Earning Activities

Earning activities were primarily affected by the following:

Higher operating revenue of ~~$37~~$55 million primarily due to the following:

An increase in CPUC-related revenue of ~~$26~~$44 million primarily due to the adoption of the 2018 GRC final decision. This increase is primarily due to SCE recording revenue in ~~CPUC~~2019 based on the 2018 final GRC decision in comparison to recording revenue ~~primarily related to a $16 million refund to customers~~ in 2018 ~~for prior overcollections and $6~~based on 2017 authorized revenue adjusted as discussed above.

Decreases in CPUC-related revenue of $35 million related to tax balancing account activities (offset in income taxes below) and $17 million from the ~~incremental return on rate base recorded through the pole loading balancing account.~~receipt of a reimbursement related to spent nuclear fuel storage costs in 2018. See "Notes to Consolidated Financial Statements— Note 12. Commitments and Contingencies—Spent Nuclear Fuel" for further information.

An increase of ~~$11~~$62 million in ~~FERC~~FERC-related revenue primarily due to the pending settlement of SCE's 2018 Formula Rate proceeding and higher operating costs subject to balancing account ~~treatment (offset~~treatment. If approved by the FERC, the settlement filed in ~~operation~~September 2019 will establish SCE's FERC transmission revenue requirement for the FERC 2018 Settlement Period. See "Liquidity and ~~maintenance expenses and interest expense below).~~Capital Resources — SCE — Regulatory Proceedings— FERC Formula Rate" for further information.

Higher operation and maintenance costs of ~~$80~~$162 million primarily due to:

Expense of $67 million for insurance protection from the Wildfire Insurance Fund following SCE's election to participate in and contribute to the fund. See "Management Overview—Southern California Wildfires and Mudslides" for further information.

Higher costs due to contractor scarcity resulting from wildfire mitigation ~~costs, including enhanced overhead inspections,~~activity and ~~other preventative~~increased inspection and preventive maintenance ~~costs.~~in areas adjacent to high fire risk areas, partially offset by the impact of the adoption of the 2018 GRC final decision primarily due to a change in capitalization rates.

~~Higher~~Lower depreciation and amortization expense of ~~$21~~$7 million primarily ~~related~~due to ~~transmission~~the change in depreciation rates from the adoption of the 2018 GRC final decision.

Lower impairment and ~~distribution investments.~~other expenses of $10 million primarily due to impact of the elimination of the GHG Reduction Funding Program as a result of the Revised San Onofre Settlement Agreement in 2018.

Higher interest expense of ~~$23~~$9 million primarily due to increased ~~borrowings and higher interest on balancing account overcollections.~~borrowings.

Lower ~~other~~ income ~~and expense~~tax expenses of $5$96 million primarily due to higher income tax benefits as a result of the adoption of the 2018 GRC final decision, tax benefits on property-related items, tax balancing accounts activities referred above and impact of tax expense on lower ~~AFUDC equity~~pre-tax income.

Cost-Recovery Activities

Cost-recovery activities were primarily affected by lower purchased power and fuel costs of $598 million driven by lower load related to customer departures to CCAs and cooler weather, partially offset by lower congestion revenue right credits.

Nine months ended September 30, 2019 versus September 30, 2018



	Nine months ended September 30, 2019									Nine months ended September 30, 2018
(in millions)	Earning Activities			Cost- Recovery Activities			Total Consolidated			Earning Activities			Cost- Recovery Activities			Total Consolidated
Operating revenue	$	4,919		$	4,429		$	9,348		$	4,825		$	4,792		$	9,617
Purchased power and fuel	—			3,848			3,848			—			4,344			4,344
Operation and maintenance	1,622			637			2,259			1,468			528			1,996
Depreciation and amortization	1,259			—			1,259			1,387			—			1,387
Property and other taxes	300			—			300			298			—			298
Impairment and other	166			—			166			(10		)	—			(10		)
Other operating income	(4		)	—			(4		)	(5		)	—			(5		)
Total operating expenses	3,343			4,485			7,828			3,138			4,872			8,010
Operating income (loss)	1,576			(56		)	1,520			1,687			(80		)	1,607
Interest expense	(548		)	(1		)	(549		)	(490		)	(2		)	(492		)
Other income and (expense)	95			57			152			91			82			173
Income before income taxes	1,123			—			1,123			1,288			—			1,288
Income tax (benefit)/expense	(183		)	—			(183		)	78			—			78
Net income	1,306			—			1,306			1,210			—			1,210
Preferred and preference stock dividend requirements	91			—			91			91			—			91
Net income available for common stock	$	1,215		$	—		$	1,215		$	1,119		$	—		$	1,119
Net income available for common stock							$	1,215								$	1,119
Less: Non-core (expense)/income							(99		)							7
Core earnings¹							$	1,314								$	1,112


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

Earning Activities

Earning activities were primarily affected by the following:

Higher operating revenue of $94 million primarily due to the following:

An increase in CPUC-related revenue of $50 million primarily due to the adoption of the 2018 GRC final decision. SCE recorded a reduction in revenue of $67 million in the second quarter of 2019 comprised of a decrease of $129 million attributable to the Test Year, as discussed above, partially offset by a $62 million increase attributable to 2019. The remaining change is primarily due to SCE recording revenue in 2019 based on the 2018 final GRC decision in comparison to recording revenue in 2018 based on 2017 authorized revenue adjusted as discussed above.

A decrease in CPUC-related revenue of $37 million related to tax balancing account activities (offset in income taxes below).

An increase of $95 million in FERC-related revenue primarily due to the pending settlement of SCE's 2018 Formula Rate proceeding and higher operating costs subject to balancing account treatment. If approved by the FERC, the settlement filed in September 2019 will establish SCE's FERC transmission revenue requirement for the FERC 2018 Settlement Period. See "Liquidity and Capital Resources — SCE — Regulatory Proceedings — FERC Formula Rate" for further information.

A decrease in other operating revenue of $14 million primarily due to rate adjustments implemented in the second quarter of 2019.

Higher operation and maintenance costs of $154 million primarily due to:

Higher costs due to contractor scarcity resulting from wildfire mitigation activity and increased inspection and preventive maintenance in areas adjacent to high fire risk areas, partially offset by the impact of the adoption of the 2018 GRC final decision primarily due to a change in capitalization rates and the timing of regulatory deferral and cost recovery of incremental wildfire insurance expenses.

Lower depreciation and amortization expense of $128 million primarily due to the change in depreciation rates and the impact of disallowed historical capital expenditures from the adoption of the 2018 GRC final decision.

Higher impairment and other of $176 million primarily related to the disallowed historical capital expenditures discussed above.

Higher interest expense of $58 million primarily due to increased borrowings.

Higher income tax benefits of ~~$99~~$261 million primarily due to ~~higher non-core income~~the adoption of the 2018 GRC final decision, tax benefits ~~of $69 million related to changes in~~on property-related items and the ~~allocation~~impact of ~~deferred tax re-measurement between customers and shareholders and~~ lower pre-tax ~~income, excluding non-core items.~~income.

Cost-Recovery Activities

Cost-recovery activities were primarily affected by the following:

~~Higher~~Lower purchased power and fuel costs of ~~$79~~$496 million primarily driven by ~~higher power~~lower load related to customer departures to CCAs and ~~gas prices,~~cooler weather, partially offset by lower congestion revenue right credits, higher contract termination charges and ~~higher charges from contract amendments, partially offset by lower load~~the absence of settlement funds received in 2018 related to ~~cooler weather and higher realized gains on hedging activities.~~the California energy crisis.

Higher operation and maintenance costs of ~~$138~~$109 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 employee-related expenses subject to balancing accounts and lower spending on ~~various~~ public ~~purpose programs and transmission access charges.~~programs.

Lower other income and ~~expense~~(expense) of $8$25 million primarily driven by lower net periodic benefit income related to the non-service cost components 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 ~~$2.6~~$3.5 billion and ~~$2.4~~$4.0 billion for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively, and $8.6 billion and $9.0 billion for the nine months ended September 30, 2019 and 2018, respectively.

The decrease for the nine months ended September 30, 2019 ~~revenue increase~~compared to the same period in 2018 is primarily related to higher cost-recovery activities related to 2018 wildfire insurance costs and 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 customer departures to CCAs and cooler weather. See "—Cost-Recovery Activities" for further details.

As a result of the CPUC-authorized decoupling mechanism, SCE earnings are not affected by changes in retail electricity sales.

Income Taxes

SCE's income tax benefit increased by ~~$99~~$96 million and $261 million for the three and nine months ended ~~March 31, 2019~~September 30, respectively, compared to the same ~~period~~periods in 2018.

The effective tax rates were ~~(48.2)~~(1.9)% and ~~(1.9)%~~13.2% for the three months ended ~~March 31,~~September 30, 2019 and 2018, respectively. The effective tax rates were (16.3)% and 6.1% for the nine months ended September 30, 2019 and 2018, respectively. SCE's effective tax rate is below the federal statutory rate of 21% 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 September 30, 2019 is primarily due to the accelerated amortization of excess deferred income taxes in connection with the pending settlement of SCE's FERC 2018 Formula Rate proceeding and return to provision adjustments associated with the filing of the 2018 Federal tax return. The effective tax rate decrease for the nine months ended September 30, 2019 is primarily due to tax benefits on property-related items recorded as a result of 2018 GRC final decision and also includes the change in the allocation of excess deferred tax re-measurement between customers and shareholders as a result of a CPUC resolution issued in 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.

~~Income~~Loss from ~~Continuing~~ Operations

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


	Three months ended March 31,						Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018			2019			2018
Edison Energy Group and subsidiaries	$	(3	)	$	(52	)	$	—		$	(6	)	$	(4	)	$	(61	)
Corporate expenses and other subsidiaries	(12		)	(16		)	(32		)	(17		)	(70		)	(51		)
Total Edison International Parent and Other	$	(15	)	$	(68	)	$	(32	)	$	(23	)	$	(74	)	$	(112	)

The loss from ~~continuing~~ operations of Edison International Parent and Other increased $9 million and decreased ~~$53~~$38 million for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.

The increase for the three months ended ~~March 31,~~September 30, 2019 ~~compared~~is primarily driven by higher interest expenses as a result of increased borrowings. The decrease for the nine months ended September 30, 2019 is primarily related to ~~the same period in 2018 primarily due to the~~an absence of an after-tax impairment charge of ~~$48~~$49 million resulting from ~~an agreement to sell~~ SoCore Energy in 2018 and lower ~~corporate expenses.~~losses at the competitive business under Edison Energy Group, partially offset by higher interest expense.

LIQUIDITY AND CAPITAL RESOURCES

SCE

SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its cash flow and access to the bank and capital markets. SCE's overall cash flows fluctuate based on, among other things, its ability to recover its costs in a timely manner from its customers through regulated rates, changes in commodity prices and volumes, collateral requirements, interest obligations, dividend payments to and equity contributions from Edison International, obligations to 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, capital market financings, and equity contributions from Edison International Parent, as needed. SCE also has availability under its credit facility to fund cash requirements.

SCE made an initial contribution of $2.4 billion to the Wildfire Insurance Fund in September 2019 and has committed to make ten annual contributions of approximately $95 million to the fund, starting on January 1, 2020. Edison International Parent supported SCE's initial contribution to the Wildfire Insurance Fund by contributing $1.2 billion to SCE, which was raised from the issuance of Edison International Parent equity. SCE raised the remaining $1.2 billion from the issuance of long-term debt. SCE also expects to finance approximately $1.6 billion of capital expenses by issuing securitized bonds. Prior to issuance of such bonds, other debt instruments may be used to temporarily finance the expenditure. For further information, see "Management Overview—Southern California Wildfires and Mudslides."

