SOUTHERN CALIFORNIA EDISON Co - Quarter Report: 2011 March (Form 10-Q)

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

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2011
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number 1-2313

SOUTHERN CALIFORNIA EDISON COMPANY
(Exact name of registrant as specified in its charter)


California		95-1240335
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
2244 Walnut Grove Avenue (P. O. Box 800) Rosemead, California		91770
(Address of principal executive offices)		(Zip Code)
(626) 302-1212 (Registrant's telephone number, including area code)

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

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

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


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

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

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

Class		Outstanding at April 28, 2011

Common Stock, no par value		434,888,104

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TABLE OF CONTENTS


GLOSSARY				iii
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS				1
	Consolidated Statements of Income			1
	Consolidated Statements of Comprehensive Income			1
	Consolidated Balance Sheets			2
	Consolidated Statements of Cash Flows			4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS				5
	Note 1. Summary of Significant Accounting Policies			5
	Note 2. Consolidated Statements of Changes in Equity			6
	Note 3. Variable Interest Entities			6
	Note 4. Fair Value Measurements			7
	Note 5. Debt and Credit Agreements			11
	Note 6. Derivative Instruments and Hedging Activities			12
	Note 7. Income Taxes			14
	Note 8. Compensation and Benefit Plans			15
	Note 9. Commitments and Contingencies			18
	Note 10. Regulatory and Environmental Developments			21
	Note 11. Supplemental Cash Flows Information			21
	Note 12. Preferred and Preference Stock			22
	Note 13. Regulatory Assets and Liabilities			22
	Note 14. Other Investments			22
	Note 15. Other Income and Expenses			23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS				24
FORWARD-LOOKING STATEMENTS				24
MANAGEMENT OVERVIEW				25
	Highlights of Operating Results			25
	Capital Program			26
	2012 CPUC General Rate Case			26
	Nuclear Industry and Regulatory Response to Events in Japan			26
	Environmental Developments			26
RESULTS OF OPERATIONS				26
	Electric Utility Results of Operations			27
		*Utility Earning Activities*		27
			2011 vs. 2010	27

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		*Utility Cost-Recovery Activities*		28
			2011 vs. 2010	28
		*Supplemental Operating Revenue Information*		28
		*Income Taxes*		29
LIQUIDITY AND CAPITAL RESOURCES				29
	Available Liquidity			29
		*Debt Covenant*		29
	Dividend Restrictions			30
	Margin and Collateral Deposits			30
		*Derivative Instruments and Power Procurement Contracts*		30
		*Workers Compensation Self-Insurance Fund*		30
	Historical Consolidated Cash Flows			30
		*Condensed Consolidated Statement of Cash Flows*		31
			Net Cash Provided by Operating Activities	31
			Net Cash Provided by Financing Activities	31
			Net Cash Used by Investing Activities	31
	Contractual Obligations and Contingencies			31
		*Contractual Obligations*		31
		*Contingencies*		32
			Environmental Remediation	32
MARKET RISK EXPOSURES				32
	Commodity Price Risk			32
	Credit Risk			32
CRITICAL ACCOUNTING ESTIMATES AND POLICIES				33
NEW ACCOUNTING GUIDANCE				33
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK				33
ITEM 4. CONTROLS AND PROCEDURES				33
	Disclosure Controls and Procedures			33
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS				33
	California Coastal Commission Potential Environmental Proceeding			33
ITEM 6. EXHIBITS				34
SIGNATURE				35

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GLOSSARY

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.


