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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ______________________________________
Commission File Number 1-2313
SOUTHERN CALIFORNIA EDISON COMPANY
(Exact name of registrant as specified in its charter)
California 95-1240335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2244 Walnut Grove Avenue
(P.O. Box 800)
Rosemead, California
(Address of principal 91770
executive offices) (Zip Code)
Registrant's telephone number, including area code: (626) 302-1212
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Capital Stock
Cumulative Preferred American
4.08% Series 4.32% Series
4.24% Series 4.78% Series
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes |X| No |_|
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Exchange Act. Yes |_| No |X|
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. |X|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer or a non-accelerated filer. See definition of "accelerated filer" and "large
accelerated filer" in Rule 12b-12 of the Exchange Act. (Check One):
Large Accelerated Filer |_| Accelerated Filer |_| Non-accelerated filer |X|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes |_| No |X|
As of June 30, 2005, there were 434,888,104 shares of Common Stock outstanding, all of which
are held by the registrant's parent holding company. The aggregate market value of
registrant's voting and non-voting common equity held by non-affiliates was zero. As of
March 3, 2006, there were 434,888,104 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents listed below have been incorporated by reference into
the parts of this report so indicated.
(1) Designated portions of the registrant's Annual Report to Shareholders
for the year ended December 31, 2005....................................Parts I and II
(2) Designated portions of the Proxy Statement relating
to registrant's 2006 Annual Meeting of Shareholders.....................Part III
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TABLE OF CONTENTS
Item Page
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Forward-Looking Statements................................................................ 1
Part I
1. Business.............................................................................. 1
Regulation........................................................................ 2
Competition....................................................................... 3
Properties........................................................................ 3
Nuclear Power Matters............................................................. 5
Purchased Power and Fuel Supply................................................... 5
Discontinued Operations........................................................... 6
Seasonality....................................................................... 6
Environmental Matters............................................................. 6
Finding Information About Geographic Area ........................................12
1A. Risk Factors..........................................................................12
1B. Unresolved Staff Comments.............................................................15
2. Properties............................................................................15
3. Legal Proceedings.....................................................................16
Navajo Nation Litigation..........................................................16
Department of the Army, Los Angeles District, Corps of Engineers/Notice of
Violation of Clean Water Act......................................................16
4. Submission of Matters to a Vote of Security Holders...................................16
Executive Officers of the Registrant......................................................17
Part II
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities........................................................19
6. Selected Financial Data...............................................................19
7. Management's Discussion and Analysis of Financial Condition and Results of Operations.19
7A. Quantitative and Qualitative Disclosures About Market Risk............................20
8. Financial Statements and Supplementary Data...........................................20
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..20
9A. Controls and Procedures...............................................................20
9B. Other Information.....................................................................20
Part III
10. Directors and Executive Officers of the Registrant....................................20
11. Executive Compensation................................................................21
12. Security Ownership of Certain Beneficial Owners and Management........................21
13. Certain Relationships and Related Transactions........................................21
14. Principal Accounting Fees and Services................................................21
15. Exhibits and Financial Statement Schedules............................................21
Financial Statements..............................................................21
Report of Independent Registered Public Accounting Firm and
Schedules Supplementing Financial Statements...................................22
Exhibits..........................................................................22
Signatures............................................................................27
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect
Southern California Edison Company's (SCE) current expectations and projections about future
events based on 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 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. See "Risk Factors" in Part I, Item 1A of this report and "Introduction" in the
MD&A for cautionary statements that accompany those forward-looking statements and identify
important factors that could cause results to differ. Readers should carefully review those
cautionary statements as they identify important factors that could cause results to differ,
or that otherwise could impact SCE or its subsidiaries.
Additional information about risks and uncertainties, including more detail about the
factors described in this report, is contained throughout this report, in the Management's
Discussion and Analysis of Financial Condition and Results of Operations (MD&A) that appears
in SCE's 2005 Annual Report to Shareholders (Annual Report), the relevant portions of which
are filed as Exhibit 13 to this report, and which is incorporated by reference into Part II,
Item 7 of this report, and in Notes to Consolidated Financial Statements (Notes to Financial
Statements). Readers are urged to read this entire report, including the information
incorporated by reference, and carefully consider the risks, uncertainties and other factors
that affect SCE's business. Forward-looking statements speak only as of the date they are
made and SCE is not obligated to publicly update or revise forward-looking statements.
Readers should review future reports filed by SCE with the Securities and Exchange
Commission (SEC).
PART I
ITEM 1. BUSINESS
SCE was incorporated in 1909 under the laws of the State of California. SCE is a public
utility primarily engaged in the business of supplying electric energy to a
50,000-square-mile area of central, coastal and southern California, excluding the City of
Los Angeles and certain other cities. This SCE service territory includes approximately 428
cities and communities and a population of more than 13 million people. In 2005, SCE's total
operating revenue was derived as follows: 39% commercial customers, 33% residential
customers, 9% resale sales, 7% industrial customers, 5% other electric revenue, 5% public
authorities, and 2% agricultural and other customers. At December 31, 2005, SCE had
consolidated assets of $24.7 billion and total shareholder's equity of $5.7 billion. SCE had
14,041 full-time employees at year-end 2005. Edison International owns all of the common
stock of SCE. Except when otherwise stated, references to SCE mean SCE together with its
subsidiaries on a consolidated basis.
Information about SCE is available on the internet website maintained by Edison
International at http://www.edisoninvestor.com. SCE makes available, free of charge on that
internet website, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably
practicable after SCE electronically files such material with, or furnishes it to, the SEC.
Such reports are also available on the SEC's internet website at http://www.sec.gov. The
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information contained in our website, or connected to that site, is not incorporated by
reference into this report.
Regulation
SCE's retail operations are subject to regulation by the California Public Utilities
Commission (CPUC). The CPUC has the authority to regulate, among other things, retail rates,
issuance of securities, and accounting practices. SCE's wholesale operations are subject to
regulation by the Federal Energy Regulatory Commission (FERC). The FERC has the authority to
regulate wholesale rates as well as other matters, including retail transmission service
pricing, accounting practices, and licensing of hydroelectric projects.
Additional information about the regulation of SCE by the CPUC and the FERC, and about SCE's
competitive environment, appears in the MD&A under the heading "Regulatory Matters." Also
see "--Competition."
SCE is subject to the jurisdiction of the United States Nuclear Regulatory Commission with
respect to its nuclear power plants. United States Nuclear Regulatory Commission regulations
govern the granting of licenses for the construction and operation of nuclear power plants
and subject those power plants to continuing review and regulation.
The construction, planning, and siting of SCE's power plants within California are subject
to the jurisdiction of the California Energy Commission and the CPUC. SCE is subject to the
rules and regulations of the California Air Resources Board, State of Nevada, and local air
pollution control districts with respect to the emission of pollutants into the atmosphere;
the regulatory requirements of the California State Water Resources Control Board and
regional boards with respect to the discharge of pollutants into waters of the state; and
the requirements of the California Department of Toxic Substances Control with respect to
handling and disposal of hazardous materials and wastes. SCE is also subject to regulation
by the United States Environmental Protection Agency (US EPA), which administers federal
statutes relating to environmental matters. Other federal, state, and local laws and
regulations relating to environmental protection, land use, and water rights also affect SCE.
The California Coastal Commission issued a coastal permit for the construction of the San
Onofre Nuclear Generating Station (San Onofre) Units 2 and 3 in 1974. This permit, as
amended, requires mitigation for impacts to fish and the San Onofre kelp bed. California
Coastal Commission jurisdiction will continue for several years due to ongoing
implementation and oversight of these permit mitigation conditions, consisting of
restoration of wetlands and construction of an artificial reef for kelp. SCE has a coastal
permit from the California Coastal Commission to construct a temporary dry cask spent fuel
storage installation for San Onofre Units 2 and 3. The California Coastal Commission also
has continuing jurisdiction over coastal permits issued for the decommissioning of San
Onofre Unit 1, including for the construction of a temporary dry cask spent fuel storage
installation for spent fuel from that unit.
The United States Department of Energy has regulatory authority over certain aspects of
SCE's operations and business relating to energy conservation, power plant fuel use and
disposal, electric sales for export, public utility regulatory policy, and natural gas
pricing.
SCE is subject to CPUC affiliate transaction rules and compliance plans governing the
relationship between SCE and its affiliates. On October 27, 2005, the CPUC issued an order
instituting rulemaking (OIR) to allow the CPUC to re-examine the relationships of the major
California energy utilities with their parent holding companies and non-regulated
affiliates. The OIR was issued in part in response to the repeal of PUHCA 1935. Additional
information about the OIR appears in the MD&A under the heading
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"Regulatory Matters--Current Regulatory Developments--Holding Company Order Instituting
Rulemaking."
In addition, the CPUC has issued affiliate transaction rules governing the relationships
between SCE and its affiliates, including Edison International and its nonutility
subsidiaries. SCE has filed compliance plans which set forth SCE's implementation of the
CPUC's affiliate transaction rules. The rules and compliance plans are intended to maintain
separateness between utility and nonutility activities and ensure that utility assets are
not used to subsidize the activities of nonutility affiliates.
Competition
Because SCE is an electric utility company operating within a defined service territory
pursuant to authority from the CPUC, SCE faces competition only to the extent that federal
and California laws permit other entities to provide electricity and related services to
customers within SCE's service territory. California law currently provides only limited
opportunities for customers to choose to purchase power directly from an energy service
provider other than SCE. SCE also faces some competition from cities that create municipal
utilities or community choice aggregators. In addition, customers may install their own
on-site power generation facilities. Competition with SCE is conducted mainly on the basis
of price as customers seek the lowest cost power available. The effect of competition on SCE
generally is to reduce the size of SCE's customer base, thereby creating upward pressure on
SCE's rate structure to cover fixed costs, which in turn may cause more customers to leave
SCE in order to obtain lower rates.
