EDISON INTERNATIONAL - Quarter Report: 2015 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2015
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to



Commission File Number	Exact Name of Registrant as specified in its charter	State or Other Jurisdiction of Incorporation or Organization	IRS Employer Identification Number
1-9936	EDISON INTERNATIONAL	California	95-4137452
1-2313	SOUTHERN CALIFORNIA EDISON COMPANY	California	95-1240335



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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

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

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



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "accelerated filer," "large accelerated filer," and "smaller reporting company" in Rule 12b-12 of the Exchange Act. (Check One):
Edison International	Large Accelerated Filer þ	Accelerated Filer ¨	Non-accelerated Filer ¨	Smaller Reporting Company ¨
Southern California Edison Company	Large Accelerated Filer ¨	Accelerated Filer ¨	Non-accelerated Filer þ	Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Edison International Yes ¨ No þ Southern California Edison Company Yes ¨ No þ

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



Common Stock outstanding as of April 24, 2015:
Edison International		325,811,206 shares
Southern California Edison Company		434,888,104 shares

TABLE OF CONTENTS



				SEC Form 10-Q Reference Number
FORWARD-LOOKING STATEMENTS			iii
GLOSSARY			v
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			2	Part I, Item 2
	MANAGEMENT OVERVIEW		2
		Highlights of Operating Results	2
		2015 General Rate Case	3
		Labor Contract Negotiation	3
		Capital Program	3
		San Onofre Proceedings, Recoveries, and Decommissioning	3
	RESULTS OF OPERATIONS		5
	Southern California Edison Company		5
		Utility Earning Activities	6
		Utility Cost-Recovery Activities	6
	Supplemental Operating Revenue Information		6
	Income Taxes		7
	Edison International Parent and Other		7
		Income from Continuing Operations	7
		Loss from Discontinued Operations (Net of Tax)	7
	LIQUIDITY AND CAPITAL RESOURCES		7
	Southern California Edison Company		7
		Available Liquidity	8
		Capital Investment Plan	8
		Dividend Restrictions	8
		Margin and Collateral Deposits	8
	Edison International Parent and Other		9
	Historical Cash Flows		9
		Southern California Edison Company	9
		Edison International Parent and Other	12
	Contingencies		12
		Environmental Remediation	12
	MARKET RISK EXPOSURES		12
	Commodity Price Risk		13
	Credit Risk		13
	CRITICAL ACCOUNTING ESTIMATES AND POLICIES		13
	NEW ACCOUNTING GUIDANCE		13
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			13	Part I, Item 3
FINANCIAL STATEMENTS			14	Part I, Item 1
	Edison International Consolidated Statements of Income		14
	Edison International Consolidated Statements of Comprehensive Income		15
	Edison International Consolidated Balance Sheets		16
	Edison International Consolidated Statements of Cash Flows		18



	SCE Consolidated Statements of Income		19
	SCE Consolidated Statements of Comprehensive Income		19
	SCE Consolidated Balance Sheets		20
	SCE Consolidated Statements of Cash Flows		22
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS		23
		Note 1. Summary of Significant Accounting Policies	23
		Note 2. Consolidated Statements of Changes in Equity	26
		Note 3. Variable Interest Entities	27
		Note 4. Fair Value Measurements	29
		Note 5. Debt and Credit Agreements	33
		Note 6. Derivative Instruments	34
		Note 7. Income Taxes	36
		Note 8. Compensation and Benefit Plans	37
		Note 9. Other Investments	38
		Note 10. Regulatory Assets and Liabilities	39
		Note 11. Commitments and Contingencies	41
		Note 12. Accumulated Other Comprehensive Loss	45
		Note 13. Interest and Other Income and Other Expenses	45
		Note 14. Discontinued Operations	45
		Note 15. Supplemental Cash Flows Information	46
CONTROLS AND PROCEDURES			47	Part I, Item 4
	Disclosure Controls and Procedures		47
	Changes in Internal Control Over Financial Reporting		47
	Jointly Owned Utility Plant		47
LEGAL PROCEEDINGS			47	Part II, Item 1
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			48	Part II, Item 2
	Purchases of Equity Securities by Edison International and Affiliated Purchasers		48
EXHIBITS			49	Part II, Item 6
SIGNATURES			50

This is a combined Form 10-Q separately filed by Edison International and Southern California Edison Company. Information contained herein relating to an individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representation whatsoever as to any other company.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's and SCE's current expectations and projections about future events based on Edison International's and SCE's knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact. Other information distributed by Edison International and SCE that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," and variations of such words and similar expressions, or discussions of strategy or of plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact Edison International and SCE, include, but are not limited to the:


•	ability of SCE to recover its costs in a timely manner from its customers through regulated rates, including regulatory assets related to San Onofre and undercollection of fuel and purchased power costs;


•	decisions and other actions by the CPUC, the FERC, the NRC and other regulatory authorities and delays in regulatory actions;


•	ability of Edison International or its subsidiaries to borrow funds and access the capital markets on reasonable terms;


•	possible customer bypass or departure due to technological advancements, federal and state subsidies, or cumulative rate impacts that make self-generation or use of alternative energy sources economically viable;

•

risks inherent in the construction of transmission and distribution infrastructure replacement and expansion projects, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there is insufficient transmission to enable the acceptance of power delivery), and governmental approvals;


•	risks associated with the operation of transmission and distribution assets and power generating facilities including: public safety issues, failure, availability, efficiency, and output of equipment and availability and cost of spare parts;


•	risks associated with the retirement and decommissioning of nuclear generating facilities;


•	physical security of SCE's critical assets and personnel and the cyber security of SCE's critical information technology systems for grid control, and business and customer data;


•	cost and availability of electricity, including the ability to procure sufficient resources to meet expected customer needs in the event of power plant outages or significant counterparty defaults under power-purchase agreements;


•	environmental laws and regulations, at both the state and federal levels, or changes in the application of those laws, that could require additional expenditures or otherwise affect the cost and manner of doing business;


•	changes in the fair value of investments and other assets;


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


•	governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market and price mitigation strategies adopted by the California Independent System Operator, Regional Transmission Organizations, and adjoining regions;


•	availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations;


•	cost and availability of labor, equipment and materials;


•	ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and to recover the costs of such insurance or in the absence of insurance the ability to recover uninsured losses;


•	effects of legal proceedings, changes in or interpretations of tax laws, rates or policies;


•	potential for penalties or disallowances caused by non-compliance with applicable laws and regulations;

iii


•	cost and availability of fuel for generating facilities and related transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts;


•	extent of technological change in the generation, storage, transmission, distribution and use of electricity;


•	cost and availability of emission credits or allowances for emission credits;


•	risk that competing transmission systems will be built by merchant transmission providers in SCE's service area; and


•	weather conditions and natural disasters.

Additional information about risks and uncertainties, including more detail about the factors described above, is contained throughout this MD&A and in Edison International's and SCE's combined 2014 Form 10-K, including the "Risk Factors" section. Readers are urged to read this entire report, including the information incorporated by reference, as well as the 2014 Form 10-K, and carefully consider the risks, uncertainties and other factors that affect Edison International's and SCE's businesses. Forward-looking statements speak only as of the date they are made and neither Edison International nor SCE are obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by Edison International and SCE with the SEC.

The MD&A for the three months ended March 31, 2015 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, 2014, and as compared to the three months ended March 31, 2014. This discussion presumes that the reader has read or has access to Edison International's and SCE's MD&A for the calendar year 2014 (the "year-ended 2014 MD&A"), which was included in the 2014 Form 10-K.

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

GLOSSARY

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



Amended Plan of Reorganization		EME Chapter 11 Bankruptcy Plan of Reorganization as amended to incorporate the terms of the Settlement Agreement, dated February 19, 2014
AFUDC		allowance for funds used during construction
2014 Form 10-K		Edison International's and SCE's combined Annual Report on Form 10-K for the year-ended December 31, 2014
ALJ		administrative law judge
APS		Arizona Public Service Company
ARO(s)		asset retirement obligation(s)
Bcf		billion cubic feet
CAA		Clean Air Act
CAISO		California Independent System Operator
CARB		California Air Resources Board
CPUC		California Public Utilities Commission
CRRs		congestion revenue rights
DOE		U.S. Department of Energy
Edison Energy		Edison International's subsidiary that holds interests in competitive businesses related to the generation, delivery and use of electricity
EME		Edison Mission Energy
EME Settlement Agreement		Settlement Agreement entered into by Edison International, EME, and the Consenting Noteholders in February 2014
EMG		Edison Mission Group Inc.
EPS		earnings per share
ERRA		energy resource recovery account
FERC		Federal Energy Regulatory Commission
Four Corners		coal fueled electric generating facility located in Farmington, New Mexico in which SCE held a 48% ownership interest
GAAP		generally accepted accounting principles
GHG		greenhouse gas
GRC		general rate case
GWh		gigawatt-hours
HLBV		hypothetical liquidation at book value
IRS		Internal Revenue Service
ISO		Independent System Operator
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations in this report
MHI		Mitsubishi Heavy Industries, Ltd. and a related company
Moody's		Moody's Investors Service
MW		megawatts
MWh		megawatt-hours
NAAQS		national ambient air quality standards
NDTCP		Nuclear Decommissioning Trust Costs Proceeding
NERC		North American Electric Reliability Corporation
NRC		Nuclear Regulatory Commission
ORA		CPUC's Office of Ratepayers Advocates
OII		Order Instituting Investigation
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)



PG&E		Pacific Gas & Electric Company
QF(s)		qualifying facility(ies)
ROE		return on common equity
S&P		Standard & Poor's Ratings Services
San Onofre		retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
San Onofre OII Settlement Agreement		Settlement Agreement by and among SCE, The Utility Reform Network, the CPUC's Office of Ratepayer Advocates and SDG&E, which was later joined by the Coalition of California Utility Employees and Friends of the Earth, (together, the "Settling Parties), dated November 20, 2014
SCE		Southern California Edison Company
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SED		Safety and Enforcement Division of the CPUC, formerly known as the Consumer Protection and Safety Division or CPSD
US EPA		U.S. Environmental Protection Agency
VIE(s)		variable interest entity(ies)

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

MANAGEMENT OVERVIEW

Highlights of Operating Results

Edison International is the parent holding company of SCE. SCE is a public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison International is also the parent company of Edison Energy, a subsidiary that holds interests in competitive businesses that are related to the generation or use of electricity. Such competitive business activities are currently not material to report as a separate business segment. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to Edison International Parent and Other refer to Edison International Parent, Edison Energy, and other subsidiaries. Unless otherwise described, all of the information contained in this report relates to both filers.



	Three months ended March 31,
(in millions)	2015			2014			Change
Net income (loss) attributable to Edison International
Continuing operations
SCE	$	305		$	208		$	97
Edison International Parent and Other	(6		)	(10		)	4
Discontinued operations	—			(22		)	22
Edison International	299			176			123
Less: Non-core items
SCE	—			(96		)	96
Edison International Parent and Other	5			—			5
Discontinued operations	—			(22		)	22
Total non-core items	5			(118		)	123
Core earnings (losses)
SCE	305			304			1
Edison International Parent and Other	(11		)	(10		)	(1		)
Edison International	$	294		$	294		$	—

Edison International's earnings are prepared in accordance with GAAP used in the United States. Management uses core earnings internally for financial planning and for analysis of performance. Core earnings (losses) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the Company's performance from period to period. Core earnings (losses) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (losses) are defined as earnings attributable to Edison International shareholders less income or loss from discontinued operations, income resulting from allocation of losses to tax equity investor under the hypothetical liquidation at book value ("HLBV") accounting method and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as: exit activities, including sale of certain assets and other activities that are no longer continuing; asset impairments and certain tax, regulatory or legal settlements or proceedings.

SCE's first quarter 2015 core earnings were similar to the first quarter of 2014 as the delay in the 2015 CPUC GRC decision and lower income tax benefits were offset by higher FERC-related revenue from rate base growth and higher earnings on funds used during construction.

During the first quarter of 2015, SCE recognized revenue from CPUC activities largely based on 2014 authorized base revenue requirements included in customer rates. The revenue requirement ultimately adopted by the CPUC will be retroactive to January 1, 2015.

Consolidated non-core items included:


•	Impairment and other charges of $231 million ($96 million after-tax) in the first quarter of 2014 related to the San Onofre OII Settlement Agreement (as discussed below). For further information, see "—San Onofre Proceedings, Recoveries, and Decommissioning."


•	A loss of $22 million for the first quarter of 2014 from revised estimates of the tax impact of a tax deconsolidation of EME from Edison International as originally contemplated prior to the EME Settlement. See 2014 Form 10-K, "Management Overview—Resolution of Uncertainty Related to EME in Bankruptcy."

•

Income of $5 million in the first quarter of 2015 related to losses allocated to tax equity investors under the HLBV accounting method. Edison International reflected in core earnings the operating results of the solar rooftop projects, related financings and the priority return to the tax equity investor. The losses allocated to the tax equity investor under HLBV accounting method results in income allocated to subsidiaries of Edison International, neither of which is due to the operating performance of the projects but rather due to the allocation of income tax attributes under the tax equity financing. Accordingly, Edison International has included the non-operating allocation of income as a non-core item. For further information on HLBV, see the 2014 Form 10-K, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies."

