—			4,466
Liabilities at fair value
Derivative contracts	—		13		—		(7		)	6
Total liabilities	—		13		—		(7		)	6
Net assets	$	2,512	$	1,800	$	141	$	7		$	4,460


¹	Represents the netting of assets and liabilities under master netting agreements and cash collateral.


²	Approximately ~~70% and 69%~~71% of SCE's equity investments were in companies located in the United States at both March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.


³	Includes corporate bonds, which were diversified and included collateralized mortgage obligations and other asset backed securities of ~~$113~~$57 million and ~~$102~~$67 million at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.


⁴	Excludes net payables of ~~$68~~$119 million and ~~$59~~$143 million at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, which consist of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.

Edison International Parent and Other

Edison International Parent and Other assets measured at fair value consisted of money market funds of ~~$43~~$19 million and ~~$541~~$115 million at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, classified as Level 1.

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:

Three months ended March 31,
(in millions) 2018 2017
Fair value of net assets (liabilities) at beginning of period $ 101
$ (1,089 )
Total realized/unrealized gains (losses):
Included in regulatory assets and liabilities¹
(20 ) (77 )
Fair value of net assets (liabilities) at end of period²
$ 81
$ (1,166 )
Change during the period in unrealized gains and losses related to assets and liabilities held at the end of the period $ 5
$ (102 )



	Three months ended March 31,
(in millions)	2019			2018
Fair value of net assets at beginning of period	$	141		$	101
Total realized/unrealized losses¹	(46		)	(20		)
Fair value of net assets at end of period²	$	95		$	81
Change during the period in unrealized gains and losses related to assets and liabilities held at the end of the period	$	(2	)	$	5


¹	Due to regulatory mechanisms, SCE's realized and unrealized gains and losses are recorded as regulatory assets and liabilities.


²	~~During the third quarter~~ There were no material transfers into or out of ~~2017, SCE designated certain derivative contracts as normal purchase~~Level 3during 2019 and ~~normal sale contracts, which resulted in a reclassification of $914 million from derivative liabilities to other liabilities.~~2018.

Edison International and SCE recognize the fair value for transfers in and transfers out of each level at the end of each reporting period. There were no material transfers between any levels during 2018 and 2017.

~~Valuation Techniques Used to Determine Fair Value~~

The process of determining fair value is the responsibility of SCE's risk management department, which reports to SCE's chief financial officer. This department obtains observable and unobservable inputs through broker quotes, exchanges, and internal valuation techniques that use both standard and proprietary models to determine fair value. Each reporting period, the risk and finance departments collaborate to determine the appropriate fair value methodologies and classifications for each derivative. Inputs are validated for reasonableness by comparison against prior prices, other broker quotes, and volatility fluctuation thresholds. Inputs used and valuations are reviewed period-over-period and compared with market conditions to determine reasonableness.

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) Significant
Assets Liabilities Valuation Technique(s) Unobservable Input Range
Congestion revenue rights
March 31, 2018 $ 81
$ —
Market simulation model and auction prices Load forecast 5,002 MW - 22,970 MW

Power prices¹
$(15.00) - $120.00

Gas prices²
$2.46 - $4.37
CAISO CRR Auction prices $(6.22) - $8.66
December 31, 2017 $ 102
—
Market simulation model and auction prices Load forecast 5,002 MW - 22,970 MW

Power prices¹
$(15.00) - $120.00

Gas prices²
$2.46 - $4.37
CAISO CRR Auction prices $(9.41) - $8.66


¹	~~Prices are in dollars per megawatt-hour.~~


²	~~Prices are in dollars per million British thermal units.~~



	Fair Value (in millions)					Significant	Range
	Assets		Liabilities		Valuation Technique(s)	Unobservable Input	(Weighted Average)
Congestion revenue rights
March 31, 2019	$	95	$	—	Auction prices	CAISO CRR auction prices	$(7.02) - $41.52 ($1.43)
December 31, 2018	141		—		Auction prices	CAISO CRR auction prices	$(7.41) - $41.52 ($1.62)

Level 3 Fair Value ~~Sensitivity~~

~~Congestion Revenue Rights~~Uncertainty

For CRRs, ~~where SCE is the buyer, generally~~ increases ~~(decreases)~~or decreases in ~~forecasted load in isolation~~CAISO auction price would result in ~~increases (decreases) to the~~higher or lower fair value. In general, an increase (decrease) in electricity and gas prices at illiquid locations tends to result in increases (decreases) to fair value; however, changes in electricity and gas prices in opposite directions may have varying results on fair value.value as of March 31, 2019, 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.

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:


	March 31, 2018				December 31, 2017				March 31, 2019				December 31, 2018
(in millions)	Carrying Value¹		Fair Value		Carrying Value¹		Fair Value		Carrying Value¹		Fair Value²		Carrying Value¹		Fair Value²
Edison International	$	13,846	$	14,940	$	12,123	$	13,760	$	15,762	$	16,068	$	14,711	$	14,844
SCE	$	12,108	$	13,225	$	10,907	$	12,547	14,021		14,412		12,971		13,180


¹	Carrying value is net of debt issuance costs.

²The fair value of Edison International's and SCE's short-term and long-term debt is classified as Level 2 and 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 of new issue prices, and relevant credit information.2.

Note 5. Debt and Credit Agreements

Long-Term Debt

In ~~January 2018, Edison International Parent borrowed~~March 2019, SCE issued $500 million under a Term Loan Agreement due in January 2019, with a variable interest rate based on the London Interbank Offered Rate plus 60 basis points. The proceeds were used to repay Edison International Parent's commercial paper borrowings. In March 2018, Edison International Parent issued $550 million of ~~4.125% senior notes due 2028. The proceeds from the March 2018 issuance were used to repay the $500 million Term Loan discussed above and for general corporate purposes.~~

~~In March 2018, SCE issued $450 million of 2.90%~~4.20% first and refunding mortgage bonds due ~~2021, $400~~in 2029 and $600 million of ~~3.65%~~4.875% first and refunding mortgage bonds due ~~2028 and $400 million of 4.125% first and refunding mortgage bonds due 2048.~~in 2049. The proceeds ~~from these bonds~~ were used to repay commercial paper borrowings and for general corporate purposes.

Credit Agreements and Short-Term Debt

In February 2019, SCE borrowed $750 million under a Term Loan Agreement due in February 2020, with a variable interest rate based on the London Interbank Offered Rate plus 70 basis points. The proceeds were used to repay SCE's commercial paper borrowings and for general corporate purposes.

In April 2019, Edison International borrowed $1.0 billion under a Term Loan Agreement due in April 2020, with a variable interest rate based on the London Interbank Offered Rate plus 90 basis points. Of the proceeds of the term loan, $750 million was contributed to SCE and the remainder of the proceeds will be used for general corporate and working capital purposes. In April 2019, SCE used the $750 million Edison International contributed to SCE to repay its February 2019 Term Loan discussed above.

SCE and Edison International Parent have multi-year revolving credit facilities of ~~$2.75~~$3.0 billion and ~~$1.25~~$1.5 billion, respectively, both facilities maturing in ~~July 2022.~~May 2023 and have two 1-year extension options. SCE's credit facility is generally used to support commercial paper borrowings and letters of credit issued for procurement-related collateral requirements, balancing account undercollections and for general corporate purposes, including working capital requirements to support operations and capital expenditures. Edison International Parent's credit facility is used to support commercial paper borrowings and for general corporate purposes.

At March 31, ~~2018,~~2019, SCE's outstanding commercial paper, net of discount, was ~~$70~~$29 million at a weighted-average interest rate of ~~2.24%~~3.15%. At March 31, ~~2018,~~2019, letters of credit issued under SCE's credit facility aggregated ~~$103~~$209 million, ~~and~~substantially all of which are scheduled to expire in twelve months or less. At December 31, ~~2017,~~2018, the outstanding commercial paper, net of discount, was ~~$738~~$720 million at a weighted-average interest rate of ~~1.75%~~3.23%. In December 2017, SCE borrowed $500 million from the credit facility. The interest rate on this loan was 2.46% on December 31, 2017. In January 2018, SCE repaid its $500 million borrowings with cash on hand.

At March 31, 2019, Edison International Parent's outstanding commercial paper, net of discount, was $153 million at a weighted-average interest rate of 3.03%. At December 31, 2018, Edison International Parent had no outstanding commercial paper. At December 31, 2017, the outstanding commercial paper, net of discount, was $639 million at a weighted-average interest rate of 1.70%. In December 2017, Edison International borrowed $500 million from the credit facility. The interest rate on this loan was 2.56% on December 31, 2017. In January 2018, Edison International repaid its $500 million borrowings with cash on hand.

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 plant and peaker plants, QF 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.

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 each of the major credit rating agencies, 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 $1 million and $4 million as of ~~both~~ March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, for which SCE has posted ~~less than $1~~no collateral and $17 million collateral at ~~both~~ March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, to its counterparties for its derivative liabilities and related outstanding payables. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, ~~2018,~~2019, SCE would be required to post ~~$12~~$1 million of additional ~~collateral of which $11 million is related to outstanding payables that are net of collateral already posted.~~collateral.

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:


	March 31, 2018																		March 31, 2019
	Derivative Assets								Derivative Liabilities								Net Asset		Derivative Assets								Derivative Liabilities								Net Assets
(in millions)	Short-Term			Long-Term		Subtotal			Short-Term			Long-Term		Subtotal			Net Asset		Short-Term			Long-Term¹		Subtotal			Short-Term²			Long-Term		Subtotal			Net Assets
Commodity derivative contracts
Gross amounts recognized	$	94		$	3	$	97		$	4		$	—	$	4		$	93	$	102		$	10	$	112		$	2		$	—	$	2		$	110
Gross amounts offset in the consolidated balance sheets	(2		)	—		(2		)	(2		)	—		(2		)	—		(1		)	—		(1		)	(1		)	—		(1		)	—
Cash collateral posted	—			—		—			(1		)	—		(1		)	1
Cash collateral posted³																			—			—		—			—			—		—			—
Net amounts presented in the consolidated balance sheets	$	92		$	3	$	95		$	1		$	—	$	1		$	94	$	101		$	10	$	111		$	1		$	—	$	1		$	110


	December 31, 2017																		December 31, 2018
	Derivative Assets								Derivative Liabilities								Net Asset		Derivative Assets						Derivative Liabilities								Net Assets
(in millions)	Short-Term			Long-Term		Subtotal			Short-Term			Long-Term		Subtotal			Net Asset		Short-Term		Long-Term¹		Subtotal		Short-Term²			Long-Term		Subtotal			Net Assets
Commodity derivative contracts
Gross amounts recognized	$	106		$	5	$	111		$	3		$	—	$	3		$	108	$	171	$	2	$	173	$	13		$	—	$	13		$	160
Gross amounts offset in the consolidated balance sheets	(1		)	—		(1		)	(1		)	—		(1		)	—		—		—		—		—			—		—			—
Cash collateral posted	—			—		—			(1		)	—		(1		)	1		—		—		—		(7		)	—		(7		)	7
Net amounts presented in the consolidated balance sheets	$	105		$	5	$	110		$	1		$	—	$	1		$	109	$	171	$	2	$	173	$	6		$	—	$	6		$	167

¹Included in "Other long-term assets" on Edison International's and SCE's consolidated balance sheets.