Properties
SCE supplies electricity to its customers through extensive transmission and distribution
networks. Its transmission facilities, which deliver power from generating sources to the
distribution network, consist of approximately 7,200 circuit miles of 33 kilovolt (kV),
55 kV, 66 kV, 115 kV, and 161 kV lines and 3,500 circuit miles of 220 kV lines (all located
in California), 1,238 circuit miles of 500 kV lines (1040 miles in California, 86 miles in
Nevada, and 112 miles in Arizona), and 851 substations. SCE's distribution system, which
takes power from substations to the customer, includes approximately 60,300 circuit miles of
overhead lines, 37,900 circuit miles of underground lines, 1.5 million poles, 569
distribution substations, 695,000 transformers, and 777,000 area and streetlights, all of
which are located in California.
SCE owns and operates the following generating facilities: (1) an undivided 75.05% interest
(1,614 megawatts (MW)) in San Onofre Units 2 and 3, which are large pressurized water
nuclear units located on the California coastline between Los Angeles and San Diego; (2) 36
hydroelectric plants (1,153 MW) located in California's Sierra Nevada, San Bernardino and
San Gabriel mountain ranges, three of which (2.7 MW) are no longer operational and will be
decommissioned; and (3) a diesel-fueled generating plant (9 MW) located on Santa Catalina
island off the southern California coast.
SCE also owns and operates an undivided 56% interest (885 MW net) in the Mohave Generating
Station (Mohave), which consists of two coal-fueled generating units located in Clark
County, Nevada near the California border. The plant ceased operating on December 31, 2005.
At this time, there is no definite return to service date. Additional information regarding
Mohave appears in the MD&A under the heading "Regulatory Matters--Mohave Generating Station
and Related Proceedings."
In addition, SCE acquired in 2004 Mountainview Power Company LLC, which consisted of a
natural gas-fueled two unit power plant in the early stages of construction in Redlands,
California. The first unit commenced commercial operations in December 2005, and the second
unit commenced commercial operations in January 2006. The Mountainview plant has a
generating capacity of 1,054 MW.
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SCE also owns an undivided 15.8% interest (601 MW) in Palo Verde Nuclear Generating Station
(Palo Verde), which is located near Phoenix, Arizona, and an undivided 48% interest (710 MW)
in Units 4 and 5 at Four Corners Generating Station (Four Corners), which is a coal-fueled
generating plant located near the City of Farmington, New Mexico. The Palo Verde and Four
Corners plants are operated by Arizona Public Service Company.
At year-end 2005, the SCE-owned generating capacity (summer effective rating) was divided
approximately as follows: 43% nuclear, 23% hydroelectric, 20% natural gas, 14% coal, and
less than 1% diesel. The capacity factors in 2005 for SCE's nuclear and coal-fired
generating units were: 98% for San Onofre; 76% for Mohave; 85% for Four Corners; and 77%
for Palo Verde. For SCE's hydroelectric plants, generating capacity is dependent on the
amount of available water. SCE's hydroelectric plants operated at a 49% capacity factor in
2005. These plants were operationally available for 91% of the year.
The San Onofre units, Four Corners station, certain of SCE's substations, and portions of
its transmission, distribution and communication systems are located on lands of the United
States or others under (with minor exceptions) licenses, permits, easements or leases, or on
public streets or highways pursuant to franchises. Certain of such documents obligate SCE,
under specified circumstances and at its expense, to relocate transmission, distribution,
and communication facilities located on lands owned or controlled by federal, state, or
local governments.
Thirty-one of SCE's 36 hydroelectric plants (some with related reservoirs) are located in
whole or in part on United States lands pursuant to 30- to 50-year FERC licenses that expire
at various times between 2006 and 2039 (the remaining five plants are located entirely on
private property and are not subject to FERC jurisdiction). Such licenses impose numerous
restrictions and obligations on SCE, including the right of the United States to acquire
projects upon payment of specified compensation. When existing licenses expire, the FERC has
the authority to issue new licenses to third parties that have filed competing license
applications, but only if their license application is superior to SCE's and then only upon
payment of specified compensation to SCE. New licenses issued to SCE are expected to contain
more restrictions and obligations than the expired licenses because laws enacted since the
existing licenses were issued require the FERC to give environmental purposes greater
consideration in the licensing process. SCE's applications for the relicensing of certain
hydroelectric projects with an aggregate dependable operating capacity of approximately 209
MW are pending. Annual licenses have been issued to SCE hydroelectric projects that are
undergoing relicensing and whose long-term licenses have expired. Federal Power Act
Section 15 requires that the annual licenses be renewed until the long-term licenses are
issued or denied.
Substantially all of SCE's properties are subject to the lien of a trust indenture securing
first and refunding mortgage bonds, of which approximately $5.4 billion in principal amount
was outstanding on December 31, 2005 (including the first mortgage bonds issued to secure a
$1.7 billion revolving credit facility). Such lien and SCE's title to its properties are
subject to the terms of franchises, licenses, easements, leases, permits, contracts, and
other instruments under which properties are held or operated, certain statutes and
governmental regulations, liens for taxes and assessments, and liens of the trustees under
the trust indenture. In addition, such lien and SCE's title to its properties are subject to
certain other liens, prior rights and other encumbrances, none of which, with minor or
insubstantial exceptions, affect SCE's right to use such properties in its business, unless
the matters with respect to SCE's interest in the Four Corners plant and the related
easement and lease referred to below may be so considered.
SCE's rights in the Four Corners station, which is located on land of the Navajo Nation of
Indians under an easement from the United States and a lease from the Navajo Nation, may be
subject to possible defects. These defects include possible conflicting grants or
encumbrances not ascertainable because of the absence of, or inadequacies in, the applicable
recording law and the record systems of the Bureau of
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Indian Affairs and the Navajo Nation, the possible inability of SCE to resort to legal
process to enforce its rights against the Navajo Nation without Congressional consent, the
possible impairment or termination under certain circumstances of the easement and lease by
the Navajo Nation, Congress, or the Secretary of the Interior, and the possible invalidity
of the trust indenture lien against SCE's interest in the easement, lease, and improvements
on the Four Corners station.
Nuclear Power Matters
Information about operating issues related to San Onofre appears in the MD&A under the
heading "Regulatory Matters--Current Regulatory Developments--San Onofre Nuclear Generating
Station Steam Generators." Information about Palo Verde steam generator replacements appears
in the MD&A under the heading "Regulatory Matters--Current Regulatory Developments--Palo Verde
Generating Station Steam Generators." Information about nuclear decommissioning can be found
in Note 8 of Notes to Financial Statements. Information about nuclear insurance can be found
in Note 9 of Notes to Financial Statements.
Purchased Power and Fuel Supply
SCE obtains the power needed to serve its customers from its generating facilities and from
purchases from qualifying facilities, independent power producers, the California
Independent System Operator, and other utilities. In addition, power is provided to SCE's
customers through purchases by the California Department of Water Resources (CDWR) under
contracts with third parties. Sources of power to serve SCE's customers during 2005 were as
follows: 33% purchased power; 23.5% CDWR; and 43.5% SCE-owned generation consisting of
14.3% nuclear, 22.7% coal, and 6.5% hydro. Additional information about SCE's power
procurement activities appears in the MD&A under the heading "Regulatory Matters."
Natural Gas Supply
SCE's natural gas requirements in 2005 were for start-up use at Mohave, to meet contractual
obligations for power tolling agreements (power contracts in which SCE has agreed to provide
the natural gas needed for generation under those power contracts) and to serve demand for
gas at SCE's new Mountainview gas-fired generation facility, which commenced operations in
December 2005. All of the physical gas purchased by SCE in 2005 was purchased under North
American Energy Standards Board agreements (master gas agreements) that define the terms and
conditions of transactions with a particular supplier prior to any financial commitment.
SCE contracted for firm access rights onto the Southern California Gas Company system at
Wheeler Ridge for 198,863 million British thermal units (MMBtu) per day in a 13-year
contract entered into in August 1993, effective November 1, 1993. SCE has the unilateral
right to renew this contract for an equivalent term upon the expiration of its initial term.
SCE has not yet made a determination as to whether this contract will be extended. SCE also
has firm transportation rights of 18,000 MMBtu per day on Southwest Gas Corp's pipeline to
serve Mohave.
In 2005, SCE secured a one-year natural gas storage capacity contract with Southern
California Gas Company for the 2005/2006 storage season. Storage capacity was secured to
provide operation flexibility and to mitigate potential costs associated with the dispatch
of SCE's tolling agreements. SCE has been in negotiations with Southern California Gas
Company for additional storage but has not yet entered into a similar arrangement.
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Nuclear Fuel Supply
For San Onofre Units 2 and 3, contractual arrangements are in place covering 100% of the
projected nuclear fuel requirements through the years indicated below:
Uranium concentrates............................................... 2008
Conversion..................................................... 2008
Enrichment..................................................... 2008
Fabrication.................................................... 2015
For Palo Verde, contractual arrangements are in place covering 100% of the projected nuclear
fuel requirements through the years indicated below:
Uranium concentrates............................................... 2008
Conversion..................................................... 2008
Enrichment..................................................... 2010
Fabrication.................................................... 2015
Spent Nuclear Fuel
Information about Spent Nuclear Fuel appears in Note 9 of Notes to Financial Statements.
Coal Supply
SCE has purchased coal pursuant to long-term contracts to provide stable and reliable fuel
supplies to its two coal-fired generating stations, the Four Corners and Mohave plants. SCE
entered into a coal contract, dated September 1, 1966, with the Utah Construction & Mining
Company, the predecessor to the current owner of the Navajo mine, the BHP Navajo Coal
Company, to supply coal to Four Corners Units 4 and 5. The initial term of this coal supply
contract for the Four Corners plant was through 2004 and included extension options for up
to 15 additional years. On January 1, 2005 SCE and the other Four Corners participants
entered into a Restated and Amended Four Corners Fuel Agreement under which coal will be
supplied until July 6, 2016. The Restated and Amended Agreement contains an option to extend
for not less than five additional years or more than 15 years. The coal supply contract for
the Mohave plant expired on December 31, 2005, and the plant has ceased operating while coal
and water issues are resolved. There is no definite return to service date. Additional
information about the litigation affecting the coal supply contract for the Mohave plant
appears in the MD&A under the heading "Other Developments--Navajo Nation Litigation."