2015 General Rate Case

As discussed in the 2014 10-K, SCE filed its original base rate revenue requirement request for its 2015 GRC in November 2013. The request was updated in January 2015 to $5.713 billion, which would be an $80 million increase over currently authorized base rate revenue. The updated base rate revenue requirement request also proposed post-test year increases in 2016 and 2017 of $286 million and $315 million, respectively. The CPUC has approved the establishment of a GRC memorandum account, which will make the 2015 revenue requirement ultimately adopted by the CPUC effective as of January 1, 2015. SCE cannot predict the revenue requirement the CPUC will ultimately authorize or forecast the timing of a final decision.

Labor Contract Negotiation

Approximately 3,900 of SCE's full-time employees are covered by collective bargaining agreements with the International Brotherhood of Electrical Workers ("IBEW"). The IBEW collective bargaining agreements expired on December 31, 2014 and are currently under negotiation. The parties have agreed to allow the expired agreements to remain in force during ongoing negotiations, subject to either party's right to terminate the agreement on 120 days written notice. SCE has made proposals to IBEW that include, among other things, pay increases. To date, the parties have not reached an agreement and there is no assurance that the parties will be able to do so.

Capital Program

During the first quarter of 2015 SCE's capital expenditures were primarily on projects designed for maintaining reliability and expanding the capability of SCE's transmission and distribution system; and upgrading and constructing new transmission lines and substations for system reliability and increased access to renewable energy. Total capital expenditures (including accruals) were $825 million and $684 million for the first three months of 2015 and 2014, respectively.

SCE has reduced its capital expenditures forecast for 2015 – 2017 by approximately $325 million to be in the range of $11.5 billion to $13.1 billion, including $3.6 billion to $4.1 billion for 2015. The update reflects a reduction in capital expenditures related to the Coolwater-Lugo Transmission Project due to the CAISO request for suspension of the CPUC proceeding for the project and revisions to the timing of capital spending (for more information, see "—Liquidity and Capital Resources—SCE—Capital Investment Plan"). Actual capital spending will be affected by: changes in regulatory, environmental and engineering design requirements; permitting and project delays; cost and availability of labor, equipment and materials; and other factors.

San Onofre Proceedings, Recoveries, and Decommissioning

As discussed in the 2014 Form 10-K, in November 2014, the CPUC approved the San Onofre OII Settlement Agreement that SCE had entered into with TURN, the ORA, SDG&E, the Coalition of California Utility Employees, and Friends of the Earth. The San Onofre OII Settlement Agreement resolved the CPUC's OII and related proceedings regarding the Steam Generator Replacement Project at San Onofre and the related outage and subsequent shutdown of San Onofre. The San Onofre OII Settlement Agreement does not affect proceedings related to recoveries from third parties described below, but does describe how shareholders and customers will share any potential recoveries.

A federal lawsuit challenging the CPUC's authority to permit rate recovery of San Onofre costs and an application to the CPUC for rehearing of its decision approving the San Onofre OII Settlement Agreement were filed in November and December 2014, respectively. On April 16, 2015, a ruling was issued dismissing the federal lawsuit with prejudice.

In February 2015, SCE filed in the OII proceeding a Late-Filed Notice of Ex Parte Communication regarding a meeting in March 2013 between an SCE senior executive and the president of the CPUC, both of whom have since retired from their respective positions. In response, the Alliance for Nuclear Responsibility, one of the intervenors in the OII, filed an application requesting that the CPUC institute an investigation into whether sanctions should be imposed on SCE in connection with the ex parte communication. The application requests that the CPUC order SCE to produce all ex parte communications between SCE and the CPUC or its staff since January 31, 2012 and all internal SCE unprivileged communications that discuss such ex parte communications.

On April 14, 2015, the OII ALJs ordered SCE to produce unprivileged documents pertaining to oral and written communications regarding the possible settlement of the OII proceeding between any SCE employee and CPUC decision makers. SCE's response is due on April 29, 2015.

On April 17, 2015, ORA and TURN issued press releases asking the CPUC to impose penalties on SCE in connection with the ex parte communication. ORA recommended penalties in the amount of $648 million, representing ORA's calculation of the difference in ratepayer value between ORA's initial negotiating position in the SONGS OII and the approved settlement. TURN did not recommend a penalty amount. Neither party asked the CPUC to reopen the settlement. TURN stated that, based on SCE's response to the OII ALJs' April 14, 2015 order, it may seek a reopening of the OII proceeding. On April 27, 2015, the Alliance for Nuclear Responsibility filed a petition to modify the CPUC’s decision approving the San Onofre OII Settlement Agreement due to the ex parte communication. The petition seeks the reversal of the decision approving the San Onofre OII Settlement Agreement and reinstatement of the OII proceeding.

SCE cannot predict the outcome of these proceedings. For further discussion of NRC Proceedings and Third-Party Recoveries, including claims against MHI and under the NEIL property damage insurance, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies—Contingencies—San Onofre Related Matters."

Rate Impacts

Due to the implementation of the San Onofre OII Settlement Agreement as of December 31, 2014, customers were refunded approximately $540 million through a reduction in SCE's ERRA undercollection ($1.03 billion at December 31, 2014). At March 31, 2015, SCE's ERRA undercollection decreased to $683 million primarily due to lower power and gas prices experienced in 2015 relative to forecasted amounts. The ERRA undercollection is expected to continue to decrease from recovery of prior year undercollections through implementation of the 2015 ERRA forecast proceeding. In addition, the ERRA undercollection is expected to decrease by approximately $340 million if the CPUC approves SCE's request to classify the majority of costs incurred at San Onofre since June 7, 2013 as decommissioning costs and provide reimbursement from SCE's nuclear decommissioning trust. These decreases will be impacted by over/undercollection of purchased power and fuel costs during 2015, including changes in natural gas and power prices.

For further information on 2015 ERRA forecast application, see "Liquidity—Regulatory Proceedings—ERRA Forecast Filing – 2015" in the year-ended 2014 MD&A.

Decommissioning

As discussed in the 2014 Form 10-K, SCE decided to permanently retire and decommission San Onofre Units 2 and 3 on June 6, 2013. For further information about the decommissioning cost estimates, see the 2014 Form 10-K under the headings, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Nuclear Decommissioning and Asset Retirement Obligation" and "Management Overview—Permanent Retirement of San Onofre and San Onofre OII Settlement" in the year-ended 2014 MD&A.

SCE has nuclear decommissioning trust funds for San Onofre Units 2 and 3 of $3.5 billion as of March 31, 2015. If the decommissioning cost estimate and assumptions regarding trust performance do not change, SCE believes that future contributions to the trust funds will not be necessary. The CPUC must issue an order granting approval for withdrawal of decommissioning trust funds.

Decommissioning costs incurred in 2013 and 2014 were recorded as operations and maintenance expenses pending the CPUC decision on access to the trusts for reimbursement. Accordingly, such costs were recovered through GRC revenues. Costs incurred for 2013 have been found reasonable under the San Onofre OII Settlement Agreement. The CPUC will conduct a reasonableness review for 2014 costs and years going forward. In March 2015, SCE requested that the CPUC

permit access to the nuclear decommissioning trusts for reimbursement of approximately $340 million in 2013 and 2014 Units 2 and 3 decommissioning costs. Under the San Onofre OII Settlement Agreement, any recoveries of 2013 and 2014 decommissioning costs from the nuclear decommissioning trusts must be refunded to customers through ERRA.

Beginning in 2015, SCE must fund decommissioning costs (recorded as a reduction of SCE's asset retirement obligation) until the CPUC approves SCE's request to access the trust funds. SCE expects that the CPUC would approve access to the trust in 2015. SCE's share of the decommissioning costs recorded during the first quarter were approximately $32 million and are estimated to be approximately $183 million for the remainder of 2015.

Depending on the ultimate interpretation of IRS regulations that address the taxation of a qualified nuclear decommissioning trust, SCE may also be restricted from withdrawing amounts from the qualified decommissioning trusts to pay for independent spent fuel storage installation ("ISFSI") where SCE is seeking, or plans to seek, recovery of the ISFSI costs in litigation against the DOE. SCE's share of ISFSI costs for 2015 (included in the above 2015 decommissioning costs estimate) are currently estimated to be approximately $28 million.

RESULTS OF OPERATIONS

Southern California Edison Company

SCE's results of operations are derived mainly through two sources:

•

Utility 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 utility earnings activities are revenue or penalties related to incentive mechanisms, other operating revenue, and regulatory charges or disallowances.

•

Utility 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. Utility 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.

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



	Three months ended March 31, 2015								Three months ended March 31, 2014
(in millions)	Utility Earning Activities			Utility Cost- Recovery Activities		Total Consolidated			Utility Earning Activities			Utility Cost- Recovery Activities		Total Consolidated
Operating revenue	$	1,563		$	945	$	2,508		$	1,550		$	1,374	$	2,924
Purchased power and fuel	—			786		786			—			1,143		1,143
Operation and maintenance	462			159		621			482			231		713
Depreciation, decommissioning and amortization	463			—		463			410			—		410
Property and other taxes	88			—		88			85			—		85
Impairment and other charges	—			—		—			231			—		231
Total operating expenses	1,013			945		1,958			1,208			1,374		2,582
Operating income	550			—		550			342			—		342
Interest expense	(136		)	—		(136		)	(136		)	—		(136		)
Other income and expenses	26			—		26			16			—		16
Income before income taxes	440			—		440			222			—		222
Income tax expense (benefit)	107			—		107			(12		)	—		(12		)
Net income	333			—		333			234			—		234
Preferred and preference stock dividend requirements	28			—		28			26			—		26
Net income available for common stock	$	305		$	—	$	305		$	208		$	—	$	208
Core earnings¹						$	305							$	304
Non-core earnings						—								(96		)
Total SCE GAAP earnings						$	305							$	208


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

Utility Earning Activities

During the first quarter of 2015, SCE recognized revenue from CPUC activities largely based on 2014 authorized base

revenue requirements included in customer rates. SCE deferred $36 million of the 2014 authorized base revenue requirement allocated to the first quarter related to incremental repair deductions pending the outcome of the 2015 GRC. The revenue deferral did not affect net income as the reduction in revenue was offset by lower income taxes. The amount of the deferred revenue was equal to the revenue requirement for flow-through tax benefits for repair deductions recorded during the first quarter of 2015 in excess of the pro rata amounts reflected in SCE's January 2015 authorized revenue requirement request (incremental repair deductions). The CPUC has authorized the establishment of a GRC memorandum account, which will make the 2015 revenue requirement ultimately adopted by the CPUC effective as of January 1, 2015. Recognition of the revenue for the period January 1, 2015 through the date of a final decision, as well as any delays in certain expenditures and changes in authorized treatment of specific costs, will impact the timing of earnings in 2015. Accordingly, quarterly earnings in 2015 will not be comparable to the same periods in 2014 (see "Management Overview—2015 General Rate Case" for further discussion).

Utility earning activities were primarily affected by the following:


•	Higher operating revenue of $13 million primarily due to the following:


•	An increase in FERC-related revenue of $35 million primarily related to rate base growth and higher operating costs.

•

A decrease in CPUC-related revenue of $25 million primarily due to the revenue deferral of $36 million, as discussed above, partially offset by a net increase in San Onofre-related revenue of $9 million due to the implementation of the San Onofre OII Settlement Agreement. Revenue for San Onofre during the first quarter of 2015 primarily related to recovery of amortization of the regulatory asset and authorized return as provided by the San Onofre Settlement Agreement compared to revenue during the first quarter of 2014 related to recovery of San Onofre's cost of service. See "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning" above for more information.


•	Lower operation and maintenance expense of $20 million primarily due to San Onofre-related expense of $26 million in the first quarter of 2014. Beginning January 1, 2015, expense related to San Onofre has been classified as decommissioning costs and recorded as a reduction to SCE's asset retirement obligation.


•	Higher depreciation, decommissioning and amortization expense of $53 million primarily due to San Onofre-related expense of $32 million in 2015 related to the amortization of the regulatory asset and a $20 million increase in depreciation primarily related to transmission and distribution investments.


•	Impairment and other charges of $231 million in the first quarter of 2014 related to the San Onofre OII Settlement Agreement. For further information, see "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning."


•	Higher other income and expenses of $10 million primarily due to higher AFUDC equity income related to higher rates and higher construction work in progress balances in 2015.


•	Higher income taxes of $119 million primarily due to income tax benefits and lower pre-tax income in 2014 due to the San Onofre Settlement Agreement. See "—Income Taxes" below for more information.

Utility Cost-Recovery Activities

Utility cost-recovery activities were primarily affected by the following:


•	Lower purchased power and fuel of $357 million primarily driven by lower power and gas prices experienced in 2015 relative to 2014 and reduced customer sales from warmer weather in the first quarter of 2015 compared to the same period in 2014.


•	Lower operation and maintenance expense of $72 million primarily due to lower spending on various public purpose programs, a decrease in transmission access charges and lower pension expenses.

Supplemental Operating Revenue Information

SCE's retail billed and unbilled revenue (excluding wholesale sales and balancing account overcollections/undercollections) was $2.6 billion and $2.3 billion for the three months ended March 31, 2015 and, 2014, respectively. The increase is primarily due to the implementation of the 2014 ERRA rate increase in June 2014.

Income Taxes

SCE's income tax provision increased by $119 million during the first quarter of 2015 compared to same period in 2014. The effective tax rates were 24.3% and (5.4)% for the three months ended March 31, 2015 and 2014, respectively. The effective tax rate increase was primarily caused by income tax benefits recorded in 2014 due to the San Onofre Settlement Agreement.