²Included in "Other current liabilities" on Edison International's and SCE's consolidated balance sheets.

³At March 31, 2019, SCE posted $11 million of cash collateral that is not offset against derivative liabilities and is reflected in "Other current assets" on the consolidated balance sheets.

Income 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:


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
Realized losses	$	(12	)	$	(2	)
Realized gains (losses)							$	32		$	(12	)
Unrealized losses	(14		)	(85		)	(50		)	(14		)

Notional Volumes of Derivative Instruments

The following table summarizes the notional volumes of derivatives used for SCE hedging activities:


		Economic Hedges			Economic Hedges
Commodity	Unit of Measure	March 31, 2018	December 31, 2017	Unit of Measure	March 31, 2019	December 31, 2018
Electricity options, swaps and forwards	GWh	542	475	GWh	2,515	2,786
Natural gas options, swaps and forwards	Bcf	135	143	Bcf	4	20
Congestion revenue rights	GWh	64,830	78,765	GWh	39,401	54,453

Note 7. Revenue

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 our customers. This typically occurs when electricity is delivered to our customers, which includes amounts for services rendered but unbilled at the end of a reporting period.

Edison International Parent and Other revenue primarily relates to Edison Energy Group, a holding company for subsidiaries engaged in pursuing competitive business opportunities across energy services and managed portfolio solutions to commercial and industrial customers. The revenue for Edison International Parent and Other is immaterial to Edison International.

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. SCE's revenue is disaggregated by two revenue sources:

The following table is a summary of SCE's revenue:

Three months ended March 31, 2018 Three months ended March 31, 2017
(in millions) Earning
Activities Cost-
Recovery
Activities Total
Consolidated Earning Activities Cost-Recovery Activities Total Consolidated
Revenues from contracts with customers $ 1,536
$ 1,192
$ 2,728
*
*
*
Alternative revenue programs and other operating revenue (23 ) (151 ) (174 ) *
*
*
Total operating revenue $ 1,513
$ 1,041
$ 2,554
$ 1,552
$ 904
$ 2,456

^*~~As discussed in Note 1, prior period amounts have not been adjusted under the modified retrospective method.~~

~~SCE's Revenue from Contracts with Customers~~

~~Provision of Electricity~~

SCE principally generates revenue from contracts with customers through supplying and delivering electricity to its customers. Rates charged to customers are based on tariff rates, approved by the CPUC and FERC. Revenue is authorized by the CPUC through triennial 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 two years are set by a methodology established in the GRC proceeding. Differences between the amount collected and authorized levels are either collected from or refunded to customers, and therefore, such differences do not impact operating revenue (see alternative revenue programs below for further information). In addition to the utility earnings activity revenue described above, SCE also earns revenue to recover costs for power procurement and other activities. SCE earns no return on these 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 non-residential customers, SCE satisfies the performance obligation of delivering electricity over time as the customers simultaneously receive and consume the delivered electricity. Since SCE has a right to invoice an amount that corresponds to the value of the delivered electricity mandated in the tariff rates established by the CPUC and FERC, SCE is eligible for and has elected the right-to-invoice practical expedient which allows SCE to recognize revenue for tariff sales in the amount for which SCE has a right to invoice. This is consistent with how SCE recognized revenue for tariff sales prior to the adoption of the new standard.

Energy sales for residential customers are typically on a month to month implied contract for transmission, distribution and generation services, while commercial and other non-residential customer contracts can extend up to 20 years. Revenue is recognized over time as the energy is supplied and delivered to its customers and the respective revenue is billed and paid on a monthly basis.

~~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. Revenue is reflected in "Revenue from contracts with customers" in 2018 (see table above) and in "Operating revenue" in 2017 and expenses are reflected in "Operation and maintenance." SCE's franchise fees billed to customers were $28 million and $29 million for the three months ended March 31, 2018 and 2017, 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.

~~Provision of Electrical Transmissions Services and Other Revenue from Contracts with Customers~~

SCE also provides services to non-residential customers that include the use of SCE's owned transmission lines to transmit electricity from generation facilities to the grid and provide the use of SCE-owned facilities to connect to the grid. SCE contracts with its customers through contracts that are on a month to month basis. The contract pricing for the use of SCE's transmission lines is mandated by tariff rates approved by either the CPUC or FERC, as applicable. Revenue is recognized over time as the services are provided. The revenue is billed and paid monthly.

~~SCE also earns an immaterial amount of revenue through telecommunication services and the sale of excess energy to customers.~~

~~The estimated revenue expected to be recognized in the future related to SCE's performance obligations that are not completed (or partially completed) at March 31, 2018 is immaterial.~~

~~SCE's Alternative Revenue Programs~~

~~Alternative Revenue Programs~~ – ~~Decoupling~~

Rates charged to customers are based on CPUC- and FERC- authorized revenue requirements as discussed above. CPUC and FERC rates decouple authorized revenue from the volume of electricity sales. Differences between amounts collected and authorized levels are either collected from or refunded to customers, and therefore, SCE earns revenue equal to amounts authorized.

The differences between amounts billed and authorized levels for both CPUC and FERC are reflected in "Alternative revenue programs and other operating revenue" in 2018 (see table above) and in "Operating revenue" in 2017.

~~Other Alternative Revenue Programs~~

The CPUC and FERC have authorized additional, alternative revenue programs which adjust billings for the effects of broad external factors or to compensate SCE for demand-side management initiatives and provide for incentive awards if SCE achieves certain objectives. These alternative revenue programs have been authorized to allow SCE to recover costs that SCE has been authorized to pass on to customers, including 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 and, for incentive-based programs, at the time the awards are approved by the CPUC. 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.

~~SCE's Contract Balances~~

~~The following table provides information about SCE's receivables, accrued unbilled revenue and contract liabilities related to contracts from customers:~~

(in millions) March 31,
2018 December 31,
2017
Receivables:
Billed revenue $ 526
$ 613
Accrued unbilled revenues 510
212
Total receivables $ 1,036
$ 825
Contract liabilities¹
$ 21
$ 20



	Three months ended March 31, 2019						Three months ended March 31, 2018
(in millions)	Earning Activities		Cost- Recovery Activities		Total Consolidated		Earning Activities			Cost-Recovery Activities			Total Consolidated
Revenues from contracts with customers^1,2,3	$	1,502	$	957	$	2,459	$	1,536		$	1,192		$	2,728
Alternative revenue programs and other operating revenue⁴	48		309		357		(23		)	(151		)	(174		)
Total operating revenue	$	1,550	$	1,266	$	2,816	$	1,513		$	1,041		$	2,554

~~Contract liabilities are included~~In the absence of a 2018 GRC decision, SCE recognized CPUC revenue in ~~"Other current liabilities"~~2018 and ~~"Other deferred credits and long-term liabilities"~~the three months ended March 31, 2019 based on the ~~consolidated balance sheets.~~2017 authorized revenue requirement adjusted mainly for the July 2017 cost of capital decision and Tax Reform. In April 2019, the CPUC issued a proposed decision, which, if adopted would result in 2018 and 2019 base rate revenue requirements of $5.102 billion and $5.422 billion, respectively. For further information, see Note 1.

~~SCE's contract receivables are shown above, gross of allowance for uncollectible accounts. Activities in the allowance for doubtful accounts for SCE's contracts with customers were as follows:~~

(in millions) 2018
Balance at January 1, $ 36
Charged to costs and expenses 7
Write-offs (6 )
Balance at March 31, $ 37

SCE's contract liabilities primarily relate to cash advances received from customers for executory services related to the use of SCE's operating assets. Revenue is recognized monthly as the services are provided.

~~The following table provides a summary of significant changes in SCE's contract liabilities:~~

(in millions) 2018
Balance at January 1, $ 20
Additions 14
Revenue recognized during the period (13 )
Balance at March 31, $ 21


²	At March 31, 2019 and December 31, 2018, SCE's receivables related to contracts from customers were $1.0 billion and $1.1 billion, respectively, which include accrued unbilled revenue of $459 million and $482 million, respectively.


³	Includes SCE's franchise fees billed to customers of $28 million for both the three months ended March 31, 2019 and 2018.


⁴	Includes differences between amounts billed and authorized levels for both CPUC and FERC.

Note 8. Income Taxes

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:


	Edison International						SCE						Edison International						SCE
	Three months ended March 31,												Three months ended March 31,
(in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Edison International:
Income from continuing operations before income taxes	$	211		$	352		$	310		$	392		$	196		$	211		$	218		$	310
Provision for income tax at federal statutory rate of 21% and 35%, respectively¹	44			124			65			137
Provision for income tax at federal statutory rate of 21%													41			44			46			65
Increase in income tax from:
State tax, net of federal benefit	(5		)	10			1			13			(7		)	(5		)	(5		)	1
Property-related	(69		)	(113		)	(69		)	(113		)	(69		)	(69		)	(69		)	(69		)
Change related to uncertain tax positions	—			(12		)	(1		)	(11		)
Shared-based compensation²	—			(43		)	—			(8		)
Shared-based compensation¹													(2		)	—			(2		)	—
Deferred tax re-measurement²													(69		)	—			(69		)	—
Other	(1		)	(6		)	(2		)	(6		)	(6		)	(1		)	(6		)	(3		)
Total income tax (benefit) expense from continuing operations	$	(31	)	$	(40	)	$	(6	)	$	12
Total income tax benefit from continuing operations													$	(112	)	$	(31	)	$	(105	)	$	(6	)
Effective tax rate	(14.7		)%	(11.4		)%	(1.9		)%	3.1		%	(57.1		)%	(14.7		)%	(48.2		)%	(1.9		)%


¹	~~In December 2017, Tax Reform was signed into law. This comprehensive reform~~Includes state taxes of ~~tax law reduces~~$1 million for the ~~federal corporate income tax rate from 35% to 21%, effective January 1, 2018.~~three months ended March 31, 2019 for both Edison International and SCE.


²~~Includes state taxes for Edison International and SCE of $6 million and $1 million, respectively, for the three months ended March 31, 2017.~~	Relates to changes in the allocation of deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution issued in February 2019. The resolution determined that customers are only entitled to excess deferred taxes which were included when setting rates, while other deferred tax re-measurement belongs to the shareholders.

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 ~~10 included in~~11.

Tax Disputes

Tax years that remain open for examination by the Internal Revenue Service ("IRS") and the California Franchise Tax Board are 2015 – 2017 ~~Form 10-K.~~

~~Unrecognized Tax Benefits~~

~~The following table provides a reconciliation of unrecognized tax benefits:~~

Edison International SCE
(in millions) 2018 2017 2018 2017
Balance at January 1, $ 432
$ 471
$ 331
$ 371
Tax positions taken during the current year:
   Increases 8
10
8
10
Tax positions taken during a prior year:
   Increases —
2
—
2
   Decreases (3 ) (10 ) (3 ) (10 )
   Decreases for settlements during the period¹
—
(82 ) —
(78 )
Balance at March 31, $ 437
$ 391
$ 336
$ 295

¹~~In the first quarter of~~and 2010 – 2017, respectively. Edison International has settled all open tax positions with the IRS for taxable years ~~2007 through 2012.~~

~~Tax Disputes~~prior to 2013.