Discontinued Operations
Information about SCE's discontinued operations appears in Note 11 of Notes to Financial
Statements.
Seasonality
Due to warmer weather during the summer months, electric utility revenue during the third
quarter of each year is generally significantly higher than other quarters.
Environmental Matters
SCE is subject to environmental regulation by federal, state and local authorities in the
jurisdictions in which it operates in the United States. This regulation, including the
areas of air and water pollution,
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waste management, hazardous chemical use, noise abatement, land use, aesthetics, and nuclear
control, continues to result in the imposition of numerous restrictions on SCE's operation
of existing facilities, on the timing, cost, location, design, construction, and operation
by SCE of new facilities, and on the cost of mitigating the effect of past operations on the
environment.
SCE believes that it is in substantial compliance with environmental regulatory requirements
and that maintaining compliance with current requirements will not materially affect its
financial position or results of operations. However, possible future developments, such as
the promulgation of more stringent environmental laws and regulations, future proceedings
that may be initiated by environmental authorities, and settlements agreed to by other
companies could affect the costs and the manner in which SCE conducts its business and could
cause it to make substantial additional capital or operational expenditures. There is no
assurance that SCE would be able to recover these increased costs from its customers or that
SCE's financial position and results of operations would not be materially adversely
affected. SCE is unable to predict the extent to which additional regulations may affect its
operations and capital expenditure requirements.
Typically, environmental laws and regulations require a lengthy and complex process for
obtaining licenses, permits and approvals prior to construction, operation or modification
of a project. Meeting all the necessary requirements can delay or sometimes prevent the
completion of a proposed project as well as require extensive modifications to existing
projects, which may involve significant capital or operational expenditures. Furthermore, if
SCE fails to comply with applicable environmental laws, it may be subject to injunctive
relief, penalties and fines imposed by regulatory authorities.
The laws and regulations discussed below primarily impact SCE's coal-fired, gas-fired and
nuclear generation facilities. The air quality and climate change discussions primarily
impact the coal-fired Mohave and Four Corners plants. Developments in the air quality and
climate change areas may also have an impact on SCE's gas-fired Mountainview plant. However,
the Mountainview plant was constructed with current pollution control technology so the
impact of new regulations would likely have less of an impact on Mountainview than Mohave
and Four Corners. The Mountainview plant is SCE's only gas-fired generation facility. The
water quality discussion primarily impacts San Onofre.
Air Quality
SCE's facilities are subject to various air quality regulations, including the Federal Clean
Air Act and similar state and local statutes.
Mohave Shutdown
In 1998, several environmental groups filed suit against the co-owners of the Mohave plant
regarding alleged violations of emissions limits. In order to resolve the lawsuit and
accelerate resolution of key environmental issues regarding the plant, the parties entered
into a consent decree, which was approved by the Nevada federal district court in December
1999. The consent decree required the installation of certain air pollution control
equipment prior to December 31, 2005 if the plant was to operate beyond that date. In
addition, operation beyond 2005 required that agreements be reached with the Navajo Nation
and the Hopi Tribe (Tribes) regarding post-2005 water and coal supply needs.
SCE's share of the costs of complying with the consent decree and taking other actions to
allow operation of the Mohave plant beyond 2005 is estimated to be approximately
$605 million. Agreement with the Tribes on water and coal supplies for Mohave was not reached
by December 31, 2005, and it is not currently known whether such an agreement will be
reached. No agreement was reached to amend the terms of the federal court consent decree. As
a result, Mohave ceased operation on December 31, 2005.
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For the Mohave plant to restart operation, it will be necessary for agreements to be reached
with the Tribes on the water and coal supply issues, and for the terms of the consent decree
to be met or modified.
Until there is a final resolution as to whether the Mohave plant will begin operating again,
and what regulations will be in effect at that time, SCE cannot evaluate the potential
impact of the air quality regulations discussed below on the operations of its facilities.
Additional capital costs related to those regulations could be required in the future and
they could be material, depending upon the final standards adopted.
Regional Haze
In the event that the Mohave plant does restart operations, its operations may be subject to
the US EPA's final rulemaking on regional haze, issued on June 15, 2005. Under the rule, by
December 17, 2007, each state must file with the US EPA as part of its State Implementation
Plan (SIP) plans for regional haze improvement. It is not known whether Nevada's regional
haze SIP for Mohave will impose any additional emissions control requirements on the Mohave
plant beyond meeting the provisions of the 1999 consent decree.
Mercury
In the event of a Mohave restart, its operations may be subject to the US EPA's Clean Air
Mercury Rule (CAMR), which was issued on March 15, 2005. CAMR creates a market-based
cap-and-trade program to reduce mercury emissions from existing coal-fired power plants down
to a national cap of 38 tons by 2010 and to 15 tons by 2018. States may join the trading
program by adopting the CAMR model trading rules in state regulations, or they may adopt
regulations that mirror the necessary components of the model trading rule. States are not
required to adopt a cap-and-trade program and may promulgate alternative regulations, such
as command and control regulations, that are equivalent to or more stringent than the CAMR's
suggested cap-and-trade program. The CAMR allocates mercury emission credits to each plant,
including Mohave, based on a model rule that states, including Nevada, may adopt.
Contemporaneous with the adoption of the CAMR, the US EPA rescinded its previous finding
that mercury emissions from coal-fired power plants had to be regulated as a hazardous air
pollutant pursuant to Section 112 of the federal Clean Air Act, which would have imposed
technology-based standards. Litigation has been filed challenging the rescission action,
alleging that the US EPA erred in adopting a market-based program rather than
technology-based emissions limitations. Litigation has also been filed to challenge the
CAMR. Depending on the results of these challenges, the CAMR rules and timetables may
change.
If Nevada adopts the US EPA's model allocations rule, SCE expects that Mohave would have
sufficient mercury credits to meet operational needs until 2018, at which time estimated
mercury credit allocations are approximately 50% lower than required for operations. States
are required to adopt a mercury reduction method and submit their mercury SIP to the US EPA
by November 2006. While Nevada has begun its scoping meetings for this rulemaking, it is not
yet known what approach Nevada will take on its mercury regulation.
For SCE, these regulations will primarily impact its possible future operation of the Mohave
plant. Additional information regarding the shutdown of Mohave appears in the MD&A under the
heading "Regulatory Matters--Current Regulatory Developments--Mohave Generating Station and
Related Proceedings."
Page 8
National Ambient Air Quality Standards
The ambient air quality standards for ozone and fine particulate matter adopted by the US
EPA in July 1997 are another regulatory standard to which Mohave may be subject if it
resumes operations. The US EPA designated non-attainment areas for the 8-hour ozone standard
on April 30, 2004, and for the fine particulate standard on January 5, 2005. States are
required to revise their implementation plans for the ozone and particulate matter standards
within three years of the effective date of the respective non-attainment designations - by
June 2007 for the 8-hour ozone SIP, and by April 2008 for the fine particulate SIP.
Clark County, Nevada, where the Mohave plant is located, has been designated a nonattainment
area for the new 8-hour ozone national ambient air quality standard. Clark County is
currently in the process of developing its SIP to demonstrate attainment of the 8-hour ozone
standard. Depending on the control measures adopted for Clark County's 8-hour ozone SIP,
Mohave may be required to reduce nitrogen oxide (NOx) emissions (NOx emissions are a
precursor to ambient levels of ozone) below the levels resulting from the low NOx burner
control technology required under the 1999 Mohave consent decree. Until information is
available regarding Clark County's SIP, SCE cannot fully evaluate the potential impact on
Mohave if it resumes operations. Additional capital costs related to those regulations could
be required in the future and they could be material, depending upon the final standards
adopted.
Clean Air Act Interstate Rule
At this time, the US EPA's Clean Air Act Interstate Rule (CAIR), does not have an impact on
SCE's facilities. CAIR, issued by the US EPA on March 10, 2005, applies to 28 eastern states
and the District of Columbia, and is intended to address ozone attainment issues by reducing
regional sulfur dioxide and NOx emissions. The CAIR has been challenged in court by state,
environmental, and industry groups, which may result in changes to the substance of the rule
and to the timetables for implementation. While the US EPA has not adopted a rule comparable
to CAIR for the western United States, where SCE has facilities, SCE cannot predict what
action the US EPA will take in the future with regard to the western United States, and what
impact those actions would have on its facilities.
New Source Review Requirements
Since 1999, the US EPA has pursued a coordinated compliance and enforcement strategy to
address Clean Air Act New Source Review (NSR) compliance issues at the nation's coal-fired
power plants. The NSR regulations impose certain requirements on facilities, such as
electric generating stations, in the event that modifications are made to air emissions
sources at the facility. The US EPA's strategy included both the filing of a number of suits
against power plant owners, and issuance of a number of administrative notices of violation
to power plant owners alleging NSR violations. SCE and its subsidiaries have not been named
as a defendant in these lawsuits and have not received any administrative notices of
violation alleging NSR violations at any facilities.
In October 2005, the US EPA announced a revised NSR strategy to take account of recent US
EPA rulemakings, such as the CAIR and regional haze rules, affecting coal-fired power
plants. Under the revised strategy, while the US EPA will continue to pursue filed cases and
cases in active negotiation, it intends to shift its future enforcement focus from
coal-fired power plants to other sectors where compliance assurance activities have the
potential to produce significant environmental benefits.
Developments will continue to be monitored by SCE, to assess what implications, if any, they
will have on the operation of power plants owned or operated by SCE, or on SCE's results of
operations or financial position.