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. The accounting treatment for these temporary differences results in recording regulatory assets and liabilities for amounts that would otherwise be recorded to deferred income tax expense.

See "Notes to Consolidated Financial Statements—Note 7. Income Taxes" for a reconciliation of the federal statutory rate of 35% to the effective income tax rates and "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning" above for more information.

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 from Continuing Operations

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



	Three months ended March 31,
(in millions)	2015			2014
Edison Energy and subsidiaries	$	2		$	(2	)
Edison Mission Group and subsidiaries	3			1
Corporate expenses and Other	(11		)	(9		)
Total Edison International Parent and Other	$	(6	)	$	(10	)

The loss from continuing operations of Edison International Parent and Other decreased $4 million for the three months ended March 31, 2015 compared to the same period in 2014 primarily due to income allocated to subsidiaries of Edison Energy under the HLBV accounting method that resulted in losses allocated to tax equity investors ($5 million after-tax). For further information, see the 2014 Form 10-K, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" and "Management Overview—Highlights of Operating Results." Results of Edison Mission Group for the three months ended March 31, 2015, were primarily due to the sale of interests in affordable housing projects of Edison Capital.

Loss from Discontinued Operations (Net of Tax)

Loss from discontinued operations, net of tax, was $22 million for the three months ended March 31, 2014. The 2014 loss from discontinued operations resulted from revised estimates of the tax impact of a tax deconsolidation of EME from Edison International as originally contemplated prior to the EME Settlement. See 2014 Form 10-K, "Management Overview—Resolution of Uncertainty Related to EME in Bankruptcy."

LIQUIDITY AND CAPITAL RESOURCES

Southern California Edison Company

SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its cash flow and access to the capital markets. SCE's overall cash flows fluctuate based on, among other things, its ability to recover its costs in a timely manner from its customers through regulated rates, changes in commodity prices and volumes, collateral requirements, interest obligations and dividend payments to Edison International, and the outcome of tax and regulatory matters.

SCE expects to fund its 2015 obligations, capital expenditures and dividends through operating cash flows, and capital market financings of debt and preferred equity, as needed. SCE also has availability under its credit facilities to fund requirements.

Available Liquidity

At March 31, 2015, SCE had $2.33 billion available under its $2.75 billion multi-year revolving credit facility. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

Debt Covenant

The 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, 2015, SCE's debt to total capitalization ratio was 0.45 to 1.

Capital Investment Plan

Transmission Projects

Coolwater-Lugo Transmission Project

The Coolwater-Lugo Project would provide additional 220 kV transmission capacity in the Kramer Junction and Lucerne Valley areas of San Bernardino County. The Coolwater-Lugo scope primarily consists of installing new transmission lines and new substation facilities. In March 2015, the CAISO filed comments with the CPUC stating that the Coolwater-Lugo project is not necessary to provide full capacity deliverability and that it would conduct additional studies, to be completed in the fourth quarter of 2015, to evaluate whether there is residual need for any elements of the Coolwater-Lugo project to interconnect any other generators. The CAISO requested that the CPUC suspend its approval proceeding for the project. On April 20, 2015, the ALJ assigned to the approval proceeding issued a proposed decision that would dismiss the approval proceeding but would allow SCE to apply for new approval if future studies determine that there is residual need for any elements of the project. SCE supports the suspension rather than the dismissal of the CPUC approval proceeding. The proposed decision is expected to be voted on at the May 21, 2015 CPUC meeting. SCE's capital expenditures forecast for the Coolwater-Lugo project were estimated to be $740 million, of which $584 million was for the 2015 – 2017 period and has been removed from the capital expenditure forecast. SCE has obtained FERC approval for abandoned plant cost recovery in the event the project is not completed.

Dividend Restrictions

The CPUC regulates SCE's capital structure which limits the dividends it may pay Edison International. SCE may make distributions to Edison International as long as the common equity component of SCE's capital structure remains at or above 48% on a 13-month weighted average basis. At March 31, 2015, SCE's 13-month weighted-average common equity component of total capitalization was 48.4% and the maximum additional dividend, taking into account declared but unpaid dividends, that SCE could pay to Edison International under this limitation was approximately $103 million, resulting in a restriction on net assets of approximately $13.33 billion.

In February 2015, SCE declared a dividend to Edison International of $147 million which will be paid in the second quarter of 2015. Future dividend amounts and timing of distributions are dependent upon several factors including the level of capital expenditures, operating cash flows and earnings.

Margin and Collateral Deposits

Certain derivative instruments, power procurement contracts and other contractual arrangements contain collateral requirements. Future collateral requirements may differ from the requirements at March 31, 2015, due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, and the impact of changes in wholesale power and natural gas prices on SCE's contractual obligations.

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

The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral that would be required as of March 31, 2015.



(in millions)
Collateral posted as of March 31, 2015¹	$	237
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade	33
Posted and potential collateral requirements²	$	270


¹	Net collateral provided to counterparties and other brokers consisted of $71 million of cash which was offset against net derivative liabilities on the consolidated balance sheets, $36 million of cash reflected in "Other current assets" on the consolidated balance sheets and $130 million in letters of credit and surety bonds.


²	SCE's total posted and potential collateral requirements may increase by $47 million based on SCE's forward positions as of March 31, 2015 due to adverse market price movements over the remaining lives of the existing power procurement contracts using a 95% confidence level.

Edison International Parent and Other

Edison International Parent and Other's liquidity and its ability to pay operating expenses and dividends to common shareholders are dependent on dividends from SCE and access to bank and capital markets.

At March 31, 2015, Edison International Parent had $625 million available under its $1.25 billion multi-year revolving credit facility. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

Edison International may finance working capital requirements to support operations and capital expenditures with commercial paper or other borrowings, subject to availability in the capital markets.

The debt covenant in Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio of less than or equal to 0.65 to 1. At March 31, 2015, Edison International Parent's consolidated debt to total capitalization ratio was 0.49 to 1.

In August 2014, Edison International entered into an amendment of the EME Settlement Agreement that finalized the remaining matters related to the EME Settlement. Edison International is obligated to make payments of $204 million on September 30, 2015 and $214 million on September 30, 2016. Edison International intends to make these payments from realization of tax benefits or issuance of commercial paper or other borrowings. Edison International has net operating loss and tax credit carryforwards retained by EME which are available to offset future consolidated taxable income or tax liabilities. As a result of the extension of 50% bonus depreciation for qualifying property under the Tax Increase Prevention Act of 2014, realization of these tax benefits has been deferred (currently forecasted through 2018). The timing of realization of these tax benefits may be further delayed in the event of future extensions of bonus depreciation and the value of the net operating loss carryforwards could be permanently reduced in the event that tax reform decreases the current corporate tax rate.

Historical Cash Flows

Southern California Edison Company



	Three months ended March 31,
(in millions)	2015			2014
Net cash provided by operating activities	$	966		$	588
Net cash provided by financing activities	320			445
Net cash used in investing activities	(1,288		)	(1,041		)
Net decrease in cash and cash equivalents	$	(2	)	$	(8	)

Net Cash Provided by Operating Activities

The following table summarizes major categories of net cash provided by operating activities as provided in more detail in SCE's consolidated statements of cash flows for the three months ended March 31, 2015 and 2014.



	Three months ended March 31,						Change in cash flows
(in millions)	2015			2014			2015/2014
Net income	$	333		$	234
Non cash items¹	532			641
Subtotal	$	865		$	875		$	(10	)
Changes in cash flow resulting from working capital²	(99		)	(31		)	(68		)
Derivative assets and liabilities, net	(10		)	(46		)	36
Regulatory assets and liabilities, net	193			(331		)	524
Other noncurrent assets and liabilities, net	17			121			(104		)
Net cash provided by operating activities	$	966		$	588		$	378


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


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

Changes in cash flows related to working capital items decreased in 2015 by $68 million. During the first quarter of 2015, SCE had higher payments for payroll and payroll related costs and income taxes. In addition, SCE had severance payments of $23 million and $10 million during the first quarters of 2015 and 2014, respectively, related to the workforce reductions.

Net cash provided by operating activities was also impacted by changes in regulatory assets and liabilities, including changes in over (under) collections of balancing accounts. SCE has a number of balancing accounts under CPUC decisions, which impact cash flows based on differences between timing of collection of amounts through rates and accrual expenditures. During the first quarters of 2015 and 2014, cash flows were impacted by the two principal balancing accounts:

•

ERRA under collections for fuel and purchased power decreased $345 million in the first quarter of 2015 due to lower power and gas prices experienced in 2015. ERRA under collections for fuel and purchased power increased $473 million in the first quarter of 2014 primarily due to higher purchased power than the forecast purchases included in customer rates in addition to higher power and gas prices.

•

The base rate revenue account ("BRRBA") tracks differences between amounts authorized by the CPUC in the GRC proceedings and amounts billed to customers. BRRBA under collections increased $72 million in the first quarter of 2015 primarily due to reduced customer sales from warmer weather during the first quarter of 2015. BRRBA over collections decreased $218 million in the first quarter of 2014 primarily due to refunds to customers of approximately $150 million, related to the sale of Four Corners in December 2013.

Cash flows provided by other noncurrent assets and liabilities were $17 million and $121 million in the first quarters of 2015 and 2014, respectively. Beginning in 2015, SCE paid $32 million of decommissioning costs (recorded as a reduction of SCE's asset retirement obligation). In addition, net cash provided by operating activities of SCE's nuclear decommissioning trusts were $67 million lower in 2015.

Net Cash Provided by Financing Activities

The following table summarizes cash provided by financing activities for the three months ended March 31, 2015 and 2014. Issuances of debt are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Long-Term Debt."



	Three months ended March 31,
(in millions)	2015			2014
Issuances of first and refunding mortgage bonds, net	$	1,287		$	—
Long-term debt matured or repurchased	(419		)	(2		)
Issuances of preference stock, net	—			270
Short-term debt financing, net	(370		)	229
Payments of common stock dividends to Edison International	(147		)	—
Payments of preferred and preference stock dividends	(34		)	(30		)
Other	3			(22		)
Net cash provided by financing activities	$	320		$	445

Net Cash Used in Investing Activities

Cash flows used in investing activities are primarily due to capital expenditures and funding of nuclear decommissioning trusts. Capital expenditures were $1.3 billion and $939 million for the three months ended March 31, 2015 and 2014, respectively, primarily related to transmission, distribution and generation investments. Net purchases of nuclear decommissioning trust investments and other were $22 million and $102 million for the three months ended March 31, 2015 and 2014, respectively.

Nuclear Decommissioning Trusts

SCE's statement of cash flows includes activities of the Nuclear Decommissioning Trusts which are reflected in the following line items:



	Three months ended March 31,
(in millions)	2015			2014
Net cash provided by operating activities: Nuclear decommissioning trusts	$	29		$	96
Net cash flow from investing activities: Proceeds from sale of investments	2,853			1,502
Purchases of investments	(2,889		)	(1,603		)
Net cash impact	$	(7	)	$	(5	)

Net cash provided by operating activities of the nuclear decommissioning trusts relate to interest and dividends less administrative expenses, taxes and decommissioning costs. Such activities represent the source (use) of the funds for investing activities. The net cash impact represents the contributions made by SCE to the nuclear decommissioning trusts. In future periods, SCE expects decommissioning costs of San Onofre to increase significantly. Such amounts will be reflected as a decrease in SCE net cash provided by operating activities and will be funded from sales of investments of the nuclear decommissioning trusts once approved by the CPUC. Decommissioning costs incurred prior to CPUC approval will be funded by SCE and are reflected as cash flow used by operating activities. See "Notes to Consolidated Financial Statements—Note 9. Other Investments" for further information.

Edison International Parent and Other

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



	Three months ended March 31,
(in millions)	2015			2014
Net cash used in operating activities	$	(2	)	$	(23	)
Net cash (used in) provided by financing activities	(7		)	35
Net cash used in investing activities	(6		)	(1		)
Net (decrease) increase in cash and cash equivalents	$	(15	)	$	11

Net Cash Used in Operating Activities

Net cash used in operating activities increased $21 million for the first quarter of 2015 compared to 2014 due to the timing of payments and receipts relating to interest, operating costs and income taxes.

Net Cash (Used in) Provided by Financing Activities

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



	Three months ended March 31,
(in millions)	2015			2014
Dividends paid to Edison International common shareholders	$	(136	)	$	(116	)
Dividends received from SCE	147			—
Payment for stock-based compensation	(94		)	(86		)
Receipt from stock option exercises	54			47
Debt financing, net¹	15			172
Other	7			18
Net cash (used in) provided by financing activities	$	(7	)	$	35


¹	Includes $9 million debt financing for Edison Energy, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Project Financing."

Contingencies

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

Environmental Remediation

As of March 31, 2015, SCE had identified 19 material sites for remediation and recorded an estimated minimum liability of $116 million. SCE expects to recover 90% of its remediation costs at certain sites. See "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies" for further discussion.

MARKET RISK EXPOSURES

Edison International's and SCE's primary market risks include fluctuations in interest rates, commodity prices and volumes, and counterparty credit. Fluctuations in interest rates can affect earnings and cash flows. Fluctuations in commodity prices and volumes and counterparty credit losses may temporarily affect cash flows, but are not expected to affect earnings due to expected recovery through regulatory mechanisms. Derivative instruments are used, as appropriate, to manage market risks including market risks of SCE's customers. For a further discussion of market risk exposures, including commodity price risk, credit risk and interest rate risk, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments" and "—Note 4. Fair Value Measurements."