SCE's long-term issuer credit ratings remain at investment grade levels after downgrade actions taken by the major credit agencies in ~~March~~the first quarter of 2019. In the third quarter of 2019, the major credit agencies changed SCE's outlook from negative to stable, due to the passage of AB 1054 and the establishment of the Wildfire Insurance Fund, which provided the Liability Cap and the new standard that the CPUC must apply when assessing the prudency of a utility. For further information, see "Management Overview—Southern California Wildfires and Mudslides." 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~~Stable	~~Watch Negative~~Stable	~~Watch Negative~~Stable

SCE's credit ratings may be further affected if, among other things, regulators fail to successfully implement AB 1054 in a consistent and credit supportive manner or the Wildfire Insurance Fund is depleted by 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 byclaims from catastrophic ~~wildfires substantially caused by utility equipment.~~wildfires. Credit rating downgrades increase the cost and may impact the availability of short-term and

long-term borrowings, including commercial paper, credit facilities, bond financings or other borrowings. In addition, some of SCE's power procurement contracts 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~~are $47 million as of ~~March 31,~~September 30, 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. Furthermore, if SCE was downgraded below investment grade, counterparties may also institute new collateral requirements for future transactions. For further details, see "— Margin and Collateral Deposits."

Available Liquidity

At ~~March 31,~~September 30, 2019, SCE had approximately $2.8 billion available under its $3.0 billion credit facility. ~~The~~In June 2019, SCE extended its credit facility ~~is available~~through May 2024, pursuant to an option to extend, and may extend its credit facility for ~~borrowing needs until May 2023 and contains two 1-year extension options.~~ one additional year with the lenders' approval.

SCE borrowed $750 million under a term loan in February 2019 and issued $1.1 billion of first and refunding mortgage bonds in March 2019. The proceeds from the term loan and the March 2019 bond issuances were used to repay commercial paper borrowings and for general corporate purposes. In August 2019, SCE issued $1.2 billion of first and refunding mortgage bonds. The proceeds of which, along with the equity contribution from Edison International Parent described below, were used to make SCE's initial contribution to the Wildfire Insurance Fund. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and ~~Credit Agreements.~~Equity Financing."

In April 2019, Edison International Parent contributed $750 million to SCE, which SCE used to repay its February 2019 term loan discussed above. In June 2019, Edison International Parent contributed $450 million to SCE, which SCE used to repay commercial paper borrowings and for general corporate purposes. In August 2019, Edison International Parent contributed $1.2 billion to SCE, which SCE used, along with the debt issuance described above, to make its initial contribution to the Wildfire Insurance Fund. In August 2019 and September 2019, Edison International Parent contributed $200 million and $450 million, respectively, for general corporate purposes.

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, 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 2017/2018 Wildfire/Mudslide ~~Events (see~~Events. For further information, see "Management Overview—Southern California Wildfires and ~~Mudslides" for further information).~~Mudslides."

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,~~September 30, 2019, SCE's debt to total capitalization ratio was ~~0.52~~0.46 to 1.

At ~~March 31,~~September 30, 2019, SCE was in compliance with all other financial covenants that affect access to capital.

Capital Investment Plan

Major Transmission Projects

Eldorado-Lugo-Mohave Upgrade

In April 2019, SCE filed an amended application for a certificate of public convenience and necessity with the CPUC, which included total project costs of $257 million, an increase of $24 million as compared to the previous estimate.

Riverside Transmission Reliability Project

In October 2018, the CPUC issued an environmental report that identified a new route alternative, different from SCE's proposed and preferred project, as the environmentally preferred project and proposed an additional underground section of the proposed 220-kV power line. In June 2019, SCE filed testimony with the CPUC that increased SCE's preferred project cost estimate to $451 million and updated the in-service date to 2024. This is an increase of $10 million and an extension of one year as compared to the previous estimate.

Regulatory Proceedings

2020 Cost of Capital Application

In April 2019, SCE filed ~~its~~an 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~~requested a ~~return on common equity~~ROE of ~~10.60%~~16.60% 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 seekand committed to reduce ~~or remove this CPUC Wildfire Risk~~its ROE if there iswas a material reduction in its wildfire cost recovery risk due to regulatory or legislative reform. In August 2019, as a result of the anticipated impact of AB 1054 on SCE's wildfire cost recovery risks, SCE updated its requested ROE to 11.45% for 2020, compared to its current CPUC ROE of 10.3%.

SCE also seeks to modify its current capital structure to increase the 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 approved, SCE seeks ~~a higher CPUC Base~~an additional 0.3% ROE ~~of 10.9%~~ to account for the increased leverage. SCE does not propose to 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 an embedded cost of preferred equity of 5.70% and requests that the CPUC 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%~~8.28% 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~~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 approved in SCE's ~~pending~~ 2018 GRC, ~~request, including the proposed 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~~$204 million from revenue currently included in bundled electric rates of ~~$11.1~~$9.4 billion.

FERC Formula Rate

2018 and 2019 Formula Rates

As discussed in the year-end 2018 MD&A, the FERC accepted, subject to refund and settlement procedures, SCE's request to implement its 2018 Formula Rate,

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

~~2019 Formula Rate~~

transmission revenue requirement. In April 2019, SCE filed an application with the FERC to ~~amend~~revise the 2018 Formula Rate with the 2019 Formula Rate, which was subsequently accepted by the FERC, effective November 11, 2019, subject to refund and settlement procedures.

In September 2019, SCE filed a settlement on its formula ~~rate associated with~~rates for the 2018 Formula Rate case that will establish SCE's FERC transmission revenue requirement for the FERC 2018 Settlement Period. The settlement provides for a weighted-average ROE of 11.2%, which includes a previously authorized 50 basis point incentive for CAISO participation and individual and previously authorized project incentives. Under the settlement, if the FERC issues a final, unappealable ruling that finds SCE is not eligible for the 50 basis point incentive for CAISO participation, then the ROE for the FERC 2018 Settlement Period will be reduced to 10.7%. The FERC has approved implementing this settlement on an interim basis pending the FERC's consideration of the settlement. The transmission revenue requirement and rates that have been billed to customers for the FERC 2018 Settlement Period were based on a total FERC weighted average ROE of 11.58%. SCE will true-up customer rates for the difference between its ~~transmission facilities~~original request and the settlement from existing regulatory liabilities pending FERC's consideration of the settlement and will reverse the true-up if the settlement is not approved by the FERC. SCE had been recognizing revenue during the FERC 2018 Settlement Period based on its expectations of the probable outcome of the 2018 Formula Rate case. Regulatory assets and liabilities were adjusted based on the probable approval of the 2018 Formula Rate case settlement, which resulted in ~~2019.~~ recording a $48.4 million increase in net income.

In the ~~revised formula rate,~~2019 Formula Rate case, SCE ~~seeks~~requested 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~~reflected 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, iswas approximately 18.4%, compared to its proposed settlement for its 2018 Formula Rate of 11.2%.

In September 2019, SCE filed a partial settlement on the 2019 Formula Rate that modifies its requested FERC Base ROE from 17.12% to 11.97%. This reduced ROE request reflects a conventional ROE of 11.12% and an additional ROE of 0.85% to compensate investors for current wildfire risk. As with the equivalent reduction in SCE's requested ROE in its 2020 CPUC Cost of Capital proceeding, for SCE this partial settlement reflects the anticipated impact of AB 1054 on its requested ROE. As modified, SCE's total ROE request, inclusive of project incentives and a 0.5% incentive for CAISO participation, would be approximately 13.25%. The FERC has approved implementing the 2019 Formula Rate as revised by partial settlement effective as of November 12, 2019 pending the FERC's consideration of the partial settlement but subject to hearing and settlement procedures. If the ~~new formula rate~~partial settlement is ~~accepted~~not approved by the FERC, itSCE will ~~supersede~~increase customer rates to reflect the ~~existing formula rate, including~~impact of the 2019 ~~annual update, and could become~~Formula Rate based on SCE's initial request being implemented effective as ~~early as 60 days from~~of November 12, 2019. Whether or not the ~~filing date.~~partial settlement is approved by the FERC, ~~has the authority~~amounts billed to ~~and may, suspend new rates for up to five months. If the new formula rate is suspended by FERC,~~customers under the 2019 ~~transmission revenue requirement rate established in the 2019 annual update~~Formula Rate 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~~until the ~~end of the suspension until it~~2019 Formula Rate proceeding is ultimately resolved.

Energy Efficiency Mechanism

In October 2019, the CPUC 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 2019incentives of approximately ~~$290~~$10.6 million ~~from~~for activities in program years 2016 and 2017. The award is approximately 5% less than SCE's requested award as a result of a CPUC decision that changed the ~~currently effective retail base transmission revenue requirement~~formula used to calculate the Energy Efficiency Savings and Performance Incentive awards.

SCE has requested an award of approximately ~~$1 billion.~~$16.7 million in incentives for activities in program years 2017 and 2018.

SCE Dividends

CPUC holding company rules require that SCE's dividend policy be established by SCE's Board of Directors on the same basis as if SCE were a stand-alone utility company, and that the capital requirements of SCE, as deemed to be necessary to meet SCE's electricity service obligations, shall receive first priority from the Boards of Directors of both Edison

International and SCE. In addition, the CPUC regulates SCE's capital structure which limits the dividends it may pay to its shareholders. Under SCE's interpretation of CPUC regulations, the common equity component of SCE's capital structure must remain at or above 48% on a weighted average basis over the 37-month period that SCE's capital structure is in effect for ratemaking purposes. Under AB 1054, the impact of SCE's contributions to the Wildfire Insurance Fund will be excluded from the measurement of SCE's CPUC-jurisdictional authorized capital structure. For further information, see "Management Overview—Southern California Wildfires and Mudslides."

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 for waiver of compliance with this equity ratio

requirement, describing that while the 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 made. Under the CPUC's rules, SCE will not be deemed to be in violation of the 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. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides." At ~~March 31,~~September 30, 2019, without excluding the $1.8 billion after-tax wildfire related charge incurred in 2018, SCE's 37-month average common equity component of total capitalization was ~~49.3%~~48.7% and the maximum additional dividend that SCE could pay to Edison International under this limitation was ~~$356~~$236 million, resulting in a restriction on net assets of approximately ~~$13.5~~$17.4 billion. If the waiver had been approved by CPUC at ~~March 31,~~

September 30, 2019, SCE's 37-month average common equity component of total capitalization would have been ~~49.7%~~49.6%. 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 its capital structure 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 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 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~~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,~~September 30, 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, and the impact of SCE's credit ratings falling below investment grade.

The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral that would have been required as of ~~March 31,~~September 30, 2019.


(in millions)
Collateral posted¹	$	222	$	260
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
Incremental collateral requirements for power and energy procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade²			47
Incremental collateral requirements for power and energy procurement contracts resulting from adverse market price movement³			31
Posted and potential collateral requirements	$	246	$	338

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:



	September 30, 2019				December 31, 2018
(in millions)	Carrying Value¹		Fair Value²		Carrying Value¹		Fair Value²
Edison International	$	17,545	$	19,514	$	14,711	$	14,844
SCE	15,208		17,081		12,971		13,180

March 31, 2019 December 31, 2018
(in millions)
Carrying
Value¹

Fair
Value²

Carrying
Value¹

Fair
Value²
Edison International $ 15,762
$ 16,068
$ 14,711
$ 14,844
SCE 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.

Note 5. Debt and ~~Credit Agreements~~Equity Financing

Long-Term Debt

~~In March~~During the first quarter of 2019, SCE issued $500 million of 4.20% first and refunding mortgage bonds due in 2029 and $600 million of 4.875% first and refunding mortgage bonds due in 2049. The proceeds were used to repay commercial paper borrowings and for general corporate purposes.

During the second quarter of 2019, Edison International Parent issued $600 million of 5.75% senior notes due June 15, 2027. Of the proceeds of the senior note offering, $450 million was contributed to SCE with the remainder used for general corporate and working capital purposes.

In August 2019, SCE issued $400 million of 2.85% first and refunding mortgage bonds due in 2029 and $800 million of 4.00% first and refunding mortgage bonds due in 2047. The proceeds, along with proceeds from the equity issuance described below, were used to make SCE's initial contribution to the Wildfire Insurance Fund of $2.4 billion in September 2019. For further information, see "— Equity".

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 Parent 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~~with 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~~contribution to repay its February 2019 Term Loan discussed above.