Page 9
Climate Change
The Kyoto Protocol on climate change officially came into effect on February 16, 2005. Under
the Kyoto Protocol, the United States would have been required, by 2008-2012, to reduce its
greenhouse gas emissions, such as carbon dioxide, by 7% from 1990 levels. Under the Bush
administration, however, the United States has chosen not to pursue ratification of the
Kyoto Protocol. Instead, the Bush administration has proposed several alternatives to
mandatory reductions of greenhouse gases.
There have been several petitions from states and other parties to compel the US EPA to
regulate greenhouse gases under the Clean Air Act. Also, in 2004 several states and
environmental organizations brought a complaint in federal court in New York, alleging that
several electric utility corporations are jointly and severally liable under a theory of
public nuisance for damages caused by their alleged contribution to global warming resulting
from carbon dioxide emissions from coal-fired power plants owned and operated by these
companies or their subsidiaries. SCE was not named as a defendant in the complaint. The case
was dismissed and is currently on appeal with the United States Court of Appeals for the
Second Circuit.
In California, Governor Schwarzenegger issued an executive order on June 1, 2005 setting
forth targets for greenhouse gas reductions. The targets call for a reduction of greenhouse
gas emissions to 2000 levels by 2010; a reduction of greenhouse gas emissions to 1990 levels
by 2020; and a reduction of greenhouse gas emissions to 80% below 1990 levels by 2050.
The CPUC is addressing climate change related issues in various regulatory proceedings. In a
decision pertaining to SCE's 2004 long-term procurement plan the CPUC is requiring a "carbon
adder" of $8-$25/ton of carbon dioxide to be used in the evaluation of fossil fuel
generation bids for contracts of five years or longer. On October 6, 2005, the CPUC adopted
a resolution directing the CPUC staff and general counsel to investigate adoption by the
CPUC of a greenhouse gas emissions performance standard for investor-owned utilities
procurement. On February 16, 2006, the CPUC issued a decision in the Procurement Incentive
Framework proceeding, in which the CPUC states its intent to develop a load-based greenhouse
gas emissions cap for SCE, and other load serving entities the CPUC asserts to be within its
jurisdiction.
SCE will continue to monitor these developments relating to greenhouse gas emissions to
determine their impacts on SCE's operations. Any legal obligation that would require SCE to
reduce substantially its emissions of carbon dioxide could require extensive mitigation
efforts at its Mohave plant if it resumes operations, and could raise considerable
uncertainty about the future viability of fossil fuels, particularly coal, as an energy
source for new and existing electric generating facilities. New regulations could also
increase the cost of purchased power, which is generally borne by SCE's customers.
Additional information regarding purchased power costs appears in the MD&A under the heading
"Regulatory Matters."
Hazardous Substances and Hazardous Waste Laws
Under various federal, state and local environmental laws and regulations, a current or
previous owner or operator of any facility, including an electric generating facility, may
be required to investigate and remediate releases or threatened releases of hazardous or
toxic substances or petroleum products located at that facility, and may be held liable to a
governmental entity or to third parties for property damage, personal injury, natural
resource damages, and investigation and remediation costs incurred by these parties in
connection with these releases or threatened releases. Many of these laws, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), and
the Resource Conservation and Recovery Act (RCRA), impose liability without regard to
whether the owner
Page 10
knew of or caused the presence of the hazardous substances, and courts have interpreted
liability under these laws to be strict and joint and several.
In addition, the federal Toxic Substances Control Act (TSCA) and accompanying regulations
govern the manufacturing, processing, distribution in commerce, use, and disposal of listed
compounds, including polychlorinated biphenyls (PCBs), a toxic substance. Federal, state,
and local laws, regulations and ordinances also govern the removal, encapsulation or
disturbance of asbestos-containing materials when these materials are in poor condition or
in the event of construction, remodeling, renovation or demolition of a building and other
structures containing asbestos.
In connection with the ownership and operation of its facilities, SCE may be liable for
costs associated with hazardous waste compliance and remediation required by the laws and
regulations identified herein. The CPUC allows SCE to recover in retail rates paid by its
customers partial environmental remediation costs at certain sites through an incentive
mechanism. Additional information about these laws and regulations appears in Note 9 of
Notes to Financial Statements and in the MD&A under the heading "Other
Developments--Environmental Matters."
Water Quality
Regulations under the federal Clean Water Act require permits for the discharge of
pollutants into United States waters and permits for the discharge of storm water flows from
certain facilities. The Clean Water Act also regulates the thermal component (heat) of
effluent discharges and the location, design, and construction of cooling water intake
structures at generating facilities. California has a US EPA approved program to issue
individual or group (general) permits for the regulation of Clean Water Act discharges.
California also regulates certain discharges not regulated by the US EPA. SCE incurs
additional expenses and capital expenditures in order to comply with guidelines and
standards applicable to certain of its facilities.
Cooling Water Intake Structures
On July 9, 2004, the US EPA published the final Phase II regulations implementing Section
316(b) of the Clean Water Act. The rulemaking establishes standards for cooling water intake
structures at existing electrical generating stations that withdraw more than 50 million
gallons of water per day and use more than 25% of that water for cooling purposes. The
purpose of the regulations is to substantially reduce the number of aquatic organisms that
are impinged against cooling water intake structures or drawn into cooling water systems.
While SCE believes that this rule, as drafted, would not have a material impact on SCE's
operations at San Onofre, certain aspects of the rule that are being contested in the
courts, such as the right to offset impacts through restoration, are important to SCE's
expectation that compliance with the new rules will not require any physical or operational
modifications at San Onofre. Until the challenges to the rulemaking have concluded, SCE
cannot determine the full financial impact of this rule.
Electric and Magnetic Fields
Electric and magnetic fields naturally result from the generation, transmission,
distribution and use of electricity. Since the 1970s, concerns have been raised about the
potential health effects of electric and magnetic fields (EMF). After 30 years of research,
a health hazard has not been established to exist. Potentially important public health
questions remain about whether there is a link between EMF exposures in homes or work and
some diseases, and because of these questions, some health authorities have identified EMF
exposures as a possible human carcinogen.
Page 11
In October 2002, the California Department of Health Services released to the CPUC and the
public its report evaluating the possible risks from EMF. The conclusions in the report of
the California Department of Health Services contrast with other recent reports by
authoritative health agencies in that the California Department of Health Services has
assigned a substantially higher probability to the possibility that there is a causal
connection between EMF exposures and a number of diseases and conditions, including
childhood leukemia, adult leukemia, amyotrophic lateral sclerosis, and miscarriages.
On August 19, 2004, the CPUC issued an order instituting rulemaking to update the CPUC's
policies and procedures related to EMF emanating from regulated utility facilities.
Following submission of comments and information by all interested parties to the CPUC in
2004 and 2005, the administrative law judge issued a draft decision in December 2005, and
the CPUC issued its final decision on January 26, 2006. The decision concluded that a direct
link between exposure to EMF and human health effects has yet to be proven, and affirms the
CPUC's existing "low-cost/no-cost" EMF policies to mitigate EMF exposure for new utility
transmission and substation projects.
Financial Information About Geographic Areas
All of SCE's revenues for the last three fiscal years are attributed to SCE's country of
domicile, the United States. All of SCE's assets are located in the United States.
ITEM 1A. RISK FACTORS
SCE's financial viability depends upon its ability to recover its costs in a timely manner
from its customers through regulated rates.
SCE is a regulated entity subject to CPUC jurisdiction in almost all aspects of its
business, including the rates, terms and conditions of its services, procurement of
electricity for its customers, issuance of securities, dispositions of utility assets and
facilities and aspects of the siting and operations of its electricity distribution systems.
SCE's ongoing financial viability depends on its ability to recover from its customers in a
timely manner its costs, including the costs of electricity purchased for its customers, in
its CPUC-approved rates and its ability to pass through to its customers in rates its
FERC-authorized revenue requirements. SCE's financial viability also depends on its ability
to recover in rates an adequate return on capital, including long-term debt and equity. If
SCE is unable to recover any material amount of its costs in rates in a timely manner or
recover an adequate return on capital, its financial condition and results of operations
could be materially adversely affected.
SCE's revenues and earnings are substantially affected by regulatory proceedings known as
general rate cases and cost of capital proceedings. General rate cases are expected to occur
every three years. During those cases, the CPUC determines SCE's rate base (the value of
assets on which SCE earns a rate of return for investors), depreciation rates, operation and
maintenance costs, and administrative and general costs that SCE may recover from its
customers through its rates. Cost of capital proceedings are conducted annually. During
those cases, the CPUC authorizes SCE's capital structure and the return on common equity
applicable to the rate base determined in the general rate case proceedings. More
information about these proceedings is set forth in the MD&A under the heading "Regulatory
Matters."
SCE's energy procurement activities are subject to regulatory and market risks that could
adversely affect its financial condition, liquidity, and earnings.
SCE obtains energy, capacity, and ancillary services needed to serve its customers from its
own generating plants and contracts with energy producers and sellers. California law and
CPUC decisions
Page 12
allow SCE to recover in customer rates reasonable procurement costs incurred in compliance
with an approved procurement plan. Nonetheless, SCE's cash flows remain subject to
volatility resulting from its procurement activities. In addition, SCE is subject to the
risks of unfavorable or untimely CPUC decisions about the compliance of procurement
activities with its procurement plan and the reasonableness of certain procurement-related
costs.
Many of SCE's power purchase contracts are tied to market prices for natural gas. Some of
its contracts also are subject to volatility in market prices for electricity. SCE seeks to
hedge its market price exposure to the extent authorized by the CPUC. SCE may not be able to
hedge its risk for commodities on favorable terms or fully recover the costs of hedges in
rates, which could adversely affect SCE's liquidity and results of operation.
In its power purchase contracts and other procurement arrangements, SCE is exposed to risks
from changes in the credit quality of its counterparties. If a counterparty were to default
on its obligations, SCE could be exposed to potentially volatile spot markets for buying
replacement power or selling excess power.
