EDISON INTERNATIONAL - Quarter Report: 2011 June (Form 10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2011
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 1-9936

EDISON INTERNATIONAL
(Exact name of registrant as specified in its charter)


California		95-4137452
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2244 Walnut Grove Avenue (P. O. Box 976) Rosemead, California		91770
(Address of principal executive offices)		(Zip Code)
(626) 302-2222 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class		Outstanding at August 1, 2011

Common Stock, no par value		325,811,206

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TABLE OF CONTENTS


GLOSSARY			v
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS			1
	Consolidated Statements of Income		1
	Consolidated Statements of Comprehensive Income		2
	Consolidated Balance Sheets		3
	Consolidated Statements of Cash Flows		5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			7
	Note 1. Summary of Significant Accounting Policies		7
	Note 2. Consolidated Statements of Changes in Equity		9
	Note 3. Variable Interest Entities		10
	Note 4. Fair Value Measurements		12
	Note 5. Debt and Credit Agreements		17
	Note 6. Derivative Instruments and Hedging Activities		18
	Note 7. Income Taxes		25
	Note 8. Compensation and Benefit Plans		26
	Note 9. Commitments and Contingencies		29
	Note 10. Regulatory and Environmental Developments		35
	Note 11. Accumulated Other Comprehensive Loss		37
	Note 12. Supplemental Cash Flows Information		38
	Note 13. Preferred and Preference Stock of Utility		38
	Note 14. Regulatory Assets and Liabilities		39
	Note 15. Other Investments		39
	Note 16. Other Income and Expenses		40
	Note 17. Business Segments		41
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			42
FORWARD-LOOKING STATEMENTS			42
EDISON INTERNATIONAL MANAGEMENT OVERVIEW
	Highlights of Operating Results		44
	Management Overview of SCE		45
		*Capital Program*	45
		*2012 CPUC General Rate Case*	45
		*FERC Formula Rates*	46
		*Nuclear Industry and Regulatory Response to Events in Japan*	46
	Management Overview of EMG		46

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	Cross-State Air Pollution Rule			46
	Homer City Capital Needs			47
	Midwest Generation Environmental Compliance Plans and Costs			48
		*Walnut Creek Project*		48
	Environmental Regulation Developments			48
SOUTHERN CALIFORNIA EDISON COMPANY
RESULTS OF OPERATIONS				49
	Three Months Ended June 30, 2011 versus June 30, 2010			49
		*Utility Earning Activities*		50
		*Utility Cost-Recovery Activities*		50
	Six Months Ended June 30, 2011 versus June 30, 2010			51
		*Utility Earning Activities*		51
		*Utility Cost-Recovery Activities*		52
	Supplemental Operating Revenue Information			52
	Income Taxes			53
LIQUIDITY AND CAPITAL RESOURCES				53
	Available Liquidity			53
		*Debt Covenant*		54
	Dividend Restrictions			54
	Margin and Collateral Deposits			54
		*Workers Compensation Self-Insurance Fund*		54
	Historical Consolidated Cash Flows			55
		*Condensed Consolidated Statement of Cash Flows*		55
			Net Cash Provided by Operating Activities	55
			Net Cash Provided by Financing Activities	55
			Net Cash Used by Investing Activities	56
	Contractual Obligations and Contingencies			56
		*Contractual Obligations*		56
		*Contingencies*		56
			Environmental Remediation	56
MARKET RISK EXPOSURES				56
	Commodity Price Risk			56
	Credit Risk			56
EDISON MISSION GROUP
RESULTS OF OPERATIONS				58
	Results of Continuing Operations			58
		*Adjusted Operating Income ("AOI")—Overview*		59
		*Adjusted Operating Income from Consolidated Operations*		61
			Midwest Generation Plants	61
			Homer City	62

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			Seasonality—Coal Plants	63
			Renewable Energy Projects	63
			Energy Trading	63
		*Adjusted Operating Income from Unconsolidated Affiliates*		64
		*Interest Expense*		64
		*Income Taxes*		65
LIQUIDITY AND CAPITAL RESOURCES				65
	Available Liquidity			65
		*Homer City Outage*		66
	Capital Investment Plan			67
		*Environmental Capital Expenditures*		67
		*Plant Capital Expenditures*		67
		*Funding of Capital Expenditures*		68
		*Renewable Energy Projects*		68
	Historical Segment Cash Flows			68
		*Condensed Statement of Cash Flows*		68
			Net Cash Provided by Operating Activities	68
			Net Cash Provided by Financing Activities	68
			Net Cash Provided by Investing Activities	69
	Credit Ratings			69
		*Overview*		69
		*Credit Rating of EMMT*		69
	Margin, Collateral Deposits and Other Credit Support for Energy Contracts			69
	Debt Covenants and Dividend Restrictions			70
		*Credit Facility Financial Ratios*		70
		*Key Ratios of EMG's Principal Subsidiaries Affecting Dividends*		70
		*EME's Senior Notes and Guaranty of Powerton-Joliet Leases*		70
	Contractual Obligations and Contingencies			71
		*Fuel Supply Contracts*		71
		*Capital Expenditures*		71
		*Midwest Generation New Source Review and Other Litigation*		71
		*Homer City New Source Review and Other Litigation*		71
	Off-Balance Sheet Transactions			71
MARKET RISK EXPOSURES				71
	Derivative Instruments			71
		*Unrealized Gains and Losses*		71
		*Fair Value Disclosures*		71
	Commodity Price Risk			72
		*Energy Price Risk*		72
		*Capacity Price Risk*		73
		*Basis Risk*		74