Commodity Price Risk

The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was a net liability of $986 million and $927 million at March 31, 2015 and December 31, 2014 respectively. For further discussion of fair value measurements and the fair value hierarchy, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements."

Credit Risk

Credit risk exposure from counterparties for power and gas trading activities is measured as the sum of net accounts receivable (accounts receivable less accounts payable) and the current fair value of net derivative assets (derivative assets less derivative liabilities) reflected on the consolidated balance sheets. SCE enters into master agreements which typically provide for a right of setoff. Accordingly, SCE's credit risk exposure from counterparties is based on a net exposure under these arrangements. SCE manages the credit risk on the portfolio for both rated and non-rated counterparties based on credit ratings using published ratings of counterparties and other publicly disclosed information, such as financial statements, regulatory filings, and press releases, to guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting agreements.

As of March 31, 2015, the amount of balance sheet exposure as described above broken down by the credit ratings of SCE's counterparties, was as follows:



	March 31, 2015
(in millions)	Exposure²		Collateral			Net Exposure
S&P Credit Rating¹
A or higher	$	297	$	—		$	297
Not rated³	10		(5		)	5
Total	$	307	$	(5	)	$	302


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 two credit ratings.


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


³	The exposure in this category relates to long-term power purchase agreements. SCE's exposure is mitigated by regulatory treatment.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

For a complete discussion on Edison International's and SCE's critical accounting policies, see "Critical Accounting Estimates and Policies" in the year-ended 2014 MD&A.

NEW ACCOUNTING GUIDANCE

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information responding to Item 3 is included in the MD&A under the heading "Market Risk Exposures" and is incorporated herein by reference.

FINANCIAL STATEMENTS



Consolidated Statements of Income	Edison International

		Three months ended March 31,
(in millions, except per-share amounts, unaudited)		2015			2014
Total operating revenue		$	2,512		$	2,926
Purchased power and fuel		786			1,143
Operation and maintenance		636			726
Depreciation, decommissioning and amortization		463			410
Property and other taxes		89			85
Impairment and other charges		—			231
Total operating expenses		1,974			2,595
Operating income		538			331
Interest and other income		39			23
Interest expense		(143		)	(141		)
Other expenses		(10		)	(8		)
Income from continuing operations before income taxes		424			205
Income tax expense (benefit)		106			(19		)
Income from continuing operations		318			224
Loss from discontinued operations, net of tax		—			(22		)
Net income		318			202
Preferred and preference stock dividend requirements of utility		28			26
Other noncontrolling interests		(9		)	—
Net income attributable to Edison International common shareholders		$	299		$	176
Amounts attributable to Edison International common shareholders:
Income from continuing operations, net of tax		$	299		$	198
Loss from discontinued operations, net of tax		—			(22		)
Net income attributable to Edison International common shareholders		$	299		$	176
Basic earnings (loss) per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding		326			326
Continuing operations		$	0.92		$	0.61
Discontinued operations		—			(0.07		)
Total		$	0.92		$	0.54
Diluted earnings (loss) per common share attributable to Edison International common shareholders:
Weighted-average shares of common stock outstanding, including effect of dilutive securities		329			329
Continuing operations		$	0.91		$	0.61
Discontinued operations		—			(0.07		)
Total		$	0.91		$	0.54
Dividends declared per common share		$	0.4175		$	0.3550

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



Consolidated Statements of Comprehensive Income	Edison International

	Three months ended March 31,
(in millions, unaudited)	2015			2014
Net income	$	318		$	202
Other comprehensive (loss) income, net of tax:
Pension and postretirement benefits other than pensions:
Net loss arising during the period plus amortization included in net income	(1		)	2
Other comprehensive (loss) income, net of tax	(1		)	2
Comprehensive income	317			204
Less: Comprehensive income attributable to noncontrolling interests	19			26
Comprehensive income attributable to Edison International	$	298		$	178

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



Consolidated Balance Sheets	Edison International

(in millions, unaudited)	March 31, 2015		December 31, 2014
ASSETS
Cash and cash equivalents	$	115	$	132
Receivables, less allowances of $67 and $68 for uncollectible accounts at respective dates	752		790
Accrued unbilled revenue	636		632
Inventory	290		281
Derivative assets	94		102
Regulatory assets	1,152		1,254
Deferred income taxes	359		452
Other current assets	382		376
Total current assets	3,780		4,019
Nuclear decommissioning trusts	4,896		4,799
Other investments	217		207
Total investments	5,113		5,006
Utility property, plant and equipment, less accumulated depreciation and amortization of $8,372 and $8,132 at respective dates	33,249		32,859
Nonutility property, plant and equipment, less accumulated depreciation of $78 and $76 at respective dates	123		122
Total property, plant and equipment	33,372		32,981
Derivative assets	212		219
Regulatory assets	7,737		7,612
Other long-term assets	364		349
Total long-term assets	8,313		8,180









Total assets	$	50,578	$	50,186

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



Consolidated Balance Sheets	Edison International

(in millions, except share amounts, unaudited)	March 31, 2015			December 31, 2014
LIABILITIES AND EQUITY
Short-term debt	$	936		$	1,291
Current portion of long-term debt	504			504
Accounts payable	1,203			1,580
Accrued taxes	118			81
Customer deposits	228			221
Derivative liabilities	185			196
Regulatory liabilities	435			401
Other current liabilities	962			1,205
Total current liabilities	4,571			5,479
Long-term debt	11,133			10,234
Deferred income taxes and credits	7,415			7,313
Derivative liabilities	1,107			1,052
Pensions and benefits	2,176			2,155
Asset retirement obligations	2,824			2,821
Regulatory liabilities	5,972			5,889
Other deferred credits and other long-term liabilities	2,279			2,255
Total deferred credits and other liabilities	21,773			21,485
Total liabilities	37,477			37,198
Commitments and contingencies (Note 11)
Redeemable noncontrolling interest	3			6
Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at respective dates)	2,460			2,445
Accumulated other comprehensive loss	(59		)	(58		)
Retained earnings	8,675			8,573
Total Edison International's common shareholders' equity	11,076			10,960
Noncontrolling interests – preferred and preference stock of utility	2,022			2,022
Total equity	13,098			12,982



Total liabilities and equity	$	50,578		$	50,186

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



Consolidated Statements of Cash Flows	Edison International

	Three months ended March 31,
(in millions, unaudited)	2015			2014
Cash flows from operating activities:
Net income	$	318		$	202
Less: loss from discontinued operations	—			(22		)
Income from continuing operations	318			224
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, decommissioning and amortization	485			432
Allowance for equity during construction	(21		)	(13		)
Impairment and other charges	—			231
Deferred income taxes and investment tax credits	72			(6		)
Other	5			4
Changes in operating assets and liabilities:
Receivables	31			112
Inventory	(10		)	(12		)
Accounts payable	63			(63		)
Prepaid and accrued taxes	38			65
Other current assets and liabilities	(229		)	(145		)
Derivative assets and liabilities, net	(10		)	(46		)
Regulatory assets and liabilities, net	193			(331		)
Nuclear decommissioning trusts	29			96
Other noncurrent assets and liabilities	—			17
Net cash provided by operating activities	964			565
Cash flows from financing activities:
Long-term debt issued, net of discount and issuance costs of $13 and $1 at respective dates	1,287			(1		)
Long-term debt matured or repurchased	(419		)	(2		)
Preference stock issued, net	—			270
Short-term debt financing, net	(355		)	401
Cash contribution from redeemable noncontrolling interest	6			—
Dividends to noncontrolling interests	(34		)	(30		)
Dividends paid	(136		)	(116		)
Other	(36		)	(42		)
Net cash provided by financing activities	313			480
Cash flows from investing activities:
Capital expenditures	(1,268		)	(940		)
Proceeds from sale of nuclear decommissioning trust investments	2,853			1,502
Purchases of nuclear decommissioning trust investments	(2,889		)	(1,603		)
Other	10			(1		)
Net cash used in investing activities	(1,294		)	(1,042		)
Net (decrease) increase in cash and cash equivalents	(17		)	3
Cash and cash equivalents at beginning of period	132			146
Cash and cash equivalents at end of period	$	115		$	149

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



Consolidated Statements of Income	Southern California Edison Company

		Three months ended March 31,
(in millions, unaudited)		2015			2014
Operating revenue		$	2,508		$	2,924
Purchase power and fuel		786			1,143
Operation and maintenance		621			713
Depreciation, decommissioning and amortization		463			410
Property and other taxes		88			85
Impairment and other charges		—			231
Total operating expenses		1,958			2,582
Operating income		550			342
Interest and other income		33			23
Interest expense		(136		)	(136		)
Other expenses		(7		)	(7		)
Income before income taxes		440			222
Income tax expense (benefit)		107			(12		)
Net income		333			234
Less: Preferred and preference stock dividend requirements		28			26
Net income available for common stock		$	305		$	208



Consolidated Statements of Comprehensive Income

	Three months ended March 31,
(in millions, unaudited)	2015		2014
Net income	$	333	$	234
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions:
Amortization of net loss included in net income	1		1
Other comprehensive income, net of tax	1		1
Comprehensive income	$	334	$	235

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



Consolidated Balance Sheets	Southern California Edison Company



(in millions, unaudited)	March 31, 2015		December 31, 2014
ASSETS
Cash and cash equivalents	$	36	$	38
Receivables, less allowances of $67 and $68 for uncollectible accounts at respective dates	732		749
Accrued unbilled revenue	636		632
Inventory	282		275
Derivative assets	94		102
Regulatory assets	1,152		1,254
Other current assets	400		390
Total current assets	3,332		3,440
Nuclear decommissioning trusts	4,896		4,799
Other investments	164		158
Total investments	5,060		4,957
Utility property, plant and equipment, less accumulated depreciation of $8,372 and $8,132 at respective dates	33,249		32,859
Nonutility property, plant and equipment, less accumulated depreciation of $76 and $75 at respective dates	69		69
Total property, plant and equipment	33,318		32,928
Derivative assets	212		219
Regulatory assets	7,737		7,612
Other long-term assets	314		300
Total long-term assets	8,263		8,131








Total assets	$	49,973	$	49,456

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



Consolidated Balance Sheets	Southern California Edison Company



(in millions, except share amounts, unaudited)	March 31, 2015			December 31, 2014
LIABILITIES AND EQUITY
Short-term debt	$	297		$	667
Current portion of long-term debt	300			300
Accounts payable	1,211			1,556
Accrued taxes	133			87
Customer deposits	228			221
Derivative liabilities	185			196
Regulatory liabilities	435			401
Deferred income taxes	278			209
Other current liabilities	965			1,183
Total current liabilities	4,032			4,820
Long-term debt	10,523			9,624
Deferred income taxes and credits	8,390			8,288
Derivative liabilities	1,107			1,052
Pensions and benefits	1,681			1,672
Asset retirement obligations	2,823			2,819
Regulatory liabilities	5,972			5,889
Other deferred credits and other long-term liabilities	2,013			2,010
Total deferred credits and other liabilities	21,986			21,730
Total liabilities	36,541			36,174
Commitments and contingencies (Note 11)
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at each date)	2,168			2,168
Additional paid-in capital	631			618
Accumulated other comprehensive loss	(27		)	(28		)
Retained earnings	8,590			8,454
Total common shareholder's equity	11,362			11,212
Preferred and preference stock	2,070			2,070
Total equity	13,432			13,282
Total liabilities and equity	$	49,973		$	49,456

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



Consolidated Statements of Cash Flows	Southern California Edison Company



	Three months ended March 31,
(in millions, unaudited)	2015			2014
Cash flows from operating activities:
Net income	$	333		$	234
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, decommissioning and amortization	483			432
Allowance for equity during construction	(21		)	(13		)
Impairment and other charges	—			231
Deferred income taxes and investment tax credits	67			(12		)
Other	3			3
Changes in operating assets and liabilities:
Receivables	18			111
Inventory	(7		)	(7		)
Accounts payable	52			(55		)
Prepaid and accrued taxes	43			54
Other current assets and liabilities	(205		)	(134		)
Derivative assets and liabilities, net	(10		)	(46		)
Regulatory assets and liabilities, net	193			(331		)
Nuclear decommissioning trusts	29			96
Other noncurrent assets and liabilities	(12		)	25
Net cash provided by operating activities	966			588
Cash flows from financing activities:
Long-term debt issued, net of discount and issuance costs of $13 for the three months ended March 31, 2015	1,287			—
Long-term debt matured or repurchased	(419		)	(2		)
Preference stock issued, net	—			270
Short-term debt financing, net	(370		)	229
Dividends paid	(181		)	(30		)
Other	3			(22		)
Net cash provided by financing activities	320			445
Cash flows from investing activities:
Capital expenditures	(1,266		)	(939		)
Proceeds from sale of nuclear decommissioning trust investments	2,853			1,502
Purchases of nuclear decommissioning trust investments	(2,889		)	(1,603		)
Other	14			(1		)
Net cash used in investing activities	(1,288		)	(1,041		)
Net decrease in cash and cash equivalents	(2		)	(8		)
Cash and cash equivalents, beginning of period	38			54
Cash and cash equivalents, end of period	$	36		$	46

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Organization and Basis of Presentation

Edison International is the parent holding company of Southern California Edison Company ("SCE"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison International is also the parent company of Edison Energy, a company that holds interests in subsidiaries that are engaged in competitive businesses related to the delivery or use of electricity. Such competitive business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE and other wholly owned and controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to Edison International Parent and Other refer to Edison International Parent and its nonutility subsidiaries. SCE's consolidated financial statements include the accounts of SCE and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated from the consolidated financial statements.