SCE relies on access to the capital markets. If SCE were unable to access capital markets or
the cost of capital were to substantially increase, its liquidity and operations could be
adversely affected.
SCE's ability to make scheduled payments of principal and interest, refinance debt, and fund
its operations and planned capital expenditure projects depends on its cash flow and access
to the capital markets. SCE's ability to arrange financing and the costs of such capital are
dependent on numerous factors, including its levels of indebtedness, maintenance of
acceptable credit ratings, its financial performance, liquidity and cash flow, and other
market conditions. Market conditions which could adversely affect SCE's financing costs and
availability include:
o an economic downturn;
o capital market conditions generally;
o market prices for electricity or gas;
o changes in interest rates and rates of inflation;
o terrorist attacks or the threat of terrorist attacks on SCE's facilities or unrelated
energy companies; and
o the overall health of the utility industry.
SCE may not be successful in obtaining additional capital for these or other reasons. The
failure to obtain additional capital from time to time may have a material adverse effect on
SCE's liquidity and operations.
SCE is subject to numerous environmental laws and regulations with respect to operation of
its facilities. New laws and regulations could adversely affect SCE.
The operation of SCE's power generation, transmission, and distribution facilities is
subject to numerous environmental laws and regulations. Those laws and regulations require
SCE to expend substantial sums to mitigate or remove the effect of its operations on the
environment and can impede the development of new facilities. Violations of environmental
laws and regulations can result in fines, penalties and liability to third parties. In
addition, new environmental laws, regulations and standards may be adopted that would impose
substantial costs on SCE or impair its future operations. Environmental advocacy groups and
regulatory agencies have been focusing considerable attention on carbon dioxide emissions
and the effect of those emissions on global warming. The adoption of new laws and
regulations to control carbon
Page 13
dioxide or other emissions could adversely affect the operation of SCE's generating plants
and other facilities and result in additional costs that could adversely affect SCE's
results of operations.
SCE is subject to extensive regulation and the risk of adverse regulatory decisions and
changes in applicable regulations or legislation.
SCE operates in a highly regulated environment. SCE's business is subject to extensive
federal, state and local energy, environmental and other laws and regulations. The CPUC
regulates SCE's retail operations, and the FERC regulates SCE's wholesale operations. The
United States Nuclear Regulatory Commission regulates SCE's nuclear power plants. The
construction, planning, and siting of SCE's power plants in California are also subject to
the jurisdiction of the California Energy Commission and the CPUC. Additional regulatory
authorities with jurisdiction over some of SCE's operations include the California Air
Resources Board, the California State Water Resources Control Board, the California
Department of Toxic Substances Control, the California Coastal Commission, the United States
Environmental Protection Agency, the United States Department of Energy, the Nuclear
Regulatory Commission, and various local regulatory districts.
SCE must periodically apply for licenses and permits from these various regulatory
authorities and abide by their respective orders. Should SCE be unsuccessful in obtaining
necessary licenses or permits or should these regulatory authorities initiate any
investigations or enforcement actions or impose penalties or disallowances on SCE, SCE's
business could be adversely affected. Existing regulations may be revised or reinterpreted
and new laws and regulations may be adopted or become applicable to SCE or SCE's facilities
in a manner that may have a detrimental effect on SCE's business or result in significant
additional costs because of SCE's need to comply with those requirements.
There are inherent risks associated with operating nuclear power generating facilities.
Spent fuel storage capacity could be insufficient to permit long-term operation of SCE's
nuclear plants.
SCE operates and is majority owner of the San Onofre Nuclear Generating Station and is part
owner of the Palo Verde Nuclear Generating Station. The United States Department of Energy
has defaulted on its obligation to begin accepting spent nuclear fuel from commercial
nuclear industry participants by January 31, 1998. If SCE or the operator of the Palo Verde
plant were unable to arrange and maintain sufficient capacity for interim spent-fuel storage
now or in the future, it could hinder operation of the plants and impair the value of SCE's
ownership interests until storage could be obtained, each of which may have a material
adverse effect on SCE.
Existing insurance and ratemaking arrangements may not protect SCE fully against losses from
a nuclear incident.
Federal law limits public liability from a nuclear incident to $10.8 billion. SCE and other
owners of the San Onofre and Palo Verde nuclear generating stations have purchased the
maximum private primary insurance available of $300 million per site. If the public
liability limit is insufficient, federal regulations may impose further revenue-raising
measures to pay claims, including a possible additional assessment on all licensed reactor
operators. In the event of such an under-insured nuclear incident, a tension could exist
between the federal government's attempt to impose revenue-raising measures upon SCE and the
CPUC's willingness to allow SCE to pass this liability along to its customers, resulting in
undercollection of SCE's costs.
Page 14
SCE's financial condition and results of operations could be materially adversely affected
if it is unable to successfully manage the risks inherent in operating its facilities.
SCE owns and operates extensive electricity facilities that are interconnected to the United
States western electricity grid. The operation of SCE's facilities and the facilities of
third parties on which it relies involves numerous risks, including:
o operating limitations that may be imposed by environmental or other regulatory
requirements;
o imposition of operational performance standards by agencies with regulatory oversight
of SCE's facilities;
o environmental and personal injury liabilities caused by the operation of SCE's
facilities;
o interruptions in fuel supply;
o blackouts;
o employee work force factors, including strikes, work stoppages or labor disputes;
o weather, storms, earthquakes, fires, floods or other natural disasters;
o acts of terrorism; and
o explosions, accidents, mechanical breakdowns and other events that affect demand,
result in power outages, reduce generating output or cause damage to SCE's assets or
operations or those of third parties on which it relies.
The occurrence of any of these events could result in lower revenues or increased expenses,
or both, which may not be fully recovered through insurance, rates or other means in a
timely manner or at all.
SCE's insurance coverage may not be sufficient under all circumstances and SCE may not be
able to obtain sufficient insurance.
SCE's insurance may not be sufficient or effective under all circumstances and against all
hazards or liabilities to which it may be subject. A loss for which SCE is not fully insured
could materially and adversely affect SCE's financial condition and results of operations.
Further, due to rising insurance costs and changes in the insurance markets, insurance
coverage may not continue to be available at all or at rates or on terms similar to those
presently available to SCE.
SCE is subject to costs and other effects of legal proceedings as well as changes in or
additions to applicable tax laws, rates or policies, rates of inflation, and accounting
standards.
SCE is subject to costs and other effects of legal and administrative proceedings,
settlements, investigations and claims, as well as the effect of new, or changes in, tax
laws, rates or policies, rates of inflation and accounting standards.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The principal properties of SCE are described above in Part I under the heading "Properties."
Page 15
ITEM 3. LEGAL PROCEEDINGS
Navajo Nation Litigation
Information about the Navajo Nation litigation appears in the MD&A under the heading "Other
Developments--Navajo Nation Litigation."
Department of the Army, Los Angeles District, Corps of Engineers/Notice of Violation of
Clean Water Act
In December 2004, the United States Army Corps of Engineers (Corps) sent SCE a Notice of
Violation (Notice), alleging that SCE or its contractors had discharged fill material into
wetlands adjacent to the Santa Ana River (River), in the City of Huntington Beach, CA
(City). Under Sections 301 and 404 of the Clean Water Act, the discharge of fill material
into waters of the United States is unlawful unless first permitted by the Corps pursuant to
Section 404 of the Clean Water Act.
The Notice provided a general description of the area in question but did not specify the
location of the violation. Following discussions and correspondence with the Corps, it was
determined that the Corps was concerned about the actions of a licensee of SCE on an
SCE-owned transmission right-of-way corridor located adjacent to the River. SCE's licensee,
or its predecessor-in-interest, had obtained from the City a Conditional Use Permit (CUP) to
locate landscape nursery operations within the right-of-way corridor. The CUP required the
licensee to perform certain drainage and grading improvements to the property before
locating nursery operations on site. During the course of the grading work, the licensee
brought additional soil onto SCE's property for use as fill material.
Potential penalties for violation of Section 404 of the Clean Water Act include a maximum
criminal fine of $50,000 per day and imprisonment for up to three years, and a maximum civil
penalty of $25,000 per day of violation. To date, however, the Corps has not proposed to
impose any specific fine or penalty on SCE with respect to the subject matter of the Notice.
In the process of investigating the matter, the Corps requested that SCE perform a wetlands
delineation study of the property to determine whether the property in question qualifies as
a wetland area subject to Corps jurisdiction. SCE has hired a consulting group to perform
the wetlands delineation study, which indicates that there are no federally regulated
wetlands or waters of the United States associated with the study area. SCE delivered the
study to the Corps in January 2006. The Corps is in the process of evaluating the wetlands
delineation study.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of shareholders of Edison International during the
fourth quarter of 2005.