In June 2019, SCE and Edison International Parent ~~have~~amended the maturity date of their multi-year revolving credit facilities of $3.0 billion and $1.5 billion, ~~respectively, both~~respectively. The facilities ~~maturing~~now mature in May ~~2023~~2024, with an option to extend for an additional year, which may be exercised upon agreement between SCE or Edison International Parent and ~~have two 1-year extension options.~~their respective lenders. 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,~~September 30, 2019, ~~SCE's~~SCE had 0 outstanding commercial ~~paper, net of discount, was $29 million at a weighted-average interest rate of 3.15%.~~paper. At ~~March 31,~~September 30, 2019, letters of credit issued under SCE's credit facility aggregated ~~$209~~$222 million, substantially all of which are scheduled to expire in twelve months or less. At December 31, 2018, the outstanding commercial paper, net of discount, was $720 million at a weighted-average interest rate of 3.23%.

~~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 no0 outstanding commercial ~~paper.~~paper at both September 30, 2019 and December 31, 2018.

Equity

In May 2019, Edison International filed a prospectus supplement and executed several distribution agreements with certain sales agents to establish an "at-the-market" ("ATM") program under which it may sell shares of its common stock having an aggregate sales price of up to $1.5 billion. As of September 30, 2019, no sales had occurred and Edison International has no obligation to sell the shares available under the ATM program.

In June 2019, SCE received a $450 million capital contribution from Edison International Parent to repay commercial paper borrowings and for general corporate purposes.

In July 2019, Edison International issued approximately $2.2 billion of common stock in an underwritten offering. Of the proceeds, $1.2 billion was contributed to SCE, which SCE used, along with the long-term debt issuance described above, to make its $2.4 billion initial contribution to the Wildfire Insurance Fund in September 2019. In August 2019 and September 2019, SCE received capital contributions of $200 million and $450 million, respectively, for general corporate purposes. The remaining $350 million will be used for general corporate purposes. For further information, see "— Long-Term Debt".

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~~As of September 30, 2019, SCE did 0t have a net fair value liability of derivatives with credit-risk-related contingent features, as such, SCE had 0 collateral posted to its counterparties. As of December 31, 2018, the net fair value of all derivative liabilities with these credit-risk-related contingent features was ~~$1 million and~~ $4 million, ~~as of March 31, 2019 and December 31, 2018, respectively,~~ for which SCE ~~has~~ posted ~~no collateral and~~ $17 million collateral ~~at March 31, 2019 and December 31, 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,~~September 30, 2019, SCE would be required to post $1 million of ~~additional~~ 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:



	September 30, 2019
	Derivative Assets									Derivative Liabilities									Net Assets
(in millions)	Short-Term			Long-Term¹			Subtotal			Short-Term²			Long-Term			Subtotal			Net Assets
Commodity derivative contracts
Gross amounts recognized	$	63		$	17		$	80		$	22		$	2		$	24		$	56
Gross amounts offset in the consolidated balance sheets	(14		)	(2		)	(16		)	(14		)	(2		)	(16		)	—
Cash collateral posted³	—			—			—			(8		)	—			(8		)	8
Net amounts presented in the consolidated balance sheets	$	49		$	15		$	64		$	—		$	—		$	—		$	64

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



	December 31, 2018
	Derivative Assets						Derivative Liabilities								Net Assets
(in millions)	Short-Term		Long-Term¹		Subtotal		Short-Term²			Long-Term		Subtotal			Net Assets
Commodity derivative contracts
Gross amounts recognized	$	171	$	2	$	173	$	13		$	—	$	13		$	160
Gross amounts offset in the consolidated balance sheets	—		—		—		—			—		—			—
Cash collateral posted³	—		—		—		(7		)	—		(7		)	7
Net amounts presented in the consolidated balance sheets	$	171	$	2	$	173	$	6		$	—	$	6		$	167

December 31, 2018
Derivative Assets Derivative Liabilities Net
Assets
(in millions) Short-Term
Long-Term¹
Subtotal
Short-Term²
Long-Term Subtotal
Commodity derivative contracts
Gross amounts recognized $ 171
$ 2
$ 173
$ 13
$ —
$ 13
$ 160
Gross amounts offset in the consolidated balance sheets —
—
—
—
—
—
—
Cash collateral posted —
—
—
(7 ) —
(7 ) 7
Net amounts presented in the consolidated balance sheets $ 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,~~September 30, 2019, SCE posted ~~$11~~$36 million of cash, ~~collateral that is not~~of which $8 million was offset against net derivative liabilities and is$28 million was reflected in "Other current assets" on the consolidated balance sheets. As December 31, 3018, SCE posted $7 million of cash, of which was offset against net derivative liabilities 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,
(in millions) 2019 2018
Realized gains (losses) $ 32
$ (12 )
Unrealized losses (50 ) (14 )



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Realized (losses) gains	$	(47	)	$	23		$	(17	)	$	3
Unrealized gains (losses)	24			(9		)	(104		)	(35		)

Notional Volumes of Derivative Instruments

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



		Economic Hedges
Commodity	Unit of Measure	September 30, 2019	December 31, 2018
Electricity options, swaps and forwards	GWh	5,015	2,786
Natural gas options, swaps and forwards	Bcf	21	20
Congestion revenue rights	GWh	54,365	54,453

Economic Hedges
Commodity Unit of Measure March 31, 2019 December 31, 2018
Electricity options, swaps and forwards GWh 2,515
2,786
Natural gas options, swaps and forwards Bcf 4
20
Congestion revenue rights GWh 39,401
54,453

Note 7. Revenue

SCE's revenue is disaggregated by two revenue sources:

Earning activities – representing revenue authorized by the CPUC and FERC, which is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission, and distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs, depreciation, taxes, and a return consistent with the capital structure. Also, included in earnings activities are revenue or penalties related to incentive mechanisms, other operating revenue, and regulatory charges or disallowances.

Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery of specific project or program costs, subject to 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 revenue:


	Three months ended March 31, 2019						Three months ended March 31, 2018									Three months ended September 30, 2019									Three months ended September 30, 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
Revenues from contracts with customers^1,2,3	$	1,502	$	957	$	2,459	$	1,536		$	1,192		$	2,728		$	1,862		$	2,022		$	3,884		$	1,851		$	2,255	$	4,106
Alternative revenue programs and other operating revenue⁴	48		309		357		(23		)	(151		)	(174		)	$	(30	)	$	(122	)	$	(152	)	$	(74	)	$	228	$	154
Total operating revenue	$	1,550	$	1,266	$	2,816	$	1,513		$	1,041		$	2,554		$	1,832		$	1,900		$	3,732		$	1,777		$	2,483	$	4,260

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:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Edison International:
Income from operations before income taxes	$	480		$	627		$	1,020		$	1,127
Provision for income tax at federal statutory rate of 21%	101			132			214			237
Increase in income tax from:
State tax, net of federal benefit	5			26			—			21
Property-related	(124		)	(76		)	(267		)	(214		)
Change related to uncertain tax positions	—			1			—			1
Share-based compensation	(1		)	(1		)	(3		)	(1		)
2018 GRC Final Decision	—			—			(80		)	—
Deferred tax re-measurement¹	—			—			(69		)	—
Other	(3		)	1			(7		)	(1		)
Total income tax benefit	$	(22	)	$	83		$	(212	)	$	43
Effective tax rate	(4.6		)%	13.2		%	(20.8		)%	3.8		%
SCE:
Income from operations before income taxes	$	524		$	653		$	1,123		$	1,288
Provision for income tax at federal statutory rate of 21%	110			137			236			270
Increase in income tax from:
State tax, net of federal benefit	8			29			6			33
Property-related²	(124		)	(76		)	(267		)	(214		)
Change related to uncertain tax positions	—			(1		)	—			(2		)
Share-based compensation	—			(1		)	(2		)	(1		)
2018 GRC Final Decision	—			—			(80		)	—
Deferred tax re-measurement¹	—			—			(69		)	—
Other	(4		)	(2		)	(7		)	(8		)
Total income tax benefit	$	(10	)	$	86		$	(183	)	$	78
Effective tax rate	(1.9		)%	13.2		%	(16.3		)%	6.1		%

Edison International SCE
Three months ended March 31,
(in millions) 2019 2018 2019 2018
Income from continuing operations before income taxes $ 196
$ 211
$ 218
$ 310
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 (7 ) (5 ) (5 ) 1
Property-related (69 ) (69 ) (69 ) (69 )
Shared-based compensation¹
(2 ) —
(2 ) —
Deferred tax re-measurement²
(69 ) —
(69 ) —
Other (6 ) (1 ) (6 ) (3 )
Total income tax benefit from continuing operations $ (112 ) $ (31 ) $ (105 ) $ (6 )
Effective tax rate (57.1 )% (14.7 )% (48.2 )% (1.9 )%


¹	~~Includes state taxes of $1 million for the three months ended March 31, 2019 for both Edison International and SCE.~~

¹Relates 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.


²	In the third quarter of 2019, SCE recorded incremental tax benefits, primarily related to FERC settlement and prior year tax return true up.

The CPUC requires flow-through ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences which reverse over time. Flow-through items reduce current authorized revenue requirements in SCE's rate cases and result in a regulatory asset for recovery of deferred income taxes in future periods. The difference between the authorized amounts as determined in SCE's rate cases, adjusted for balancing and memorandum account activities, and the recorded flow-through items also result in increases or decreases in regulatory assets with a corresponding impact on the effective tax rate to the extent that recorded deferred amounts are expected to be recovered in future rates. For further information, see Note 11.

2018 GRC Final Decision

During the second quarter of 2019, SCE recorded a tax benefit of $80 million related to the adoption of the 2018 GRC final decision mainly related to tax benefits on property-related items. This change results primarily from an updated estimate in the amount of excess deferred taxes returned to ratepayers for the year 2018.

Tax Disputes

Tax years that remain open for examination by the Internal Revenue Service ("IRS") and the California Franchise Tax Board are ~~2015~~2016 – ~~2017~~2018 and 2010 – 2017, respectively. Edison International has settled all open tax positions with the IRS for taxable years prior to 2013.

In the fourth quarter of 2018, Edison International ~~reached~~recorded the impacts of a settlement reached with the California Franchise Tax Board for tax years 1994 – 2006 ~~and has updated its uncertain tax positions to reflect this settlement. As a result of the settlement, Edison International expects~~that resulted in a $65 million refund of tax and ~~interest from~~interest. This refund was received in the ~~California Franchise Tax Board in~~second quarter of 2019. Tax years 2007 – 2009 are currently under protest with the California Franchise Tax Board.

Note 9. Compensation and Benefit Plans

Pension Plans

Net periodic pension expense components ~~for continuing operations~~ are:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Edison International:
Service cost	$	31		$	32		$	95		$	96
Non-service cost (benefit)
Interest cost	38			35			116			105
Expected return on plan assets	(52		)	(56		)	(156		)	(169		)
Amortization of prior service cost	—			1			1			2
Amortization of net loss¹	2			2			6			6
Regulatory adjustment	(4		)	2			(12		)	7
Total non-service benefit²	$	(16	)	$	(16	)	$	(45	)	$	(49	)
Total expense recognized	$	15		$	16		$	50		$	47
SCE:
Service cost	$	31		$	31		$	93		$	93
Non-service cost (benefit)
Interest cost	35			32			106			96
Expected return on plan assets	(48		)	(52		)	(146		)	(159		)
Amortization of prior service cost	—			1			1			2
Amortization of net loss¹	1			1			4			4
Regulatory adjustment	(4		)	2			(12		)	7
Total non-service benefit²	$	(16	)	$	(16	)	$	(47	)	$	(50	)
Total expense recognized	$	15		$	15		$	46		$	43

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

Includes the amount of net loss reclassified from other comprehensive ~~loss of $2 million and $1 million~~loss. The amount reclassified for Edison International and SCE was $2 million and $2 million, respectively, for ~~both~~ the three months ended ~~March 31,~~September 30, 2019, and $6 million and $5 million, respectively, for the nine months ended September 30, 2019. The amount reclassified for Edison International and SCE was $2 million and $1 million, respectively, for the three months ended September 30, 2018, and $6 million and $4 million, respectively, for the nine months ended September 30, 2018.