In the ~~first~~fourth quarter of ~~2017,~~2018, Edison International ~~settled all open tax positions~~reached a settlement with the IRS for taxable years 2007 through 2012. Edison International has previously made cash deposits to cover the estimated tax and interest liability from this audit cycle and expects a $7 million refund of this deposited amount.

~~Tax years that remain open for examination by the IRS and~~ the California Franchise Tax Board ~~are 2014 – 2016 and 2010 – 2016, respectively. Edison International has settled all open~~for tax ~~position with the IRS for taxable years prior to 2013.~~

~~Tax~~ years 1994 – 2006 ~~are currently in~~and has updated its uncertain tax positions to reflect this settlement. As a result of the settlement, ~~negotiations with~~Edison International expects a $65 million refund of tax and interest from the California Franchise Tax ~~Board. While we expect to resolve these tax years within the next twelve months, the impacts cannot be reasonably estimated until further progress has been made.~~Board in 2019. Tax years 2007 – 2009 are currently under protest with the California Franchise Tax Board.

Note 9. Compensation and Benefit Plans

Pension Plans

Edison International made contributions of $18 million during the three months ended March 31, 2018, which includes contributions of $13 million by SCE. Edison International expects to make contributions of $48 million during the remainder of 2018, which includes $37 million from SCE. Annual contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms.

Net periodic pension expense components for continuing operations are:


	Edison International						SCE						Edison International						SCE
	Three months ended March 31,												Three months ended March 31,
(in millions)	2018			2017 ²			2018			2017²			2019			2018			2019			2018
Service cost	$	32		$	36		$	31		$	35		$	32		$	32		$	31		$	31
Non-service cost
Interest cost	35			41			32			37			39			35			35			32
Expected return on plan assets	(57		)	(53		)	(53		)	(50		)	(52		)	(57		)	(49		)	(53		)
Amortization of prior service cost	1			1			1			1			—			1			—			1
Amortization of net loss¹	2			5			1			4			2			2			1			1
Regulatory adjustment (deferred)	2			(3		)	2			(3		)	(4		)	2			(4		)	2
Total non-service cost	$	(17	)	$	(9	)	$	(17	)	$	(11	)
Total non-service benefit²													$	(15	)	$	(17	)	$	(17	)	$	(17	)
Total expense recognized	$	15		$	27		$	14		$	24		$	17		$	15		$	14		$	14


¹	Includes ~~the amount of~~ net loss reclassified from other comprehensive ~~loss. The amount reclassified~~loss of $2 million and $1 million for Edison International and SCE, ~~was $2 million and $1 million,~~ respectively, for both the three months ended March 31, ~~2018,~~2019 and ~~$3 million and $2 million, respectively, for the three months ended March 31, 2017.~~2018.

²Included in "Other income and expenses" on Edison International's and SCE's consolidated statement of income.

During the first quarter of 2018, Edison International and SCE adopted an accounting standard retrospectively related to the presentation of the components of net periodic benefit costs for the defined benefit pension and other postretirement plans. Prior years' consolidated income statements have been updated to reflect the retrospective application of this accounting standard. Service and non-service costs are included in "Operation and maintenance" and "Other income and expenses," respectively, on the consolidated income statement. See Note 1 for further information.

Postretirement Benefits Other Than Pensions ("~~PBOP(s)"~~PBOP")

Edison International made contributions of $3 million during the three months ended March 31, 2018 and expects to make contributions of $9 million during the remainder of 2018, substantially all of which are expected to be made by SCE. 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. Benefits in retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date. Under the terms of the Edison International Health and Welfare Benefit Plan ("PBOP Plan") each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of all PBOP Plan benefits with respect to its employees and former employees. 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.

Net periodic PBOP expense components for continuing operations are:


	Edison International						SCE						Edison International						SCE
	Three months ended March 31,												Three months ended March 31,
(in millions)	2018			2017 ¹			2018			2017 ¹			2019			2018			2019			2018
Service cost	$	9		$	9		$	9		$	9		$	8		$	9		$	8		$	9
Non-service cost
Interest cost	21			24			21			24			21			21			21			21
Expected return on plan assets	(30		)	(27		)	(30		)	(27		)	(28		)	(30		)	(28		)	(30		)
Amortization of prior service cost	—			(1		)	—			(1		)
Total non-service cost	$	(9	)	$	(4	)	$	(9	)	$	(4	)
Amortization of net gain													(1		)	—			(1		)	—
Regulatory adjustment (deferred)													6			—			6			—
Total non-service benefit¹													$	(2	)	$	(9	)	$	(2	)	$	(9	)
Total expense	$	—		$	5		$	—		$	5		$	6		$	—		$	6		$	—

¹Included in "Other income and expenses" on Edison International's and SCE's consolidated statement of income.

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):


	Longest Maturity Dates	Amortized Cost				Fair Value				Longest Maturity Dates	Amortized Cost				Fair Value
(in millions)	Longest Maturity Dates	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017		Longest Maturity Dates	March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Stocks	—	*		$	236	$	1,520	$	1,596	—	*		*		$	1,550	$	1,381
Municipal bonds	2054	636		643		740		768		2057	662		665		785		767
U.S. government and agency securities	2067	1,259		1,235		1,331		1,319		2067	1,116		1,193		1,224		1,288
Corporate bonds	2057	593		579		644		643		2050	549		573		603		611
Short-term investments and receivables/payables¹	One-year	95		110		99		114		One-year	124		70		129		73
Total		$	2,583	$	2,803	$	4,334	$	4,440		$	2,451	$	2,501	$	4,291	$	4,120


*	~~Effective January 1, 2018, SCE adopted an accounting standards update related to the classification and measurement of financial instruments in which equity~~Equity investments are measured at fair value. ~~See Note 1 for further information.~~


¹	Short-term investments include ~~$37~~$35 million and ~~$29~~$71 million of repurchase agreements payable by financial institutions which earn interest, are fully secured by U.S. Treasury securities and mature by April ~~2, 2018~~1, 2019 and January 2, ~~2018~~2019 as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Trust fund earnings (based on specific identification) increase the trust fund balance and the asset retirement obligation ("ARO") regulatory liability. Unrealized holding gains, net of losses, ~~were $1.5~~were$1.6 billion and ~~$1.6~~$1.4 billion at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, and other-than-temporary impairments of ~~$159~~$162 million and ~~$143~~$170 million at the respective periods.

Trust assets are used to pay income taxes arising from trust investing activity. Deferred tax liabilities related to net unrealized gains were $366 million and $323 million at March 31, 2019 and December 31, 2018, ~~were $375 million.~~respectively. Accordingly, the fair value of trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled ~~$4.0~~$3.9 billion and $3.8 billion at March 31, ~~2018.~~

~~For the three months ended March~~2019 and December 31, 2018, respectively.

The following table summarizes the gains and 2017, gross realized gains were $61 million and $99 million, respectively, and gross realized losses were $8 million and $16 million, respectively. Unrealized losses, net of gains, for equity securities were $63 million and unrealized gains, net of losses, for equity securities were $20 million(losses) for the ~~three months ended March 31, 2018 and 2017, respectively.~~ trust investments:



	Three months ended March 31,
(in millions)	2019		2018
Gross realized gains	$	23	$	61
Gross realized loss	—		8
Net unrealized gains (losses) for equity securities	$	168	$	(63	)

Due to regulatory mechanisms, changes in assets of the trusts from income or loss items have no impact on operating revenue or earnings.

~~Sale of SoCore Energy~~

On February 28, 2018, Edison International agreed to sell SoCore Energy to a third party, subject to the completion of closing conditions, which were satisfied April 16, 2018. As a result, Edison International accounted for the assets and liabilities of SoCore Energy as held for sale as of March 31, 2018 and recognized a pre-tax loss of $66 million ($48 million after-tax). The following table summarizes the assets and liabilities held for sale at March 31, 2018:

(in millions) March 31, 2018
Assets:
Cash and cash equivalents $ 18
Short-term restricted cash 25
Receivables 6
Non-utility property, plant and equipment¹
203
Other assets 18
Total assets of business held for sale $ 270
Liabilities:
Accounts payable $ 1
Accrued liabilities 4
Debt obligations 82
Other liabilities 27
Noncontrolling interest (NCI) 28
Total liabilities and NCI of business held for sale¹
$ 142


¹	During the first quarter of 2018, the carrying value of assets and liabilities was adjusted to fair value less transaction costs, which resulted in a pre-tax loss of $66 million recorded in "Impairment and other charges" in Edison International's consolidated income statements.

Note 11. Regulatory Assets and Liabilities

Regulatory Assets

SCE's regulatory assets included on the consolidated balance sheets are:


(in millions)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	459	$	484	$	935	$	814
Power contracts and energy derivatives	203		203
Power contracts					333		305
Other	16		16		18		14
Total current	678		703		1,286		1,133
Long-term:
Deferred income taxes, net of liabilities	3,202		3,143		3,683		3,589
Pensions and other postretirement benefits	268		271		274		271
Power contracts and energy derivatives	774		799
Power contracts					597		700
Unamortized investments, net of accumulated amortization	116		123		117		118
San Onofre¹	72		72
Unamortized loss on reacquired debt	164		168		150		153
Regulatory balancing accounts	160		143		232		360
Environmental remediation	140		144		135		134
Other	36		51		80		55
Total long-term	4,932		4,914		5,268		5,380
Total regulatory assets	$	5,610	$	5,617	$	6,554	$	6,513


¹	In accordance with the Revised San Onofre Settlement Agreement, SCE wrote down the San Onofre regulatory asset. SCE has requested to apply $72 million of the U.S. Department of Energy ("DOE") proceeds, currently reflected as a regulatory liability in the DOE litigation memorandum account, against the remaining San Onofre regulatory asset. See Note 12 for further information.

Regulatory Liabilities

SCE's regulatory liabilities included on the consolidated balance sheets are:


(in millions)	March 31, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	1,124	$	1,009	$	836	$	1,080
Energy derivatives	61		74		100		158
San Onofre¹	47		5
Other²	115		33
2018 GRC					341		274
Other					18		20
Total current	1,347		1,121		1,295		1,532
Long-term:
Costs of removal	2,772		2,741
Re-measurement of deferred taxes	2,834		2,892
Recoveries in excess of ARO liabilities³	1,496		1,575
Cost of removal					2,808		2,769
Re-measurement of deferred taxes¹					2,650		2,776
Recoveries in excess of ARO liabilities²					1,357		1,130
Regulatory balancing accounts	1,482		1,316		1,428		1,344
Other postretirement benefits	26		26		189		185
Other	73		64		156		125
Total long-term	8,683		8,614		8,588		8,329
Total regulatory liabilities	$	10,030	$	9,735	$	9,883	$	9,861

~~During the three months ended March 31, 2018,~~ SCE ~~recorded San Onofre revenue based on the Prior San Onofre Settlement Agreement. As a result of the Revised San Onofre Settlement Agreement, SCE recorded a~~decreased its regulatory liability ~~pending~~and recorded an income tax benefit of $69 million during the ~~CPUC approval~~first quarter of 2019 related to changes in the ~~agreement. See~~allocation of deferred tax re-measurement between customers and shareholders. For further information, see Note ~~12 for additional information.~~8.