----------------------
Page 16
Pursuant to Form 10-K's General Instruction (General Instruction) G(3), the following
information is included as an additional item in Part I:
Executive Officers of the Registrant
-------------------------- ------------------- ----------------------------------------------
Age at
Executive Officer(1) December 31, 2005 Company Position
-------------------------- ------------------- ----------------------------------------------
John E. Bryson 62 Chairman of the Board
-------------------------- ------------------- ----------------------------------------------
Alan J. Fohrer 55 Chief Executive Officer and Director
-------------------------- ------------------- ----------------------------------------------
John R. Fielder 60 President
-------------------------- ------------------- ----------------------------------------------
Ronald L. Litzinger 46 Senior Vice President, Transmission and
Distribution
-------------------------- ------------------- ----------------------------------------------
Thomas M. Noonan 54 Senior Vice President and Chief Financial
Officer
-------------------------- ------------------- ----------------------------------------------
Stephen E. Pickett 55 Senior Vice President and General Counsel
-------------------------- ------------------- ----------------------------------------------
Pedro J. Pizarro 40 Senior Vice President, Power Procurement
-------------------------- ------------------- ----------------------------------------------
Richard M. Rosenblum 55 Senior Vice President, Generation
-------------------------- ------------------- ----------------------------------------------
Mahvash Yazdi 54 Senior Vice President, Business Integration,
and Chief Information Officer
-------------------------- ------------------- ----------------------------------------------
Lynda L. Ziegler 53 Senior Vice President, Customer Service
-------------------------- ------------------- ----------------------------------------------
Frederick J. Grigsby, Jr. 58 Vice President, Human Resources and Labor
Relations
-------------------------- ------------------- ----------------------------------------------
Linda G. Sullivan 42 Vice President and Controller
-------------------------- ------------------- ----------------------------------------------
_________________
(1) The term "Executive Officers" is defined by Rule 3b-7 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
Page 17
None of SCE's executive officers is related to each other by blood or marriage. As set forth
in Article IV of SCE's Bylaws, the elected officers of SCE are chosen annually by and serve
at the pleasure of SCE's Board of Directors and hold their respective offices until their
resignation, removal, other disqualification from service, or until their respective
successors are elected. All of the above officers have been actively engaged in the business
of SCE, Edison International and/or the nonutility company affiliates of SCE for more than
five years. Those officers who have not held their present position with SCE for the past
five years had the following business experience during that period:
--------------------- ------------------------------------------------ ----------------------------
Executive Officer Company Position Effective Dates
--------------------- ------------------------------------------------ ----------------------------
John E. Bryson Chairman of the Board, SCE January 2003 to present
Chairman of the Board, President, and Chief January 2000 to present
Executive Officer, Edison International
Chairman of the Board, Edison Capital(1) January 2000 to present
Chairman of the Board, EME(2) January 2000 to December
2002
--------------------- ------------------------------------------------ ----------------------------
Alan J. Fohrer Chief Executive Officer and Director, SCE January 2003 to present
Chairman of the Board and Chief Executive January 2002 to December
Officer, SCE 2002
President and Chief Executive Officer, EME(2) January 2000 to December
2001
--------------------- ------------------------------------------------ ----------------------------
John R. Fielder President, SCE October 2005 to present
Senior Vice President, Regulatory Policy and February 1998 to October
Affairs, SCE 2005
--------------------- ------------------------------------------------ ----------------------------
Ronald L. Litzinger Senior Vice President, Transmission and May 2005 to present
Distribution, SCE
Vice President, Strategic Planning, EIX May 2004 to April 2005
Senior. Vice President and Chief Technical January 2002 to April 2004
Officer, EME
Senior Vice President, Worldwide Operations, June 1999 to December 2001
EME
--------------------- ------------------------------------------------ ----------------------------
Thomas M. Noonan Senior Vice President and Chief Financial June 2005 to present
Officer, SCE
Vice President and Controller, Edison March 1999 to May 2005
International and SCE
--------------------- ------------------------------------------------ ----------------------------
Stephen E. Pickett Senior Vice President and General Counsel, SCE January 2002 to present
Vice President and General Counsel, SCE January 2000 to December
2001
--------------------- ------------------------------------------------ ----------------------------
Pedro J. Pizarro Senior Vice President, Power Procurement, SCE May 2005 to present
Vice President, Power Procurement, SCE January 2004 to April 2005
Vice President, Strategy and Business July 2001 to December 2003
Development, SCE
Vice President, Technology Business September 2000 to June 2001
Development, Edison International
--------------------- ------------------------------------------------ ----------------------------
Richard M. Rosenblum Senior Vice President, Generation, and Chief November 2005 to present
Nuclear Officer, SCE
Senior Vice President, Generation, SCE September 2005 to November 2005
Senior Vice President, Transmission & February 1998 to September
Distribution 2005
--------------------- ------------------------------------------------ ----------------------------
Mahvash Yazdi Senior Vice President, Business Integration, September 2003 to present
and Chief Information Officer, Edison
International and SCE
Senior Vice President and Chief Information January 2000 to September
Officer, SCE and Edison International 2003
--------------------- ------------------------------------------------ ----------------------------
Page 18
--------------------- ------------------------------------------------ ----------------------------
Lynda L. Ziegler Senior Vice President, Customer Service, SCE March 2006 to present
Vice President, Customer Programs and Services May 2005 to February 2006
Division, SCE
Director, Customer Programs and Services January 1999 to April 2005
Division, SCE
--------------------- ------------------------------------------------ ----------------------------
Frederick J. Vice President, Human Resources, Edison January 2004 to present
Grigsby, Jr. International and SCE
Vice President, Human Resources and Labor July 2001 to December 2003
Relations, SCE
--------------------- ------------------------------------------------ ----------------------------
Linda G. Sullivan Vice President and Controller, Edison June 2005 to present
International and SCE
Assistant Controller, Edison International May 2002 to May 2005
Assistant Controller, SCE March 2005 to May 2005
Manager, Controllers Department, Edison September 1999 to April
International 2002
Controller, Edison Select(3) September 1999 to August
2001
--------------------- ------------------------------------------------ ----------------------------
____________________
(1) Edison Capital is a subsidiary of Edison International and has investments worldwide in
energy and infrastructure projects and affordable housing projects located throughout the
United States.
(2) EME is a subsidiary of Edison International and is an independent power producer engaged
in the business of owning or leasing, operating and selling energy and capacity from
electric power generation facilities.
(3) Edison Select was a nonutility subsidiary of Edison International that was engaged in
the business of offering retail products and services. Edison Select was sold in August
2001.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Certain information responding to Item 5 with respect to frequency and amount of cash
dividends is included in SCE's Annual Report to Shareholders for the year ended December 31,
2005 (Annual Report), under Quarterly Financial Data on page 80 and is incorporated herein
by this reference. As a result of the formation of a holding company described above in
Item 1, all of the issued and outstanding common stock of SCE is owned by Edison
International and there is no market for such stock.
Item 201(d) of Regulation S-K, "Securities Authorized For Issuance Under Equity Compensation
Plans," is not applicable because SCE has no compensation plans under which equity
securities of SCE are authorized for issuance.
ITEM 6. SELECTED FINANCIAL DATA
Information responding to Item 6 is included in the Annual Report under "Selected Financial
and Operating Data: 2001-2005" on page 81, and is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Information responding to Item 7 is included in the Annual Report on pages 1 through 34 and
is incorporated herein by this reference.
Page 19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responding to Item 7A is included in the MD&A under "Market Risk Exposures" on
pages 19 through 21.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Certain information responding to Item 8 is set forth after Item 15 in Part III. Other
information responding to Item 8 is included in the Annual Report on pages 37 through 41 and
is incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
SCE's management, under the supervision and with the participation of the company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness of 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 (the Exchange Act)) as of the end of
the period covered by this report. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of the period, SCE's disclosure
controls and procedures are effective.
Change in Internal Control Over Financial Reporting
There were no changes in SCE's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter
ended December 31, 2005 that have materially affected, or are reasonably likely to
materially affect, SCE's internal control over financial reporting.
For the reasons discussed in Note 1 of the Notes to Consolidated Financial Statements, SCE
has not designed, established, or maintained internal control over financial reporting for
four variable interest entities, referred to as "VIEs," that SCE was required to consolidate
under an accounting interpretation issued by the Financial Accounting Standards Board. SCE's
evaluation of internal control over financial reporting did not include these VIEs.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning executive officers of SCE is set forth in Part I in accordance with
General Instruction G(3), pursuant to Instruction 3 to Item 401(b) of Regulation S-K. Other
information responding to Item 10 will appear in SCE's definitive Proxy Statement (Proxy
Statement) to be filed with the SEC in connection with SCE's Annual Shareholders' Meeting to
be held on April 27, 2006, under the headings "Election of Directors, Nominees for Election"
and "Ethics and Compliance Code," and
Page 20
is incorporated herein by this reference. The SCE Board of Directors has determined that
Thomas C. Sutton, the Chair of the Board Audit Committee, is a financial expert under SEC
Guidelines and is independent under the New York Stock Exchange listing standards.
ITEM 11. EXECUTIVE COMPENSATION
Information responding to Item 11 will appear in the Proxy Statement under the headings
"Director Compensation," "Executive Compensation:--Summary Compensation Table, Option/SAR
Grants in 2005, Aggregated Option/SAR Exercises in 2005 and FY-End Option/SAR Values,
Long-Term Incentive Plan Awards in Last Fiscal Year, Pension Plan Table, Other Retirement
Benefits, and Employment Contracts and Termination of Employment Arrangements," and
"Compensation and Executive Personnel Committees' Interlocks and Insider Participation," and
is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information responding to Item 12 will appear in the Proxy Statement under the headings
"Stock Ownership of Directors, Director Nominee, and Executive Officers" and "Stock Ownership
of Certain Shareholders," and is incorporated herein by this reference.
Item 201(d) of Regulation S-K, "Securities Authorized For Issuance Under Equity Compensation
Plans," is not applicable because SCE has no compensation plans under which equity
securities of SCE are authorized for issuance.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information responding to Item 13 will appear in the Proxy Statement under the headings
"Certain Relationships and Transactions," and is incorporated herein by this reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Information responding to Item 14 will appear in the Proxy Statement under the heading
"Independent Registered Public Accounting Firm Fees," and is incorporated herein by this
reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The following items contained in the Annual Report are found on pages 1 through 79, and are
incorporated herein by this reference.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income - Years Ended December 31, 2005, 2004 and 2003
Consolidated Statements of Comprehensive Income - Years Ended December 31, 2005,
2004, and 2003
Consolidated Balance Sheets - December 31, 2005 and 2004
Consolidated Statements of Cash Flows - Years Ended December 31, 2005, 2004 and 2003
Consolidated Statements of Changes in Common Shareholders' Equity - Years Ended
December 31, 2005, 2004 and 2003
Notes to Consolidated Financial Statements
Page 21
(a)(2) Report of Independent Registered Public Accounting Firm and Schedules Supplementing
Financial Statements
The following documents may be found in this report at the indicated page numbers:
Page
Report of Independent Registered Public Accounting Firm
on Financial Statement Schedules 23
Schedule II - Valuation and Qualifying Accounts for the
Year Ended December 31, 2005 24
Year Ended December 31, 2004 25
Year Ended December 31, 2003 26
Schedules I and III through V, inclusive, are omitted as not required or not applicable.