Edison International's and SCE's significant accounting policies were described in Note 1 of "Notes to Consolidated Financial Statements" included in the 2014 Form 10-K. This quarterly report should be read in conjunction with the financial statements and notes included in the 2014 Form 10-K.

In the opinion of management, all adjustments, consisting of recurring accruals, have been made that are necessary to fairly state the consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the operating results for the full year.

The December 31, 2014 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Revision to Consolidated Statements of Cash Flow

The consolidated statements of cash flows of Edison International and SCE for the three months ended March 31, 2014 were revised to correct an error in the amount of purchases of nuclear decommissioning trust investments and in the amount attributable to the nuclear decommissioning trusts in the operating activities section of the consolidated statements of cash flows. The revisions had no impact on the consolidated balance sheet, statements of income, comprehensive income, changes in equity or on the net change in cash and cash equivalents. Management believes the revisions do not have a material impact on the prior period financial statements. The following table presents the cash flow statement effects related to the revision for the three months ended March 31, 2014:



	Edison International									SCE
(in millions)	As Reported			Adjustment			As Revised			As Reported			Adjustment			As Revised
Nuclear decommissioning trusts	$	29		$	67		$	96		$	29		$	67		$	96
Total cash provided by operating activities	498			67			565			521			67			588
Purchases of nuclear decommissioning trust investments	(1,536		)	(67		)	(1,603		)	(1,536		)	(67		)	(1,603		)
Total cash used in investing activities	(975		)	(67		)	(1,042		)	(974		)	(67		)	(1,041		)

Cash Equivalents

Cash equivalents included investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows:



	Edison International				SCE
(in millions)	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
Money market funds	$	35	$	35	$	5	$	5

Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period as follows:



	Edison International				SCE
(in millions)	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
Book balances reclassified to accounts payable	$	121	$	180	$	121	$	177

Inventory

Inventory is primarily composed of materials, supplies and spare parts, and stated at the lower of cost or market, cost being determined by the average cost method.

San Onofre Impairment and Other Charges

As discussed in Note 1 of "Notes to Consolidated Financial Statements" included in the 2014 Form 10-K, in March 2014, SCE entered into a settlement agreement with The Utility Reform Network ("TURN"), the CPUC's Office of Ratepayer Advocates ("ORA"), SDG&E, the Coalition of California Utility Employees, and Friends of the Earth (together, the "Settling Parties") related to the regulatory proceedings for San Onofre. SCE recorded a pre-tax charge of approximately $231 million (approximately $96 million after-tax) in the first quarter of 2014.

In September 2014, SCE and the Settling Parties entered into an Amended and Restated Settlement Agreement (the "San Onofre OII Settlement Agreement") which was approved by the CPUC on November 20, 2014. As a result of these developments, SCE revised the pre-tax charge to $163 million (approximately $72 million after-tax) in the fourth quarter of 2014. Including amounts previously recorded in 2013, the total impact of the San Onofre OII Settlement Agreement was a pre-tax charge of $738 million (approximately $437 million after-tax).

Earnings Per Share

Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards payable in common shares, including performance shares and restricted stock units, which earn dividend equivalents on an equal basis with common shares once the awards are vested. EPS attributable to Edison International common shareholders was computed as follows:



	Three months ended March 31,
(in millions, except per-share amounts)	2015		2014
Basic earnings per share – continuing operations:
Income from continuing operations attributable to common shareholders	$	299	$	198
Participating securities dividends	—		—
Income from continuing operations available to common shareholders	$	299	$	198
Weighted average common shares outstanding	326		326
Basic earnings per share – continuing operations	$	0.92	$	0.61
Diluted earnings per share – continuing operations:
Income from continuing operations available to common shareholders	$	299	$	198
Income impact of assumed conversions	—		—
Income from continuing operations available to common shareholders and assumed conversions	$	299	$	198
Weighted average common shares outstanding	326		326
Incremental shares from assumed conversions	3		3
Adjusted weighted average shares – diluted	329		329
Diluted earnings per share – continuing operations	$	0.91	$	0.61

In addition to the participating securities discussed above, Edison International also may award stock options which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 79,394 and 2,050,449 shares of common stock for the three months ended March 31, 2015 and 2014, 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 Not Yet Adopted

On May 28, 2014, the FASB issued an accounting standards update on revenue recognition including enhanced disclosures. Under the new standard, revenue is recognized when (or as) a good or service is transferred to the customer and the customer obtains control of the good or service. Edison International and SCE are currently evaluating this new guidance which is effective January 1, 2017 and cannot determine the impact of this standard at this time.

On April 7, 2015, the FASB issued an accounting standards update that will require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Currently, these costs are presented as a deferred charge asset. Edison International and SCE will adopt this guidance in the first quarter of 2016. The adoption of this accounting standards update is not expected to have a material impact on Edison International's and SCE's consolidated financial statements.

On April 15 2015, the FASB issued an accounting standard update on fees paid by a customer for software licenses. This new standard provides guidance about whether a cloud computing arrangement includes a software license which may be capitalized in certain circumstances. If a cloud computing arrangement does not include a software license, then the arrangement should be accounted for as a service contract. Edison International and SCE are currently evaluating this guidance, which is effective January 1, 2016, and expects this new standard will not have a material impact on the consolidated financial statements.

Note 2. Consolidated Statements of Changes in Equity

The following table provides Edison International's changes in equity for the three months ended March 31, 2015:



	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, 2014	$	2,445	$	(58	)	$	8,573		$	10,960		$	2,022		$	12,982
Net income	—		—			299			299			28			327
Other comprehensive loss	—		(1		)	—			(1		)	—			(1		)
Common stock dividends declared ($0.4175 per share)	—		—			(136		)	(136		)	—			(136		)
Dividends to noncontrolling interests	—		—			—			—			(28		)	(28		)
Stock-based compensation	9		—			(61		)	(52		)	—			(52		)
Non-cash stock-based compensation	6		—			—			6			—			6
Balance at March 31, 2015	$	2,460	$	(59	)	$	8,675		$	11,076		$	2,022		$	13,098

The following table provides Edison International's changes in equity for the three months ended March 31, 2014:



	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, 2013	$	2,403	$	(13	)	$	7,548		$	9,938		$	1,753		$	11,691
Net income	—		—			176			176			26			202
Other comprehensive income	—		2			—			2			—			2
Common stock dividends declared ($0.3550 per share)	—		—			(116		)	(116		)	—			(116		)
Dividends to noncontrolling interests	—		—			—			—			(26		)	(26		)
Stock-based compensation	9		—			(50		)	(41		)	—			(41		)
Non-cash stock-based compensation	5		—			15			20			—			20
Issuance of preference stock	—		—			—			—			270			270
Balance at March 31, 2014	$	2,417	$	(11	)	$	7,573		$	9,979		$	2,023		$	12,002

The following table provides SCE's changes in equity for the three months ended March 31, 2015:



	Equity Attributable to Edison International
(in millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Preferred and Preference Stock		Total Equity
Balance at December 31, 2014	$	2,168	$	618	$	(28	)	$	8,454		$	2,070	$	13,282
Net income	—		—		—			333			—		333
Other comprehensive income	—		—		1			—			—		1
Dividends declared on common stock	—		—		—			(147		)	—		(147		)
Dividends declared on preferred and preference stock	—		—		—			(28		)	—		(28		)
Stock-based compensation	—		9		—			(22		)	—		(13		)
Non-cash stock-based compensation	—		4		—			—			—		4
Balance at March 31, 2015	$	2,168	$	631	$	(27	)	$	8,590		$	2,070	$	13,432

The following table provides SCE's changes in equity for the three months ended March 31, 2014:



	Equity Attributable to Edison International
(in millions)	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Preferred and Preference Stock		Total Equity
Balance at December 31, 2013	$	2,168	$	592		$	(11	)	$	7,594		$	1,795	$	12,138
Net income	—		—			—			234			—		234
Other comprehensive income	—		—			1			—			—		1
Dividends declared on common stock	—		—			—			(126		)	—		(126		)
Dividends declared on preferred and preference stock	—		—			—			(26		)	—		(26		)
Stock-based compensation	—		9			—			(31		)	—		(22		)
Non-cash stock-based compensation	—		2			—			10			—		12
Issuance of preference stock	—		(5		)	—			—			275		270
Balance at March 31, 2014	$	2,168	$	598		$	(10	)	$	7,655		$	2,070	$	12,481

Note 3. Variable Interest Entities

A VIE is defined as a legal entity that meets one of two conditions: (1) the equity owners do not have sufficient equity at risk, or (2) the holders of the equity investment at risk, as a group, lack any of the following three characteristics: decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The primary beneficiary is required to consolidate the VIE. A subsidiary of Edison International is the primary beneficiary of an entity that owns rooftop solar projects. Commercial and operating activities are generally the factors that most significantly impact the economic performance of such VIEs. Commercial and operating activities include construction, operation and maintenance, fuel procurement, dispatch and compliance with regulatory and contractual requirements.

Variable Interest in VIEs that are not Consolidated

Power Purchase Contracts

SCE has power purchase agreements ("PPAs") that are classified as variable interests in VIEs, including tolling agreements through which SCE provides the natural gas to fuel the plants and contracts with qualifying facilities ("QFs") that contain variable pricing provisions based on the price of natural gas. SCE has concluded that it is not the primary beneficiary of these VIEs since it does not control the commercial and operating activities of these entities. Since payments for capacity are the primary source of income, the most significant economic activity for these VIEs is the operation and maintenance of the power plants.

As of the balance sheet date, the carrying amount of assets and liabilities in SCE's consolidated balance sheet that relate to its involvement with VIEs result from amounts due under the PPAs or the fair value of those derivative contracts. Under these contracts, SCE recovers the costs incurred through demonstration of compliance with its CPUC-approved long-term power procurement plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 11 of the 2014 Form 10-K. As a result, there is no significant potential exposure to loss to SCE from its variable interest in these VIEs. The aggregate contracted capacity dedicated to SCE from these VIE projects was 4,125 MW and 5,641 MW at March 31, 2015 and 2014, respectively, and the amounts that SCE paid to these projects were $103 million and $125 million for the three months ended March 31, 2015 and 2014, respectively. These amounts are recoverable in customer rates, subject to reasonableness review.

Unconsolidated Trusts of SCE

SCE Trust I, Trust II and Trust III were formed in 2012, 2013 and 2014, respectively, for the exclusive purpose of issuing the 5.625%, 5.10% and 5.75% trust preference securities, respectively ("trust securities"). The trusts are VIEs. SCE has concluded that it is not the primary beneficiary of these VIEs as it does not have the obligation to absorb the expected losses or the right to receive the expected residual returns of the trusts. SCE Trust I, Trust II and Trust III issued trust securities in the face amount of $475 million, $400 million and $275 million, respectively, (cumulative, liquidation amount of $25 per share) to the public and $10,000 of common stock each to SCE. The trusts invested the proceeds of these trust securities in Series F, Series G and Series H Preference Stock issued by SCE in the principal amounts of $475 million, $400 million and $275 million (cumulative, $2,500 per share liquidation value), respectively, which have substantially the same payment terms as the respective trust securities.

The Series F, Series G and Series H Preference Stock and the corresponding trust securities do not have a maturity date. Upon any redemption of any shares of the Series F, Series G or Series H Preference Stock, a corresponding dollar amount of trust securities will be redeemed by the applicable trust. The applicable trust will make distributions at the same rate and on the same dates on the applicable series of trust securities when and if the SCE board of directors declares and makes dividend payments on the Series F, Series G or Series H Preference Stock. The applicable trust will use any dividends it receives on the Series F, Series G or Series H Preference Stock to make its corresponding distributions on the applicable series of trust securities. If SCE does not make a dividend payment to any of these trusts, SCE would be prohibited from paying dividends on its common stock. SCE has fully and unconditionally guaranteed the payment of the trust securities and trust distributions, if and when SCE pays dividends on the Series F, Series G and Series H Preference Stock.

The Trust I, Trust II and Trust III balance sheets as of March 31, 2015 and December 31, 2014, consisted of investments of $475 million, $400 million and $275 million in the Series F, Series G and Series H Preference Stock, respectively, $475 million, $400 million and $275 million of trust securities, respectively, and $10,000 each of common stock.

The following table provides a summary of the trusts' income statements:



	Three months ended March 31,
(in millions)	Trust I		Trust II		Trust III
2015
Dividend income	$	7	$	5	$	4
Dividend distributions	7		5		4
2014
Dividend income	$	7	$	5	$	1
Dividend distributions	7		5		1

Note 4. Fair Value Measurements

Recurring Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an "exit price"). Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including assumptions about nonperformance risk. As of March 31, 2015 and December 31, 2014, nonperformance risk was not material for Edison International and SCE.

Assets and liabilities are categorized into a three-level fair value hierarchy based on valuation inputs used to determine fair value.

Level 1 – The fair value of Edison International's and SCE's Level 1 assets and liabilities is determined using unadjusted quoted prices in active markets that are available at the measurement date for identical assets and liabilities. This level includes exchange-traded equity securities, U.S. treasury securities, mutual funds and money market funds.

Level 2 – Edison International and SCE's Level 2 assets and liabilities include fixed income securities primarily consisting of U.S. government and agency bonds, municipal bonds and corporate bonds, and over-the-counter derivatives. The fair value of fixed income securities is determined using a market approach by obtaining quoted prices for similar assets and liabilities in active markets and inputs that are observable, either directly or indirectly, for substantially the full term of the instrument.