²	During the three months ended March 31, 2018, SCE recorded CPUC revenue based on the 2017 authorized revenue requirements adjusted for the July 2017 cost of capital decision and Tax Reform pending the outcome of the 2018 GRC. SCE recorded a regulatory liability primarily associated with these adjustments.

Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of 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.

Net Regulatory Balancing Accounts

The following table summarizes the significant components of regulatory balancing accounts included in the above tables of regulatory assets and liabilities:


(in millions)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Asset (liability)
Energy resource recovery account	$	413		$	464		$	927		$	815
New system generation balancing account	(213		)	(197		)	(96		)	(74		)
Public purpose programs and energy efficiency programs	(1,288		)	(1,145		)	(1,304		)	(1,200		)
Tax accounting memorandum account and pole loading balancing account	(260		)	(259		)	(128		)	28
Base revenue requirement balancing account	(322		)	(200		)
Base revenue requirement balancing account¹							(282		)	(628		)
DOE litigation memorandum account	(156		)	(156		)	(69		)	(69		)
Greenhouse gas auction revenue	(50		)	(22		)
Greenhouse gas auction revenue and low carbon fuel standard revenue							(150		)	(81		)
FERC balancing accounts	(222		)	(205		)	(139		)	(180		)
Catastrophic event memorandum account	94			90			95			144
Wildfire expense memorandum account							41			128
Other	17			(68		)	8			(133		)
Liability	$	(1,987	)	$	(1,698	)	$	(1,097	)	$	(1,250	)


¹	The base revenue requirement balancing account at March 31, 2019 includes recovery of $107 million of premiums related to a 12-month, $300 million wildfire insurance policy purchased in December 2017. See Note 12 for further discussion.

Note 12. Commitments and Contingencies

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 ~~provided~~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, and indemnities for specified environmental liabilities and income taxes with respect to assets sold. 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.

SCE has ~~indemnified~~agreed to indemnify the City of Redlands, California in connection with the Mountainview power plant's California Energy Commission permit for cleanup or associated actions related to groundwater contaminated by perchlorate due to the disposal of filter cake at the City's solid waste landfill. The obligations under this agreement are not limited to a specific time period or subject to a maximum liability. As of March 31, 2019, there has been no groundwater contamination identified. Thus, SCE has not recorded a liability related to this indemnity.

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 these other proceedings will not, individually or in the aggregate, materially affect its financial position, results of operations and cash flows.

Southern California Wildfires and Mudslides

In December 2017 ~~several~~and November 2018, wind-driven wildfires ~~(the "December 2017 Wildfires")~~ impacted portions of SCE's service territory, ~~and caused~~causing 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 ~~these~~the 2017 fires ~~known~~originated on December 4, 2017, in the Anlauf Canyon area of Ventura County (the investigating agencies refer to this fire as the ~~Thomas Fire,~~"Thomas Fire"), followed shortly thereafter by a second fire that originated near Koenigstein Road in ~~Ventura County and~~the City of Santa Paula (the "Koenigstein Fire"). While the progression of these two fires remains under review, the December 4, 2017 fires eventually burned substantial acreage ~~located~~ in both Ventura and Santa Barbara Counties. According to ~~the most recent California Department of Forestry and Fire Protection ("Cal Fire") incident~~CAL FIRE information, ~~reports,~~ the Thomas ~~Fire~~and Koenigstein Fires burned over 280,000 acres, destroyed or damaged an estimated ~~1,063~~1,343 structures and resulted in two fatalities. The largest of the November 2018 fires, known as the Woolsey Fire, originated in Ventura County and burned acreage in both Ventura and Los Angeles Counties. According to CAL FIRE information, the Woolsey Fire burned almost 100,000 acres, destroyed an estimated 1,643 structures, damaged an estimated ~~280~~364 structures and resulted in ~~one fatality.~~ three fatalities.

As ~~of March 31, 2018, SCE had incurred approximately $46 million of capital expenditures~~described below, multiple lawsuits related to ~~restoration of service resulting from~~ the ~~December 2017 Wildfires.~~

~~Determining wildfire origin~~Thomas and ~~cause is often a complex~~Koenigstein Fires and ~~time-consuming process,~~the Woolsey Fire have been initiated against SCE and ~~several investigations into the facts and circumstances~~Edison International. Some of the Thomas ~~Fire are believed to be ongoing.~~and Koenigstein Fires lawsuits claim that SCE and Edison International have responsibility for the damages caused by mudslides and flooding in Montecito and surrounding areas in January 2018 (the "Montecito Mudslides") based on a theory that SCE has ~~been advised~~responsibility for the Thomas and/or Koenigstein Fires and that the ~~origins~~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 ~~causes~~resulted in 21 fatalities, with two additional fatalities presumed.

The extent of the fire are being investigated by Cal Fire and the Ventura County Fire Department. In connection with its investigation of the Thomas Fire, Cal Fire has removed and retained certain of SCE's equipment that was located near suspected ignition points of the fire. SCE expects that the Ventura County Fire Department and/or Cal Fire will ultimately issue reports concerning the origins and causes of the Thomas Fire but cannot predict when these reports will be released or if any findings will be issued before the investigations are completed. The CPUC's SED is also conducting an investigation to assess the compliance of SCE and its facilities with applicable rules and regulations in areas impacted by the Thomas Fire. In addition, as it does in all wildfire matters in which its facilities may or are alleged to be involved, SCE is conducting its own investigation of the Thomas Fire. At this time, SCE cannot predict when its own investigation, or the investigations of Cal Fire, the Ventura County Fire Department or the SED, will be completed.

~~Any potential~~ liability for ~~December 2017 Wildfire-related~~wildfire-related damages ~~will depend~~in actions against utilities depends on a number of factors, including whether SCE substantially caused or contributed to the damages and whether parties seeking recovery of damages will be

required to show negligence in addition to causation. ~~Certain~~ 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 for alleged violations of CPUC rules and state laws in connection with the ignition of a wildfire.

Final determinations of liability for the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire (each a "2017/2018 Wildfire/Mudslide Event," and, collectively, the "2017/2018 Wildfire/Mudslide Events"), including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes. Even when investigations are still pending or liability is disputed, an assessment of likely outcomes, including through future settlement of disputed claims, may require a liability to be accrued under accounting standards. Based on information available to SCE and consideration of the risks associated with litigation, Edison International and SCE expect to incur a material loss in connection with the 2017/2018 Wildfire/Mudslide Events and accrued a liability of $4.7 billion in the fourth quarter of 2018. In the fourth quarter of 2018, Edison International and SCE also recorded expected recoveries from insurance of $2.0 billion and expected recoveries through FERC electric rates of $135 million. The net charge to earnings recorded in the fourth quarter of 2018 was $1.8 billion after-tax. The liability that was accrued corresponds to the lower end of the reasonably estimated range of expected potential losses that may be incurred in connection with the 2017/2018 Wildfire/Mudslide Events and is subject to change as additional information becomes available. Edison International and SCE will seek to offset any actual losses realized with recoveries from insurance policies in place at the time of the events and, to the extent actual losses exceed insurance, through electric rates. 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. See "—Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates" for additional information.

External Investigations and Internal Review

The VCFD and CAL FIRE have issued reports concerning their findings regarding the causes of the Thomas Fire and the Koenigstein Fire. The VCFD and CAL FIRE findings do not determine legal causation of or assign legal liability for the Thomas or Koenigstein Fires; final determinations of legal causation and liability would only be made during lengthy and complex litigation. The reports did not address the causes of the Montecito Mudslides. SCE expects that the VCFD and CAL FIRE will ultimately also issue a report concerning the departments' findings of origin and cause of the Woolsey Fire but cannot predict when this report will be released. The CPUC's Safety Enforcement Division ("SED") is also conducting investigations to assess SCE's compliance with applicable rules and regulations in areas impacted by the fires. SCE cannot predict when the SED's investigations will be completed.

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 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 molten metal was found on the ground in that location during their investigation. 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 system and at least 15 minutes prior to the start time indicated in the report. SCE is continuing to assess the progression of the Thomas Fire and the extent of damages that may be attributable to that fire.

Koenigstein Fire

On March 20, 2019, the VCFD and CAL FIRE 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 has previously disclosed that SCE believed its equipment was associated with the ignition of the

Koenigstein Fire. SCE is continuing to assess the progression of the Koenigstein Fire and the extent of damages that may be attributable to that 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 outageon 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. Whether the November 8, 2018 outage was related to contact being made between the support wire and the electrical wire has not been determined. SCE believes that its equipment could be found to have been 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.

Wildfire-related Litigation

Multiple lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed. A number of the lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions. The lawsuits, which have been filed in the superior courts of Ventura, Santa Barbara and Los Angeles Counties in the case of the Thomas and Koenigstein Fires and the Montecito Mudslides, and in Ventura and Los Angeles Counties in the case of the Woolsey Fire, allege, among other things, negligence, inverse condemnation, trespass, private nuisance, personal injury, wrongful death, and violations of the California Public Utilities and Health and Safety Codes. SCE expects to be the subject of additional lawsuits related to the 2017/2018 Wildfire/Mudslide Events. The litigation could take a number of years to be resolved because of the complexity of the matters and number of plaintiffs.

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. On October 4, 2018, the 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 January 2019, SCE filed a cross-complaint against certain governmental 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.

Additionally, in July 2018 and September 2018, two separate derivative lawsuits for breach of fiduciary duties and unjust enrichment were filed in the Los Angeles Superior Court against certain current and former members of the Boards of Directors of Edison International and SCE. Edison International and SCE are identified as nominal defendants in those actions. The derivative lawsuits generally allege that the individual defendants violated their fiduciary duties by causing or allowing SCE to operate in an unsafe manner in violation of relevant regulations, resulting in substantial liability and damage from the Thomas and Koenigstein Fires and the Montecito Mudslides.

In November 2018, a purported class action lawsuit alleging securities fraud and related claims was filed in the federal court against EIX, SCE and certain current and former officers of Edison International and SCE. The plaintiff alleges that Edison International and SCE made false and/or misleading statements in filings with the Securities and Exchange Commission by failing to disclose that SCE had allegedly failed to maintain its electric transmission and distribution networks in compliance with safety regulations, and that those alleged safety violations led to fires that occurred in 2018, including the Woolsey Fire.

In January 2019, two separate derivative lawsuits alleging breach of fiduciary duties, securities fraud, misleading proxy statements, unjust enrichment, and related claims were filed in federal court against all current and certain former members of the Boards of Directors and certain current and former officers of Edison International and SCE. Edison International and SCE are named as nominal defendants in those actions. The derivative lawsuits generally allege that the individual defendants breached their fiduciary duties and made misleading statements or allowed misleading statements to be made (i) between March 21, 2014 and August 10, 2015, with respect to certain ex parte communications between SCE and CPUC decision-makers concerning the settlement of the San Onofre Order Instituting Investigation proceeding (the "San Onofre OII") and (ii) from February 23, 2016 to the present, concerning compliance with applicable laws and regulations concerning electric system maintenance and operations related to wildfire risks. The lawsuits generally allege that these breaches of duty and misstatements led to substantial liability and damage resulting from the disclosure of SCE's ex parte communications in connection with the San Onofre OII settlement, and from the 2017/2018 Wildfire/Mudslide Events. For more information regarding the San Onofre OII, see Note 12 in the 2018 Form 10-K.

Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates

The process for estimating losses associated with wildfire litigation claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including but not limited to estimates based on currently available information and assessments, opinions regarding litigation risk, and prior experience with litigating and settling other wildfire cases. As additional information becomes available, management estimates and assumptions regarding the causes and financial impact of the 2017/2018 Wildfire/Mudslide Events may change. Such additional information is expected to become available from multiple external sources, during the course of litigation, and from SCE's ongoing internal review, including, among other things, information regarding the extent of damages that may be attributable to any fire determined to have been substantially caused by SCE's equipment, information that may be obtained from the equipment in CAL FIRE's possession, and information pertaining to fire progression, suppression activities, alleged damages and insurance claims.

As described above, the $1.8 billion after-tax liability corresponds to the lower end of the reasonably estimated range of expected losses that may be incurred in connection with the 2017/2018 Wildfire/Mudslide Events and is subject to change as additional information becomes available. Edison International and SCE currently believe that it is reasonably possible that the amount of the actual loss will be greater than the amount accrued. However, Edison International and SCE are currently unable to reasonably estimate an upper end of the range of expected losses given the 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, whether inverse condemnation will be held applicable to SCE with respect to damages caused by the Montecito Mudslides, and the preliminary nature of the litigation processes.

For events that occurred in 2017 and early 2018, principally the Thomas and Koenigstein Fires and Montecito Mudslides, SCE has $1 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence. SCE also had other general liability insurance coverage of approximately $450 million, but it is uncertain whether these other policies would apply to liabilities alleged to be related to the Montecito Mudslides. For the Woolsey Fire, SCE has an additional $1 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence. Edison International and SCE record a receivable for insurance recoveries when recovery of a recorded loss is determined to be probable. At March 31, 2019, Edison International and SCE had recorded $2.0 billion for expected insurance recoveries associated with the recorded loss for the 2017/2018 Wildfire/Mudslide Events. SCE will seek to recover uninsured costs resulting from the 2017/2018 Wildfire/Mudslide Events through electric rates. The amount of the receivable is subject to change based on additional information. Recovery of these costs 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 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 future wildfire cost-recovery proceedings. SCE will continue to evaluate the probability of recovery based on available evidence, including guidance that may be issued by the Commission on Catastrophic Wildfire Cost and Recovery, and new 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. SCE will seek recovery of the CPUC portion of any uninsured wildfire-related costs through its WEMA. See "—Recovery of Wildfire-Related Costs" below.

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 a regulatory asset of $135 million, the FERC portion of the $4.7 billion liability accrued.

At March 31, 2019 and December 31, 2018, the balance sheets include estimated losses (established at the lower end of the reasonably estimated range of expected losses) of $4.7 billion for the 2017/2018 Wildfire/Mudslide Events.

Current Wildfire Insurance Coverage

SCE has approximately $1 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence, for events (including the Woolsey fire) during the period June 30, 2018 through May 31, 2019. If the $1 billion of insurance coverage is exhausted as a result of liabilities related to the Woolsey Fire, SCE has approximately $735 million of wildfire-specific insurance coverage for wildfire events during the period February 1, 2019 through May 31, 2019, subject to a self-insured retention of $35 million per occurrence and up to $15 million of co-insurance, which results in net coverage of approximately $685 million. SCE has also obtained approximately $1.2 billion of wildfire-specific insurance coverage for events that may occur during the period June 1, 2019 through June 30, 2020, subject to up to $115 million of co-insurance and $50 million of self-insured retention, which results in net coverage of approximately $1 billion. SCE expects its coverage for this period to be subject to an initial self-insured retention of $10 million per occurrence, but, based on policies currently in place, SCE's coverage for the period is subject to a self-insurance retention of $50 million per occurrence. SCE may obtain additional wildfire-specific insurance for this time period in the future. Various coverage limitations within the policies that make up SCE's wildfire insurance coverage could result in additional material self-insured costs in the event of multiple wildfire occurrences during a policy period or with a single wildfire with damages in excess of the policy limits.

SCE's cost of obtaining wildfire insurance coverage has increased significantly as a result of, among other things, the number of recent and significant wildfire events throughout California and the application of inverse condemnation to investor-owned utilities. As such, SCE may not be able to obtain sufficient wildfire insurance at a reasonable cost.

Based on policies currently in effect, SCE anticipates that its wildfire insurance expense, prior to any regulatory deferrals, will total approximately $399 million during 2019. Wildfire insurance expense will increase in 2019 if SCE obtains additional wildfire-specific insurance. In February 2019, the CPUC approved recovery of $107 million of the costs incurred by SCE to obtain a 12-month, $300 million wildfire insurance policy in December 2017. As a result of this decision, SCE will recover these insurance premiums during 2019. As of March 31, 2019, SCE had regulatory assets of $148 million related to wildfire insurance costs and believes that such amounts are probable of recovery. While SCE believes that amounts deferred are probable of recovery, there is no assurance that SCE will be allowed to recover costs that have been incurred, or costs incurred in the future for additional wildfire insurance, in electric rates.

Recovery of Wildfire-Related Costs

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.~~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 ~~fires,~~wildfires, finding that SDG&E did not prudently manage and operate its facilities prior to or at the outset of the 2007 wildfires.

~~When~~ 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 and the California Supreme Court have denied SDG&E's petitions for review of the CPUC's denial of SDG&E's application.

In September 2018, California Senate Bill 901 ("SB 901") was signed by the Governor of California. Although SB 901 does not address the strict liability standard imposed by courts in inverse condemnation actions, the bill as enacted introduces a number of considerations the CPUC can apply to determine whether costs are recoverable in electric rates for wildfires occurring on or after January 1, 2019, including, among other things, the utility's actions, circumstances beyond the utility's control and the impact of extreme climate conditions. SB 901 requires investor-owned utilities to prepare annually, for CPUC approval, wildfire risk mitigation plans, and compliance with an approved plan is ~~held~~one of the factors that the CPUC can consider in addressing cost recovery. On February 6, 2019, in compliance with SB 901, SCE filed its wildfire mitigation plan

for 2019. While SCE takes the position in its wildfire mitigation plan that substantial compliance with the plan, once approved, will demonstrate that SCE prudently operated its system and met the CPUC's prudent manager standard regarding wildfire risk mitigation, the CPUC may not agree with SCE's position. Pursuant to ~~be applicable~~the requirements of SB 901, a Commission on Catastrophic Wildfire Cost and Recovery was formed in January 2019 to ~~a utility,~~examine, among other things, the socialization of catastrophic wildfire costs in an equitable manner. SB901 also provides an opportunity for utilities to securitize costs that are deemed just and reasonable by the CPUC for wildfires that occur after January 1, 2019 and, to the extent costs exceed the maximum amount the utility ~~may be held liable~~can pay without harming ratepayers or materially impacting the utility's ability to provide adequate and safe services, for ~~property damages~~wildfires that occurred in 2017. Based on events and ~~associated interest and attorney's fees. If inverse condemnation~~information available to date, SCE believes it is ~~held~~unlikely that it will seek to ~~be inapplicable~~use this mechanism to ~~SCE~~securitize costs incurred in connection with the December 2017 Wildfires, SCE could be held liable for property damages and associated interest if the property damages were found to have been proximately caused by SCE's alleged negligence. If SCE is found negligent, SCE could also be held liable for, among other things, fire suppression costs, business interruption losses, evacuation costs, medical expenses and personal injury/wrongful death claims. These potential liabilities, in the aggregate, could be substantial. Additionally, SCE could potentially be subject to fines for alleged violations of CPUC rules and laws in connection with the December 2017 Wildfires.

SCE is aware of multiple lawsuits filed related to the Thomas Fire naming SCE as a defendant. Several of the lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions. The lawsuits, which have been filed in the superior courts of Ventura, Santa Barbara and Los Angeles Counties allege, among other things, negligence, inverse condemnation, trespass, private nuisance, and violations of the public utilities and health and safety codes. The Chair of the California Judicial Council has ordered that the lawsuits be coordinated in the Los Angeles Superior Court. SCE expects to be the subject of additional lawsuits related to the Thomas Fire. The litigation could take a number of years to be resolved because of the complexity of the matters and the time needed to complete the ongoing investigations.

Given the preliminary stages of the investigations and the uncertainty as to the causes of the Thomas Fire, and the extent and magnitude of potential damages, Edison International and SCE are currently unable to predict the outcome of the claims made against SCE and Edison International or reasonably estimate a range of losses that may be incurred.

SCE has approximately $1 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence, for wildfire-related claims for the period ending on May 31, 2018. SCE also has approximately $300 million of additional insurance coverage for wildfire-related occurrences for the period from December 31, 2017 to December 31, 2017/2018 which may be used in addition to the $1 billion in wildfire insurance for wildfire events occurring on or after December 31, 2017 and on or before May 31, 2018, and would be available for new wildfire events, if any, occurring after

May 31, 2018 and on or before December 30, 2018. Various coverage limitations within the policies that make up SCE's wildfire insurance coverage could result in material self-insured costs in the event of multiple wildfire occurrences during a policy period. Should responsibility for a significant portion of the damages related to the December 2017 Wildfires be attributed to SCE, SCE's insurance may not be sufficient to cover all such damages. In addition, SCE may not be authorized to recover its uninsured damages through electric service rates if, for example, the CPUC finds that the damages were incurred because SCE was not a prudent manager of its facilities.Wildfire/Mudslide Events.

Edison International and SCE ~~are pursuing~~continue to pursue legislative, regulatory and legal strategies to address the application of a strict liability standard to wildfire-related damages without the ability to recover resulting ~~damages~~costs in electric rates. In April 2019, a strike force formed by California Governor Gavin Newsom released a report entitled Wildfires and Climate Change: California's Energy Future that sets forth, among other things, guiding principles for potential reform of California policies regarding wildfire liability. While this report recommended that the Commission on Catastrophic Wildfire Cost and Recovery, the California legislature and the strike force continue working to develop a solution for consideration by the Governor and the legislature, Edison International and SCE cannot predict whether or when there will be a comprehensive solution mitigating the significant risk faced by a California investor-owned ~~utility~~utilities related to ~~wildfires will be achieved.~~

~~Montecito Mudslides~~wildfires.

In ~~January 2018, torrential rains~~April 2019, in Santa Barbara County produced mudslides and flooding in Montecito and surrounding areas (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 at least 21 fatalities, with two additional fatalities presumed.

Of the lawsuits mentioned above, several allege that SCE has responsibility for the Thomas Fire and that the Thomas Fire proximately caused the Montecito Mudslides, resulting in the plaintiffs' claimed damages. Some of the Montecito Mudslides lawsuits also name Edison International as a defendant. In addition to other causes of action, some of the Montecito Mudslides lawsuits also allege personal injury and wrongful death. The Chair of the California Judicial Council has ordered that the Thomas Fire and Montecito Mudslides lawsuits be coordinated in the Los Angeles Superior Court. SCE expects that additional lawsuits related to the Montecito Mudslides will be filed.