iii

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		*Coal and Transportation Price Risk*		74
		*Emission Allowances Price Risk*		74
	Credit Risk			75
	Interest Rate Risk			76
EDISON INTERNATIONAL PARENT AND OTHER
RESULTS OF OPERATIONS				77
LIQUIDITY AND CAPITAL RESOURCES				77
	Historical Cash Flows			77
		*Condensed Statement of Cash Flows*		77
			Net Cash Used by Operating Activities	78
			Net Cash Provided (Used) by Financing Activities	78
EDISON INTERNATIONAL (CONSOLIDATED)
LIQUIDITY AND CAPITAL RESOURCES				79
	Contractual Obligations			79
CRITICAL ACCOUNTING ESTIMATES AND POLICIES				79
NEW ACCOUNTING GUIDANCE				79
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				79
ITEM 4. CONTROLS AND PROCEDURES				79
	Disclosure Controls and Procedures			79
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS				79
	California Coastal Commission Potential Environmental Proceeding			79
	Navajo Nation Litigation			80
	Midwest Generation New Source Review and Other Litigation			80
	Homer City New Source Review and Other Litigation			80
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS				80
	Purchases of Equity Securities by the Issuer and Affiliated Purchasers			80
ITEM 6. EXHIBITS				81
SIGNATURE				82

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GLOSSARY

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


2010 Form 10-K		Edison International's Annual Report on Form 10-K for the year-ended December 31, 2010
2010 Tax Relief Act		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
AFUDC		allowance for funds used during construction
Ambit project		American Bituminous Power Partners, L.P.
AOI		Adjusted Operating Income (Loss)
APS		Arizona Public Service Company
ARO(s)		asset retirement obligation(s)
BACT		best available control technology
BART		best available retrofit technology
Bcf		billion cubic feet
Big 4		Kern River, Midway-Sunset, Sycamore and Watson natural gas power projects
Btu		British thermal units
CAA		Clean Air Act
CAIR		Clean Air Interstate Rule
CAISO		California Independent System Operator
CAMR		Clean Air Mercury Rule
CARB		California Air Resources Board
CDWR		California Department of Water Resources
CEC		California Energy Commission
coal plants		Midwest Generation coal plants and Homer City plant
Commonwealth Edison		Commonwealth Edison Company
CPS		Combined Pollutant Standard
CPUC		California Public Utilities Commission
CSAPR		Cross-State Air Pollution Rule
CRRs		congestion revenue rights
DOE		U.S. Department of Energy
EME		Edison Mission Energy
EMG		Edison Mission Group Inc.
EMMT		Edison Mission Marketing & Trading, Inc.
EPS		earnings per share
ERRA		energy resource recovery account
EWG		Exempt Wholesale Generator
Exelon Generation		Exelon Generation Company LLC
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FGIC		Financial Guarantee Insurance Company
FIP(s)		federal implementation plan(s)
Four Corners		coal fueled electric generating facility located in Farmington, New Mexico in which SCE holds a 48% ownership interest
GAAP		generally accepted accounting principles
GHG		greenhouse gas
Global Settlement		A settlement between Edison International and the IRS that resolved federal tax disputes related to Edison Capital's cross-border, leveraged leases through 2009, and all other outstanding federal tax disputes and affirmative claims for tax years 1986 through 2002 and related matters with state tax authorities.
GRC		general rate case
GWh		gigawatt-hours
Homer City		EME Homer City Generation L.P., a Pennsylvania limited partnership that leases and operates three coal-fired electric generating units and related facilities located in Indiana County, Pennsylvania

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Illinois EPA		Illinois Environmental Protection Agency
IRS		Internal Revenue Service
ISO		Independent System Operator
kWh(s)		kilowatt-hour(s)
LIBOR		London Interbank Offered Rate
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations in this report
Midwest Generation		Midwest Generation, LLC
Midwest Generation plants		EME's power plants (fossil fuel) located in Illinois
MMBtu		million British thermal units
Mohave		two coal fueled electric generating facilities that no longer operate located in Clark County, Nevada in which SCE holds a 56% ownership interest
Moody's		Moody's Investors Service
MRTU		Market Redesign and Technology Upgrade
MW		megawatts
MWh		megawatt-hours
NAAQS		national ambient air quality standards
NAPP		Northern Appalachian
NERC		North American Electric Reliability Corporation
Ninth Circuit		U.S. Court of Appeals for the Ninth Circuit
NOV		notice of violation
NO_x		nitrogen oxide
NRC		Nuclear Regulatory Commission
NSR		New Source Review
NYISO		New York Independent System Operator
PADEP		Pennsylvania Department of Environmental Protection
Palo Verde		large pressurized water 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)
PBR		performance-based ratemaking
PG&E		Pacific Gas & Electric Company
PJM		PJM Interconnection, LLC
PRB		Powder River Basin
PSD		Prevention of Significant Deterioration
QF(s)		qualifying facility(ies)
ROE		return on equity
RPM		Reliability Pricing Model
RTO(s)		Regional Transmission Organization(s)
S&P		Standard & Poor's Ratings Services
San Onofre		large pressurized water nuclear electric generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
SCE		Southern California Edison Company
SNCR		selective non-catalytic reduction
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SIP(s)		state implementation plan(s)
SO₂		sulfur dioxide
US EPA		U.S. Environmental Protection Agency
VIE(s)		variable interest entity(ies)
year-ended 2010 MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2010 Form 10-K