The fair value of SCE's over-the-counter derivative contracts is determined using an income approach. SCE uses standard pricing models to determine the net present value of estimated future cash flows. Inputs to the pricing models include forward published or posted clearing prices from exchanges (New York Mercantile Exchange and Intercontinental Exchange) for similar instruments and discount rates. A primary price source that best represents trade activity for each market is used to develop observable forward market prices in determining the fair value of these positions. Broker quotes, prices from exchanges or comparison to executed trades are used to validate and corroborate the primary price source. These price quotations reflect mid-market prices (average of bid and ask) and are obtained from sources believed to provide the most liquid market for the commodity.

Level 3 – The fair value of SCE's Level 3 assets and liabilities is determined using the income approach through various models and techniques that require significant unobservable inputs. This level includes over-the-counter options, tolling arrangements and derivative contracts that trade infrequently such as congestion revenue rights ("CRRs") and long-term power agreements. Edison International Parent and Other does not have any Level 3 assets and liabilities.

Assumptions are made in order to value derivative contracts in which observable inputs are not available. Changes in fair value are based on changes to forward market prices, including extrapolation of short-term observable inputs into forecasted prices for illiquid forward periods. In circumstances where fair value cannot be verified with observable market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. Modeling methodologies, inputs and techniques are reviewed and assessed as markets continue to develop and more pricing information becomes available and the fair value is adjusted when it is concluded that a change in inputs or techniques would result in a new valuation that better reflects the fair value of those derivative contracts.

SCE

The following table sets forth assets and liabilities of SCE that were accounted for at fair value by level within the fair value hierarchy:



	March 31, 2015
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral¹			Total
Assets at fair value
Derivative contracts	$	—	$	—	$	306		$	—		$	306
Other	34		—		—			—			34
Nuclear decommissioning trusts:
Stocks²	2,074		—		—			—			2,074
Fixed Income³	1,027		1,651		—			—			2,678
Short-term investments, primarily cash equivalents	44		98		—			—			142
Subtotal of nuclear decommissioning trusts⁴	3,145		1,749		—			—			4,894
Total assets	3,179		1,749		306			—			5,234
Liabilities at fair value
Derivative contracts	—		81		1,282			(71		)	1,292
Total liabilities	—		81		1,282			(71		)	1,292
Net assets (liabilities)	$	3,179	$	1,668	$	(976	)	$	71		$	3,942



	December 31, 2014
(in millions)	Level 1		Level 2		Level 3			Netting and Collateral¹			Total
Assets at fair value
Derivative contracts	$	—	$	—	$	321		$	—		$	321
Other	33		—		—			—			33
Nuclear decommissioning trusts:
Stocks²	2,031		—		—			—			2,031
Fixed Income³	703		1,350		—			—			2,053
Short-term investments, primarily cash equivalents	606		166		—			—			772
Subtotal of nuclear decommissioning trusts⁴	3,340		1,516		—			—			4,856
Total assets	3,373		1,516		321			—			5,210
Liabilities at fair value
Derivative contracts	—		86		1,223			(61		)	1,248
Total liabilities	—		86		1,223			(61		)	1,248
Net assets (liabilities)	$	3,373	$	1,430	$	(902	)	$	61		$	3,962


¹	Represents the netting of assets and liabilities under master netting agreements and cash collateral across the levels of the fair value hierarchy. Netting among positions classified within the same level is included in that level.


²	Approximately 72% and 73% of SCE's equity investments were located in the United States at March 31, 2015 and December 31, 2014, respectively.


³	Includes corporate bonds, which were diversified and included collateralized mortgage obligations and other asset backed securities of $161 million and $49 million at March 31, 2015 and December 31, 2014, respectively.


⁴	Excludes net receivables of $2 million and net payables of $57 million at March 31, 2015 and December 31, 2014, which consist of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.

Edison International

Edison International assets measured at fair value consisted of money market funds of $35 million at both March 31, 2015 and December 31, 2014 classified as Level 1.

SCE Fair Value of Level 3

The following table sets forth a summary of changes in SCE's fair value of Level 3 net derivative assets and liabilities:



	Three months ended March 31,
(in millions)	2015			2014
Fair value of net liabilities at beginning of period	$	(902	)	$	(805	)
Total realized/unrealized gains (losses):
Included in regulatory assets and liabilities¹	(74		)	31
Purchases	—			7
Settlements	—			(6		)
Fair value of net liabilities at end of period	$	(976	)	$	(773	)
Change during the period in unrealized gains and losses related to assets and liabilities held at the end of the period	$	(96	)	$	22


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

Edison International and SCE recognize the fair value for transfers in and transfers out of each level at the end of each reporting period. There were no transfers between any levels during 2015 and 2014.

Valuation Techniques Used to Determine Fair Value

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

The following table sets forth SCE's valuation techniques and significant unobservable inputs used to determine fair value for significant Level 3 assets and liabilities:



	Fair Value (in millions)					Significant	Range
	Assets		Liabilities		Valuation Technique(s)	Unobservable Input	(Weighted Average)
Congestion revenue rights
March 31, 2015	$	297	$	—	Market simulation model	Load forecast	7,630 MW - 25,431 MW
						Power prices¹	$1.65 - $109.95
						Gas prices²	$3.65 - $6.53
December 31, 2014	317		—		Market simulation model	Load forecast	7,630 MW - 25,431 MW
						Power prices¹	$1.65 - $109.95
						Gas prices²	$3.65 - $6.53
Tolling
March 31, 2015	9		1,275		Option model	Volatility of gas prices	16% - 40% (20%)
						Volatility of power prices	26% - 37% (30%)
						Power prices	$28.00 - $54.80 ($40.10)
December 31, 2014	4		1,175		Option model	Volatility of gas prices	13% - 53% (20%)
						Volatility of power prices	25% - 42% (30%)
						Power prices	$30.60 - $61.40 ($44.60)


¹	Prices are in dollars per megawatt-hour.


²	Prices are in dollars per million British thermal units.

Level 3 Fair Value Sensitivity

Congestion Revenue Rights

For CRRs, where SCE is the buyer, generally increases (decreases) in forecasted load in isolation would result in increases (decreases) to the fair value. In general, an increase (decrease) in electricity and gas prices at illiquid locations tends to result in increases (decreases) to fair value; however, changes in electricity and gas prices in opposite directions may have varying results on fair value.

Tolling Arrangements

The fair values of SCE's tolling arrangements contain intrinsic value and time value. Intrinsic value is the difference between the market price and strike price of the underlying commodity. Time value is made up of several components, including volatility, time to expiration, and interest rates. The option model for tolling arrangements reflects plant specific information such as operating and start-up costs.

For tolling arrangements where SCE is the buyer, increases in volatility of the underlying commodity prices would result in increases to fair value as it represents greater price movement risk. As power and gas prices increase, the fair value of tolling arrangements tends to increase. The valuation of tolling arrangements is also impacted by the correlation between gas and power prices. As the correlation increases, the fair value of tolling arrangements tends to decline.

Nuclear Decommissioning Trusts

SCE's nuclear decommissioning trust investments include equity securities, U.S. treasury securities and other fixed income securities. Equity and treasury securities are classified as Level 1 as fair value is determined by observable market prices in active or highly liquid and transparent markets. The remaining fixed income securities are classified as Level 2. The fair value of these financial instruments is based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information.

Fair Value of Debt Recorded at Carrying Value

The carrying value and fair value of Edison International's and SCE's long-term debt (including current portion of long-term debt) are as follows:



	March 31, 2015				December 31, 2014
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
SCE	$	10,823	$	12,601	$	9,924	$	11,479
Edison International	11,637		13,440		10,738		12,319

The fair value of Edison International and SCE's short-term and long-term debt is classified as Level 2 and is based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes of new issue prices and relevant credit information.

The carrying value of Edison International's and SCE's trade receivables and payables, other investments, and short-term debt approximates fair value.

Note 5. Debt and Credit Agreements

Credit Agreements and Short-Term Debt

SCE and Edison International Parent have multi-year revolving credit facilities of $2.75 billion and $1.25 billion, respectively, which both expire in July 2019. The credit facility for SCE 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, 2015, SCE's outstanding commercial paper was $297 million at a weighted-average interest rate of 0.34%. At March 31, 2015, letters of credit issued under SCE's credit facility aggregated $128 million and are scheduled to expire in twelve months or less. At December 31, 2014, the outstanding commercial paper was $367 million at a weighted-average interest rate of 0.40%.

At March 31, 2015, Edison International Parent's outstanding commercial paper was $625 million at a weighted-average interest rate of 0.57%. At December 31, 2014, the outstanding commercial paper was $619 million at a weighted-average interest rate of 0.45%.

Project Financing

During 2014, indirect subsidiaries of Edison International entered into a $31.6 million non-recourse debt financing to support investment in approximately 35 megawatts of solar rooftop projects. The financing is required to be converted to a 7-year term loan during 2015, subject to meeting specified conditions. As of March 31, 2015, there was $14.3 million outstanding under this financing at a weighted average interest rate of 2.67% which is currently classified as short-term debt.

Long-Term Debt

During the first quarter of 2015, SCE issued $550 million of 1.845% amortizing first and refunding mortgage bonds due in 2022, $325 million of 2.4% first and refunding mortgage bonds due in 2022, and $425 million of 3.6% first and refunding mortgage bonds due in 2045. The proceeds from these bonds were used to repay outstanding debt and for general corporate purposes. The $550 million amortizing first and refunding mortgage bonds and the $325 million of first and refunding mortgage bonds have been designated as a financing of the San Onofre regulatory asset.

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 power purchase agreements. 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 power purchase agreements 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 contracts contain master netting agreements or similar agreements, which generally allow counterparties subject to the agreement to setoff 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 contracts contain a provision that requires SCE to maintain an investment grade rating from each of the major credit rating agencies, referred to as a credit-risk-related contingent feature. If SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover derivative liabilities and the related outstanding payables. The net fair value of all derivative liabilities with these credit-risk-related contingent features was $8 million and $53 million as of March 31, 2015 and December 31, 2014, respectively. SCE has posted $10 million at March 31, 2015 and $13 million at December 31, 2014 to its counterparties at the respective dates for its derivative liabilities and related outstanding payables. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2015, SCE would be required to post $28 million of additional collateral of which $21 million is related to outstanding payables that are net of collateral already posted.

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 offset against margin and cash collateral deposits. In addition, SCE has provided collateral in the form of letters of credit. Collateral requirements can vary depending upon the level of unsecured credit extended by counterparties, changes in market prices relative to contractual commitments and other factors. See Note 4 for a discussion of fair value of derivative instruments. The following table summarizes the gross and net fair values of SCE's commodity derivative instruments:



	March 31, 2015
	Derivative Assets								Derivative Liabilities
(in millions)	Short-Term			Long-Term		Subtotal			Short-Term			Long-Term		Subtotal			Net Liability
Commodity derivative contracts
Gross amounts recognized	$	97		$	212	$	309		$	259		$	1,107	$	1,366		$	1,057
Gross amounts offset in the consolidated balance sheets	(3		)	—		(3		)	(3		)	—		(3		)	—
Cash collateral posted¹	—			—		—			(71		)	—		(71		)	(71		)
Net amounts presented in the consolidated balance sheets	$	94		$	212	$	306		$	185		$	1,107	$	1,292		$	986



	December 31, 2014
	Derivative Assets								Derivative Liabilities
(in millions)	Short-Term			Long-Term		Subtotal			Short-Term			Long-Term		Subtotal			Net Liability
Commodity derivative contracts
Gross amounts recognized	$	104		$	219	$	323		$	259		$	1,052	$	1,311		$	988
Gross amounts offset in the consolidated balance sheets	(2		)	—		(2		)	(2		)	—		(2		)	—
Cash collateral posted¹	—			—		—			(61		)	—		(61		)	(61		)
Net amounts presented in the consolidated balance sheets	$	102		$	219	$	321		$	196		$	1,052	$	1,248		$	927


¹	In addition, at both March 31, 2015 and December 31, 2014, SCE had posted $36 million of collateral that is not offset against derivative liabilities and is reflected in "Other current assets" on the consolidated balance sheets.

Income Statement Impact of Derivative Instruments

SCE recognizes realized gains and losses on derivative instruments as purchased power expense and expects that such gains or losses will be part of the purchase 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 results of derivative activities and related regulatory offsets are recorded 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)	2015			2014
Realized losses	$	(36	)	$	(37	)
Unrealized (losses) gains	(69		)	52

Notional Volumes of Derivative Instruments

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



	Unit of	Economic Hedges
Commodity	Measure	March 31, 2015	December 31, 2014
Electricity options, swaps and forwards	GWh	3,044	3,618
Natural gas options, swaps and forwards	Bcf	62	83
Congestion revenue rights	GWh	112,090	122,859
Tolling arrangements	GWh	77,684	79,989

Note 7. Income Taxes

Effective Tax Rate

The table below provides a reconciliation of income tax expense computed at the federal statutory income tax rate to the income tax provision:



	Edison International						SCE
	Three months ended March 31,
(in millions)	2015			2014			2015			2014
Income from continuing operations before income taxes	$	424		$	205		$	440		$	222
Provision for income tax at federal statutory rate of 35%	148			71			154			78
Increase (decrease) in income tax from:
State tax, net of federal benefit	11			1			14			1
Property-related	(60		)	(51		)	(60		)	(51		)
Change related to uncertain tax positions	15			7			10			7
San Onofre OII settlement	—			(40		)	—			(40		)
Other	(8		)	(7		)	(11		)	(7		)
Total income tax expense (benefit) from continuing operations	$	106		$	(19	)	$	107		$	(12	)
Effective tax rate	25.0		%	(9.3		)%	24.3		%	(5.4		)%

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 in SCE's rate cases 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. 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. It is reasonably possible that by the end of 2015, unrecognized tax benefits may decrease by approximately $96 million due to a change in estimate of tax positions subject to flow-through regulatory treatment.