In the event that SCE is determined to have liability for damages caused by the Thomas Fire, SCE cannot predict whether the courts will conclude that the Montecito Mudslides were caused by the Thomas Fire or that SCE is liable for damages caused by the Montecito Mudslides. As a result, Edison International and SCE are currently unable to predict the outcome of the claims made against SCE and Edison International or reasonably estimate a range of losses that may be incurred. If it is determined that the Montecito Mudslides were caused by the Thomas Fire and that SCE is liable for damages caused by the Montecito Mudslides, then SCE's insurance coverage for such damages may be limitedrequested increases to its ~~wildfire insurance.~~CPUC and FERC returns on common equity, SCE also has other general liability insurance coverage of approximately $450 million but it is uncertain whether these other policies would apply to liabilities alleged to be related to the mudslides. Additionally, if SCE is determined to be liable for a significant portion of costs associated with the Montecito Mudslides, SCE's insurance may not be sufficient to cover all such damages. In addition, SCE may not be authorized to recover its uninsured damages through electric service rates if, for example,requested from both the CPUC ~~finds that the damages were incurred because~~and FERC an additional 6% return on common equity to compensate investors for current wildfire risk. SCE ~~was not~~would seek to reduce or remove this additional return on common equity if there is a ~~prudent manager of~~material reduction in its ~~facilities.~~

If it is ultimately determined that SCE is legally responsible for damages caused by the Montecito Mudslides and inverse condemnation is held to be applicable to SCE, SCE may be held liable for resulting property damages and associated interest and attorney's fees. If inverse condemnation is held to be inapplicable to SCE in connection with the Montecito Mudslides, SCE could be held liable for property damages and associated interest if the property damages were found to have been proximately caused by SCE’s alleged negligence. If SCE is found negligent, SCE could also be held liable for, among other things, business interruption losses, evacuation costs, clean-up costs, medical expenses and personal injury/wrongful death claims associated with the Montecito Mudslides. These potential liabilities, in the aggregate, could be substantial. SCE cannot predict whether it will be subjectedwildfire cost recovery risk due to regulatory ~~fines related to the Montecito Mudslides.~~

~~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~~

In November 2014, the CPUC approved the San Onofre OII Settlement Agreement by and among The Utility Reform Network ("TURN"), the CPUC's Office of Ratepayers Advocates ("ORA"), San Diego Gas & Electric ("SDG&E"), the Coalition of California Utility Employees, and Friends of the Earth (the "Prior San Onofre Settlement Agreement"), which, at the time, resolved the CPUC's investigation regarding the steam generator replacement project at San Onofre and the related outages and subsequent shutdown of San Onofre. Subsequently, the San Onofre Order Instituting Investigation ("OII") proceeding record was reopened by a joint ruling of the Assigned Commissioner and the Assigned administrative law judge ("ALJ") to consider whether, in light of the Company not reporting certain ~~ex parte~~ communications on a timely basis, the Prior San Onofre Settlement Agreement remained reasonable, consistent with the law and in the public interest, which is the standard the CPUC applies in reviewing settlements submitted for approval.

~~Entry into Revised Settlement~~

On January 30, 2018, SCE, SDG&E, The Alliance for Nuclear Responsibility, The California Large Energy Consumers Association, California State University, Citizens Oversight dba Coalition to Decommission San Onofre, the Coalition of California Utility Employees, the Direct Access Customer Coalition, Ruth Henricks, ORA, TURN, and Women's Energy Matters (the "OII Parties") entered into a Revised San Onofre Settlement Agreement in the San Onofre OII proceeding (the "Revised San Onofre Settlement Agreement"). If approved by the CPUC, the Revised San Onofre Settlement Agreement will resolve all issues under consideration in the San Onofre OII and will modify the Prior San Onofre Settlement Agreement. If approved by the CPUC, the Revised San Onofre Settlement Agreement will also result in the dismissal of a federal lawsuit currently pending in the Ninth Circuit Court of Appeals challenging the CPUC's authority to permit rate recovery of San Onofre costs. The Revised San Onofre Settlement Agreement was the result of multiple mediation sessions in 2017 and January 2018 and was signed on January 30, 2018 following a settlement conference in the OII, as required under CPUC rules.

The San Onofre OII Assigned Commissioner and Assigned ALJ have issued joint rulings that, among other things, (i) direct the parties to submit joint testimony to the CPUC in support of the Revised San Onofre Settlement Agreement on April 27, 2018; (ii) direct all parties to submit briefing on whether an attorneys' fees provision in a related settlement agreement pertaining to the dismissal of a federal lawsuit challenging the Prior San Onofre Settlement Agreement impacts the integrity of the CPUC's intervenor compensation program; and (iii) schedule a public participation hearing and a status conference. In lieu of joint testimony, with the ALJ's consent, the parties submitted a joint stipulation of facts in support of the Revised San Onofre Settlement Agreement on April 27, 2018.

~~Disallowances, Refunds and Recoveries~~

If the Revised San Onofre Settlement Agreement is approved by the CPUC, SCE and SDG&E (the "Utilities") will cease rate recovery of San Onofre costs as of the date their combined remaining San Onofre regulatory assets equal $775 million (the "Cessation Date"). SCE has previously requested the CPUC to authorize SCE to reduce the San Onofre regulatory asset by applying $72 million of proceeds received from litigation with the DOE related to DOE's failure to meet its obligation to begin accepting spent nuclear fuel from San Onofre. If that request is approved by the CPUC, the Cessation Date is estimated to be December 19, 2017. If that request is not approved by the CPUC, the Cessation Date is estimated to be April 21, 2018. The Utilities will refund to customers San Onofre-related amounts recovered in rates after the Cessation Date. SCE will retain amounts collected under the Prior San Onofre Settlement Agreement before the Cessation Date. SCE also will retain $47 million of proceeds received in 2017 from arbitration with Mitsubishi Heavy Industries ("MHI") over MHI's delivery of faulty steam generators. In the Revised San Onofre Settlement Agreement, SCE retains the right to sell its stock of nuclear fuel and not share such proceeds with customers, as was provided in the Prior San Onofre Settlement Agreement. SCE intends to sell its nuclear fuel inventory as market conditions warrant. Sales of nuclear fuel may be significant.

Under the Prior San Onofre Settlement Agreement, the Utilities agreed to fund $25 million for a Research, Development and Demonstration program that is intended to develop technologies and methodologies to reduce greenhouse gas emissions ("GHG Reduction Program"). The Utilities' funding obligation is reduced to $12.5 million under the Revised San Onofre Settlement Agreement.

If approved by the CPUC, the Revised San Onofre Settlement Agreement will also provide certain exclusions from the determination of SCE's ratemaking capital structure. Notwithstanding that SCE will no longer recover its San Onofre regulatory asset, the debt borrowed to finance the regulatory asset will continue to be excluded from SCE's ratemaking capital structure. Additionally, SCE may exclude the after-tax charge resulting from the implementation of the Revised San Onofre Settlement Agreement from its ratemaking capital structure.

~~Additional Challenges related to the Settlement of San Onofre CPUC Proceedings~~

A federal lawsuit challenging the CPUC's authority to permit rate recovery of San Onofre costs and an application to the CPUC for rehearing of its decision approving the Prior San Onofre Settlement Agreement were filed in November and December 2014, respectively. In April 2015, the federal lawsuit was dismissed with prejudice and the plaintiffs in that case appealed the dismissal to the Ninth Circuit in May 2015. In light of the San Onofre OII meet-and-confer sessions, the Ninth Circuit cancelled the hearing that had been scheduled for February 9, 2017 and ordered the parties to notify the Ninth Circuit of the status of the San Onofre OII by May 1, 2017 and periodically thereafter. In October 2017, the Ninth Circuit scheduled a hearing for February 13, 2018 and directed the parties to file a status report on January 30, 2018. As part of the Revised San Onofre Settlement Agreement, subject to CPUC approval of the Revised San Onofre Settlement Agreement, the plaintiffs agreed to dismiss this case with prejudice. In light of these developments, the February 13 hearing was cancelled and the Ninth Circuit appeal is currently stayed.

In July 2015, a purported securities class action lawsuit was filed in federal court against Edison International, its then Chief Executive Officer and its then Chief Financial Officer. The complaint was later amended to include SCE's former President as a defendant. The lawsuit alleges that the defendants violated the securities laws by failing to disclose that Edison International had ~~ex parte~~ contacts with CPUC decision-makers regarding the San Onofre OII that were either unreported or more extensive than initially reported. The initial complaint purports to be filed on behalf of a class of persons who acquired Edison International common stock between March 21, 2014 and June 24, 2015 (the "Class Period"). In September 2016, the federal court granted defendants' motion to dismiss the complaint, with an opportunity for plaintiff to amend the complaint. Plaintiff filed a second amended complaint in October 2016, which the federal court dismissed again with an opportunity for the plaintiff to amend the complaint. Plaintiff filed a third amended complaint in May 2017, which the federal court dismissed with prejudice in March 2018. Plaintiffs' have appealed the dismissal.

In November 2015, a purported securities class action lawsuit was filed in federal court against Edison International, its then Chief Executive Officer and its Treasurer by an Edison International employee, alleging claims under the Employee Retirement Income Security Act. The complaint purports to be filed on behalf of a class of Edison International employees who were participants in the Edison 401(k) Savings Plan and invested in the Edison International Stock Fund between March 27, 2014 and June 24, 2015. The complaint alleges that defendants breached their fiduciary duties because they knew or should have known that investment in the Edison International Stock Fund was imprudent because the price of Edison International common stock was artificially inflated due to Edison International's alleged failure to disclose certain ~~ex parte~~ communications with CPUC decision-makers related to the San Onofre OII. In July 2016, the federal court granted the defendants' motion to dismiss the lawsuit with an opportunity for the plaintiff to amend her complaint. Plaintiff filed an amended complaint in July 2016, that dismissed Edison International as a named defendant and the remaining defendants filed a motion to dismiss in August 2016. These defendants' motion was heard by the court in November 2016. In June 2017, the federal court again granted defendants' motion to dismiss the lawsuit with an opportunity for the plaintiff to amend her complaint. Plaintiff filed an amended complaint in early July 2017. Defendants have filed motion to dismiss the amended complaint, which was heard by the court in October 2017, and are awaiting a ruling.

~~Edison International and SCE cannot predict the outcome of these proceedings.~~legislative reform.

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 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 March 31, ~~2018,~~2019, SCE's recorded estimated minimum liability to remediate its 2021 identified material sites (sites with a liability balance at March 31, ~~2018,~~2019, in which the upper end of the range of the costs is at least $1 million) was ~~$142~~$136 million, including ~~$92~~$89 million related to San Onofre. In addition to these sites, SCE also has 1615 immaterial sites with a liability balance as of March 31, ~~2018,~~2019, for which the total minimum recorded liability was $4 million. Of the ~~$146~~$140 million total environmental remediation liability for SCE, ~~$140~~$135 million has been recorded as a regulatory asset. SCE expects to recover ~~$47~~$43 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) and ~~$93~~$92 million through a mechanism that allows SCE to recover 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 ~~$131~~$138 million and $8$7 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 30 years. Remediation costs for each of the next five years are expected to range from $4$7 million to ~~$18~~$24 million. Costs incurred for the three months ended March 31, 2019 and 2018 were $2 million and ~~2017 were~~ $4 million, ~~and $2 million,~~ respectively.

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

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 $1.06 billion, respectively. 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 $52 million per year.