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



Consolidated Statements of Income	Edison International
	Three months ended June 30,						Six months ended June 30,
(in millions, except per-share amounts, unaudited)	2011			2010			2011			2010

Electric utility	$	2,445		$	2,246		$	4,676		$	4,405
Competitive power generation		538			495			1,090			1,147

Total operating revenue		2,983			2,741			5,766			5,552

Fuel		256			254			515			549
Purchased power		649			612			1,158			1,220
Operations and maintenance		1,263			1,144			2,412			2,183
Depreciation, decommissioning and amortization		435			380			852			749

Total operating expenses		2,603			2,390			4,937			4,701

Operating income		380			351			829			851
Interest and dividend income		30			4			34			23
Equity in income from unconsolidated affiliates – net		18			20			12			39
Other income		42			36			83			70
Interest expense		(203	)		(175	)		(398	)		(343	)
Other expenses		(13	)		(16	)		(25	)		(28	)

Income from continuing operations before income taxes		254			220			535			612
Income tax expense (benefit)		62			(136	)		127			14

Income from continuing operations		192			356			408			598
Income (loss) from discontinued operations – net of tax		(1	)		1			(3	)		8

Net income		191			357			405			606
Dividends on preferred and preference stock of utility		15			13			29			26

Net income attributable to Edison International common shareholders	$	176		$	344		$	376		$	580

Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax	$	177		$	343		$	379		$	572
Income (loss) from discontinued operations, net of tax		(1	)		1			(3	)		8

Net income attributable to Edison International common shareholders	$	176		$	344		$	376		$	580

Basic earnings per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding		326			326			326			326
Continuing operations	$	0.54		$	1.05		$	1.16		$	1.75
Discontinued operations		—			—			(0.01	)		0.02

Total	$	0.54		$	1.05		$	1.15		$	1.77

Diluted earnings per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding, including effect of dilutive securities		329			327			328			327
Continuing operations	$	0.54		$	1.05		$	1.16		$	1.75
Discontinued operations		—			—			(0.01	)		0.02

Total	$	0.54		$	1.05		$	1.15		$	1.77

Dividends declared per common share	$	0.320		$	0.315		$	0.640		$	0.630

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

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Consolidated Statements of Comprehensive Income						Edison International
			Three months ended June 30,						Six months ended June 30,
(in millions, unaudited)			2011			2010			2011			2010

Net income			$	191		$	357		$	405		$	606

Other comprehensive loss, net of tax:
	Pension and postretirement benefits other than pensions:
		Net gain arising during the period, net of income tax expense of $2 for the six months ended June 30, 2010		—			—			—			12
		Amortization of net (gain) loss included in net income, net of income tax expense (benefit) of $1 and $1 for the three months and $3 and $(4) for the six months ended June 30, 2011 and 2010, respectively		1			2			4			(6	)
		Prior service credit arising during the period, net of income tax expense of $1 for the six months ended June 30, 2010		—			—			—			2
		Amortization of prior service credit, net of income tax benefit of $1 for the six months ended June 30, 2010		—			—			—			(2	)
	Unrealized gain (loss) on derivatives qualified as cash flow hedges:
		Unrealized holding gain (loss) arising during the period, net of income tax expense (benefit) of $(9) and $(50) for the three months and $(5) and $12 for the six months ended June 30, 2011 and 2010, respectively		(14	)		(77	)		(8	)		18
		Reclassification adjustments included in net income, net of income tax benefit of $6 and $35 for the three months and $12 and $49 for the six months ended June 30, 2011 and 2010, respectively		(7	)		(53	)		(17	)		(73	)

Other comprehensive loss				(20	)		(128	)		(21	)		(49	)

Comprehensive income				171			229			384			557
Less: Comprehensive income attributable to noncontrolling interests				15			13			29			26

Comprehensive income attributable to Edison International			$	156		$	216		$	355		$	531

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

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Consolidated Balance Sheets	Edison International
(in millions, unaudited)	June 30, 2011		December 31, 2010

ASSETS
Cash and cash equivalents	$	945	$	1,389
Receivables, less allowances of $87 and $85 for uncollectible accounts at respective dates		1,018		931
Accrued unbilled revenue		619		442
Inventory		589		568
Prepaid taxes		356		390
Derivative assets		117		133
Restricted cash		11		2
Margin and collateral deposits		65		65
Regulatory assets		469		378
Other current assets		148		124

Total current assets		4,337		4,422

Nuclear decommissioning trusts		3,657		3,480
Investments in unconsolidated affiliates		552		559
Other investments		231		223

Total investments		4,440		4,262

Utility property, plant and equipment, less accumulated depreciation of $6,486 and $6,319 at respective dates		25,847		24,778
Competitive power generation and other property, plant and equipment, less accumulated depreciation of $2,009 and $1,865 at respective dates		5,613		5,406

Total property, plant and equipment		31,460		30,184

Derivative assets		242		437
Restricted deposits		27		47
Rent payments in excess of levelized rent expense under plant operating leases		1,288		1,187
Regulatory assets		4,690		4,347
Other long-term assets		591		644

Total long-term assets		6,838		6,662




Total assets	$	47,075	$	45,530

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

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Edison International
Consolidated Balance Sheets
(in millions, except share amounts, unaudited)	June 30, 2011			December 31, 2010