Property-related items include recognition of income tax benefits from repair deductions for income tax purposes.

Tax Disputes

Tax Years 2007 – 2009

The IRS examination phase of tax years 2007 through 2009 was completed during the first quarter of 2013. Edison International received a Revenue Agent Report from the IRS on February 28, 2013 which included a proposed adjustment to disallow a component of SCE's percentage repair allowance deduction (similar to the 2003 – 2006 tax years). The proposed adjustment to disallow a component of SCE's percentage repair allowance deduction, if sustained, would result in a federal tax liability of approximately $77 million, including interest through March 31, 2015. Edison International has tentatively

reached an agreement with the IRS regarding SCE’s percentage repair allowance deduction, which if finalized, would result in a federal tax liability of approximately $16 million, including interest through March 31, 2015.

Tax Years 2010 – 2012

A Revenue Agent Report from the IRS is expected to be received from the examination phase of tax years 2010 through 2012 within the next six months. After receipt of the Revenue Agent Report, SCE expects to update its assessment of uncertain tax positions.

Note 8. Compensation and Benefit Plans

Pension Plans

Edison International made contributions of $4 million during the three months ended March 31, 2015, which includes contributions of $1 million by SCE. Edison International expects to make contributions of $117 million during the remainder of 2015, which includes $91 million from SCE. Annual contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms, pending the outcome of the 2015 GRC decision. Annual contributions to these plans are expected to be, at a minimum, equal to the related annual expense.

Pension expense components for continuing operations are:



	Edison International						SCE
	Three months ended March 31,
(in millions)	2015			2014			2015			2014
Service cost	$	35		$	30		$	35		$	29
Interest cost	41			45			38			44
Expected return on plan assets	(57		)	(57		)	(53		)	(56		)
Amortization of prior service cost	1			1			1			1
Amortization of net loss¹	9			1			7			—
Expense under accounting standards	$	29		$	20		$	28		$	18
Regulatory adjustment	(1		)	31			(1		)	31
Total expense recognized	$	28		$	51		$	27		$	49


¹	Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was $3 million and $2 million, respectively, for the three months ended March 31, 2015, and $2 million and $1 million, respectively, for the three months ended March 31, 2014.

Postretirement Benefits Other Than Pensions

Edison International made contributions of $15 million during the three months ended March 31, 2015 and expects to make contributions of $44 million during the remainder of 2015, substantially all of which are expected to be made by SCE. Annual contributions made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans, pending the outcome of the 2015 GRC decision. Benefits under these plans, with some exceptions, are generally unvested and subject to change. Under the terms of the Edison International Health and Welfare Plan ("PBOP Plan") each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of all PBOP benefits with respect to its employees and former employees. A participating employer may terminate the PBOP benefits with respect to its employees and former employees, as may SCE (as Plan sponsor), and, accordingly, the participants' PBOP benefits are not vested benefits.

PBOP expense components for continuing operations are:



	Edison International						SCE
	Three months ended March 31,
(in millions)	2015			2014			2015			2014
Service cost	$	12		$	11		$	12		$	11
Interest cost	29			27			28			27
Expected return on plan assets	(28		)	(28		)	(28		)	(28		)
Amortization of prior service credit	(3		)	(9		)	(3		)	(9		)
Amortization of net loss	6			—			6			—
Total expense	$	16		$	1		$	15		$	1

Workforce Reductions

In 2012, SCE commenced multiple efforts to reduce its workforce in order to reflect SCE's strategic direction to optimize its cost structure, moderate customer rate increases and align its cost structure with its peers. In addition, in June 2013, SCE announced plans to permanently retire San Onofre, which resulted in additional workforce reductions. During the second quarter of 2014, SCE increased the estimated impact for workforce reductions related to transferring certain information technology activities to third parties. Through March 31, 2015, SCE's share of estimated cash severance for all of these workforce reductions totaled $215 million. The following table provides a summary of changes in the accrued severance liability associated with these reductions:



(in millions)
Balance at January 1, 2015	$	35
Additions	—
Payments	(23		)
Balance at March 31, 2015	$	12

The liability presented in the table above is reflected in "Other current liabilities" on the consolidated balance sheets. The severance costs are included in "Operation and maintenance" on the consolidated income statements.

Note 9. Other 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:



	Longest Maturity Dates	Amortized Cost				Fair Value
(in millions)	Longest Maturity Dates	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
Stocks	—	$	544	$	524	$	2,074	$	2,031
Municipal bonds	2054	679		681		826		822
U.S. government and agency securities	2045	1,127		777		1,207		836
Corporate bonds	2057	585		346		645		395
Short-term investments and receivables/payables¹	One-year	139		692		144		715
Total		$	3,074	$	3,020	$	4,896	$	4,799


¹	Short-term investments include $92 million of repurchase agreements payable by financial institutions which earn interest, are fully secured by U.S. Treasury securities and mature by April 2, 2015.

Trust fund earnings (based on specific identification) increase the trust fund balance and the ARO regulatory liability. Proceeds from sales of securities (which are reinvested) were $2.9 billion and $1.5 billion for the three months ended

March 31, 2015 and 2014, respectively. Unrealized holding gains, net of losses, were $1.8 billion and $1.8 billion at March 31, 2015 and December 31, 2014, respectively.

The following table sets forth a summary of changes in the fair value of the trust:



	Three months ended March 31,
(in millions)	2015			2014
Balance at beginning of period	$	4,799		$	4,494
Gross realized gains	27			10
Gross realized losses	(2		)	—
Unrealized gains, net	44			62
Other-than-temporary impairments	(4		)	(3		)
Interest and dividends	28			28
Contributions	7			5
Income taxes	—			(7		)
Administrative expenses and other	(3		)	(2		)
Balance at end of period	$	4,896		$	4,587

Trust assets are used to pay income taxes as the Trust files separate income taxes returns from SCE. Deferred income taxes related to unrealized gains at March 31, 2015 were $448 million. Accordingly, the fair value of Trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled $4.4 billion at March 31, 2015. Due to regulatory mechanisms, changes in assets of the trusts from income items have no impact on operating revenue or earnings.

Note 10. Regulatory Assets and Liabilities

Regulatory Assets

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



(in millions)	March 31, 2015		December 31, 2014
Current:
Regulatory balancing accounts	$	957	$	1,088
Energy derivatives	167		159
Other	28		7
Total current	1,152		1,254
Long-term:
Deferred income taxes, net	3,506		3,405
Pensions and other postretirement benefits	1,214		1,218
Energy derivatives	910		850
Unamortized investments, net	235		255
San Onofre	1,246		1,288
Unamortized loss on reacquired debt	214		201
Regulatory balancing accounts	49		44
Other	363		351
Total long-term	7,737		7,612
Total regulatory assets	$	8,889	$	8,866

Regulatory Liabilities

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



(in millions)	March 31, 2015		December 31, 2014
Current:
Regulatory balancing accounts	$	384	$	380
Other¹	51		21
Total current	435		401
Long-term:
Costs of removal	2,810		2,826
Recoveries in excess of ARO liabilities²	2,013		1,956
Regulatory balancing accounts	1,091		1,083
Other	58		24
Total long-term	5,972		5,889
Total regulatory liabilities	$	6,407	$	6,290


¹	During the first quarter of 2015, SCE recognized revenue from CPUC activities largely based on 2014 authorized base revenue requirements included in customer rates. SCE deferred $36 million of the 2014 authorized base revenue requirement allocated to the first quarter related to incremental repair deductions pending the outcome of the 2015 GRC.

Represents the cumulative differences between ARO expenses and amounts collected in rates primarily for the decommissioning of the SCE's nuclear generation facilities. Decommissioning costs recovered through rates are primarily placed in nuclear decommissioning trusts. This regulatory liability also represents the deferral of realized and unrealized gains and losses on the nuclear decommissioning trust investments (see Note 9).

Net Regulatory Balancing Accounts

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



(in millions)	March 31, 2015			December 31, 2014
Asset (liability)
Energy resource recovery account	$	683		$	1,028
New system generation balancing account	(63		)	35
Public purpose programs and energy efficiency programs	(851		)	(874		)
Base rate recovery balancing account	67			(5		)
Greenhouse gas auction revenue	(218		)	(182		)
FERC balancing accounts	(9		)	(32		)
Generator settlements	—			(197		)
Other	(78		)	(104		)
Liability	$	(469	)	$	(331	)

Note 11. Commitments and Contingencies

Third-Party Power Purchase Agreements

During the three months ended March 31, 2015, SCE had new power procurement contracts with additional commitments estimated to be: $6 million for remainder of 2015, $34 million for 2016, $117 million for 2017, $166 million for 2018, $204 million for 2019 and $1.9 billion for the period remaining thereafter.

Indemnities

Edison International and SCE have various financial and performance guarantees and indemnity agreements which are issued in the normal course of business.

Edison International and SCE have provided indemnifications through contracts entered into in the normal course of business. These are primarily indemnifications against adverse litigation outcomes in connection with underwriting agreements, and indemnities for specified environmental liabilities and income taxes with respect to assets sold. Edison International's and SCE's obligations under these agreements may or may not be limited in terms of time and/or amount, and in some instances Edison International and SCE may have recourse against third parties. Edison International and SCE have not recorded a liability related to these indemnities. The overall maximum amount of the obligations under these indemnifications cannot be reasonably estimated.

SCE has indemnified the City of Redlands, California in connection with Mountainview'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. 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 results of operations or liquidity.

San Onofre Related Matters

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

Settlement of San Onofre CPUC Proceedings

In November 2014, the CPUC approved the San Onofre OII Settlement Agreement that SCE had entered into with TURN, the ORA, SDG&E, the Coalition of California Utility Employees, and Friends of the Earth. The San Onofre OII Settlement Agreement resolved the CPUC's OII and related proceedings regarding the Steam Generator Replacement Project at San Onofre and the related outage and subsequent shutdown of San Onofre. The San Onofre OII Settlement Agreement does not affect proceedings related to recoveries from third parties described below, but does describe how shareholders and customers will share any potential recoveries.

On April 14, 2015, the OII ALJs ordered SCE to produce unprivileged documents pertaining to oral and written communications regarding regarding the possible settlement of the OII proceeding between any SCE employee and CPUC decision makers. SCE's response is due on April 29, 2015.

SCE cannot predict the outcome of these proceedings.

NRC Proceedings

In February 2015, the NRC issued a proposed decision resolving the review of SCE's compliance with the license amendment regulatory process related to the RSGs by an NRC Staff Petition Review Board by finding the issue to be moot, given the permanent cessation of operation of San Onofre. In March 2015, the NRC issued a lessons learned report in which it restated earlier NRC inspection findings that SCE properly concluded that the replacement steam generators at San Onofre did not require a formal license amendment prior to installation using a common NRC process for replacement components.

Certain anti-nuclear groups and individual members of Congress have alleged that SCE knew of deficiencies in the steam generators when they were installed or otherwise did not correctly follow NRC requirements for the design and installation of the replacement steam generators, something which SCE has vigorously denied, and have called for investigations, including by the Department of Justice. SCE cannot predict when or whether ongoing proceedings by the NRC will be completed or whether inquiries by other government agencies will be initiated.

NEIL Insurance Claims

San Onofre carries accidental property damage and carried accidental outage insurance issued by Nuclear Electric Insurance Limited ("NEIL") and has placed NEIL on notice of claims under both policies. The NEIL policies have a number of exclusions and limitations that NEIL may assert reduce or eliminate coverage (such as a limitation under which benefits may be reduced by up to 90% for periods following a planned shutdown), and SCE may choose to challenge NEIL's application of any such exclusions and limitations. Through August 30, 2014, the San Onofre owners had submitted approximately $433 million in claims (SCE's share of which is approximately $339 million) under the accidental outage insurance. These claims continue to be under review and are subject to revision and updating over time. The accidental outage insurance at San Onofre has been canceled prospectively as a result of the permanent retirement. SCE has not submitted a proof of loss under the accidental property damage insurance but reserves the right to do so. The parties are continuing discussions. SCE may challenge any reduction or denial of coverage that results from any coverage determination by NEIL. No amounts have been recognized in SCE's financial statements, pending NEIL's response to the San Onofre owners’ claims.

Under the San Onofre OII Settlement Agreement, recoveries from NEIL, if any, will first be applied to reimburse costs incurred in pursuing such recoveries, including litigation costs. To the extent SCE's share of recoveries from NEIL exceeds such costs, recoveries under the accidental outage insurance will be allocated 95% to customers and 5% to SCE and all other NEIL recoveries will be allocated 82.5% to customers and 17.5% to SCE. SCE customers' portion of amounts recovered from NEIL would be distributed to SCE customers via a credit to SCE's ERRA account.