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 ~~$13.1~~$14.1 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 through a Facility Form issued by American Nuclear Insurers ("ANI"). 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 ~~$60~~$65 million per nuclear incident for future incidents. However, it would have to pay no more than approximately $9$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.

~~For more information on nuclear insurance coverage, see Note 11 in the 2017 Form 10-K.~~

Spent Nuclear Fuel

Under federal law, the 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. Currently, both San Onofre and Palo Verde have interim storage for spent nuclear fuel on site sufficient for their current license period.

In June 2010, the United States Court of Federal Claims issued a decision granting SCE and the San Onofre co-owners damages of approximately $142 million ~~(SCE~~(SCE's share $112 million) to recover costs incurred through December 31, 2005 for

the DOE's failure to meet its obligation to begin accepting spent nuclear fuel from San Onofre. SCE received payment from the federal government in the amount of the damage award. In April 2016, SCE, as operating agent, settled a lawsuit on behalf of the San Onofre owners against the DOE for $162 million ~~including~~(SCE's share $124 million, which included reimbursement for approximately $2 million in legal ~~costs (SCE share $124 million)~~and other costs), to compensate for damages caused by the DOE's failure to meet its obligation to begin accepting spent nuclear fuel for the period from January 1, 2006 to December 31, 2013. In August 2018, the CPUC approved SCE's proposal to return the SCE share of the award to customers based on the amount that customers actually contributed for fuel storage costs; resulting in approximately $105.6 million of the SCE share being returned to customers and the remaining $16.6 million being returned to shareholders. Of the $105.6 million, $71.6 million was applied against the remaining San Onofre Regulatory Asset in accordance with the Revised San Onofre Settlement Agreement.

The April 2016 settlement also ~~provides~~provided for a claim submission/audit process for expenses incurred from 2014 – 2016, where SCE may submit a claim for damages caused by the DOE failure to accept spent nuclear fuel each year, followed by a government audit and payment of the claim. This process ~~will make~~made additional legal action to recover damages incurred in 2014 ~~– 2016~~–2016 unnecessary. The first such claim covering damages for 2014 – 2015 was filed on September 30, 2016 for approximately $56 million. In February 2017, the DOE reviewed the 2014 – 2015 claim submission and reduced the original request to approximately $43 million ~~(SCE~~(SCE's share was approximately $34 million). SCE accepted the DOE's determination, and the government paid the 2014 – 2015 claim under the terms of the settlement. In October 2017, SCE filed a claim covering damages for 2016 for approximately $58 million. In ~~March~~May 2018, the DOE ~~completed its review~~approved reimbursement of ~~SCE’s~~approximately $45 million (SCE's share was approximately $35 million) of SCE's 2016 ~~claim submission and determined that SCE should be reimbursed approximately $44 million, not allowing~~damages, disallowing recovery of approximately ~~$14~~$13 million. ~~In April 2018,~~ SCE ~~submitted a request for reconsideration~~accepted the DOE's determination, and the government paid the 2016 claim under the terms of the ~~DOE's March 2018 determination, requesting that the DOE allow recovery of an additional $1.2 million. All~~settlement. The damages ~~recovered by SCE~~awards are subject to CPUC review as to how ~~these~~the amounts ~~would~~will be ~~distributed~~refunded among customers, shareholders, or to offset ~~fuel decommissioning or storage~~other costs.

Note 13. Leases

Leases as Lessee

SCE has entered into various agreements to purchase power, electric capacity and other energy products that may be accounted for as leases as SCE has dispatch rights that determine when and how a plant runs. Prior to January 1, 2019, a power purchase agreement contained a lease when SCE purchased substantially all of the output from a specific plant and did not otherwise meet a fixed price unit of output exception. SCE also leases property and equipment primarily related to vehicles, office space and other equipment. The terms of the contracts included in the table below are 5 to 20 years for PPA leases, 5 to 72 years for office leases, and 5 to 12 years for the remaining other operating leases.

The following table summarizes SCE's lease payments for operating and finance leases as of March 31, 2019.



(in millions)	PPA Operating Leases¹		Other Operating Leases²		PPA Finance Leases¹
2019	$	118	$	32	$	1
2020	124		33		1
2021	103		27		1
2022	79		22		2
2023	47		17		2
Thereafter	536		101		9
Total lease payments	$	1,007	$	232	$	16
Amount representing interest³	249		62		6
Lease liabilities	$	758	$	170	$	10

At December 31, 2018, SCE's future expected minimum lease commitments under non-cancellable leases were as follows:



(in millions)	PPA Operating Leases¹		Other Operating Leases²		PPA Capital Leases¹
2019	$	148	$	42	$	5
2020	124		31		6
2021	103		27		6
2022	79		22		6
2023	47		17		5
Thereafter	536		101		66
Total lease payments	$	1,037	$	240	$	94
Amount representing executory costs					(25		)
Amount representing interest					(33		)
Net commitments⁴					$	36


¹	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.


²	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.


³	Lease payments are discounted to their present value using SCE's incremental borrowing rates.


⁴	Includes two contracts with net commitments of $26 million that will commence in 2019.

Supplemental balance sheet information related to SCE's leases was as follows:



(in millions)	March 31, 2019
Operating leases:
Operating lease ROU assets	$	928
Current portion of operating lease liabilities	156
Operating lease liabilities	772
Total operating lease liabilities	$	928

Finance leases included in:
Utility property, plant and equipment, gross	$	14
Accumulated depreciation	(4		)
Utility property, plant and equipment, net	10
Other current liabilities	1
Other long-term liabilities	9
Total finance lease liabilities	$	10

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 and interest and amortization expense for finance leases. The following table summarizes the components of SCE's lease expense:



(in millions)	Three months ended March 31, 2019
PPA leases:
Operating lease cost	$	30
Variable lease cost	372
Total PPA lease cost	402
Other operating leases cost	11
Total lease cost	$	413

Other information related to leases was as follows:



(in millions, except lease term and discount rate)	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
PPA leases	$	30
Other leases	11

ROU assets obtained in exchange for lease obligations:
Other operating leases	9

Weighted average remaining lease term (in years):
Operating leases
PPA leases	12.85
Other leases	12.54
PPA Finance leases	12.14

Weighted average discount rate:
Operating leases
PPA leases	4.24		%
Other leases	3.85		%
PPA Finance leases	8.70		%

Leases as Lessor

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 three months ended March 31, 2019, SCE recognized $5 million in lease income, which is included in operating revenue on the consolidated statements of income. At March 31, 2019, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:



(in millions)
2019	$	11
2020	15
2021	10
2022	10
2023	9
Thereafter	141
Total	$	196

Note ~~13.~~14. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, consist of:


	Edison International						SCE						Edison International						SCE
	Three months ended March 31,												Three months ended March 31,
(in millions)	2018			2017			2018			2017			2019			2018			2019			2018
Beginning balance	$	(43	)	$	(53	)	$	(19	)	$	(20	)	$	(50	)	$	(43	)	$	(23	)	$	(19	)
Pension and PBOP – net loss:
Reclassified from accumulated other comprehensive loss¹	2			2			2			1			2			2			1			2
Other²	(5		)	2			(5		)	1			(10		)	(5		)	(5		)	(5		)
Change	(3		)	4			(3		)	2			(8		)	(3		)	(4		)	(3		)
Ending Balance	$	(46	)	$	(49	)	$	(22	)	$	(18	)	$	(58	)	$	(46	)	$	(27	)	$	(22	)


¹	These items are included in the computation of net periodic pension and PBOP Plan expense. See Note 9 for additional information.

~~Effective January 1, 2018, Edison International and SCE adopted an accounting standards update related to the measurement of financial instruments. As a result of this new accounting guidance,~~ Edison International and SCE recognized cumulative effect adjustments to the opening balance of retained earnings and accumulated other comprehensive loss on January 1, 2019 and 2018 related to the adoption of the accounting standards update on the reclassification of stranded tax effects resulting from Tax Reform in 2019 and the measurement of financial instruments in 2018. See Note 1 for further ~~information.~~information on the reclassification of stranded tax effects.

Note ~~14.~~15. Other Income and Expenses

Other income and expenses are as follows:


	Three months ended March 31,						Three months ended March 31,
(in millions)	2018			2017			2019			2018
SCE other income and expenses:
SCE other income and (expenses):
Equity allowance for funds used during construction	$	22		$	19		$	17		$	22
Increase in cash surrender value of life insurance policies and life insurance benefits	8			12			9			8
Interest income	4			1			9			4
Net periodic benefit income (costs) - non-service cost components	26			9
Net periodic benefit income – non-service components							19			26
Civic, political and related activities and donations	(4		)	(4		)	(13		)	(4		)
Other	(5		)	(2		)	(3		)	(5		)
Total SCE other income and expenses	51			35
Other income and expenses of Edison International Parent and Other:
Net periodic benefit income (costs) - non-service cost components	—			(1		)
Total SCE other income and (expenses)							38			51
Other income and (expenses) of Edison International Parent and Other:
Net periodic benefit costs – non-service components							(2		)	—
Other	—			(1		)	2			—
Total Edison International other income and expenses	$	51		$	33
Total Edison International other income and (expenses)							$	38		$	51

Note ~~15.~~16. Supplemental Cash Flows Information

Supplemental cash flows information for continuing operations is:


	Edison International					SCE					Edison International					SCE
	Three months ended March 31,										Three months ended March 31,
(in millions)	2018			2017		2018			2017		2019		2018			2019		2018
Cash payments for interest and taxes:
Interest, net of amounts capitalized	$	164		$	167	$	149		$	152	$	200	$	164		$	177	$	149
Tax refunds	(93		)	—		(18		)	—
Tax refunds, net											—		(93		)	—		(18		)
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock	$	197		$	177	$	212		$	—	$	200	$	197		$	200	$	212
Preferred and preference stock	1			1		1			1		1		1			1		1

SCE's accrued capital expenditures at March 31, 2019 and 2018 ~~and 2017~~ were ~~$399~~$392 million and ~~$275~~$399 million, respectively. Accrued capital expenditures will be included as an investing activity in the consolidated statements of cash flow in the period paid.

Note 17. Related-Party Transactions

For the three months ended March 31, 2019, SCE purchased wildfire liability insurance with premiums of $186 million from Edison Insurance Services, Inc. ("EIS"), a wholly-owned subsidiary of Edison International. The related-party transactions included in SCE's consolidated balance sheets for wildfire-related insurance purchased from EIS were as follows:



	March 31,		December 31,
(in millions)	2019		2018
Long-term insurance receivable due from affiliate	$	1,000	$	1,000
Prepaid insurance¹	169		13
Current payables due to affiliate²	62		4

¹Reflected in "Prepaid expenses" on SCE's consolidated balance sheets. The amortization expense for prepaid insurance was $31 million and $36 million for the three months ended March 31, 2019 and 2018, respectively.

²Reflected in "Accounts payable" on SCE's consolidated balance sheets.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The management of Edison International and SCE, under the supervision and with the participation of Edison International's and SCE's respective Chief Executive Officers and Chief Financial Officers, have evaluated the effectiveness of Edison International's and SCE's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended), respectively, as of the end of the first quarter of ~~2018.~~2019. Based on that evaluation, Edison International's and SCE's respective Chief Executive Officers and Chief Financial Officers have each concluded that, as of the end of the period, Edison International's and SCE's disclosure controls and procedures, respectively, were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in Edison International's or SCE's internal control over financial reporting, respectively, during the first quarter of ~~2018~~2019 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 as discussed in Note 2. Property, Plant and Equipment in the ~~2017~~2018 Form 10-K.