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

Postretirement Benefits Other Than Pensions ("PBOP")

Net periodic PBOP expense components for ~~continuing operations~~Edison International and SCE are:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Service cost	$	8		$	10		$	24		$	29
Non-service cost (benefit)
Interest cost	21			21			63			63
Expected return on plan assets	(28		)	(31		)	(84		)	(91		)
Amortization of prior service cost	(1		)	—			(1		)	(1		)
Amortization of net gain	—			—			(2		)	—
Regulatory adjustment	5			—			17			—
Total non-service benefit¹	$	(3	)	$	(10	)	$	(7	)	$	(29	)
Total expense	$	5		$	—		$	17		$	—

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

¹Included in "Other income and ~~expenses"~~(expense)" 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
(in millions)	Longest Maturity Dates	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
Stocks	—	*		*		$	1,619	$	1,381
Municipal bonds	2057	$	692	$	665	847		767
U.S. government and agency securities	2067	1,113		1,193		1,272		1,288
Corporate bonds	2068	640		573		721		611
Short-term investments and receivables/payables¹	One-year	19		70		20		73
Total		$	2,464	$	2,501	$	4,479	$	4,120

Longest
Maturity
Dates
Amortized Cost Fair Value
(in millions) March 31,
2019 December 31,
2018 March 31,
2019 December 31, 2018
Stocks — *
*
$ 1,550
$ 1,381
Municipal bonds 2057 662
665
785
767
U.S. government and agency securities 2067 1,116
1,193
1,224
1,288
Corporate bonds 2050 549
573
603
611
Short-term investments and receivables/payables¹
One-year 124
70
129
73
Total $ 2,451
$ 2,501
$ 4,291
$ 4,120


*	Equity investments are measured at fair value.


¹	Short-term investments include ~~$35~~$36 million and $71 million of repurchase agreements payable by financial institutions which earn interest, are fully secured by U.S. Treasury securities and mature by ~~April~~October 1, 2019 and January 2, 2019 as of ~~March 31,~~September 30, 2019 and December 31, 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$1.6~~were $1.7 billion and $1.4 billion at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively, and other-than-temporary impairments of ~~$162~~$159 million and $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~~$432 million and $323 million at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively. Accordingly, the fair value of trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled ~~$3.9~~$4.0 billion and $3.8 billion at ~~March 31,~~September 30, 2019 and December 31, 2018, respectively.

The following table summarizes the gains and (losses) for the trust investments:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Gross realized gains	$	19		$	28		$	64		$	115
Gross realized loss	(1		)	(7		)	(1		)	(17		)
Net unrealized gains for equity securities	3			72			209			4

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.

Note 11. Regulatory Assets and Liabilities

Regulatory Assets

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



(in millions)	September 30, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	823	$	814
Power contracts	275		305
Other	22		14
Total current	1,120		1,133
Long-term:
Deferred income taxes, net of liabilities	3,950		3,589
Pensions and other postretirement benefits	281		271
Power contracts	465		700
Unamortized investments, net of accumulated amortization	117		118
Unamortized loss on reacquired debt	145		153
Regulatory balancing accounts	550		360
Environmental remediation	132		134
Other	91		55
Total long-term	5,731		5,380
Total regulatory assets	$	6,851	$	6,513

(in millions) March 31,
2019 December 31,
2018
Current:
Regulatory balancing accounts $ 935
$ 814
Power contracts
333
305
Other 18
14
Total current 1,286
1,133
Long-term:
Deferred income taxes, net of liabilities 3,683
3,589
Pensions and other postretirement benefits 274
271
Power contracts
597
700
Unamortized investments, net of accumulated amortization 117
118
Unamortized loss on reacquired debt 150
153
Regulatory balancing accounts 232
360
Environmental remediation
135
134
Other 80
55
Total long-term 5,268
5,380
Total regulatory assets $ 6,554
$ 6,513

Regulatory Liabilities

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



(in millions)	September 30, 2019		December 31, 2018
Current:
Regulatory balancing accounts	$	957	$	1,080
Energy derivatives	41		158
2018 GRC¹	—		274
Other	12		20
Total current	1,010		1,532
Long-term:
Cost of removal	2,721		2,769
Re-measurement of deferred taxes²	2,474		2,776
Recoveries in excess of ARO liabilities³	1,494		1,130
Regulatory balancing accounts	1,490		1,344
Other postretirement benefits	198		185
Other	167		125
Total long-term	8,544		8,329
Total regulatory liabilities	$	9,554	$	9,861

(in millions) March 31,
2019 December 31,
2018
Current:
Regulatory balancing accounts $ 836
$ 1,080
Energy derivatives 100
158
2018 GRC 341
274
Other 18
20
Total current 1,295
1,532
Long-term:
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 1,428
1,344
Other postretirement benefits 189
185
Other 156
125
Total long-term 8,588
8,329
Total regulatory liabilities $ 9,883
$ 9,861

During 2018, SCE recorded CPUC revenue based on the 2017 authorized revenue requirement adjusted for the July 2017 cost of capital decision and Tax Reform pending the outcome of the 2018 GRC. SCE recorded regulatory liabilities associated with these adjustments. In May 2019, these regulatory liabilities were reversed due to the adoption of 2018 GRC final decision. For further information, see Note 1.


²	SCE decreased its regulatory liability and recorded an income tax benefit of $69 million during the first ~~quarter~~nine months of 2019 related to changes in the allocation of deferred tax re-measurement between customers and shareholders. For further information, see Note 8.

³Represents 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.

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 and Memorandum Accounts

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



(in millions)	September 30, 2019			December 31, 2018
Asset (liability)
Energy resource recovery account	$	205		$	815
Portfolio allocation balancing account¹	341			—
New system generation balancing account	102			(74		)
Public purpose programs and energy efficiency programs	(1,260		)	(1,200		)
Tax accounting memorandum account and pole loading balancing account²	(18		)	28
Base revenue requirement balancing account³	(595		)	(628		)
DOE litigation memorandum account	(70		)	(69		)
Greenhouse gas auction revenue and low carbon fuel standard revenue	(222		)	(81		)
FERC balancing accounts	(96		)	(180		)
Wildfire-related memorandum accounts⁴	506			272
Other	33			(133		)
Liability	$	(1,074	)	$	(1,250	)

(in millions) March 31,
2019 December 31,
2018
Asset (liability)
Energy resource recovery account $ 927
$ 815
New system generation balancing account (96 ) (74 )
Public purpose programs and energy efficiency programs (1,304 ) (1,200 )
Tax accounting memorandum account and pole loading balancing account (128 ) 28
Base revenue requirement balancing account¹
(282 ) (628 )
DOE litigation memorandum account (69 ) (69 )
Greenhouse gas auction revenue and low carbon fuel standard revenue (150 ) (81 )
FERC balancing accounts (139 ) (180 )
Catastrophic event memorandum account
95
144
Wildfire expense memorandum account

41
128
Other 8
(133 )
Liability $ (1,097 ) $ (1,250 )


¹	In May 2019, the CPUC approved a portfolio allocation balancing account to determine and pro-ratably recover from responsible bundled service and departing load customers the “above-market” costs of all generation resources that are eligible for cost recovery.

The ~~base~~2018 GRC final decision approved changes to expand the use of the two-way TAMA. The expanded TAMA will track revenue ~~requirement balancing account at March 31, 2019 includes recovery of $107 million of premiums related to a 12-month, $300 million wildfire insurance~~differences resulting from changes in income tax expense caused by net revenue changes, mandatory or elective tax law changes, tax accounting changes, tax procedural changes, or tax policy ~~purchased in December 2017. See Note 12 for further discussion.~~changes during the 2018 GRC period.

³ The base revenue requirement balancing account at September 30, 2019 includes recovery of $107 million of premiums related to a 12-month, $300 million wildfire insurance policy purchased in December 2017.

⁴The wildfire-related memorandum accounts represent wildfire-related costs that are probable of future recovery from customers, subject to a reasonableness review. The Catastrophic Event Memorandum Account ("CEMA") is used to track the costs related to restoring service and damage repair, upon declaration of disasters by state or federal authorities. In December 2018, the CPUC approved the establishment of the Wildfire Expense Memorandum Account ("WEMA") to track incremental wildfire insurance costs and uninsured wildfire-related claims costs. In March 2019, the CPUC approved a fire risk mitigation memorandum account to track costs related to the reduction of fire risk that are incremental to the amount in SCE's revenue requirement. In June 2019, the CPUC approved a wildfire mitigation plan memorandum account to track costs incurred to implement SCE's Wildfire Mitigation Plan that are not currently reflected in revenue requirements.

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 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 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,~~September 30, 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

~~Approximately 35% of SCE's service territory is in areas identified as high fire risk by SCE.~~ Multiple factors have contributed to increased ~~wildfires,~~wildfire activity, 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. SCE has determined that approximately 27% of its service territory is in areas identified as high fire risk.

In December 2017 and November 2018, wind-driven wildfires impacted portions of SCE's service territory, 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 the 2017 fires originated on December 4, 2017, in the Anlauf Canyon area of Ventura County (the investigating agencies refer to this fire as the "Thomas Fire"), followed shortly thereafter by a second fire that originated near Koenigstein Road in the City of Santa Paula (the "Koenigstein Fire"). While the progression of these two fires remains under review, the December 4, 2017 fires eventually burned substantial acreage in both Ventura and Santa Barbara Counties. According to CAL FIRE, ~~information,~~ the Thomas and Koenigstein Fires, collectively, burned over 280,000 acres, destroyed or damaged an estimated 1,343 structures and resulted in ~~two~~2 confirmed fatalities. The largest of the November 2018 fires, known as the ~~Woolsey Fire,~~"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 364 structures and resulted in ~~three~~3 confirmed fatalities. NaN additional fatalities have been associated with the Woolsey Fire.

As described below, multiple lawsuits related to the Thomas and Koenigstein Fires and the Woolsey Fire have been initiated against SCE and Edison International. Some of the Thomas and Koenigstein Fires lawsuits claim that SCE and Edison International have responsibility for the damages caused by mudslides and flooding in Montecito and surrounding areas in January 2018 (the "Montecito Mudslides") based on a theory alleging that SCE has responsibility for the Thomas and/or Koenigstein Fires and that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides. According to Santa Barbara County initial reports, the Montecito Mudslides destroyed an estimated 135 structures, damaged an estimated 324 structures, and resulted in 21 confirmed fatalities, with ~~two~~2 additional fatalities presumed.

In October 2019, a wind-driven fire known as the "Saddle Ridge Fire" originated in Los Angeles California and caused significant damage in Los Angeles County. According to the Los Angeles Fire Department (“LAFD”), the Saddle Ridge Fire has burned approximately 9,000 acres, destroyed an estimated 19 structures, damaged an estimated 88 structures, and resulted in 1 fatality. An investigation into the cause of the Saddle Ridge Fire is being led by the LAFD, and LAFD investigators have identified the area of origin of the Saddle Ridge Fire as a 50 by 70 foot area beneath an SCE high voltage transmission tower. The SED is also conducting an investigation of the Saddle Ridge Fire. SCE reported to the CPUC that SCE facilities were impacted close-in-time to the reported time of the fire on October 10, 2019. Given the preliminary stage of SCE’s review into the Saddle Ridge Fire, SCE is unable at this time to determine if it will incur a material loss as a result of the fire.

Liability Overview

The extent of liability for wildfire-related damages 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. 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 have 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 reports did not address the causes of the Montecito Mudslides. SCE has also received a non-final redacted draft of a report from the VCFD regarding Woolsey Fire (the "Redacted Woolsey Report"). SCE received the Redacted Woolsey Report subject to a protective order in the litigation related to the Woolsey fire and, other than the information disclosed in this Form 10-Q, is not authorized to release the report or its contents to the public at this time. The VCFD and CAL FIRE findings do not determine legal causation of or assign legal liability for the Thomas, Koenigstein or ~~Koenigstein~~Woolsey 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.~~Thomas, Koenigstein and Woolsey Fires. SCE cannot predict when the SED's investigations will be completed.

Edison International and SCE are aware of separate ongoing investigations by the California Attorney General's Office of the Thomas Fire and the Woolsey Fire for the purpose of determining whether any criminal violations have occurred. SCE could be subject to material fines, penalties, or restitution if it is determined that it failed to comply with applicable laws and regulations. SCE is not aware of any basis for felony liability with regards to the Thomas Fire, the Koenigstein Fire or the Woolsey Fire.