2010 Form 10-K		SCE's Annual Report on Form 10-K for the year-ended December 31, 2010
2010 Tax Relief Act		Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010
AFUDC		allowance for funds used during construction
APS		Arizona Public Service Company
ARO(s)		asset retirement obligation(s)
Bcf		Billion cubic feet
CAA		Clean Air Act
CAIR		Clean Air Interstate Rule
CAISO		California Independent System Operator
CAMR		Clean Air Mercury Rule
CARB		California Air Resources Board
CDWR		California Department of Water Resources
CEC		California Energy Commission
CPUC		California Public Utilities Commission
CRRs		congestion revenue rights
DOE		U. S. Department of Energy
ERRA		energy resource recovery account
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FGIC		Financial Guarantee Insurance Company
FIP(s)		federal implementation plan(s)
Four Corners		coal fueled electric generating facility located in Farmington, New Mexico in which SCE holds a 48% ownership interest
GAAP		generally accepted accounting principles
GHG		greenhouse gas
Global Settlement		A settlement between Edison International and the IRS that resolves all of SCE's federal income tax disputes and affirmative claims for tax years 1986 through 2002 and related matters with state tax authorities.
GRC		general rate case
IRS		Internal Revenue Service
ISO		Independent System Operator
kWh(s)		kilowatt-hour(s)
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations in this report
Mohave		two coal fueled electric generating facilities that no longer operate located in Clark County, Nevada in which SCE holds a 56% ownership interest
Moody's		Moody's Investors Service
MRTU		Market Redesign Technical Upgrade
MW		megawatts
MWh		megawatt-hours
NAAQS		national ambient air quality standards
NERC		North American Electric Reliability Corporation
Ninth Circuit		U.S. Court of Appeals for the Ninth Circuit
NO_x		nitrogen oxide
NRC		Nuclear Regulatory Commission
NSR		New Source Review
Palo Verde		large pressurized water nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest

iii

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PBOP(s)		postretirement benefits other than pension(s)
PBR		Performance-based ratemaking
PG&E		Pacific Gas & Electric Company
PSD		Prevention of Significant Deterioration
QF(s)		qualifying facility(ies)
ROE		return on equity
S&P		Standard & Poor's Ratings Services
San Onofre		large pressurized water nuclear electric generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
SCE		Southern California Edison Company
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SIP(s)		state implementation plan(s)
SO₂		sulfur dioxide
US EPA		U.S. Environmental Protection Agency
VIE(s)		variable interest entity(ies)
year-ended 2010 MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2010 Form 10-K

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Part 1. Financial information

ITEM 1. FINANCIAL STATEMENTS



Consolidated Statements of Income		Southern California Edison Company

	Three months ended March 31,

(in millions, unaudited)	2011			2010

Operating revenue	$	2,232		$	2,159

Fuel		76			81
Purchased power		508			608
Operation and maintenance		784			713
Depreciation, decommissioning and amortization		344			309
Property and other taxes		77			68

Total operating expenses		1,789			1,779

Operating income		443			380
Interest income		2			1
Other income		38			34
Interest expense – net of amounts capitalized		(111	)		(99	)
Other expenses		(13	)		(10	)

Income before income taxes		359			306
Income tax expense		123			129

Net income		236			177
Dividends on preferred and preference stock		14			13

Net income available for common stock	$	222		$	164

Consolidated Statements of Comprehensive Income

			Three months ended March 31,

(in millions, unaudited)			2011		2010

Net income			$	236	$	177
Other comprehensive income, net of tax:
	Pension and postretirement benefits other than pensions:
		Amortization of net loss included in net income		1		1

Comprehensive income			$	237	$	178

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

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Consolidated Balance Sheets		Southern California Edison Company

(in millions, unaudited)	March 31, 2011		December 31, 2010


ASSETS
Cash and cash equivalents	$	53	$	257
Receivables, less allowances of $87 and $85 for uncollectible accounts at respective dates		625		715
Accrued unbilled revenue		410		442
Inventory		328		332
Prepaid taxes		225		168
Derivative assets		77		87
Regulatory assets		407		378
Other current assets		101		81

Total current assets		2,226		2,460

Nuclear decommissioning trusts		3,619		3,480
Other investments		76		68

Total investments		3,695		3,548

Utility property, plant and equipment, less accumulated depreciation of $6,488 and $6,319 at respective dates		25,276		24,778
Nonutility property, plant and equipment, less accumulated depreciation of $101 and $100 at respective dates		75		71

Total property, plant and equipment		25,351		24,849

Derivative assets		289		367
Regulatory assets		4,450		4,347
Other long-term assets		333		335

Total long-term assets		5,072		5,049





Total assets	$	36,344	$	35,906

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

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Consolidated Balance Sheets		Southern California Edison Company

(in millions, except share amounts, unaudited)	March 31, 2011			December 31, 2010