LEGAL PROCEEDINGS

Thomas Fire and Koenigstein Fire Litigation

In December 2017, ~~Wildfires Litigation~~

~~The December 2017 Wildfires~~wind-driven wildfires impacted portions of SCE's service territory, ~~and caused~~causing substantial damage to both residential and business properties and service outages for SCE customers. The VCFD and CAL FIRE have determined that the largest of ~~these~~the 2017 fires ~~known~~originated on December 4, 2017, in the Anlauf Canyon area of Ventura County (the investigating agencies refer to this fire as the ~~Thomas Fire, originated in Ventura County and burned acreage located in both Ventura and Santa Barbara Counties.~~"Thomas Fire"), followed shortly thereafter by the Koenigstein Fire. According to ~~the most recent Cal Fire incident~~CAL FIRE information, ~~reports,~~ the Thomas ~~Fire~~and Koenigstein Fires burned over 280,000 acres, destroyed or damages an estimated ~~1,063 structures, damaged an estimated 280~~1,343 structures and resulted in ~~one fatality.~~two fatalities.

As of April ~~27, 2018,~~26, 2019, SCE was aware of at least 52151 lawsuits, representing approximately 2,300 plaintiffs, related to the Thomas ~~Fire~~and Koenigstein Fires naming SCE as a defendant. ~~Seventeen~~Seventy-eight of these lawsuits also name Edison International as a defendant based on its ownership and atalleged control of SCE. At least four of the lawsuits were filed as purported class actions. The lawsuits, which have been filed in the superior courts of Ventura, Santa Barbara and Los Angeles Counties allege, among other things, negligence, inverse condemnation, trespass, private nuisance, and violations of the public utilities and health and safety codes. The ~~Chair of the California Judicial Council has ordered that the~~ lawsuits behave been coordinated in the Los Angeles Superior Court.

For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."

Montecito Mudslides Litigation

In January 2018, torrential rains in Santa Barbara County produced mudslides and flooding in Montecito and surrounding areas. According to Santa Barbara County initial reports, the Montecito Mudslides destroyed an estimated 135 structures, damaged an estimated 324 structures, and resulted in at least 21 fatalities, with two additional fatalities presumed.

~~Twenty-nine~~Sixty-eight of the 52151 lawsuits mentioned under ~~"December 2017 Wildfires~~"Thomas Fire and Koenigstein Fire Litigation" above allege that SCE has responsibility for the Thomas ~~Fire~~and/or Koenigstein Fires and that the Thomas ~~Fire~~and/or Koenigstein Fires proximately caused the Montecito Mudslides, resulting in the ~~plaintiffs’~~plaintiffs' claimed damages. ~~Eleven~~Twenty-seven of the 68 Montecito Mudslides lawsuits also name Edison International as a ~~defendant.~~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. The ~~Chair of~~Thomas and Koenigstein Fires lawsuits and the ~~California Judicial Council has ordered that the Thomas Fire and~~ Montecito Mudslides lawsuits behave been coordinated in the Los Angeles Superior Court.

For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."

Woolsey Fire Litigation

In November 2018, wind-driven wildfires impacted portions of SCE's service territory and caused substantial damage to both residential and business properties and service outages for SCE customers. The largest of these fires, known as the Woolsey Fire, originated in Ventura County and burned acreage located in both Ventura and Los Angeles Counties. According to CAL FIRE information, the Woolsey Fire burned almost 100,000 acres, destroyed an estimated 1,643 structures, damaged an estimated 364 structures and resulted in three fatalities.

As of April 26, 2019, SCE was aware of at least 72 lawsuits, representing approximately 1,100 plaintiffs, related to the Woolsey Fire naming SCE as a defendant. Fifty-eight of these lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. At least two of the lawsuits were filed as purported class actions. 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. The Woolsey Fire lawsuits have been coordinated in the Los Angeles Superior Court.

For further information, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by Edison International and Affiliated Purchasers

The following table contains information about all purchases of Edison International Common Stock made by or on behalf of Edison International in the first quarter of ~~2018.~~2019.

Period
(a) Total
Number of Shares
(or Units)
Purchased¹

(b) Average
Price Paid per Share (or Unit)¹

(c) Total
Number of Shares
(or Units)
Purchased
as Part of
Publicly
Announced
Plans or
Programs

(d) Maximum
Number (or
Approximate
Dollar Value)
of Shares
(or Units) that May
Yet Be Purchased
Under the Plans or
Programs
January 1, 2018 to January 31, 2018 120,022
$ 62.63
�� —
February 1, 2018 to February 28, 2018 79,352
$ 62.21
— —
March 1, 2018 to March 31, 2018 103,142
$ 62.72
— —
Total 302,516
$ 62.55
— —



Period	(a) Total Number of Shares (or Units) Purchased¹	(b) Average Price Paid per Share (or Unit)¹			(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1, 2019 to January 31, 2019	308,921		$	56.51	—	—
February 1, 2019 to February 28, 2019	211,617		$	59.49	—	—
March 1, 2019 to March 31, 2019	386,783		$	62.56	—	—
Total	907,321		$	59.79	—	—

¹The shares were purchased by agents acting on Edison International's behalf for delivery to plan participants to fulfill requirements in connection with Edison International's: (i) 401(k) Savings Plan; (ii) Dividend Reinvestment and Direct Stock Purchase Plan; and (iii) long-term incentive compensation plans. The shares were purchased in open-market transactions pursuant to plan terms or participant elections. The shares were never registered in Edison International's name and none of the shares purchased were retired as a result of the transactions.

OTHER INFORMATION

On April, 26, 2019, Edison International entered into a Term Loan Agreement ("Term Loan Agreement") and borrowed the maximum amount available under the Term Loan Agreement. The Term Loan Agreement provides for a $1.0 billion term loan due in April 2020, with a variable interest rate based on the London Interbank Offered Rate plus 90 basis points. The term loan may be prepaid in whole or in part without any premium or penalty. Of the proceeds of the term loan, $750 million was contributed to SCE and the remainder of the proceeds will be used for general corporate and working capital purposes.

Certain of the investment banking firms that are a party to the Term Loan Agreement or their affiliates have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending, commercial banking and/or similar services for Edison International and certain of its subsidiaries and affiliates, for which services they have in the past received, and may in the future receive, customary compensation and reimbursement of expenses.

The foregoing description is qualified in its entirety by reference to the full text of the Term Loan Agreement, filed as Exhibit 10. 1 hereto and incorporated by reference herein.

The shares were purchased by agents acting on Edison International's behalf for delivery to plan participants to fulfill requirements in connection with Edison International's: (i) 401(k) Savings Plan; (ii) Dividend Reinvestment and Direct Stock Purchase Plan; and (iii) long-term incentive compensation plans. The shares were purchased in open-market transactions pursuant to plan terms or participant elections. The shares were never registered in Edison International's name and none of the shares purchased were retired as a result of the transactions.

EXHIBITS



Exhibit Number		Description


10.1		Term Loan Credit Agreement, dated as of ~~January~~April 26, ~~2018,~~2019, among Edison International Company, the several banks and other financial institutions from time to time parties thereto, and Citibank, 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 January 26, 2018)*

10.2		~~Revised San Onofre Settlement~~Term Loan Credit Agreement, dated ~~January 30, 2018~~as of February 4, 2019, among Southern California Edison Company, the several banks and other financial institutions from time to time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (File No. ~~1-9936,~~1-2313, filed as Exhibit 10.1 to ~~Edison International’s~~Southern California Edison's Form 8-K dated ~~January 30, 2018~~ and filed ~~January 31, 2018)~~February 4, 2019)*

10.3**		Edison International ~~2018~~2019 Long-Term Incentives Terms and Conditions

10.4**		Edison International ~~2008~~ Executive ~~Disability Plan, as amended and restated effective April 2, 2018~~

10.5**		~~Edison International 2008 Executive Severance Plan, as amended and restated effective April 2, 2018~~

10.6**		Edison International 2008 Executive Retirement Plan, as amended and restated effective August 24, 2016 (as amended) (File No. 1-9936, filed as Exhibit 10.8 to Edison International's Form 10-K dated December 31, 2017 and filed February 22, 2018)*

10.7**		~~Edison International Executive Deferred~~Incentive Compensation Plan ~~as amended~~As Amended and ~~restated effective June 19, 2014 (as amended)~~

10.8**		~~Edison International 2008 Executive Deferred Compensation Plan, as amended and restated effective December 9, 2015 (as amended)~~Restated Effective February 27, 2019

31.1		Certifications of the Chief Executive Officer and Chief Financial Officer of Edison International pursuant to Section 302 of the Sarbanes-Oxley Act

31.2		Certifications of the Chief Executive Officer and Chief Financial Officer of Southern California Edison Company pursuant to Section 302 of the Sarbanes-Oxley Act

32.1		Certifications of the Chief Executive Officer and the Chief Financial Officer of Edison International required by Section 906 of the Sarbanes-Oxley Act

32.2		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

101.1		Financial statements from the quarterly report on Form 10-Q of Edison International for the quarter ended March 31, ~~2018,~~2019, filed on ~~May 1, 2018,~~April 30, 2019, formatted in 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; and (v) the Notes to Consolidated Financial Statements

101.2		Financial statements from the quarterly report on Form 10-Q of Southern California Edison Company for the quarter ended March 31, ~~2018,~~2019, filed on ~~May 1, 2018,~~April 30, 2019, formatted in 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; and (v) the Notes to Consolidated Financial Statements


*	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 ~~Rule 12b-32~~

** Indicates a management contractEdison International or ~~compensatory plan or arrangement, as required by Item 15(a)(3)~~SCE of ~~Form 10-K~~

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.

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/ Aaron D. Moss	By:	/s/ Aaron D. Moss

	Aaron D. Moss Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)		Aaron D. Moss Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)

Date:	~~May 1, 2018~~April 30, 2019	Date:	~~May 1, 2018~~April 30, 2019

5961



(in millions)
Collateral posted as of March 31, 2018¹	$	106
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade	36
Incremental collateral requirements for power procurement contracts resulting from adverse market price movement²	1
Posted and potential collateral requirements	$	143



	Three months ended March 31,
(in millions)	Trust I		Trust II		Trust III		Trust IV		Trust V		Trust VI
2018
Dividend income	*		$	5	$	4	$	4	$	4	$	6
Dividend distributions	*		5		4		4		4		6
2017
Dividend income	$	7	$	5	$	4	$	4	$	4	*
Dividend distributions	7		5		4		4		4		*



(in millions)	2018
Balance at January 1,	$	36
Charged to costs and expenses	7
Write-offs	(6		)
Balance at March 31,	$	37



(in millions)	March 31, 2018
Assets:
Cash and cash equivalents	$	18
Short-term restricted cash	25
Receivables	6
Non-utility property, plant and equipment¹	203
Other assets	18
Total assets of business held for sale	$	270
Liabilities:
Accounts payable	$	1
Accrued liabilities	4
Debt obligations	82
Other liabilities	27
Noncontrolling interest (NCI)	28
Total liabilities and NCI of business held for sale¹	$	142