LIABILITIES AND EQUITY
Short-term debt	$	388		$	115
Current portion of long-term debt		53			48
Accounts payable		1,110			1,362
Accrued taxes		33			52
Accrued interest		225			205
Customer deposits		208			217
Derivative liabilities		238			217
Regulatory liabilities		820			738
Other current liabilities		807			998

Total current liabilities		3,882			3,952

Long-term debt		12,956			12,371

Deferred income taxes		5,819			5,625
Deferred investment tax credits		132			122
Customer advances		121			112
Derivative liabilities		580			468
Pensions and benefits		2,306			2,260
Asset retirement obligations		2,616			2,561
Regulatory liabilities		4,759			4,524
Other deferred credits and other long-term liabilities		2,147			2,041

Total deferred credits and other liabilities		18,480			17,713

Total liabilities		35,318			34,036

Commitments and contingencies (Note 9)
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at each date)		2,347			2,331
Accumulated other comprehensive loss		(97	)		(76	)
Retained earnings		8,476			8,328

Total Edison International's common shareholders' equity		10,726			10,583

Preferred and preference stock of utility		1,029			907
Other noncontrolling interests		2			4

Total noncontrolling interests		1,031			911

Total equity		11,757			11,494

Total liabilities and equity	$	47,075		$	45,530

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

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Consolidated Statements of Cash Flows		Edison International
		Six months ended June 30,
(in millions, unaudited)		2011			2010

Cash flows from operating activities:
Net income		$	405		$	606
Less: Income (loss) from discontinued operations			(3	)		8

Income from continuing operations			408			598
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, decommissioning and amortization			852			749
Regulatory impacts of net nuclear decommissioning trust earnings (reflected in accumulated depreciation)			75			74
Other amortization			75			56
Stock-based compensation			15			14
Equity in income from unconsolidated affiliates – net			(12	)		(39	)
Distributions from unconsolidated entities			15			39
Deferred income taxes and investment tax credits			223			247
Proceeds from U.S. treasury grants			—			92
Income from leveraged leases			(3	)		(2	)
Changes in operating assets and liabilities:
	Receivables		64			13
	Inventory		(21	)		(36	)
	Margin and collateral deposits – net of collateral received		1			12
	Prepaid taxes		34			(167	)
	Other current assets		(189	)		(136	)
	Rent payments in excess of levelized rent expense		(101	)		(111	)
	Accounts payable		66			(114	)
	Accrued taxes		(19	)		(69	)
	Other current liabilities		(212	)		(164	)
	Derivative assets and liabilities – net		303			806
	Regulatory assets and liabilities – net		(260	)		(720	)
	Other assets		(31	)		(36	)
	Other liabilities		(58	)		(152	)
Operating cash flows from discontinued operations			(3	)		8

Net cash provided by operating activities			1,222			962

Cash flows from financing activities:
Long-term debt issued			592			645
Long-term debt issuance costs			(5	)		(19	)
Long-term debt repaid			(30	)		(366	)
Bonds purchased			(56	)		—
Preference stock issued – net			123			—
Short-term debt financing – net			292			410
Settlements of stock-based compensation – net			(13	)		(2	)
Dividends and distributions to noncontrolling interests			(28	)		(25	)
Dividends paid			(209	)		(205	)

Net cash provided by financing activities		$	666		$	438

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

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Edison International
Consolidated Statements of Cash Flows
	Six months ended June 30,
(in millions, unaudited)	2011			2010

Cash flows from investing activities:
Capital expenditures	$	(2,256	)	$	(2,070	)
Purchase of interest in acquired companies		—			(4	)
Proceeds from sale of nuclear decommissioning trust investments		1,146			600
Purchases of nuclear decommissioning trust investments and other		(1,230	)		(697	)
Proceeds from partnerships and unconsolidated subsidiaries, net of investment		5			44
Investments in other assets		3			13
Effect of consolidation and deconsolidation of variable interest entities		—			(91	)

Net cash used by investing activities		(2,332	)		(2,205	)

Net decrease in cash and cash equivalents		(444	)		(805	)
Cash and cash equivalents, beginning of period		1,389			1,673

Cash and cash equivalents, end of period	$	945		$	868

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Summary of Significant Accounting Policies

Edison International has two business segments for financial reporting purposes: an electric utility operation segment (SCE) and a competitive power generation segment (EMG). SCE is an investor-owned public utility primarily engaged in the business of supplying electricity to an approximately 50,000 square mile area of southern California. EMG is the holding company for its principal wholly owned subsidiary, EME. EME is a holding company with subsidiaries and affiliates engaged in the business of developing, acquiring, owning or leasing, operating and selling energy and capacity from independent power production facilities. EME also engages in hedging and energy trading activities in competitive power markets through its Edison Mission Marketing & Trading, Inc. ("EMMT") subsidiary.

Basis of Presentation

Edison International's significant accounting policies were described in Note 1 of "Edison International Notes to Consolidated Financial Statements" included in the 2010 Form 10-K. Edison International follows the same accounting policies for interim reporting purposes, with the exception of accounting principles adopted as of January 1, 2011, discussed below in "—New Accounting Guidance." This quarterly report should be read in conjunction with the financial statements and notes included in the 2010 Form 10-K.

In the opinion of management, all adjustments, including recurring accruals, have been made that are necessary to fairly state the consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three- and six-month periods ended June 30, 2011 are not necessarily indicative of the operating results for the full year.