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~~As previously disclosed, ~~that~~ SCE ~~believed~~believes that 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 Redacted Woolsey Report states that the ~~November 8, 2018 outage~~VCFD investigation team determined that electrical equipment owned and operated by SCE was ~~related to contact being made between~~ the ~~support wire and~~cause of the ~~electrical wire has not been determined.~~Woolsey Fire. Absent additional evidence, SCE believes that it is likely that its equipment ~~could be found to have been~~was associated with the ignition of the Woolsey Fire. SCE expects to obtain and review additional information and materials in the possession of CAL FIRE and others during the course of its internal review and the Woolsey Fire litigation process, including SCE equipment that has been retained by CAL FIRE.

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~~2 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. The July 2018 lawsuit has been dismissed at plaintiff's request and the September 2018 lawsuit is currently stayed.

In November 2018, a purported class action lawsuit alleging securities fraud and related claims was filed in ~~the~~ federal court against ~~EIX,~~Edison International, 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~~2 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

At September 30, 2019 and December 31, 2018, Edison International's and SCE's 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.

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,~~September 30, 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.~~proceedings for fires ignited prior to July 12, 2019. 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.~~WEMA or its CEMA. In July 2019, SCE filed a CEMA application with the CPUC to seek recovery of, among other things, approximately $5.9 million in costs incurred to restore service to customers and to repair, replace and restore buildings and SCE's facilities damaged or destroyed as a result of the Thomas and Koenigstein Fires. SCE continues to incur costs for reconstructing its system and restoring service to structures that were damaged or destroyed by these two fires and plans to file additional applications with the CPUC to recover such costs. See ~~"—Recovery~~"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.~~cost, in the future.

Based on policies currently in effect, SCE anticipates that its wildfire insurance expense in 2019, 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.~~$400 million. 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,~~September 30, 2019, SCE had regulatory assets of ~~$148~~approximately $265 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.

SCE tracks insurance premium costs related to wildfire liability insurance policies as well as other wildfire-related costs in its WEMA. In July 2019, SCE filed a WEMA application with the CPUC to seek recovery of $478 million in wildfire insurance premium costs incurred in excess of premiums approved in the 2018 GRC.

Recovery of Wildfire-Related Costs

Pre-AB 1054 Cost Recovery

California courts have previously found investor-owned utilities to be strictly liable for property damage, regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that caused the property damage. The rationale stated by these courts for applying this theory to investor-owned utilities is that property damages resulting from a public improvement, such as the distribution of electricity, can be spread across the larger community that benefited from such improvement through recovery of uninsured wildfire-related costs in electric rates. However, in November 2017, the CPUC issued a decision denying SDG&E's request to include in its rates uninsured wildfire-related costs arising from several 2007 wildfires, finding that SDG&E did not meet the prudency standard because it did not prudently manage and operate its facilities prior to or at the outset of the 2007 wildfires. In July 2018, the

CPUC denied both SDG&E's application for rehearing on its cost recovery request and a joint application for rehearing filed by SCE and PG&E limited to the applicability of inverse condemnation principles in the same proceeding. The California Court of Appeal, the California Supreme Court and the ~~California~~United States 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 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 the requirements of SB 901, a Commission on Catastrophic Wildfire Cost and Recovery was formed in January 2019 to 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 can pay without harming ratepayers or materially impacting the utility's ability to provide adequate and safe services, for wildfires that occurred in 2017. Based on events and information available to date, SCE believes it is unlikely that it will seek to use this mechanism to securitize costs incurred in connection with the 2017/2018 Wildfire/Mudslide Events.

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 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~~Legislation

On July 12, 2019, AB 1054 was signed by the Governor of California and became effective immediately. The summary of the ~~legislature,~~wildfire legislation below is based on SCE’s interpretation of AB 1054. A lawsuit challenging the validity of AB 1054 was filed in federal court on July 19, 2019. Edison International and SCE ~~cannot~~are unable to predict ~~whether~~the outcome of this lawsuit.

Wildfire Insurance Fund

AB 1054 provided for a wildfire insurance fund("Wildfire Insurance Fund") to reimburse utilities for payment of third-party damage claims arising from certain wildfires that exceed, in aggregate in a calendar year, the greater of $1 billion or the utility's insurance coverage. The Wildfire Insurance Fund was established in September 2019 when ~~there~~both SCE and SDG&E made their initial contributions to the fund. The Wildfire Insurance Fund is available for claims related to wildfires ignited after July 12, 2019 that are determined to have been caused by a utility by the responsible government investigatory agency.

SCE and SDG&E have collectively made initial contributions of approximately $2.7 billion to the Wildfire Insurance Fund. While PG&E has agreed to make an initial contribution of approximately $4.8 billion to the Wildfire Insurance Fund, its participation in, and contributions to, the fund are subject to it emerging from bankruptcy and meeting certain other conditions prior to June 30, 2020. SCE, SDG&E and PG&E are also expected to make aggregate annual contributions of $3 billion to the Wildfire Insurance Fund over a 10-year period. If PG&E is unable to participate in the Wildfire Insurance Fund, the investor-owned utility aggregate annual contributions to the fund are expected to be approximately $1 billion. In addition to PG&E's, SCE's and SDG&E's contributions to the Wildfire Insurance Fund, $13.5 billion is expected to be collected from their ratepayers through a dedicated rate component to support a $10.5 billion contribution to the fund. Based on a decision adopted by the CPUC in October 2019 in the Order Instituting Rulemaking to Consider Authorization of a Non-Bypassable Charge to Support the Wildfire Insurance Fund, PG&E’s ratepayers will not be required to contribute to the fund if PG&E does not participate in the Wildfire Insurance Fund. In that case, $7.5 billion will be collected from SCE's and SDG&E's ratepayers through the dedicated rate component to support a ~~comprehensive solution mitigating~~contribution to the ~~significant risk faced~~Wildfire Insurance Fund. In addition to funding contributions to the Wildfire Insurance Fund, the amount collected from utility ratepayers will pay for, among other things, any interest and financing costs related to any bonds that are issued to support the contributions to the Wildfire Insurance Fund.

SCE made an initial contribution of approximately $2.4 billion to the Wildfire Insurance Fund in September, 2019 and has committed to make ten annual contributions of approximately $95 million per year to the fund, starting on January 1, 2020. Edison International supported SCE's initial contribution to the Wildfire Insurance Fund by ~~California~~raising $1.2 billion from the issuance of Edison International equity. SCE raised the remaining $1.2 billion from the issuance of long-term debt. SCE's contributions to the Wildfire Insurance Fund will not be recoverable through electric rates and will be excluded from the measurement of SCE's CPUC-jurisdictional authorized capital structure. SCE will also not be entitled to cost recovery for any borrowing costs incurred in connection with its contributions to the Wildfire Insurance Fund. See Note 1 for information on the accounting impact of SCE's contributions to the Wildfire Insurance Fund.

Participating investor-owned utilities will be reimbursed from the Wildfire Insurance Fund for eligible claims, subject to the fund administrator's review, and will be required to reimburse the fund for withdrawn amounts that the CPUC disallows, subject, in some instances, to the Liability Cap (as defined below). If the utility has maintained a valid safety certification and its actions or inactions that resulted in the wildfire are not found to constitute conscious or willful disregard of the rights and safety of others, the aggregate requirement to reimburse the fund over a trailing three calendar year period is capped at 20% of the equity portion of the utility's transmission and distribution rate base in the year of the prudency determination ("Liability Cap"). The initial Liability Cap for SCE will be approximately $2.5 billion based on its 2019 rate base, and will be adjusted annually. SCE will not be allowed to recover borrowing costs incurred to reimburse the fund for amounts that the CPUC disallows. The Wildfire Insurance Fund, and consequently the Liability Cap, will terminate when the administrator determines that the fund has been exhausted.

AB 1054 Prudency Standard

As a result of the establishment of the Wildfire Insurance Fund, AB 1054 created a new standard that the CPUC must apply when assessing the prudency of a utility in connection with a request for recovery of wildfire costs for wildfires ignited after July 12, 2019. Under AB 1054, the CPUC is required to find a utility to be prudent if the utility's conduct related to ~~wildfires.~~

~~In April 2019,~~the ignition was consistent with actions that a reasonable utility would have undertaken under similar circumstances, at the relevant point in ~~addition~~time, and based on the information available at that time. Prudent conduct under the AB 1054 standard is not limited to ~~other requested increases~~the optimum practice, method, or act to ~~its CPUC~~the exclusion of others, but rather encompasses a spectrum of possible practices, methods, or acts consistent with utility system needs, the interest of the ratepayers, and ~~FERC returns on common equity, SCE requested from both~~the requirements of governmental agencies. AB 1054 also provides that the CPUC may determine that wildfire costs may be recoverable, in whole or in part, by taking into account factors within and ~~FERC an additional 6% return on common equity~~outside the utility's control, including humidity, temperature, and winds. Further, utilities with a valid safety certification will be presumed to ~~compensate investors for current~~have acted prudently related to a wildfire ~~risk. SCE would seek to reduce or remove this additional return on common equity if there is~~ignition unless a ~~material reduction~~party in ~~its wildfire~~the cost recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at which time, the burden shifts back to the utility to prove its conduct was reasonable. If a utility does not have a valid safety certification, it will have the burden to prove, based on a preponderance of evidence, that its conduct was prudent. The new prudency standard will survive the termination of the Wildfire Insurance Fund.

Utilities participating in the Wildfire Insurance Fund that are found to be prudent are not required to reimburse the fund for amounts withdrawn from the fund and can recover wildfire costs through electric rates if the fund has been exhausted.

Capital Expenditure Requirement

Under AB 1054, approximately $1.6 billion spent by SCE on wildfire risk ~~due~~mitigation capital expenditures cannot be included in the equity portion of SCE's rate base. SCE can apply for an irrevocable order from the CPUC to ~~regulatory or legislative reform.~~finance these capital expenditures, including through the issuance of securitized bonds, and can recover any prudently incurred financing costs. SCE expects to finance this capital requirement by issuing securitized bonds.

Wildfire Mitigation Plan and Safety Certification

Under AB 1054, SCE is required to file a wildfire mitigation plan every three years beginning in 2020, and can obtain an annual safety certification upon the submission of certain required safety information, including an approved wildfire mitigation plan. On July 25, 2019, SCE obtained its initial safety certification that will be valid for twelve months.

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,~~September 30, 2019, SCE's recorded estimated minimum liability to remediate its 21 identified material sites (sites with a liability balance at ~~March 31,~~September 30, 2019, in which the upper end of the range of the costs is at least $1 million) was ~~$136~~$133 million, including ~~$89~~$88 million related to San Onofre. In addition to these sites, SCE also has 15 immaterial sites with a liability balance as of ~~March 31,~~September 30, 2019, for which the total minimum recorded liability was $4 million. Of the ~~$140~~$137 million total environmental remediation liability for SCE, ~~$135~~$132 million has been recorded as a regulatory asset. SCE expects to recover ~~$43~~$41 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 ~~$92~~$91 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 ~~$138~~$141 million and $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 $7 million to ~~$24~~$17 million. Costs incurred for the ~~three~~nine months ended ~~March 31,~~September 30, 2019 and 2018 were $2$4 million and $4$7 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,~~Nuclear Electric Insurance Limited ("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 ~~$14.1~~$13.9 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").~~Insurers. SCE withdrew from participation in the secondary insurance pool for San Onofre for offsite liability insurance effective January 5, 2018. Based on its ownership interests in Palo Verde, SCE could be required to pay a maximum of approximately $65 million per nuclear incident for future incidents. However, it would have to pay no more than approximately $10 million per future incident in any one year. SCE could be required to pay a maximum of approximately $255 million per nuclear incident and a maximum of $38 million per year per incident for liabilities arising from events prior to January 5, 2018, although SCE is not aware of any such events.

Spent Nuclear Fuel

Under federal law, the ~~DOE~~Department of Energy ("DOE") is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE has not met its contractual obligation to accept spent nuclear fuel. Extended delays by the DOE have led to the construction of costly alternatives and associated siting and environmental issues. 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'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 (SCE's share $124 million, which included reimbursement for approximately $2 million in legal 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 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 made additional legal action to recover damages incurred in 2014 –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'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 May 2018, the DOE approved reimbursement of approximately $45 million (SCE's share was approximately $35 million) of SCE's 2016 damages, disallowing recovery of approximately $13 million. SCE accepted the DOE's determination, and the government paid the 2016 claim under the terms of the

settlement. The damages awards are subject to CPUC review as to how the amounts will be refunded among customers, shareholders, or to offset other costs.