LIABILITIES AND EQUITY
Short-term debt	$	200		$	—
Accounts payable		958			1,271
Accrued taxes		47			45
Accrued interest		118			169
Customer deposits		211			217
Derivative liabilities		215			212
Regulatory liabilities		778			738
Other current liabilities		482			663

Total current liabilities		3,009			3,315

Long-term debt		7,627			7,627

Deferred income taxes		5,096			4,829
Deferred investment tax credits		117			118
Customer advances		112			112
Derivative liabilities		461			449
Pensions and benefits		1,851			1,838
Asset retirement obligations		2,508			2,507
Regulatory liabilities		4,733			4,524
Other deferred credits and other long-term liabilities		1,393			1,380

Total deferred credits and other liabilities		16,271			15,757

Total liabilities		26,907			26,699

Commitments and contingencies (Note 9)
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at each date)		2,168			2,168
Additional paid-in capital		575			572
Accumulated other comprehensive loss		(24	)		(25	)
Retained earnings		5,673			5,572

Total common shareholder's equity		8,392			8,287
Preferred and preference stock		1,045			920

Total equity		9,437			9,207

Total liabilities and equity	$	36,344		$	35,906

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

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Consolidated Statements of Cash Flows		Southern California Edison Company

			Three months ended March 31,

(in millions, unaudited)			2011			2010

Cash flows from operating activities:
Net income			$	236		$	177
Adjustments to reconcile to net cash provided by operating activities:
	Depreciation, decommissioning and amortization			344			309
	Regulatory impacts of net nuclear decommissioning trust earnings (reflected			41			38
		in accumulated depreciation)
	Other amortization			28			21
	Stock-based compensation			4			4
	Deferred income taxes and investment tax credits			257			189
Changes in operating assets and liabilities:
	Receivables			90			62
	Inventory			4			1
	Margin and collateral deposits – net of collateral received			2			(2	)
	Prepaid taxes			(57	)		(104	)
	Other current assets			(4	)		(47	)
	Accounts payable			(88	)		(158	)
	Accrued taxes			2			29
	Other current liabilities			(244	)		(153	)
	Derivative assets and liabilities – net			102			577
	Regulatory assets and liabilities – net			(42	)		(636	)
	Other assets			(6	)		(14	)
	Other liabilities			3			20

Net cash provided by operating activities				672			313

Cash flows from financing activities:
Long-term debt issued				—			494
Long-term debt issuance costs				—			(5	)
Long-term debt repaid				(1	)		(252	)
Preference stock issued				123			—
Short-term debt financing – net				200			180
Settlements of stock-based compensation – net				(4	)		1
Dividends paid				(128	)		(113	)

Net cash provided by financing activities				190			305

Cash flows from investing activities:
Capital expenditures				(1,022	)		(867	)
Proceeds from sale of nuclear decommissioning trust investments				622			286
Purchases of nuclear decommissioning trust investments and other				(669	)		(335	)
Customer advances for construction and other investments				3			(6	)
Effect of deconsolidation of variable interest entities				—			(92	)

Net cash used by investing activities				(1,066	)		(1,014	)

Net decrease in cash and cash equivalents				(204	)		(396	)
Cash and cash equivalents, beginning of period				257			462

Cash and cash equivalents, end of period			$	53		$	66

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Significant Accounting Policies

SCE is an investor-owned public utility primarily engaged in the business of supplying electricity to an approximately 50,000 square-mile area of southern California. SCE is a wholly-owned subsidiary of Edison International.

Basis of Presentation

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

In the opinion of management, all adjustments, including recurring accruals, have been made that are necessary to fairly state the consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three month period ended March 31, 2011 are not necessarily indicative of the operating results for the full year.

The December 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

Cash Equivalents

Cash equivalents included investments in money market funds totaling $30 million and $243 million at March 31, 2011 and December 31, 2010, respectively. Generally, the carrying value of cash equivalents equals the fair value, as all investments have maturities of three months or less.

SCE temporarily invests the ending daily cash balance in its primary disbursement accounts until required for check clearing. SCE reclassified $206 million and $196 million of checks issued against these accounts, but not yet paid by the financial institution, from cash to accounts payable at March 31, 2011 and December 31, 2010, respectively.