(a)(3) Exhibits
See Exhibit Index beginning on page 28 of this report.
SCE will furnish a copy of any exhibit listed in the accompanying Exhibit Index upon written
request and upon payment to SCE of its reasonable expenses of furnishing such exhibit, which
shall be limited to photocopying charges and, if mailed to the requesting party, the cost of
first-class postage.
Page 22
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules
To the Board of Directors and
Shareholder of Southern California Edison Company
Our audits of the consolidated financial statements referred to in our report dated March 6,
2006, appearing in the 2005 Annual Report of Southern California Edison Company (which
report and consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial statement schedules listed in
Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present
fairly, in all material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLC
Los Angeles, California
March 6, 2006
Page 23
Southern California Edison Company
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 2005
Additions
------------------------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------------------------------------------------------------------------------------------
(In millions)
Uncollectible Accounts:
Customers $ 24.0 $ 8.4 $ -- $ 10.5 $ 21.9
All other 6.9 8.4 -- 4.5 10.8
----------------------------------------------------------------------------------------------
Total $ 30.9 $ 16.8 $ -- $ 15.0(a) $ 32.7
----------------------------------------------------------------------------------------------
____________________
(a) Accounts written off, net.
Page 24
Southern California Edison Company
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 2004
Additions
-----------------------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------------------------------------------------------------------------------------------
(In millions)
Uncollectible Accounts:
Customers $ 23.7 $ 16.7 $ -- $ 16.4 $ 24.0
All other 6.6 3.3 -- 3.0 6.9
----------------------------------------------------------------------------------------------
Total $ 30.3 $ 20.0 $ -- $ 19.4(a) $ 30.9
----------------------------------------------------------------------------------------------
____________________
(a) Accounts written off, net.
Page 25
Southern California Edison Company
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 2003
Additions
------------------------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------------------------------------------------------------------------------------------
(In millions)
Uncollectible Accounts:
Customers $ 30.0 $ 19.2 $ -- $ 25.5 $ 23.7
All other 6.1 4.6 -- 4.1 6.6
----------------------------------------------------------------------------------------------
Total $ 36.1 $ 23.8 $ -- $ 29.6(a) $ 30.3
----------------------------------------------------------------------------------------------
____________________
(a) Accounts written off, net.
Page 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SOUTHERN CALIFORNIA EDISON COMPANY
By:
/s/ Linda G. Sullivan
------------------------------------
Linda G. Sullivan
Vice President and Controller
Date: March 7, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and
on the date indicated.
Signature Title
Principal Executive Officer: Chief Executive Officer and Director
Alan J. Fohrer*
Principal Financial Officer: Senior Vice President and
Thomas M. Noonan* Chief Financial Officer
Controller or Principal Accounting Officer: Vice President and Controller
Linda G. Sullivan
Board of Directors:
John E. Bryson* Director
France A. Cordova* Director
Bradford M. Freeman* Director
Bruce Karatz* Director
Luis G. Nogales* Director
Ronald L. Olson* Director
James M. Rosser* Director
Richard T. Schlosberg, III* Director
Robert H. Smith* Director
Thomas C. Sutton* Director
*By:
/s/ Linda G. Sullivan
------------------------------------
Linda G. Sullivan
Vice President and Controller
Date: March 7, 2006
Page 27
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
3.1 Certificate of Restated Articles of Incorporation of Southern California Edison
Company, effective March 2, 2006
3.2 Amended Bylaws of Southern California Edison Company, as Adopted by the Board of
Directors effective October 20, 2005 (File No. 1-2313, filed as Exhibit 3.1 to
Southern California Edison Company's Form 8-K dated October 20, 2005, and filed
October 26, 2005)*
4.1 Southern California Edison Company First Mortgage Bond Trust Indenture, dated as
of October 1, 1923 (Registration No. 2-1369)*
4.2 Supplemental Indenture, dated as of March 1, 1927 (Registration No. 2-1369)*
4.3 Third Supplemental Indenture, dated as of June 24, 1935 (Registration No. 2-1602)*
4.4 Fourth Supplemental Indenture, dated as of September 1, 1935 (Registration No.
2-4522)*
4.5 Fifth Supplemental Indenture, dated as of August 15, 1939 (Registration No.
2-4522)*
4.6 Sixth Supplemental Indenture, dated as of September 1, 1940 (Registration No.
2-4522)*
4.7 Eighth Supplemental Indenture, dated as of August 15, 1948 (Registration No.
2-7610)*
4.8 Twenty-Fourth Supplemental Indenture, dated as of February 15, 1964 (Registration
No. 2-22056)*
4.9 Eighty-Eighth Supplemental Indenture, dated as of July 15, 1992 (File No. 1-2313,
Form 8-K dated July 22, 1992)*
4.10 Indenture, dated as of January 15, 1993 (File No. 1-2313, Form 8-K dated January
28, 1993)*
10.1** Form of 1981 Deferred Compensation Agreement (File No. 1-2313, filed as Exhibit
10.2 to Southern California Edison Company's Form 10-K for the year ended
December 31, 1981)*
10.2** Form of 1985 Deferred Compensation Agreement for Executives (File No. 1-2313,
filed as Exhibit 10.3 to Southern California Edison Company's Form 10-K for the
year ended December 31, 1985)*
10.3** Form of 1985 Deferred Compensation Agreement for Directors (File No. 1-2313,
filed as Exhibit 10.4 to Southern California Edison Company's Form 10-K for the
year ended December 31, 1985)*
10.4** Director Deferred Compensation Plan as restated May 14, 2002 (File No. 1-9936,
filed as Exhibit 10.1 to Edison International's Form 10-Q for the quarter ended
June 30, 2002)*
10.4.1** Director Deferred Compensation Plan Amendment No. 1, effective January 1, 2003
(File No. 1-9936, filed as Exhibit 10.4.1 to Edison International's Form 10-K for
the year ended December 31, 2002)*
10.5** Director Grantor Trust Agreement, dated August 1995 (File No. 1-9936, filed as
Exhibit 10.10 to Edison International's Form 10-K for the year ended December 31,
1995)*
Page 28
10.5.1** Director Grantor Trust Agreement Amendment 2002-1, effective May 14, 2002 (File
No. 1-9936, filed as Exhibit 10.4 to Edison International's Form 10-Q for the
quarter ended June 30, 2002)*
10.6** Executive Deferred Compensation Plan, as amended and restated January 1, 1998
(File No. 1-9936, filed as Exhibit 10.2 to Edison International's Form 10-Q for
the quarter ended March 31, 1998)*
10.6.1** Executive Deferred Compensation Plan Amendment No. 1, effective January 1, 2003
(File No. 1-9936, filed as Exhibit 10.6.1 to Edison International's Form 10-K for
the year ended December 31, 2002)*
10.7** Executive Grantor Trust Agreement, dated August 1995 (File No. 1-9936, filed as
Exhibit 10.12 to Edison International's Form 10-K for the year ended December 31,
1995)*
10.7.1** Executive Grantor Trust Agreement Amendment 2002-1, effective May 14, 2002 (File
No. 1-9936, filed as Exhibit 10.3 to Edison International's Form 10-Q for the
quarter ended June 30, 2002)*
10.8** Executive Supplemental Benefit Program, as amended January 30, 1990 (File
No. 1-9936, filed as Exhibit 10.2 to Edison International's Form 10-Q for the
quarter ended September 30, 1999)*
10.9** Dispute resolution amendment, adopted November 30, 1989 of 1981 Executive
Deferred Compensation Plan and 1985 Executive and Director Deferred Compensation
Plans (File No. 1-9936, filed as Exhibit 10.21 to Edison International's Form
10-K for the year ended December 31, 1998)*
10.10** Executive Retirement Plan as restated effective April 1, 1999 (File No. 1-9936,
filed as Exhibit 10.1 to Edison International's Form 10-Q for the quarter ended
September 30, 1999)*
10.10.1** Executive Retirement Plan Amendment 2001-1, effective March 12, 2001 (File No.
1-9936, filed as Exhibit 10.1 to Edison International's Form 10-Q for the quarter
ended March 31, 2001)*
10.10.2** Executive Retirement Plan Amendment 2002-1, effective January 1, 2003 (File No.
1-9936, filed as Exhibit 10.10.2 to Edison International's Form 10-K for the year
ended December 31, 2002)*
10.11** Executive Incentive Compensation Plan, effective January 1, 1997 (File No.
1-9936, filed as Exhibit 10.12 to Edison International's Form 10-K for the year
ended December 31, 1997)*
10.12** Executive Disability and Survivor Benefit Program, effective January 1, 1994
(File No. 1-9936, filed as Exhibit 10.22 to Edison International's Form 10-K for
the year ended December 31, 1994)*
10.13** Retirement Plan for Directors, as amended February 19, 1998 (File No. 1-9936,
filed as Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended
June 30, 1998)*
10.14** Officer Long-Term Incentive Compensation Plan as amended January 1, 1998 (File
No. 1-9936, filed as Exhibit 10.3 to Edison International's Form 10-Q for the
quarter ended March 31, 1998)*
10.15** Equity Compensation Plan as restated effective January 1, 1998 (File No. 1-9936,
filed as Exhibit 10.1 to Edison International's Form 10-Q for the quarter ended
June 30, 1998)*
10.15.1** Equity Compensation Plan Amendment No. 1, effective May 18, 2000 (File No.