The December 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Cash Equivalents

Cash equivalents included investments in money market funds totaling $743 million and $1.1 billion at June 30, 2011 and December 31, 2010, respectively. Generally, the carrying value of cash equivalents equals the fair value, as all investments have maturities of three months or less.

Edison International temporarily invests the ending daily cash balance in its primary disbursement accounts until required for check clearing. Edison International reclassified $185 million and $197 million of checks issued against these accounts, but not yet paid by the financial institution, from cash to accounts payable at June 30, 2011 and December 31, 2010, respectively.

Inventory

Inventory is stated at the lower of cost or market, cost being determined by the weighted-average cost method for fuel, and the average cost method for materials and supplies. Inventory consisted of the following:

(in millions)	June 30, 2011		December 31, 2010


Coal, gas, fuel oil and other raw materials	$	203	$	184
Spare parts, materials and supplies		386		384

Total inventory	$	589	$	568

Earnings Per Share

Edison International computes earnings per share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison

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International's participating securities are stock-based compensation awards payable in common shares, including stock options, performance shares and restricted stock units, which earn dividend equivalents on an equal basis with common shares. Stock options awarded during the period 2003 through 2006 received dividend equivalents. EPS attributable to Edison International common shareholders was computed as follows:

	Three months ended June 30,					Six months ended June 30,

(in millions)	2011		2010			2011		2010

Basic earnings per share – continuing operations:
Income from continuing operations attributable to common shareholders, net of tax	$	177	$	343		$	379	$	572
Participating securities dividends		—		(2	)		—		(2	)

Income from continuing operations available to common shareholders	$	177	$	341		$	379	$	570
Weighted average common shares outstanding		326		326			326		326

Basic earnings per share – continuing operations	$	0.54	$	1.05		$	1.16	$	1.75

Diluted earnings per share – continuing operations:
Income from continuing operations available to common shareholders	$	177	$	341		$	379	$	570
Income impact of assumed conversions		1		1			1		1

Income from continuing operations available to common shareholders and assumed conversions	$	178	$	342		$	380	$	571
Weighted average common shares outstanding		326		326			326		326
Incremental shares from assumed conversions		3		1			2		1

Adjusted weighted average shares – diluted		329		327			328		327
Diluted earnings per share – continuing operations	$	0.54	$	1.05		$	1.16	$	1.75

Stock-based compensation awards to purchase 5,896,940 and 9,645,334 shares of common stock for the three months ended June 30, 2011 and 2010, respectively, and 5,896,940 and 6,080,199 shares of common stock for the six months ended June 30, 2011 and 2010 respectively, were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the awards was greater than the average market price of the common shares during the respective periods and, therefore, the effect would have been antidilutive.

New Accounting Guidance

Accounting Guidance Adopted in 2011

Revenue—Multiple-Deliverables

In October 2009, the Financial Accounting Standards Board ("FASB") issued amended guidance for identifying separate deliverables in a revenue-generating transaction where multiple deliverables exist, and provides guidance for allocating and recognizing revenues based on those separate deliverables. This update also requires additional disclosure related to the significant assumptions used to determine the revenue recognition of the separate deliverables. This guidance is required to be applied prospectively to new or significantly modified revenue arrangements. Edison International adopted this guidance effective January 1, 2011. The adoption of this accounting standards update did not have a material impact on Edison International's consolidated results of operations, financial position or cash flows.

Fair Value Measurements and Disclosures

The FASB issued an accounting standards update modifying the disclosure requirements related to fair value measurements. Under these requirements, purchases and settlements for Level 3 fair value measurements are presented on a gross basis, rather than net. Edison International adopted this guidance effective January 1, 2011.

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Accounting Guidance Not Yet Adopted

Fair Value Measurement

In May 2011, the FASB issued an accounting standards update modifying the fair value measurement and disclosure guidance. This guidance prohibits grouping of financial instruments for purposes of fair value measurement and requires the value be based on the individual security. This amendment also results in new disclosures primarily related to Level 3 measurements including quantitative disclosure about unobservable inputs and assumptions, a description of the valuation processes and a narrative description of the sensitivity of the fair value to changes in unobservable inputs. Edison International will adopt this guidance effective January 1, 2012 and does not expect the adoption of this standard will have a material impact on Edison International's consolidated statements of income, financial position or cash flows.

Presentation of Comprehensive Income

In June 2011, the FASB issued an accounting standards update on the presentation of comprehensive income. An entity can elect to present items of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate but consecutive statements. Edison International will adopt this guidance effective January 1, 2012. Edison International currently presents the statement of comprehensive income immediately following the statement of income and expects to continue to do so. The adoption of this accounting standards update does not change the items that constitute net income and other comprehensive income.

Note 2. Consolidated Statements of Changes in Equity

The following table provides the changes in equity for the six months ended June 30, 2011.