MHI Claims

SCE is also pursuing claims against Mitsubishi Heavy Industries, Ltd. and a related company ("MHI"), which designed and supplied the RSGs. MHI warranted the RSGs for an initial period of 20 years from acceptance and is contractually obligated to repair or replace defective items with dispatch and to pay specified damages for certain repairs. MHI's stated liability under the purchase agreement is limited to $138 million and excludes consequential damages, defined to include "the cost of replacement power" however, limitations in the contract are subject to applicable exceptions both in the contract and under law. SCE has advised MHI that it believes one or more of such exceptions apply and that MHI's liability is not limited to $138 million. MHI has advised SCE that it disagrees. In October 2013 SCE sent MHI a formal request for binding arbitration under the auspices of the International Chamber of Commerce in accordance with the purchase contract seeking damages for all losses. In the request for arbitration, SCE alleges contract and tort claims and seeks at least $4 billion in damages on behalf of itself and its customers and in its capacity as Operating Agent for San Onofre. MHI has denied any liability and has

asserted counterclaims for $41 million, for which SCE has denied any liability. Each of the other San Onofre owners sued MHI, alleging claims arising from MHI's supplying the faulty steam generators. These litigation claims have been stayed pending the arbitration. The other owners (SDG&E and Riverside) have been added as additional claimants in the arbitration.

SCE, on behalf of itself and the other San Onofre owners, has submitted seven invoices to MHI totaling $149 million for steam generator repair costs incurred through April 30, 2013. MHI paid the first invoice of $45 million, while reserving its right to challenge it and subsequently rejected a portion of the first invoice and has not paid further invoices, claiming further documentation is required, which SCE disputes. SCE recorded its share of the invoice paid (approximately $35 million) as a reduction of repair and inspection costs in 2012.

Under the San Onofre OII Settlement Agreement, recoveries from MHI (including amounts paid by MHI under the first invoice), if any, will first be applied to reimburse costs incurred in pursuing such recoveries, including litigation costs. To the extent SCE's share of recoveries from MHI exceed such costs, they will be allocated 50% to customers and 50% to SCE.

The first $282 million of SCE's customers' portion of such recoveries from MHI will be distributed to customers via a credit to a sub-account of SCE's Base Revenue Requirement Balancing Account ("BRRBA"), reducing revenue requirements from customers. Amounts in excess of the first $282 million distributable to SCE customers will reduce SCE's regulatory asset represented by the unamortized balance of investment in San Onofre base plant, reducing the revenue requirement needed to amortize such investment. The amortization period, however, will be unaffected. Any additional amounts received after the regulatory asset is recovered will be applied to the BRRBA.

The San Onofre OII Settlement Agreement provides the utilities with the discretion to resolve the NEIL and MHI disputes without CPUC approval or review, but the utilities are obligated to use their best efforts to inform the CPUC of any settlement or other resolution of these disputes to the extent this is possible without compromising any aspect of the resolution. SCE and SDG&E have also agreed to allow the CPUC to review the documentation of any final resolution of the NEIL and MHI disputes and the litigation costs incurred in pursuing claims against NEIL and MHI to ensure they are not exorbitant in relation to the recovery obtained. There is no assurance that there will be any recoveries from NEIL or MHI or that if there are recoveries, that they will equal or exceed the costs incurred to pursue them.

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, 2015, SCE's recorded estimated minimum liability to remediate its 19 identified material sites (sites in which the upper end of the range of the costs is at least $1 million) was $116 million, including $84 million related to San Onofre. In addition to these sites, SCE also has 39 immaterial sites for which the total minimum recorded liability was $4 million. Of the $120 million total environmental remediation liability for SCE, $116 million has been recorded as a regulatory asset. SCE expects to recover $30 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 $86 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 $158 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 $5 million to $23 million. Costs incurred were $1 million for both the three months ended March 31, 2015 and 2014.

Based upon the CPUC's regulatory treatment of environmental remediation costs incurred at SCE, SCE believes that costs ultimately recorded will not materially affect its results of operations, financial position or cash flows. There can be no assurance, however, that future developments, including additional information about existing sites or the identification of new sites, will not require material revisions to estimates.

Nuclear Insurance

SCE is a member of NEIL, a mutual insurance company owned by entities with nuclear facilities. NEIL provides insurance for nuclear property damage, including damages caused by acts of terrorism up to specified limits, and for accidental outages for active facilities. The amount of nuclear property damage insurance purchased for San Onofre and Palo Verde exceeds the minimum federal requirement of $1.06 billion. If NEIL losses at any nuclear facility covered by the arrangement were to exceed the accumulated funds for these insurance programs, SCE could be assessed retrospective premium adjustments of up to approximately $52 million per year.

Federal law limits public offsite liability claims for bodily injury and property damage from a nuclear incident to the amount of available financial protection, which is currently approximately $13.6 billion. Based on its ownership interests, SCE could be required to pay a maximum of approximately $255 million per nuclear incident. However, it would have to pay no more than approximately $38 million per incident in any one year.

For more information on insurance coverage, see Note 11 in the 2014 Form 10-K.

Wildfire Insurance

Severe wildfires in California have given rise to large damage claims against California utilities for fire-related losses alleged to be the result of the failure of electric and other utility equipment. Invoking a California Court of Appeal decision, plaintiffs pursuing these claims have relied on the doctrine of inverse condemnation, which can impose strict liability (including liability for a claimant's attorneys' fees) for property damage. Prolonged drought conditions in California have also increased the risk of severe wildfire events. On June 1, 2014, Edison International renewed its liability insurance coverage, which included coverage for SCE's wildfire liabilities up to a $547.5 million limit (with a self-insured retention of $10 million per wildfire occurrence). Various coverage limitations within the policies that make up this insurance coverage could result in additional self-insured costs in the event of multiple wildfire occurrences during the policy period (June 1, 2014 to May 31, 2015). SCE also has additional coverage for certain wildfire liabilities of $450 million, which applies when total covered wildfire claims exceed $550 million, through June 14, 2015. SCE may experience coverage reductions and/or increased insurance costs in future years. No assurance can be given that future losses will not exceed the limits of SCE's insurance coverage.

Spent Nuclear Fuel

Under federal law, the 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 the current license period.

SCE, as operating agent, filed a lawsuit on behalf of the San Onofre owners against the DOE in the Court of Federal Claims seeking damages of approximately $182 million for 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. Additional legal action would be necessary to recover damages incurred after December 31, 2013. All damages recovered by SCE are subject to CPUC review as to how these amounts would be distributed among customers, shareholders, or to offset fuel decommissioning or storage costs.

Note 12. Accumulated Other Comprehensive Loss

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



	Edison International						SCE
	Three months ended March 31,
(in millions)	2015			2014			2015			2014
Beginning balance	$	(58	)	$	(13	)	$	(28	)	$	(11	)
Pension and PBOP – net income (loss):
Other comprehensive loss before reclassifications	(3		)	—			—			—
Reclassified from accumulated other comprehensive loss¹	2			2			1			1
Change	(1		)	2			1			1
Ending Balance	$	(59	)	$	(11	)	$	(27	)	$	(10	)


¹	These items are included in the computation of net periodic pension and PBOP expense. See Note 8 for additional information.

Note 13. Interest and Other Income and Other Expenses

Interest and other income and other expenses are as follows:



	Three months ended March 31,
(in millions)	2015		2014
SCE interest and other income:
Equity allowance for funds used during construction	$	21	$	13
Increase in cash surrender value of life insurance policies and life insurance benefits	10		7
Interest income	1		2
Other	1		1
Total SCE interest and other income	33		23
Edison International Parent and Other other income	6		—
Total Edison International interest and other income	$	39	$	23
SCE other expenses:
Civic, political and related activities and donations	5		5
Other	2		2
Total SCE other expenses	7		7
Edison International Parent and Other other expenses	3		1
Total Edison International other expenses	$	10	$	8

Note 14. Discontinued Operations

EME Chapter 11 Bankruptcy

In December 2012, EME and certain of its wholly-owned subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division. The Amended Plan of Reorganization, including the EME Settlement Agreement, was completed on April 1, 2014 with the sale of substantially all of EME's assets to NRG Energy, Inc. and the transactions called for in the EME Settlement Agreement, including an initial cash payment to the Reorganization Trust of $225 million in April 2014. For further discussion of the EME Settlement Agreement, see the 2014 Form 10-K, "Notes to Consolidated Financial Statements—Note 15."

In August 2014, Edison International entered into an amendment of the EME Settlement Agreement that finalized the remaining matters related to the EME Settlement including setting the amount of the two installment payments at $204 million due on September 30, 2015 and $214 million due on September 30, 2016.

Loss from discontinued operations, net of tax, was $22 million for the three months ended March 31, 2014. The 2014 loss from discontinued operations resulted from revised estimates of the impact of a tax deconsolidation of EME from Edison International as originally contemplated prior to the EME Settlement.

Note 15. Supplemental Cash Flows Information

Supplemental cash flows information for continuing operations is:



	Edison International				SCE
	Three months ended March 31,
(in millions)	2015		2014		2015		2014
Cash payments for interest and taxes:
Interest, net of amounts capitalized	$	152	$	157	$	144	$	149
Tax payments, net	—		—		32		3
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock	$	136	$	116	$	147	$	126
Preferred and preference stock	3		4		3		4

SCE's accrued capital expenditures at March 31, 2015 and 2014 were $407 million and $438 million, respectively. Accrued capital expenditures will be included as an investing activity in the consolidated statements of cash flow in the period paid.

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 Chief Executive Officer and Chief Financial Officer and SCE's President and Chief Financial Officer, 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 third quarter of 2014. Based on that evaluation, Edison International's Chief Executive Officer and Chief Financial Officer and SCE's President and Chief Financial Officer 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

During the first quarter of 2015, SCE began transitioning a portion of its information technology services to third-party providers under managed services agreements. The transition of day-to-day responsibilities to outside service providers has resulted in certain changes to business processes and internal controls over financial reporting. SCE continues to be responsible for the design and operating effectiveness of controls over financial reporting and has taken steps to provide oversight of controls performed by its managed service provider during this period of change and will continue to evaluate the operating effectiveness of related controls during subsequent periods.

There were no other changes in Edison International's or SCE's internal control over financial reporting, respectively, during the first quarter of 2015 that have materially affected, or are reasonably likely to materially affect, Edison International's or SCE's internal control over financial reporting.

Jointly Owned Utility Plant

Edison International's and SCE's respective scope of evaluation of internal control over financial reporting includes their Jointly Owned Utility Projects as discussed in Note 2. Property, Plant and Equipment in the 2014 Form 10-K.

LEGAL PROCEEDINGS

Shaver Lake Dam Project Administrative Civil Liability Complaint

In 2011, SCE installed a PVC plastic geomembrane liner on the Shaver Lake Dam to prevent water seepage. Before starting the project, SCE received the required regulatory permits and approvals. SCE and the California Department of Fish and Wildlife executed a Streambed Alteration Agreement in November 2011 that governed SCE's activities in Shaver Lake as required by state and federal law. SCE also obtained the required federal Clean Water Act Certification in November 2011 for the project's completion.

In February 2012, the California Department of Fish and Wildlife and the Central Valley Regional Water Quality control Board issued letters alleging that SCE had violated provisions of the Streambed Alteration Agreement and certain conditions of the federal Clean Water Act Certification, respectively. Both letters alleged that during the draining of Shaver Lake, SCE failed to prevent the discharge of sediment into an adjoining creek, causing the deaths of fish in the lake and creek. In October 2014, SCE received a pre-issuance draft of an Administrative Civil Liability Complaint from the Central Valley Regional Water Quality Control Board alleging violations of certain permit conditions relating to the Shaver Lake Dam Project. The Regional Water Quality Control Board is seeking $25 million in civil penalties for the violations. SCE disputes the allegations.

Dominguez Channel Oil Spill Complaint

SCE has been named as a defendant in a criminal misdemeanor complaint filed by the L.A. City Attorney's office arising from a 2013 oil spill associated with the failure of an underground primary cable and ground rod located in close proximity to a pipeline controlled by a private pipeline management company. The City's complaint alleges that 840 gallons of oil leaked from the pipeline into the City's storm drain which connected to the Dominguez channel. The private pipeline management company is also named as a defendant in the complaint. The City alleges violations of the California Fish and Game code as well as other state statutes and city ordinances.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by Edison International and Affiliated Purchasers

The following table contains information about all purchases of Edison International Common Stock made by or on behalf of Edison International in the first quarter of 2015.



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, 2015 to January 31, 2015	1,588,696		$	67.32	—	—
February 1, 2015 to February 28, 2015	71,428		64.77		—	—
March 1, 2015 to March 31, 2015	675,452		63.14		—	—
Total	2,335,576		66.04		—	—

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

EXHIBITS



Exhibit Number		Description

10.1**		Edison International 2015 Executive Annual Incentive Program

10.2**		Edison International 2015 Long-Term Incentives Terms and Conditions

10.3**		Edison International Executive Incentive Compensation Plan, as amended and restated effective February 25, 2015

10.4**		Southern California Edison Company Executive Supplemental Benefit Program, as amended effective February 25, 2015

10.5**		Edison International 2008 Executive Retirement Plan, as amended and restated effective February 25, 2015

10.6**		Edison International 2008 Executive Severance Plan, as amended and restated effective February 25, 2015

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, 2015, filed on April 28, 2015, 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, 2015, filed on April 28, 2015, 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

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/ Mark C. Clarke	By:	/s/ Connie J. Erickson

	Mark C. Clarke Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)		Connie J. Erickson Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)

Date:	April 28, 2015	Date:	April 28, 2015