1-9936, filed as Exhibit 10.4 to Edison International's Form 10-Q for the quarter
ended June 30, 2000)*
10.16** 2000 Equity Plan, effective May 18, 2000 (File No. 1-9936, filed as Exhibit 10.1
to Edison International's Form 10-Q for the quarter ended June 30, 2000)*
Page 29
10.17** Terms and conditions for 1996 long-term compensation awards under the Officer
Long-Term Incentive Compensation Plan (File No. 1-9936, filed as Exhibit 10.16.2
to Edison International's Form 10-K for the year ended December 31, 1996)*
10.18** Terms and conditions for 1997 long-term compensation awards under the Officer
Long-Term Incentive Compensation Plan (File No. 1-9936, filed as Exhibit 10.16.3
to Edison International's Form 10-K for the year ended December 31, 1997)*
10.19** Terms and conditions for 1998 long-term compensation awards under the Equity
Compensation Plan (File No. 1-9936, filed as Exhibit 10.4 to Edison
International's Form 10-Q for the quarter ended June 30, 1998)*
10.20** Terms and conditions for 1999 long-term compensation awards under the Equity
Compensation Plan (File No. 1-9936, filed as Exhibit 10.1 to Edison
International's Form 10-Q for the quarter ended March 31, 1999)*
10.21** Terms and conditions for 2000 basic long-term incentive compensation awards under
the Equity Compensation Plan, as restated (File No. 1-9936, filed as Exhibit 10.2
to Edison International's Form 10-Q for the quarter ended March 31, 2000)*
10.22** Terms and conditions for 2000 special stock option awards under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.2 to
Edison International's Form 10-Q for the quarter ended June 30, 2000)*
10.23** Terms and conditions for 2001 retention incentives under the Equity Compensation
Plan (File No. 1-9936, filed as Exhibit 10.5 to Edison International's Form 10-Q
for the quarter ended March 31, 2001)*
10.24** Terms and conditions for 2001 exchange offer deferred stock units under the
Equity Compensation Plan (File No. 1-9936, filed as Attachment C of Exhibit
(a)(1) to Edison International's Schedule TO-I dated October 26, 2001)*
10.25** Terms and conditions for 2002 long-term compensation awards under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to
Edison International's Form 10-Q for the quarter ended March 31, 2002)*
10.26** Terms and conditions for 2003 long-term compensation awards under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to
Edison International's Form 10-Q for the quarter ended March 31, 2003)*
10.27** Terms and conditions for 2004 long-term compensation awards under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.1 to
Edison International's Form 10-Q for the quarter ended March 31, 2004)*
10.28** Terms and conditions for 2005 long-term compensation award under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 99.2 to
Edison International's Form 8-K dated December 16, 2004 and filed on December 22,
2004)*
10.29** Terms and conditions for 2006 long-term compensation awards under the Equity
Compensation Plan and 2000 Equity Plan (File No. 1-9936, filed as Exhibit 10.29 to
Edison International's Form 10-K for the year ended December 16, 2005)*
10.30** Director Nonqualified Stock Option Terms and Conditions under the Equity
Compensation Plan (File No. 1-9936, filed as Exhibit 10.1 to Edison
International's Form 10-Q for the quarter ended June 30, 2002)*
10.31** Director 2004 Nonqualified Stock Option Terms and Conditions under the Equity
Compensation Plan (File No. 1-9936, filed as Exhibit 10.1 to Edison
International's Form 10-Q for the quarter ended June 30, 2004.)*
10.32** Estate and Financial Planning Program as amended April 23, 1999 (File No. 1-9936,
filed as Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended
June 30, 1999)*
10.33** Option Gain Deferral Plan as restated September 15, 2000 (File No. 1-9936, filed
as Exhibit 10.25 to Edison International's Form 10-K for the year ended December
31, 2000)*
Page 30
10.34** Resolution regarding the computation of disability and survivor benefits prior to
age 55 for Alan J. Fohrer dated February 17, 2000 (File No. 1-9936, filed as
Exhibit 10.2 to Edison International's Form 10-Q for the quarter ended March 31,
2000)*
10.35** Executive Severance Plan as adopted effective January 1, 2001 (File No. 1-9936,
filed as Exhibit 10.34 to Edison International's Form 10-K for the year ended
December 31, 2001)*
10.36** Amendment to 1985 Deferred Compensation Plan Agreement for Executives and
Deferred Compensation Plan Deferred Compensation Agreement with John E. Bryson,
dated December 31, 2003 (File No. 1-2313, filed as Exhibit 10.34 to Southern
California Edison Company's Form 10-K for the year ended December 31, 2003)*
10.37** Agreement between Edison International and Southern California Edison Company,
dated December 31, 2003, addressing responsibility for the prospective costs of
participation of John E. Bryson under the 1985 Deferred Compensation Plan
Agreement for Executives, dated September 27, 1985, as amended, and the Deferred
Compensation Plan Deferred Compensation Agreement, dated November 28, 1984, as
amended (File No. 1-2313, filed as Exhibit 10.35 to Southern California Edison
Company's Form 10-K for the year ended December 31, 2003)*
10.38** Amendment to 1985 Deferred Compensation Plan Agreement for Directors with
James M. Rosser, dated December 31, 2003 (File No. 1-2313, filed as Exhibit 10.36
to Southern California Edison Company's Form 10-K for the year ended December 31,
2003)*
10.39** Amendment to 1985 Deferred Compensation Plan Agreement for Executives and
Deferred Compensation Plan Deferred Compensation Agreement with Harold B. Ray
dated December 31, 2003 (File No. 1-2313, filed as Exhibit 10.37 to SCE Form 10-K
for the year ended December 31, 2003)*
10.40** Edison International Director Compensation Schedule, adopted May 19, 2005, as
amended (File No. 1-9936, filed as Exhibit 10.48 to Edison International's Form
10-K for the year ended December 31, 2005)*
10.41** Edison International Director Nonqualified Stock Options 2005 Terms and
Conditions (File No. 1-9936, filed as Exhibit 99.3 to Edison International's Form
8-K dated May 19, 2005, and filed on May 25, 2005)*
10.42** Retirement Agreement, dated as of August 25, 2005, between Southern California
Edison Company and Robert Foster (File No. 1-2313, filed as Exhibit 10.1 to
Southern California Edison Company's Form 8-K dated August 25, 2005 and filed on
August 26, 2005)*
10.43** Consulting Agreement, dated as of August 25, 2005, between Southern California
Edison Company and Robert Foster (File No. 1-2313, filed as Exhibit 10.2 to
Southern California Edison Company's Form 8-K dated August 25, 2005, and filed on
August 26, 2005)*
10.44** Legal Fees Reimbursement, dated September 2005 between Southern California Edison
Company and Robert Foster (File No. 1-2313, filed as Exhibit 10.3 to Southern
California Edison Company's Form 10-Q for the quarter ended September 30, 2005)*
10.45** Edison International Director Nonqualified Stock Options 2005 Terms and
Conditions (File No. 1-2313, filed as Exhibit 99.3 to Edison International's Form
8-K dated May 19, 2005, and filed on May 25, 2005)*
10.46** Consulting Agreement, dated as of December 14, 2005, between Southern California
Edison Company and Harold B. Ray (File No. 1-2313, filed as Exhibit 10.2 to
Southern California Edison Company's Form 8-K dated December 15, 2005, and filed
on December 21, 2005)*
Page 31
10.47** Director Deferred Compensation Plan Authorization of Edison International and
Southern California Edison Company (File No. 1-2313, to Southern California
Edison Company's Form 8-K dated December 30, 2004, and filed on January 5, 2005)*
10.48** Form of Indemnity Agreement between Southern California Edison Company and its
Directors and any officer, employee or other agent designated by the Board of
Directors (File No. 1-2313, filed as Exhibit 10.5 to Southern California Edison
Company's Form 10-Q for the period ended June 30, 2005, and filed on August 9,
2005)*
10.49** Edison International Executive Perquisites (File No. 1-9936, filed as Exhibit 10.56
to Edison International's Form 10-K for the year ended December 31, 2005)*
10.50** Deferred Compensation Program Amendments (File No. 1-9936, filed as Exhibit 10.55
to Edison International's Form 10-K for the year ended December 31, 2005)*
10.51** Southern California Edison Company Named Executive Officer Base Salaries for 2006
10.52.1 Amended and Restated Agreement for the Allocation of Income Tax Liabilities and
Benefits among Edison International, Southern California Edison Company and The
Mission Group dated September 10, 1996 (File No. 1-9936, filed as Exhibit 10.3 to
Edison International's Form 10-Q for the quarter ended September 30, 2002)*
10.52.2 Administrative Agreement re Tax Allocation Payments among Edison International,
Southern California Edison Company, The Mission Group, Edison Capital, Mission
Energy Holding Company, Edison Mission Energy, Edison O&M Services, Edison
Enterprises, and Mission Land Company dated July 2, 2001 (File No. 1-9936, filed
as Exhibit 10.3.4 to Edison International's Form 10-Q for the quarter ended
September 30, 2002)*
10.53 Amended and Restated Credit Agreement, dated December 15, 2005 among Southern
California Edison Company and JPMorgan Chase Bank, N.A., as Administrative Agent,
Citicorp North America, Inc., as Syndication Agent, and Credit Suisse First
Boston, Lehman Commercial Paper, Inc., and Wells Fargo Bank, N.A., as
Documentation Agents (File No. 1-2313, to Southern California Edison Company's
Form 8-K dated December 15, 2006 and filed on December 21, 2005)*
12 Computation of Ratios of Earnings to Fixed Charges
13 Selected portions of the Annual Report to Shareholders for year ended
December 31, 2005
23 Consent of Independent Registered Public Accounting Firm - PricewaterhouseCoopers
LLP
24.1 Power of Attorney
24.2 Certified copy of Resolution of Board of Directors Authorizing Signature
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act
31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act
32 Statement Pursuant to 18 U.S.C. Section 1350
_____________
* Incorporated by reference pursuant to Rule 12b-32.
** Indicates a management contract or compensatory plan or arrangement, as required by
Item 15(a)3.