	Equity Attributable to Edison International											Noncontrolling Interests

(in millions)	Common Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Subtotal			Other			Preferred and Preference Stock			Total Equity

Balance at December 31, 2010	$	2,331	$	(76	)	$	8,328		$	10,583		$	4		$	907		$	11,494

Net income		—		—			376			376			—			29			405
Other comprehensive loss		—		(21	)		—			(21	)		—			—			(21	)
Common stock dividends declared ($0.64 per share)		—		—			(209	)		(209	)		—			—			(209	)
Dividends, distributions to noncontrolling interests and other		—		—			—			—			(2	)		(29	)		(31	)
Stock-based compensation and other		4		—			(17	)		(13	)		—			—			(13	)
Noncash stock-based compensation and other		12		—			(2	)		10			—			(1	)		9
Issuance of preference stock		—		—			—			—			—			123			123

Balance at June 30, 2011	$	2,347	$	(97	)	$	8,476		$	10,726		$	2		$	1,029		$	11,757

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	June 30, 2011				December 31, 2010

(in millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Long-term debt, including current portion	$	13,009	$	13,075	$	12,419	$	12,360

		Economic Hedges

Commodity	Unit of Measure	June 30, 2011		December 31, 2010

Electricity options, swaps and forwards	GWh		34,471		32,138
Natural gas options, swaps and forwards	Bcf		255		250
CRRs	GWh		147,992		181,291
Tolling arrangements	GWh		105,631		114,599

	Derivative Assets									Derivative Liabilities

(in millions)	Short- Term			Long- Term			Subtotal			Short- Term			Long- Term			Subtotal			Net Liability

Non-trading activities
Economic hedges	$	89		$	200		$	289		$	243		$	579		$	822		$	533
Netting and collateral		(11	)		(21	)		(32	)		(12	)		(21	)		(33	)		(1	)

Total	$	78		$	179		$	257		$	231		$	558		$	789		$	532

	Derivative Assets						Derivative Liabilities

(in millions)	Short- Term		Long- Term		Subtotal		Short- Term			Long- Term		Subtotal			Net Liability

Non-trading activities
Economic hedges	$	87	$	367	$	454	$	216		$	449	$	665		$	211
Netting and collateral		—		—		—		(4	)		—		(4	)		(4	)

Total	$	87	$	367	$	454	$	212		$	449	$	661		$	207

	Three months ended June 30,						Six months ended June 30,

(in millions)	2011			2010			2011			2010

Realized losses	$	(35	)	$	(38	)	$	(74	)	$	(62	)
Unrealized losses		(227	)		(276	)		(323	)		(857	)

	Equity Attributable to Edison International											Noncontrolling Interests

(in millions)	Common Stock		Accumulated Other Comprehensive Income			Retained Earnings			Subtotal			Other			Preferred and Preference Stock			Total Equity

Balance at December 31, 2009	$	2,304	$	37		$	7,500		$	9,841		$	258		$	907		$	11,006

Net income		—		—			580			580			—			26			606
Other comprehensive loss		—		(49	)		—			(49	)		—			—			(49	)
Deconsolidation of variable interest entities		—		—			—			—			(249	)		—			(249	)
Cumulative effect of a change in accounting principle, net of tax		—		—			15			15			—			—			15
Common stock dividends declared ($0.63 per share)		—		—			(205	)		(205	)		—			—			(205	)
Dividends, distributions to noncontrolling interests and other		—		—			—			—			(3	)		(26	)		(29	)
Stock-based compensation and other		2		—			(4	)		(2	)		—			—			(2	)
Noncash stock-based compensation and other		9		—			(7	)		2			—			—			2

Balance at June 30, 2010	$	2,315	$	(12	)	$	7,879		$	10,182		$	6		$	907		$	11,095

(in millions)		June 30, 2011		December 31, 2010


Current assets		$	39	$	26
Net property, plant and equipment			712		739
Other long-term assets			5		6

	Total assets	$	756	$	771

Current liabilities		$	23	$	25
Long-term debt net of current portion			68		71
Deferred revenues			69		71
Other long-term liabilities			21		21

	Total liabilities	$	181	$	188

Noncontrolling interests		$	3	$	4

	June 30, 2011

(in millions)	Investment		Maximum Exposure

Natural gas-fired projects	$	321	$	321
Renewable energy projects		229		229

		As of June 30, 2011

(in millions)		Level 1		Level 2		Level 3			Netting and Collateral¹			Total

Assets at Fair Value
Money market funds²		$	743	$	—	$	—		$	—		$	743

Derivative contracts:
	Electricity		—		44		231			(33	)		242
	Natural gas		—		65		11			—			76
	Fuel oil		6		—		—			(6	)		—
	Tolling		—		—		41			—			41
	Coal		—		1		—			(1	)		—

Subtotal of commodity contracts			6		110		283			(40	)		359

Long-term disability plan			9		—		—			—			9

Nuclear decommissioning trusts:
	Stocks³		2,062		—		—			—			2,062
	Municipal bonds		—		812		—			—			812
	U.S. government and agency securities		309		118		—			—			427
	Corporate bonds⁴		—		310		—			—			310
	Short-term investments, primarily cash equivalents⁵		4		31		—			—			35

Subtotal of nuclear decommissioning trusts			2,375		1,271		—			—			3,646

Total assets⁶			3,133		1,381		283			(40	)		4,757

Liabilities at Fair Value
Derivative contracts:
	Electricity		—		9		71			(9	)		71
	Natural gas		—		239		6			(1	)		244
	Tolling		—		—		481			—			481

Subtotal of commodity contracts			—		248		558			(10	)		796
Interest rate contracts			—		22		—			—			22

Total liabilities			—		270		558			(10	)		818

Net assets (liabilities)		$	3,133	$	1,111	$	(275	)	$	(30	)	$	3,939

June 30, 2011

				Hedging Activities
Commodity	Instrument	Classification	Unit of Measure	Cash Flow Hedges			Economic Hedges			Trading Activities