Inventory

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

(in millions)	March 31, 2011		December 31, 2010


Fuel	$	20	$	21
Materials and supplies, spare parts		308		311

Total inventory	$	328	$	332

New Accounting Guidance

Accounting Guidance Adopted in 2011

Fair Value Measurements and Disclosures

The FASB issued an accounting standards update modifying the disclosure requirements related to fair value measurements. Under these requirements, purchases and settlements for Level 3 fair value

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measurements are presented on a gross basis, rather than net. SCE adopted this guidance effective January 1, 2011.

Note 2. Consolidated Statements of Changes in Equity

The following table provides the changes in equity for the three months ended March 31, 2011.

	Equity Attributable to SCE

(in millions)	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Preferred and Preference Stock		Total Equity

Balance at December 31, 2010	$	2,168	$	572		$	(25	)	$	5,572		$	920	$	9,207

Net income		—		—			—			236			—		236
Other comprehensive income		—		—			1			—			—		1
Dividends declared on common stock		—		—			—			(115	)		—		(115	)
Dividends declared on preferred and preference stock		—		—			—			(14	)		—		(14	)
Stock-based compensation and other		—		1			—			(5	)		—		(4	)
Noncash stock-based compensation and other		—		4			—			(1	)		—		3
Issuance of preference stock		—		(2	)		—			—			125		123

Balance at March 31, 2011	$	2,168	$	575		$	(24	)	$	5,673		$	1,045	$	9,437

The following table provides the changes in equity for the three months ended March 31, 2010.

	Equity Attributable to SCE

(in millions)	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Preferred and Preference Stock		Noncontrolling Interest			Total Equity

Balance at December 31, 2009	$	2,168	$	551	$	(19	)	$	4,746		$	920	$	349		$	8,715

Net income		—		—		—			177			—		—			177
Other comprehensive income		—		—		1			—			—		—			1
Deconsolidation of variable interest entities		—		—		—			—			—		(349	)		(349	)
Dividends declared on preferred and preference stock		—		—		—			(13	)		—		—			(13	)
Stock-based compensation and other		—		2		—			(1	)		—		—			1
Noncash stock-based compensation and other		—		4		—			(4	)		—		—			—

Balance at March 31, 2010	$	2,168	$	557	$	(18	)	$	4,905		$	920	$	—		$	8,532

Note 3. Variable Interest Entities

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

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Variable Interest in VIEs that are not Consolidated

Power Purchase Contracts

SCE has 16 power purchase agreements ("PPAs") that are considered variable interests in VIEs, including 6 tolling agreements through which SCE provides the natural gas to operate the plants and 10 contracts with QFs that contain variable pricing provisions based on the price of natural gas. SCE has concluded that it is not the primary beneficiary of these VIEs since it does not control the commercial and operating activities of these entities. In general, because payments for capacity are the primary source of income, the most significant economic activity for SCE's VIEs is the operation and maintenance of the power plants.

As of the balance sheet date, the carrying amount of assets and liabilities in SCE's consolidated balance sheet that relate to its involvement with VIEs result from amounts due under the PPAs or the fair value of those derivative contracts. These are accounted for at fair value. Under these contracts, SCE recovers the costs incurred under its approved long-term power procurement plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees or other commitments associated with these contracts other than the purchase commitments described in Note 9, so there is no significant potential exposure to loss as a result of SCE's involvement with these VIEs. The aggregate capacity dedicated to SCE for these VIE projects was 3,820 MW at March 31, 2011 and the amounts that SCE paid to these projects were $86 million and $125 million for the three months ended March 31, 2011 and 2010, respectively. These amounts are recovered in customer rates.

Note 4. Fair Value Measurements

Recurring Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an "exit price"). Fair value of an asset or liability should consider assumptions that market participants would use in pricing the asset or liability, including assumptions about nonperformance risk.