Note 13. Leases

Leases as Lessee

SCE ~~has entered~~enters 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~~primarily 10 and 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,~~September 30, 2019.


(in millions)	PPA Operating Leases¹		Other Operating Leases²		PPA Finance Leases¹		PPA Operating Leases^1,2		Other Operating Leases³		PPA Finance Leases¹
2019	$	118	$	32	$	1	$	20	$	11	$	—
2020	124		33		1		70		35		1
2021	103		27		1		48		28		1
2022	79		22		2		48		23		2
2023	47		17		2		47		17		2
Thereafter	536		101		9		536		104		9
Total lease payments	$	1,007	$	232	$	16	$	769	$	218	$	15
Amount representing interest³	249		62		6
Amount representing interest⁴							226		60		6
Lease liabilities	$	758	$	170	$	10	$	543	$	158	$	9

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			PPA Operating Leases¹		Other Operating Leases³		PPA Capital Leases¹
2019	$	148	$	42	$	5		$	148	$	42	$	5
2020	124		31		6			124		31		6
2021	103		27		6			103		27		6
2022	79		22		6			79		22		6
2023	47		17		5			47		17		5
Thereafter	536		101		66			536		101		66
Total lease payments	$	1,037	$	240	$	94		$	1,037	$	240	$	94
Amount representing executory costs					(25		)					25
Amount representing interest					(33		)					33
Net commitments⁴					$	36
Net commitments												$	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	During the second quarter of 2019, SCE amended 3 power contracts that resulted in a $161 million reduction in ROU assets and lease liabilities as these contracts no longer qualify as leases.


³	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.


³⁴	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)	September 30, 2019
Operating leases:
Operating lease ROU assets	$	701
Current portion of operating lease liabilities	90
Operating lease liabilities	611
Total operating lease liabilities	$	701

Finance leases included in:
Utility property, plant and equipment, gross	$	14
Accumulated depreciation	(5		)
Utility property, plant and equipment, net	9
Other current liabilities	—
Other long-term liabilities	9
Total finance lease liabilities	$	9

(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 September 30, 2019		Nine months ended September 30, 2019
PPA leases:
Operating lease cost	$	38	$	98
Finance lease cost	1		1
Variable lease cost	751		1,742
Total PPA lease cost	790		1,841
Other operating leases cost	12		35
Total lease cost	$	802	$	1,876

(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)	Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
PPA leases	$	98
Other leases	34

ROU assets obtained in exchange for lease obligations:
Other operating leases	23

Weighted average remaining lease term (in years):
Operating leases
PPA leases	16.03
Other leases	12.75
PPA Finance leases	11.71

Weighted average discount rate:
Operating leases
PPA leases	4.44		%
Other leases	3.89		%
PPA Finance leases	8.74		%

(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 and nine months ended ~~March 31,~~September 30, 2019, SCE recognized $5$4 million and $14 million, respectively, in lease income, which is included in operating revenue on the consolidated statements of income. At ~~March 31,~~September 30, 2019, the undiscounted cash flow expected to be received from lease payments for the remaining years is as follows:



(in millions)
2019	$	4
2020	14
2021	10
2022	10
2023	9
Thereafter	155
Total	$	202

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

Note 14. Accumulated Other Comprehensive Loss

~~The changes in~~Edison International's accumulated other comprehensive loss, net of tax, consist of:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Beginning balance	$	(57	)	$	(44	)	$	(50	)	$	(43	)
Pension and PBOP – net loss:
Reclassified from accumulated other comprehensive loss¹	2			1			5			5
Other²	—			1			(10		)	(4		)
Change	2			2			(5		)	1
Ending Balance	$	(55	)	$	(42	)	$	(55	)	$	(42	)

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

Edison International 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 on the reclassification of stranded tax effects.

SCE's accumulated other comprehensive loss, net of tax, consist of:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Beginning balance	$	(26	)	$	(21	)	$	(23	)	$	(19	)
Pension and PBOP – net loss:
Reclassified from accumulated other comprehensive loss¹	1			1			3			4
Other²	—			—			(5		)	(5		)
Change	1			1			(2		)	(1		)
Ending Balance	$	(25	)	$	(20	)	$	(25	)	$	(20	)


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

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 on the reclassification of stranded tax effects.

Note 15. Other Income and ~~Expenses~~(Expense)

Other income and ~~expenses~~(expense) are as follows:



	Three months ended September 30,						Nine months ended September 30,
(in millions)	2019			2018			2019			2018
SCE other income and (expense):
Equity allowance for funds used during construction	$	26		$	32		$	75		$	76
Increase in cash surrender value of life insurance policies and life insurance benefits	9			16			27			30
Interest income	13			6			29			15
Net periodic benefit income – non-service components	19			26			54			79
Civic, political and related activities and donations	(5		)	(9		)	(26		)	(25		)
Other	(4		)	1			(7		)	(2		)
Total SCE other income and (expense)	58			72			152			173
Other income and (expense) of Edison International Parent and Other:
Net periodic benefit costs – non-service components	—			—			(2		)	(1		)
Other	—			4			1			4
Total Edison International other income and (expense)	$	58		$	76		$	151		$	176

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

Note 16. Supplemental Cash Flows Information

Supplemental cash flows information ~~for continuing operations~~ is:



	Edison International						SCE
	Nine months ended September 30,
(in millions)	2019			2018			2019			2018
Cash payments for interest and taxes:
Interest, net of amounts capitalized	$	582		$	509		$	518		$	466
Tax refunds, net	(65		)	(92		)	(166		)	(17		)
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock	$	220		$	197		$	—		$	314

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

SCE's accrued capital expenditures at ~~March 31,~~September 30, 2019 and 2018 were ~~$392~~$486 million and ~~$399~~$421 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,~~September 30, 2019, SCE ~~purchased~~did not purchase wildfire liability insurance ~~with premiums of $186 million~~ from Edison Insurance Services, Inc. ("EIS"), a wholly-owned subsidiary of Edison International. For the nine months ended September 30, 2019, SCE purchased wildfire liability insurance with premiums of $260 million. 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		September 30, 2019		December 31, 2018
Long-term insurance receivable due from affiliate	$	1,000	$	1,000	$	1,000	$	1,000
Prepaid insurance¹	169		13		42		13
Current payables due to affiliate²	62		4		—		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.

The amortization expense for wildfire-related insurance was $51 million and $35 million for the three months ended September 30, 2019 and 2018 respectively, and $123 million and $106 million for the nine months ended September 30, 2019 and 2018, respectively.

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~~third quarter of 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~~third quarter of 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 Notes to Consolidated Financial Statements—Note 2. Property, Plant and Equipment in the 2018 Form 10-K.

LEGAL PROCEEDINGS

Thomas Fire and Koenigstein Fire Litigation

In December 2017, wind-driven wildfires impacted portions of SCE's service territory, 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 the 2017 fires originated on December 4, 2017, in the Anlauf Canyon area of Ventura County (the investigating agencies refer to this fire as the "Thomas Fire"), followed shortly thereafter by the Koenigstein Fire. According to CAL FIRE, ~~information,~~ the Thomas and Koenigstein Fires burned over 280,000 acres, destroyed or damages an estimated 1,343 structures and resulted in two fatalities.

As of ~~April 26,~~October 24, 2019, SCE was aware of at least ~~151~~198 lawsuits, representing approximately ~~2,300~~3,000 plaintiffs, related to the Thomas and Koenigstein Fires naming SCE as a defendant. ~~Seventy-eight~~Ninety-eight of these lawsuits also name Edison International as a defendant based on its ownership and alleged 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 lawsuits have been coordinated in the Los Angeles Superior Court. Three categories of plaintiffs have filed lawsuits against SCE and Edison International relating to the Thomas Fire, Koenigstein Fire and Montecito Mudslides: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. An initial jury trial for a limited number of plaintiffs, sometimes referred to as a bellwether jury trial, on certain fire only matters is scheduled for April 20, 2020.

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.

~~Sixty-eight~~Seventy-nine of the ~~151~~198 lawsuits mentioned under "Thomas Fire and Koenigstein Fire Litigation" above allege that SCE has responsibility for the Thomas and/or Koenigstein Fires and that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides, resulting in the plaintiffs' claimed damages. ~~Twenty-seven~~Thirty-four of the 6879 Montecito Mudslides lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. In addition to other causes of action, some of the Montecito Mudslides lawsuits also allege personal injury and wrongful death. The Thomas and Koenigstein Fires lawsuits and the Montecito Mudslides lawsuits have been coordinated in the Los Angeles Superior Court.

Three categories of plaintiffs have filed lawsuits against SCE and Edison International relating to the Thomas Fire, Koenigstein Fire and Montecito Mudslides: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs.

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. Two additional fatalities have also been associated with the Woolsey Fire.

As of ~~April 26,~~October 24, 2019, SCE was aware of at least 72102 lawsuits, representing approximately ~~1,100~~3,000 plaintiffs, related to the Woolsey Fire naming SCE as a defendant. ~~Fifty-eight~~Eighty-six 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. Three categories of plaintiffs have filed lawsuits against SCE and Edison International relating to the Woolsey Fire: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. An initial jury trial for a limited number of plaintiffs on certain matters, sometimes referred to as a bellwether jury trial, is scheduled in July 2020.

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

RISK FACTORS

SCE's anticipated new customer service system is subject to implementation and cost-recovery risks that could materially affect SCE's business and financial condition.

SCE is currently testing a new customer service system that it anticipates implementing in 2021. If the customer service system does not function as intended upon implementation, SCE could experience, among other things, delayed or inaccurate customer bills that lead to over- or under- collections and other customer service concerns or degradation. Further, the process of implementing new technologies like the new customer service system represents opportunity for cybersecurity attacks on our information systems, which could lead to sensitive confidential personal and other data being compromised. Customer service degradation or the compromise of sensitive confidential personal and other data, could result in violations of applicable privacy and other laws, material financial loss to SCE or to its customers, customer dissatisfaction, loss of confidence in SCE's security measures, and significant litigation and/or regulatory exposure, all of which could materially affect SCE's financial condition and results of operations and materially damage the business reputation of Edison International and SCE.

The expected cost of the new customer service system is significantly higher than SCE had originally projected. If the CPUC determines that any costs incurred by SCE to build, test and implement the customer service system were not reasonably or prudently incurred, SCE will not be able to recover such costs through electric rates.

SCE will not benefit from all of the features of AB 1054 if the Wildfire Insurance Fund is exhausted.

Catastrophic wildfires could rapidly exhaust the Wildfire Insurance Fund and SCE will not be reimbursed by the Wildfire Insurance Fund or benefit from the Liability Cap if the fund has been exhausted as a result of damage claims previously incurred by SCE or the other participating utilities. Also, SCE will not benefit from a presumption of prudency or the Liability Cap established under AB 1054 if SCE is unable to maintain a valid safety certification from the CPUC.

In addition, because PG&E's participation in, and contributions to, the Wildfire Insurance Fund are subject to it emerging from bankruptcy and meeting certain other conditions prior to June 30, 2020, the Wildfire Insurance Fund may be smaller than is currently anticipated.

For more information on AB 1054, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides—Recovery of Wildfire-Related Costs—2019 Wildfire Legislation."

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~~third quarter of 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, 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
— —



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
July 1, 2019 to July 31, 2019	255,127		$	69.40	—	—
August 1, 2019 to August 31, 2019	—		—		—	—
September 1, 2019 to September 30, 2019	—		—		—	—
Total	255,127		$	69.40	—	—

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.~~

EXHIBITS



Exhibit Number		Description


10.1		~~Term Loan Credit Agreement, dated as of April 26, 2019, among~~ Edison International ~~Company, the several banks and other financial institutions from time to time parties thereto, and Citibank, N.A.,~~Director Matching Gifts Program, as ~~administrative agent for the lenders~~

~~10.2~~		~~Term Loan Credit Agreement, dated as of February 4,~~revised effective January 1, 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. 1-2313, filed as Exhibit 10.1 to Southern California Edison's Form 8-K dated and filed February 4, 2019)*

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

10.4**		~~Edison International Executive Incentive Compensation Plan As Amended and 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,~~September 30, 2019, filed on ~~April 30,~~October 29, 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,~~September 30, 2019, filed on ~~April 30,~~October 29, 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

104		The cover page of this report formatted in Inline XBRL (included as Exhibit 101)


*	~~Incorporated by reference pursuant to Rule 12b-32.~~


**	Indicates a management contract or compensatory plan or arrangement, as required by Item 15(a)(3).

Edison International and SCE will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written request and upon payment to Edison International or SCE of their reasonable expenses of furnishing such exhibit, which shall be limited to photocopying charges and, if mailed to the requesting party, the cost of first-class postage.