Electricity	Forwards/Futures	Sales	GWh		18,901	¹		17,660	³		39,629
Electricity	Forwards/Futures	Purchases	GWh		203	¹		17,750	³		42,863
Electricity	Capacity	Sales	MW-Day (in thousands)		171	²		—			17	²
Electricity	Capacity	Purchases	MW-Day (in thousands)		17	²		—			247	²
Electricity	Congestion	Sales	GWh		—			124	⁴		14,314	⁴
Electricity	Congestion	Purchases	GWh		—			5,459	⁴		287,221	⁴
Natural gas	Forwards/Futures	Sales	bcf		—			1.5			354.1
Natural gas	Forwards/Futures	Purchases	bcf		—			1.5			351.8
Fuel oil	Forwards/Futures	Sales	barrels		—			—			45,000
Fuel oil	Forwards/Futures	Purchases	barrels		—			240,000			70,000
Coal	Forwards/Futures	Sales	tons		—			—			2,564,250
Coal	Forwards/Futures	Purchases	tons		—			—			2,564,250

(in millions)

Instrument	Purpose	Type of Hedge	Notional Amount		Expiration Date

Amortizing interest rate swap	Convert floating rate (6-month LIBOR) debt to fixed rate (3.175%) debt	Cash flow	$	84	June 2016
Amortizing interest rate swap	Convert floating rate (6-month LIBOR) debt to fixed rate (3.415%) debt	Cash flow		110	December 2020
Amortizing interest rate swap	Convert floating rate (3-month LIBOR) debt to fixed rate (4.29%) debt	Cash flow		120	December 2025
Amortizing interest rate swap	Convert floating rate (3-month LIBOR) debt to fixed rate (3.46%) debt	Cash flow		67	March 2026

December 31, 2010


Non-trading activities
	Cash flow hedges	$	54		$	2		$	56		$	10		$	25		$	35		$	21
	Economic hedges		77			2			79			71			—			71			8
Trading activities			184			103			287			148			29			177			110

			315			107			422			229			54			283			139
Netting and collateral received¹			(269	)		(37	)		(306	)		(223	)		(35	)		(258	)		(48	)

Total		$	46		$	70		$	116		$	6		$	19		$	25		$	91

	Cash Flow Hedge Activity¹ Six Months Ended June 30,

	Cash Flow Hedge Activity¹ Six Months Ended June 30,						Income Statement Location
(in millions)	2011			2010			Income Statement Location

Beginning of period derivative gains	$	27		$	175
Effective portion of changes in fair value		(13	)		30
Reclassification to net income		(29	)		(122	)	Competitive power generation revenue

End of period derivative gains (losses)	$	(15	)	$	83

		Three Months Ended June 30,						Six Months Ended June 30,

(in millions)	Income Statement Location	2011			2010			2011		2010

Economic hedges	Competitive power generation revenue	$	20		$	(3	)	$	26	$	(7	)
	Fuel		(2	)		(2	)		4		(1	)
Trading activities	Competitive power generation revenue		41			33			57		80

(in millions)		June 30, 2011		December 31, 2010


Collateral provided to counterparties:
	Offset against derivative liabilities	$	4	$	8
	Reflected in margin and collateral deposits		64		65
Collateral received from counterparties:
	Offset against derivative assets		33		52

(in millions)		2011			2010


Balance at January 1,		$	565		$	664
Tax positions taken during the current year:
	Increases		26			35
Tax positions taken during a prior year:
	Increases		14			127
	Decreases		(10	)		(40	)
	Decreases for settlements during the period		—			(82	)

Balance at June 30,		$	595		$	704

				Weighted-Average

	Stock options			Exercise Price		Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in millions)

Outstanding at December 31, 2010		19,142,209		$	33.28
Granted		3,314,149			37.95
Expired		(87,641	)		47.93
Forfeited		(244,066	)		32.52
Exercised		(1,002,771	)		24.74

Outstanding at June 30, 2011		21,121,880			34.37		6.26

Vested and expected to vest at June 30, 2011		20,639,870			34.38		6.21	$	136

Exercisable at June 30, 2011		12,613,025			34.70		4.74		93

	Equity Awards					Liability Awards

	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Fair Value

Nonvested at December 31, 2010		415,028		$	30.99		415,028		$	34.74
Granted		148,697			27.96		148,697
Forfeited		(113,762	)		43.42		(113,762	)

Nonvested at June 30, 2011		449,963			28.04		449,963			29.43

			Weighted-Average Grant Date Fair Value


Nonvested at December 31, 2010	644,796		$	32.18
Granted	247,408			37.95
Forfeited	(16,467	)		32.13
Paid Out	(104,420	)		52.35

Nonvested at June 30, 2011	771,317		$	31.98

(in millions)	Unrealized Gain (Loss) on Cash Flow Hedges			Pension and PBOP – Net Gain (Loss)			Pension and PBOP – Prior Service Cost			Accumulated Other Comprehensive Loss


Balance at December 31, 2010	$	16		$	(87	)	$	(5	)	$	(76	)
Current period change		(25	)		4			—			(21	)

Balance at June 30, 2011	$	(9	)	$	(83	)	$	(5	)	$	(97	)

(in millions)		June 30, 2011		December 31, 2010


Current:
	Regulatory balancing accounts	$	268	$	213
	Energy derivatives		194		162
	Other		7		3