SCE categorizes financial assets and liabilities into a fair value hierarchy based on valuation inputs used to derive fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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

		As of March 31, 2011

(in millions)		Level 1		Level 2		Level 3			Collateral			Total

Assets at Fair Value
Money market funds¹		$	30	$	—	$	—		$	—		$	30

Derivative contracts²:
	Electricity		—		1		46			—			47
	Natural gas		—		66		8			—			74
	CRRs		—		—		123			—			123
	Tolling		—		—		122			—			122

Subtotal of derivative contracts			—		67		299			—			366

Long-term disability plan			9		—		—			—			9

Nuclear decommissioning trusts:
	Stocks³		2,068		—		—			—			2,068
	Municipal bonds		—		772		—			—			772
	Corporate bonds⁴		—		320		—			—			320
	U.S. government and agency securities		251		103		—			—			354
	Short-term investments, primarily cash equivalents⁵		—		80		—			—			80

	Sub-total of nuclear decommissioning trusts		2,319		1,275		—			—			3,594

Total assets⁶			2,358		1,342		299			—			3,999

Liabilities at Fair Value
Derivative contracts²:
	Electricity		—		—		45			—			45
	Natural gas		—		254		7			(4	)		257
	Tolling		—		—		374			—			374

Subtotal of derivative contracts			—		254		426			(4	)		676
Total liabilities			—		254		426			(4	)		676

Net assets		$	2,358	$	1,088	$	(127	)	$	4		$	3,323

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		Economic Hedges

Commodity	Unit of Measure	March 31, 2011		December 31, 2010

Electricity options, swaps and forwards	GWh		32,795		32,138
Natural gas options, swaps and forwards	Bcf		208		250
Congestion revenue rights	GWh		167,668		181,291
Tolling arrangements	GWh		113,541		114,599

				Weighted-Average

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

Outstanding at December 31, 2010		10,064,736		$	32.86
Granted		1,750,787			37.95
Forfeited		(62,642	)		32.37
Exercised		(286,650	)		24.62
Affiliate transfers – net		106,728			32.61

Outstanding at March 31, 2011		11,572,959			33.83		6.65

Vested and expected to vest at March 31, 2011		11,301,432			33.83		6.59	$	64

Exercisable at March 31, 2011		6,666,056			33.94		5.10		45

	Equity Awards					Liability Awards


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

Nonvested at December 31, 2010		219,904		$	32.15		219,904		$	37.68
Granted		78,175			31.81		78,175
Forfeited		(44,788	)		54.69		(44,788	)
Affiliate transfers – net		3,097			27.15		3,097

Nonvested at March 31, 2011		256,388			28.05		256,388			25.85

			Weighted-Average Grant Date Fair Value


Nonvested at December 31, 2010	385,877		$	32.90
Granted	131,039			37.95
Forfeited	(5,935	)		30.35
Paid Out	(68,149	)		55.34
Affiliate transfers – net	5,657			29.74

Nonvested at March 31, 2011	448,489			31.79

		Three months ended March 31,

(in millions, except per award amounts)		2011		2010

Stock based compensation expense¹		$	2	$	5
Income tax benefits related to stock compensation expense			1		2
Excess tax benefits²			2		1
Stock options
	Cash used to purchase shares to settle options		11		4
	Cash from participants to exercise stock options		7		3
	Value of options exercised		4		1
Restricted stock units
	Value of shares settled		4		—
	Tax benefits realized from settlement of awards		2		—

	March 31, 2011				December 31, 2010


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

Long-term debt, including current portion	$	7,627	$	8,079	$	7,627	$	8,285

	Derivative Assets									Derivative Liabilities


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

Non-trading activities
Economic hedges	$	85		$	302		$	387		$	225		$	475		$	700		$	313
Netting and collateral		(8	)		(13	)		(21	)		(10	)		(14	)		(24	)		(3	)

Total	$	77		$	289		$	366		$	215		$	461		$	676		$	310

(in millions)		March 31, 2011		December 31, 2010


Collateral provided to counterparties:
	Offset against derivative liabilities	$	4	$	4
	Reflected in other current assets		4		5

(in millions)		2011			2010


Balance at January 1,		$	329		$	482
Tax positions taken during the current year
	Increases		22			15
Tax positions taken during a prior year
	Increases		—			128
	Decreases		(6	)		(20	)

Balance at March 31,		$	345		$	605

(in millions)		March 31, 2011		December 31, 2010


Current:
	Regulatory balancing accounts	$	227	$	213
	Energy derivatives		173		162
	Other		7		3