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:	~~April 30,~~October 29, 2019	Date:	~~April 30,~~October 29, 2019

6179



(Mark One)
þ☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~March 31,~~	September 30, 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)~~



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



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 Filerþ	Accelerated Filer¨	Non-accelerated Filer¨	Smaller Reporting Company¨	Emerging growth company¨
	þ	☐	☐	☐	☐
Southern California Edison Company	Large Accelerated Filer¨	Accelerated Filer¨	Non-accelerated Filerþ	Smaller Reporting Company¨	Emerging growth company¨
		☐	þ	☐	☐



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	EIX	NYSE	LLC



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.



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 26,~~October 24, 2019:
Edison International		~~325,811,206~~358,601,135 shares
Southern California Edison Company		434,888,104 shares



					SEC Form 10-Q Reference Number
GLOSSARY				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
		2018 General Rate Case		4
		~~Capital Program~~ 2021 General Rate Case		4
		Wildfire Mitigation and Wildfire Insurance Expenses		~~Southern California Wildfires~~5 ~~and Mudslides~~
		Capital Program		5
		~~RESULTS OF OPERATIONS~~Southern California Wildfires and Mudslides		76
	~~Southern California Edison Company~~			7
		~~Three months ended March 31, 2019 versus March 31, 2018~~		7
			~~Earning Activities~~	8
			~~Cost-Recovery Activities~~	8
	~~Supplemental Operating Revenue Information~~			8
	~~Income Taxes~~RESULTS OF OPERATIONS			9
	Southern California Edison ~~International Parent and Other~~Company			9
		~~Income from Continuing Operations~~		9
	~~LIQUIDITY AND CAPITAL RESOURCES~~			9
	~~Southern California Edison Company~~Impact of 2018 GRC			9
		~~Available Liquidity~~Three months ended September 30, 2019 versus September 30, 2018		10
		~~Capital Investment Plan~~		10
		~~Regulatory Proceedings~~		10
		~~SCE~~ ~~Dividend~~s		11
			~~Margin and Collateral Deposits~~Earning Activities	11
			Cost-Recovery Activities	12
		Nine~~Edison International Parent and Other~~ months ended September 30, 2019 versus September 30, 2018		12
			~~Historical Cash Flows~~Earning Activities	13
			Cost-Recovery Activities	13
		~~Southern California Edison Company~~Supplemental Operating Revenue Information		1314
		Income Taxes		14
	Edison International Parent and Other			14
		Loss from Operations		14
	LIQUIDITY AND CAPITAL RESOURCES			15
	Southern California Edison Company			15
		Available Liquidity		15
		Capital Investment Plan		16
		~~Contingencies~~Regulatory Proceedings		16
		SCE Dividends		~~MARKET RISK EXPOSURES~~18
		Margin and Collateral Deposits		1618
		Decommissioning of San Onofre		19
	~~Commodity Price Risk~~Edison International Parent and Other			16
	~~Credit Risk~~			1719



	~~CRITICAL ACCOUNTING ESTIMATES AND POLICIES~~Historical Cash Flows		1721
		~~NEW ACCOUNTING GUIDANCE~~Southern California Edison Company	17
~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~			17	~~Part I, Item 3~~
~~FINANCIAL STATEMENTS~~			18	~~Part I, Item 1~~
	~~Edison International Consolidated Statements of Income~~		1821
		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~~Parent and Other		24
	~~SCE Consolidated Statements of Cash Flows~~Contingencies		24
	MARKET RISK EXPOSURES		25
	Commodity Price Risk		25
	Credit Risk		25
	CRITICAL ACCOUNTING ESTIMATES AND POLICIES		25
	NEW ACCOUNTING GUIDANCE		26
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			~~NOTES TO CONSOLIDATED~~ 26	Part I, Item 3
FINANCIAL STATEMENTS			27	Part I, Item 1
	Edison International Consolidated Statements of Income		27
			~~Note 1. Summary~~Edison International Consolidated Statements of ~~Significant Accounting Policies~~Comprehensive Income		2728
	Edison International Consolidated Balance Sheets		~~Note 2.~~29
	Edison International Consolidated Statements of ~~Changes in Equity~~Cash Flows		31
	SCE Consolidated Statements of Income		~~Note 3. Variable Interest Entities~~32
	SCE Consolidated Statements of Comprehensive Income		32
	SCE Consolidated Balance Sheets		33
			~~Note 4. Fair Value Measurements~~SCE Consolidated Statements of Cash Flows		3435
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		36
		Note ~~5. Debt and Credit Agreements~~1. Summary of Significant Accounting Policies	3736
		Note ~~6. Derivative Instruments~~	38
		~~Note 7. Revenue~~	40
		~~Note 8. Income Taxes~~	41
		~~Note 9. Compensation and Benefit Plans~~2. Consolidated Statements of Changes in Equity	42
		Note ~~10. Investments~~	43
		~~Note 11. Regulatory Assets and Liabilities~~	44
		~~Note 12. Commitments and Contingencies~~3. Variable Interest Entities	46
		Note ~~13. Leases~~4. Fair Value Measurements	5347
		Note ~~14. Accumulated Other Comprehensive Loss~~5. Debt and Equity Financing	50
		Note 6. Derivative Instruments	51
		Note 7. Revenue	54
		Note 8. Income Taxes	55
		Note 9. Compensation and Benefit Plans	56
		Note ~~15. Other Income and Expenses~~	56
		~~Note 16. Supplemental Cash Flows Information~~10. Investments	57
		Note ~~17. Related-Party Transactions~~	57
~~CONTROLS AND PROCEDURES~~			58	~~Part I, Item 4~~
	~~Disclosure Controls~~11. Regulatory Assets and ~~Procedures~~Liabilities		58
		~~Changes in Internal Control Over Financial Reporting~~Note 12. Commitments and Contingencies	5860
		~~Jointly Owned Utility Plant~~Note 13. Leases	5869
		~~LEGAL PROCEEDINGS~~Note 14. Accumulated Other Comprehensive Loss	5872	~~Part II, Item 1~~
	~~Thomas Fire and Koenigstein Fire Litigation~~	58Note 15. Other Income and (Expense)	73
		Note 16. Supplemental Cash Flows Information	73



		~~Montecito Mudslides Litigation~~Note 17. Related-Party Transactions	5874
CONTROLS AND PROCEDURES			75	Part I, Item 4
	Disclosure Controls and Procedures		75
	~~Woolsey Fire Litigation~~Changes in Internal Control Over Financial Reporting		5975
	Jointly Owned Utility Plant		75
LEGAL PROCEEDINGS			75	Part II, Item 1
	Thomas Fire and Koenigstein Fire Litigation		75
	Montecito Mudslides Litigation		75
	Woolsey Fire Litigation		76
RISK FACTORS			76	Part II, Item 1A
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			5977	Part II, Item 2
	Purchases of Equity Securities by Edison International and Affiliated Purchasers		5977
~~OTHER INFORMATION~~EXHIBITS			59	~~Part II, Item 5~~
~~EXHIBITS~~			6078	Part II, Item 6
SIGNATURES			6179



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 December 31, 2018
AB 1054		California Assembly Bill 1054, executed by the Governor of California on July 12, 2019
AFUDC		allowance for funds used during construction
ALJ		administrative law judge
ARO(s)		asset retirement obligation(s)
Bcf		billion cubic feet
bonus depreciation		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 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
December 2017 Wildfires		several wind-driven wildfires, including the Thomas Fire and the Koenigstein Fire, that occurred in December 2017 and impacted portions of 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., a wholly-owned subsidiary of Edison International, is a holding company for subsidiaries engaged in competitive businesses that provide energy services 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
FERC 2018 Settlement Period		January 1, 2018 through November 11, 2019
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 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
Liability Cap		If the insurance fund allowed under AB 1054 is established, and subject to certain other conditions, a cap on the aggregate requirement to reimburse the insurance fund over a trailing three calendar year period equal to 20% of the equity portion of the utility’s transmission and distribution rate base in the year of the prudency determination
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
NRC		Nuclear Regulatory Commission
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, Cal Advocates, TURN, and Women's Energy Matters, all of whom are parties to the Revised San Onofre Settlement Agreement
PABA		Portfolio Allocation Balancing Account
Palo Verde		nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest
PBOP(s)		postretirement benefits other than pension(s)
PCIA		Power Charge Indifference Adjustment
PG&E		Pacific Gas & Electric Company
Prior San Onofre Settlement Agreement		San Onofre OII Settlement Agreement by and among TURN, 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 Financial Services LLC
San Onofre		retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
SCE		Southern California Edison Company, a wholly-owned subsidiary of Edison International
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


(in millions)	2019		2020		Total 2019 – 2020
(in billions)							2019		2020		2021		2022		2023		Total 2019 – 2023
Distribution	$	3,219	$	2,898	$	6,117	$	3.2	$	3.3	$	3.4	$	3.4	$	3.3	$	16.6
Transmission	701		786		1,487		0.8		0.8		0.8		0.8		0.6		3.8
Generation	211		235		446		0.2		0.2		0.2		0.2		0.2		1.0
Subtotal	4,131		3,919		8,050		4.2		4.3		4.4		4.4		4.1		21.4
Estimated wildfire mitigation-related capital expenditures	346		500 – 700		846 – 1,046		0.4		0.7		0.9		1.0		1.2		4.2
Total estimated capital expenditures	$	4,477	$4,419 – $4,619		$8,896 – $9,096		$	4.6	$	5.0	$	5.3	$	5.4	$	5.3	$	25.6
Total estimated capital expenditures using range case discussed above							$	4.6	$	4.8	$	4.8	$	4.8	$	4.8	$	23.8



US EPA		U.S. Environmental Protection Agency
VCFD		The Ventura County Fire Department
WMP		a wildfire mitigation plan required to be filed ~~annually~~every three years under California ~~Senate~~Assembly Bill ~~901~~1054 to describe a utility's plans to construct, operate, and maintain electrical lines and equipment that will help minimize the risk of catastrophic wildfires caused by such electrical lines and equipment
Wildfire Insurance Fund		The insurance fund established pursuant to AB 1054
Woolsey Fire		a wind-driven fire that originated in Ventura County in November 2018



(in millions)	2017 Authorized Revenue		Adjustments			2018 Revenue Recognized in Form 10-K			2018 Test Year Authorized Revenue			Adjustment to 2018 Revenue recorded in 2019
Authorized revenue	$	5,640	$	(235	)	$	5,405		$	5,116		$	(289	)	¹
Cost of service:
Operation and maintenance	1,931		(11		)	1,920			1,582			(338		)	²
Depreciation	1,575		59			1,634			1,579			(55		)	³
Property and payroll taxes	285		9			294			315			21
Income taxes	257		(287		)	(30		)	(19		)	11
Authorized return	1,592		(5		)	1,587			1,659			72
Total authorized revenue	$	5,640	$	(235	)	$	5,405		$	5,116		$	(289	)


¹	The change in authorized revenue in the Test Year is comprised of $129 million in earnings activities and $160 million in cost recovery activities.


²	Authorized revenue for operation and maintenance costs decreased due to:


³	Incremental collateral requirements were based on potential changes in SCE's forward positions as of ~~March 31,~~September 30, 2019 due to adverse market price movements over the remaining lives of existing power contracts using a 95% confidence level.


	Three months ended March 31,						Change in cash flows			Nine months ended September 30,						Change in cash flows
(in millions)	2019			2018			2019/2018			2019			2018			2019/2018
Net income	$	323		$	316					$	1,306		$	1,210
Non-cash items¹	370			465						1,277			1,697
Subtotal	$	693		$	781		$	(88	)	$	2,583		$	2,907		$	(324	)
Contributions to Wildfire Insurance Fund										(2,363		)	—			(2,363		)
Changes in cash flow resulting from working capital²	(271		)	(354		)	83			(247		)	(692		)	445
Regulatory assets and liabilities	(96		)	405			(501		)	(470		)	213			(683		)
Other noncurrent assets and liabilities³	(79		)	(31		)	(48		)	(142		)	(170		)	28
Net cash provided by operating activities	$	247		$	801		$	(554	)
Net cash (used in) provided by operating activities										$	(639	)	$	2,258		$	(2,897	)


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, tax receivables and payables, and other current assets and liabilities.