			469		378

Long-term:
	Deferred income taxes – net		1,912		1,855
	Pensions and other postretirement benefits		1,089		1,097
	Unamortized generation investment – net		328		355
	Unamortized loss on reacquired debt		258		268
	Energy derivatives		465		177
	Nuclear-related ARO investment – net		163		154
	Unamortized distribution investment – net		125		105
	Regulatory balancing accounts		53		56
	Other		297		280

			4,690		4,347

Total Regulatory Assets		$	5,159	$	4,725

		Amortized Cost				Fair Value


(in millions)	Longest Maturity Dates	June 30, 2011		December 31, 2010		June 30, 2011		December 31, 2010

Stocks	—	$	862	$	895	$	2,062	$	2,029
Municipal bonds	2050		699		706		812		790
U.S. government and agency securities	2041		396		270		427		288
Corporate bonds	2054		255		288		310		346
Short-term investments and receivables/payables	One-year		44		26		46		27

Total		$	2,256	$	2,185	$	3,657	$	3,480

(in millions)		June 30, 2011			December 31, 2010


Total Assets:
	Electric utility	$	37,365		$	35,906
	Competitive power generation		9,804			9,597
	Parent and other²		(94	)		27

Consolidated Edison International		$	47,075		$	45,530

		Three months ended June 30, 2011								Three months ended June 30, 2010


(in millions)		Utility Earning Activities			Utility Cost- Recovery Activities		Total Consolidated			Utility Earning Activities			Utility Cost- Recovery Activities		Total Consolidated

Operating revenue		$	1,383		$	1,063	$	2,446		$	1,308		$	939	$	2,247

Fuel and purchased power			—			732		732			—			706		706
Operations and maintenance			549			297		846			537			218		755
Depreciation, decommissioning and amortization			323			33		356			306			14		320
Property taxes and other			68			1		69			61			1		62

Total operating expenses			940			1,063		2,003			904			939		1,843

Operating income			443			—		443			404			—		404
Net interest expense and other			(89	)		—		(89	)		(85	)		—		(85	)

Income before income taxes			354			—		354			319			—		319
Income tax expense			128			—		128			5			—		5

Net income			226			—		226			314			—		314
Dividends on preferred and preference stock			15			—		15			13			—		13

Net income available for common stock		$	211		$	—	$	211		$	301		$	—	$	301

Core Earnings¹							$	211							$	248
Non-Core Earnings:
	Global Settlement							—								53
	Tax impact of health care legislation							—								—

Total SCE GAAP Earnings							$	211							$	301

(in millions)	Credit Facilities


Commitment	$	2,894
Outstanding borrowings supported by credit facilities		(200	)
Outstanding letters of credit		(71	)

Amount available	$	2,623

(in millions)

Collateral posted as of June 30, 2011¹	$	86
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade		71

Posted and potential collateral requirements²	$	157

		June 30, 2011

(in millions)		Exposure²		Collateral			Net Exposure

S&P Credit Rating¹
	A or higher	$	130	$	—		$	130
	A-		9		—			9
	Not rated³		41		(31	)		10

Total		$	180	$	(31	)	$	149

(in millions)		Cash and Cash Equivalents		Available Under Credit Facilities		Total Available Liquidity


EME as a holding company		$	237	$	448	$	685
EME subsidiaries without contractual dividend restrictions			195		—		195

EME corporate cash and cash equivalents			432		448		880
EME subsidiaries with contractual dividend restrictions
	Midwest Generation¹		254		497		751
	Homer City		61		—		61
	Other EME subsidiaries		86		—		86
Other EMG subsidiaries			37		—		37

Total		$	870	$	945	$	1,815

(in millions)	EME			Midwest Generation


Commitments	$	564		$	500
Outstanding borrowings		—			—
Outstanding letters of credit		(116	)		(3	)

Amount available	$	448		$	497

(in millions)		July through December 2011		2012		2013


Midwest Generation Plants
	Environmental¹	$	49	$	172	$	317
	Plant capital		11		21		28
Homer City Plant
	Environmental¹		—		—		—
	Plant capital		5		26		16
Walnut Creek Project			173		257		43
Renewable Energy Projects
	Capital and construction		72		—		—
	Turbine commitments		45		8		—
Other capital			7		14		14

Total		$	362	$	498	$	418

	Moody's Rating		Fitch Rating


EME¹	Caa1	B-	CCC
Midwest Generation²	Ba3	B+	BB-
EMMT	Not Rated	B-	Not Rated

	Twelve months ended

	June 30, 2011		December 31, 2010

Ratio		1.83		2.07
Covenant threshold (not less than)		1.20		1.20




Corporate-debt-to-capital ratio	0.52	0.52
Covenant threshold (not more than)	0.75	0.75

Subsidiary	Financial Ratio	Covenant


Midwest Generation (Midwest Generation plants)	Debt to Capitalization Ratio	Less than or equal to 0.60 to 1	0.14 to 1
Homer City (Homer City plant)	Senior Rent Service Coverage Ratio	Greater than 1.7 to 1	1.75 to 1

		24-Hour Forward Energy Prices¹

		Northern Illinois Hub		PJM West Hub

2011
	July	$	36.43	$	51.14
	August		38.60		51.32
	September		29.83		43.39
	October		26.21		40.24
	November		29.67		40.84
	December		31.33		46.46
2012 calendar "strip"²			33.08		46.01