			407		378

Long-term:
	Deferred income taxes – net		1,878		1,855
	Pensions and other postretirement benefits		1,094		1,097
	Unamortized generation investment – net		339		355
	Unamortized loss on reacquired debt		263		268
	Energy derivatives		261		177
	Nuclear-related ARO investment – net		167		154
	Unamortized distribution investment – net		109		105
	Regulatory balancing accounts		52		56
	Other		287		280

			4,450		4,347

Total Regulatory Assets		$	4,857	$	4,725

		Amortized Cost				Fair Value


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

Stocks	—	$	845	$	895	$	2,068	$	2,029
Municipal bonds	2049		683		706		772		790
Corporate bonds	2044		263		288		320		346
U.S. government and agency securities	2040		331		270		354		288
Short-term investments and receivables/payables	One-year		100		26		105		27

Total		$	2,222	$	2,185	$	3,619	$	3,480

(in millions)	2011			2010


Balance at January 1,	$	3,480		$	3,140
Realized gains – net		23			21
Unrealized gains – net		102			62
Other-than-temporary impairments		(9	)		(3	)
Interest, dividends, contributions and other		23			28

Balance at March 31,	$	3,619		$	3,248

		Three months ended March 31, 2011								Three months ended March 31, 2010


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

Operating revenue		$	1,363		$	869	$	2,232		$	1,265		$	894		$	2,159
Fuel and purchased power			—			584		584			—			689			689
Operations and maintenance			528			256		784			519			194			713
Depreciation, decommissioning and amortization			317			27		344			300			9			309
Property taxes and other			75			2		77			68			—			68

Total operating expenses			920			869		1,789			887			892			1,779

Operating income			443			—		443			378			2			380
Net interest expense and other			(84	)		—		(84	)		(72	)		(2	)		(74	)

Income before income taxes			359			—		359			306			—			306
Income tax expense			123			—		123			129			—			129

Net income			236			—		236			177			—			177
Dividends on preferred and preference stock			14			—		14			13			—			13

Net income available for common stock		$	222		$	—	$	222		$	164		$	—		$	164

Core Earnings¹							$	222								$	203
Non-Core Earnings:
	Tax impact of health care legislation							—									(39	)

Total SCE GAAP Earnings							$	222								$	164

(in millions)	Credit Facilities


Commitment	$	2,894
Outstanding borrowings supported by credit facilities		(200	)
Outstanding letters of credit		(73	)

Amount available	$	2,621

(in millions)

Collateral posted as of March 31, 2011¹	$	80
Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade		53

Posted and potential collateral requirements for derivative instruments and power procurement contracts²	$	133

		March 31, 2011

(in millions)		Exposure²		Collateral			Net Exposure

S&P Credit Rating¹
	A or higher	$	151	$	—		$	151
	A-		14		—			14
	Not rated³		122		(50	)		72

Total		$	287	$	(50	)	$	237


	3.1		Certificate of Restated Articles of Incorporation of SCE, effective March 2, 2006 (File No. 1-2313, filed as Exhibit 3.1 to Southern California Edison Company's Form 10-K for the year ended December 31, 2005)*
	3.2		Certificate of Determination of Preferences of the Series D Preference Stock effective March 10, 2011 (File No. 1-2313, filed as Exhibit 4 to Southern California Edison Company's Form 8-K dated March 7, 2011 and filed March 9, 2011)*
	10.1		Edison International 2011 Executive Annual Incentive Program (File No. 1-9936, filed as Exhibit 10.1 to the Edison International Form 10-Q for the quarter ended March 31, 2011)*
	10.2		Edison International 2011 Long-Term Incentive Terms and Conditions (File No. 1-9936 filed as Exhibit 10.2 to Edison International Form 10-Q for the quarter ended March 31, 2011)*
	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
	101**		Financial statements from the quarterly report on Form 10-Q of SCE for the quarter ended March 31, 2011, filed on May 2, 2011, formatted in XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to the Consolidated Financial Statements


		SOUTHERN CALIFORNIA EDISON COMPANY (Registrant)
		By		/s/ Chris C. Dominski Chris C. Dominski Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)