	March 31, 2019
(in millions)	Exposure²		Collateral		Net Exposure
S&P Credit Rating¹
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.


Consolidated Statements of Income	Edison International							Edison International

		Three months ended March 31,						Three months ended September 30,						Nine months ended September 30,
(in millions, except per-share amounts, unaudited)		2019			2018			2019			2018			2019			2018
Total operating revenue		$	2,824		$	2,564		$	3,741		$	4,269		$	9,377		$	9,648
Purchased power and fuel		1,005			926			1,708			2,306			3,848			4,344
Operation and maintenance		882			675			841			674			2,318			2,068
Depreciation and amortization		480			462			459			466			1,260			1,391
Property and other taxes		110			107			99			97			302			301
Impairment and other		(4		)	66			—			(11		)	166			60
Other operating income		(1		)	(2		)	(2		)	(2		)	(5		)	(5		)
Total operating expenses		2,472			2,234			3,105			3,530			7,889			8,159
Operating income		352			330			636			739			1,488			1,489
Interest expense		(194		)	(170		)	(214		)	(188		)	(619		)	(538		)
Other income and expense		38			51
Income from continuing operations before income taxes		196			211
Income tax benefit		(112		)	(31		)
Income from continuing operations		308			242
Other income and (expense)								58			76			151			176
Income before taxes								480			627			1,020			1,127
Income tax (benefit) expense								(22		)	83			(212		)	43
Net income		308			242			502			544			1,232			1,084
Preferred and preference stock dividend requirements of SCE		30			30			31			31			91			91
Other noncontrolling interests		—			(6		)	—			—			—			(14		)
Net income attributable to Edison International common shareholders		$	278		$	218		$	471		$	513		$	1,141		$	1,007
Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax		$	278		$	218
Net income attributable to Edison International common shareholders		$	278		$	218
Basic earnings per share:
Weighted-average shares of common stock outstanding		326			326			347			326			333			326
Continuing operations		$	0.85		$	0.67
Basic earnings per common share attributable to Edison International common shareholders		$	0.85		$	0.67		$	1.36		$	1.57		$	3.43		$	3.09
Diluted earnings per share:
Weighted-average shares of common stock outstanding, including effect of dilutive securities		327			327			349			327			334			327
Continuing operations		$	0.85		$	0.67
Diluted earnings per common share attributable to Edison International common shareholders		$	0.85		$	0.67		$	1.35		$	1.57		$	3.42		$	3.08


Consolidated Statements of Comprehensive Income	Edison International									Edison International

	Three months ended March 31,					Three months ended September 30,				Nine months ended September 30,
(in millions, unaudited)	2019		2018			2019		2018		2019		2018
Net income	$	308	$	242		$	502	$	544	$	1,232	$	1,084
Other comprehensive income (loss), net of tax:
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions:
Amortization of net loss included in net income	2		2			2		1		5		5
Other	—		(5		)	—		1		—		(4		)
Other comprehensive income (loss), net of tax	2		(3		)
Other comprehensive income, net of tax						2		2		5		1
Comprehensive income	310		239			504		546		1,237		1,085
Less: Comprehensive income attributable to noncontrolling interests	30		24			31		31		91		77
Comprehensive income attributable to Edison International	$	280	$	215		$	473	$	515	$	1,146	$	1,008


Consolidated Balance Sheets	Edison International				Edison International

(in millions, unaudited)	March 31, 2019		December 31, 2018		September 30, 2019		December 31, 2018
ASSETS
Cash and cash equivalents	$	328	$	144	$	547	$	144
Receivables, less allowances of $49 and $52 for uncollectible accounts at respective dates	716		730
Receivables, less allowances of $51 and $52 for uncollectible accounts at respective dates					1,099		730
Accrued unbilled revenue	459		482		639		482
Inventory	312		282		348		282
Income tax receivables	192		191		127		191
Prepaid expenses	465		148		293		148
Derivative assets	101		171		49		171
Regulatory assets	1,286		1,133		1,120		1,133
Wildfire Insurance Fund contributions					323		—
Other current assets	140		78		117		78
Total current assets	3,999		3,359		4,662		3,359
Nuclear decommissioning trusts	4,291		4,120		4,479		4,120
Other investments	76		63		89		63
Total investments	4,367		4,183		4,568		4,183
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
Utility property, plant and equipment, less accumulated depreciation and amortization of $9,873 and $9,566 at respective dates					43,150		41,269
Nonutility property, plant and equipment, less accumulated depreciation of $84 and $82 at respective dates					85		79
Total property, plant and equipment	41,764		41,348		43,235		41,348
Regulatory assets	5,268		5,380		5,731		5,380
Wildfire Insurance Fund contributions					2,849		—
Operating lease right-of-use assets	933		—		705		—
Other long-term assets	2,462		2,445		2,462		2,445
Total long-term assets	8,663		7,825		11,747		7,825













Total assets	$	58,793	$	56,715	$	64,212	$	56,715


Consolidated Statements of Cash Flows	Edison International						Edison International

	Three months ended March 31,						Nine months ended September 30,
(in millions, unaudited)	2019			2018			2019			2018
Cash flows from operating activities:
Net income	$	308		$	242		$	1,232		$	1,084
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	498			479			1,316			1,639
Allowance for equity during construction	(17		)	(22		)	(75		)	(76		)
Impairment and other	(4		)	66			166			60
Deferred income taxes and investment tax credits	(114		)	4			(221		)	133
Other	5			17			88			48
Nuclear decommissioning trusts	(73		)	(24		)	(114		)	(86		)
Contributions to Wildfire Insurance Fund							(2,363		)	—
Changes in operating assets and liabilities:
Receivables	9			77			(383		)	(325		)
Inventory	(30		)	(7		)	(68		)	(25		)
Accounts payable	31			(216		)	284			20
Tax receivables and payables	82			162			163			137
Other current assets and liabilities	(381		)	(277		)	(340		)	(424		)
Regulatory assets and liabilities, net	(96		)	405			(470		)	213
Other noncurrent assets and liabilities	(8		)	(47		)	(32		)	(127		)
Net cash provided by operating activities	210			859
Net cash (used in) provided by operating activities							(817		)	2,271
Cash flows from financing activities:
Long-term debt issued, net of discount and issuance costs of $13 and $17 for the respective periods	1,087			1,783
Long-term debt issued, net of premium, discount and issuance costs of $2 and $63 for the respective periods							2,902			3,237
Term loan issued	750			—			1,000			—
Long-term debt matured	(40		)	(41		)	(81		)	(654		)
Common stock issued							2,165			—
Short-term debt financing, net	(538		)	(2,261		)	(722		)	(2,228		)
Payments for stock-based compensation	(41		)	(10		)	(64		)	(37		)
Receipts from stock option exercises	22			2			51			20
Dividends to noncontrolling interests	(36		)	(36		)	(96		)	(96		)
Dividends paid	(200		)	(197		)	(594		)	(591		)
Other	5			15			(3		)	38
Net cash provided by (used in) financing activities	1,009			(745		)	4,558			(311		)
Cash flows from investing activities:
Capital expenditures	(1,074		)	(1,137		)	(3,497		)	(3,241		)
Proceeds from sale of nuclear decommissioning trust investments	1,208			931			3,354			3,017
Purchases of nuclear decommissioning trust investments	(1,135		)	(907		)	(3,240		)	(2,931		)
Proceeds from sale of SoCore Energy, net of cash acquired by buyer							—			78
Other	15			16			38			64
Net cash used in investing activities	(986		)	(1,097		)	(3,345		)	(3,013		)
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
Net increase (decrease) in cash, cash equivalent and restricted cash	233			(1,026		)
Net increase (decrease) in cash, cash equivalents and restricted cash							396			(1,053		)
Cash, cash equivalents and restricted cash at beginning of period	152			1,132			152			1,132
Cash, cash equivalents and restricted cash at end of period	$	385		$	106		$	548		$	79



(in millions, except share amounts, unaudited)	September 30, 2019			December 31, 2018
LIABILITIES AND EQUITY
Short-term debt	$	—		$	720
Current portion of long-term debt	79			79
Accounts payable	1,663			1,519
Customer deposits	302			299
Regulatory liabilities	1,010			1,532
Current portion of operating lease liabilities	90			—
Other current liabilities	1,182			997
Total current liabilities	4,326			5,146
Long-term debt	15,129			12,892
Deferred income taxes and credits	6,360			5,898
Pensions and benefits	434			433
Asset retirement obligations	3,030			3,031
Regulatory liabilities	8,544			8,329
Operating lease liabilities	611			—
Wildfire-related claims	4,669			4,669
Other deferred credits and other long-term liabilities	2,874			2,391
Total deferred credits and other liabilities	26,522			24,751
Total liabilities	45,977			42,789
Commitments and contingencies (Note 12)
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	3,737			680
Accumulated other comprehensive loss	(25		)	(23		)
Retained earnings	9,520			8,715
Total equity	17,645			13,785









Total liabilities and equity	$	63,622		$	56,574



~~Consolidated Balance Sheets~~	~~Southern California Edison Company~~


¹	Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets. ~~Restricted cash at March 31, 2019 primarily relates to funds held by SCE that were used in April 2019 for nuclear decommissioning activities at San Onofre.~~



	Three months ended September 30,				Nine months ended September 30,
(in millions, except per-share amounts)	2019		2018		2019		2018
Basic earnings per share:
Net income attributable to common shareholders	$	471	$	513	$	1,141	$	1,007
Participating securities dividends	—		—		—		—
Net income available to common shareholders	$	471	$	513	$	1,141	$	1,007
Weighted average common shares outstanding	347		326		333		326
Basic earnings per share	$	1.36	$	1.57	$	3.43	$	3.09
Diluted earnings per share:
Net income attributable to common shareholders	$	471	$	513	$	1,141	$	1,007
Participating securities dividends	—		—		—		—
Net income available to common shareholders	$	471	$	513	$	1,141	$	1,007
Income impact of assumed conversions	—		—		—		—
Net income available to common shareholders and assumed conversions	$	471	$	513	$	1,141	$	1,007
Weighted average common shares outstanding	347		326		333		326
Incremental shares from assumed conversions	2		1		1		1
Adjusted weighted average shares – diluted	349		327		334		327
Diluted earnings per share	$	1.35	$	1.57	$	3.42	$	3.08



	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
Balance at December 31, 2018	$	2,545	$	(50	)	$	7,964		$	10,459		$	2,193		$	12,652
Net income	—		—			278			278			30			308
Other comprehensive income	—		2			—			2			—			2
Cumulative effect of accounting changes¹	—		(10		)	10			—			—			—
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	—		—			(18		)	(18		)	—			(18		)
Noncash stock-based compensation	5		—			—			5			—			5
Balance at March 31, 2019	$	2,550	$	(58	)	$	8,034		$	10,526		$	2,193		$	12,719
Net income	—		—			392			392			30			422
Other comprehensive income	—		1			—			1			—			1
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	—		—			(4		)	(4		)	—			(4		)
Noncash stock-based compensation	5		—			—			5			—			5
Balance at June 30, 2019	$	2,555	$	(57	)	$	8,222		$	10,720		$	2,193		$	12,913
Net income	—		—			471			471			31			502
Other comprehensive income	—		2			—			2			—			2
Common stock issued, net of issuance cost	2,185		—			—			2,185			—			2,185
Common stock dividends declared ($0.6125 per share)	—		—			(219		)	(219		)	—			(219		)
Dividends to noncontrolling interests ($0.255 - $0.299 per share for preferred stock; $15.625 - $35.936 per share for preference stock)	—		—			—			—			(31		)	(31		)
Stock-based compensation	—		—			(5		)	(5		)	—			(5		)
Noncash stock-based compensation	6		—			—			6			—			6
Balance at September 30, 2019	$	4,746	$	(55	)	$	8,469		$	13,160		$	2,193		$	15,353