SOUTHERN CALIFORNIA EDISON Co - Quarter Report: 2023 March (Form 10-Q)

Three months ended March 31,

(in millions)

Gross realized gains

Gross realized losses

Net unrealized gains/(losses) for equity securities

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2023
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to


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


EDISON INTERNATIONAL	SOUTHERN CALIFORNIA EDISON COMPANY

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

Securities registered pursuant to Section 12(b) of the Act:

Edison International:


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

Southern California Edison Company: None.

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


Edison International	Yes ☑ No ☐	Southern California Edison Company	Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).


Edison International	Yes ☑ No ☐	Southern California Edison Company	Yes ☑ No ☐

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


Edison International	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company	Emerging growth company
	☑	☐	☐	☐	☐
Southern California Edison Company	Large Accelerated Filer	Accelerated Filer	Non-accelerated Filer	Smaller Reporting Company	Emerging growth company
	☐	☐	☑	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Edison International

☐

Southern California Edison Company

☐

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


Edison International	Yes ☐ No ☑	Southern California Edison Company	Yes☐ No ☑

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


Common Stock outstanding as of April 25, 2023:
Edison International	382,983,023 Shares
Southern California Edison Company	434,888,104 Shares

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TABLE OF CONTENTS

		SEC Form 10-Q
		Reference Number
GLOSSARY	iii
FORWARD-LOOKING STATEMENTS	1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4	Part I, Item 2
MANAGEMENT OVERVIEW	4
Highlights of Operating Results	4
Customer-funded Self-Insurance	5
Capital Program	5
Southern California Wildfires and Mudslides	6
RESULTS OF OPERATIONS	7
Southern California Edison Company	7
Three months ended March 31, 2023 versus March 31, 2022	8
Earning Activities	8
Cost-Recovery Activities	9
Supplemental Operating Revenue Information	9
Income Taxes	9
Edison International Parent and Other	9
Loss from Operations	10
LIQUIDITY AND CAPITAL RESOURCES	10
Southern California Edison Company	10
Available Liquidity	11
Regulatory Proceedings	11
Capital Investment Plan	12
Decommissioning of San Onofre	12
Margin and Collateral Deposits	13
Edison International Parent and Other	13
Edison International Income taxes	14
Historical Cash Flows	15
Southern California Edison Company	15
Edison International Parent and Other	17
Contingencies	18
MARKET RISK EXPOSURES	18
CRITICAL ACCOUNTING ESTIMATES AND POLICIES	18
NEW ACCOUNTING GUIDANCE	18
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19	Part I, Item 3

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FINANCIAL STATEMENTS	20	Part I, Item 1
Edison International Consolidated Statements of Income	20
Edison International Consolidated Statements of Comprehensive Income	21
Edison International Consolidated Balance Sheets	22
Edison International Consolidated Statements of Cash Flows	24
SCE Consolidated Statements of Income	25
SCE Consolidated Statements of Comprehensive Income	25
SCE Consolidated Balance Sheets	26
SCE Consolidated Statements of Cash Flows	28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	29
Note 1. Summary of Significant Accounting Policies	29
Note 2. Consolidated Statements of Changes in Equity	32
Note 3. Variable Interest Entities	33
Note 4. Fair Value Measurements	35
Note 5. Debt and Credit Agreements	38
Note 6. Derivative Instruments	39
Note 7. Revenue	41
Note 8. Income Taxes	42
Note 9. Compensation and Benefit Plans	43
Note 10. Investments	44
Note 11. Regulatory Assets and Liabilities	45
Note 12. Commitments and Contingencies	46
Note 13. Equity	58
Note 14. Accumulated Other Comprehensive Loss	58
Note 15. Other Income	59
Note 16. Supplemental Cash Flows Information	59
Note 17. Related-Party Transactions	59
CONTROLS AND PROCEDURES	61	Part I, Item 4
Disclosure Controls and Procedures	61
Changes in Internal Control Over Financial Reporting	61
Jointly Owned Utility Plant	61
LEGAL PROCEEDINGS	62	Part II, Item 1
2017/2018 Wildfire/Mudslide Events	62
Environmental Proceedings	62
EXHIBITS	63	Part II, Item 6
SIGNATURES	64

This combined Form 10-Q is separately filed by Edison International and SCE. Information contained in this document relating to SCE is filed by Edison International and separately by SCE. SCE makes no representation as to information relating to Edison International or its subsidiaries, except as it may relate to SCE and its subsidiaries.

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GLOSSARY

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



2017/2018 Wildfire/Mudslide Events		the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire, collectively
2022 Form 10-K		Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2022
2022 MD&A		Edison International's and SCE's MD&A for the calendar year 2022, which was included in the 2022 Form 10‑K
AB 1054		California Assembly Bill 1054, executed by the governor of California on July 12, 2019
AB 1054 Excluded Capital Expenditures		$1.6 billion in wildfire risk mitigation capital expenditures that SCE has excluded from the equity portion of SCE's rate base as required under AB 1054
AB 1054 Liability Cap		a cap on the aggregate requirement to reimburse the Wildfire Insurance Fund over a trailing three calendar year period which applies if certain conditions are met and is equal to 20% of the equity portion of the utility's transmission and distribution rate base, excluding general plant and intangibles, in the year of the applicable prudency determination
ARO(s)		asset retirement obligation(s)
BRRBA		Base Revenue Requirement Balancing Account
CAISO		California Independent System Operator
Capital Structure Compliance Period		January 1, 2023 to December 31, 2025, the current compliance period for SCE's CPUC authorized capital structure
CAPP		California Arrearage Payment Program
CCAs		community choice aggregators which are cities, counties, and certain other public agencies with the authority to generate and/or purchase electricity for their local residents and businesses
CDP		Coastal Development Permit
CEMA		Catastrophic Event Memorandum Account
COVID-19		Coronavirus disease 2019
CPUC		California Public Utilities Commission
CSRP		Customer Service Re-platform, a SCE project to implement a new customer service system
Edison Energy		Edison Energy, LLC, an indirect wholly-owned subsidiary of Edison International engaged in the competitive business of providing integrated decarbonization and energy solutions to commercial, institutional and industrial customers in North America and Europe
Edison International Proxy Statement		Proxy Statement filed with the SEC in connection with Edison International's Annual Meeting of Shareholders' held on April 27, 2023
EIS		Edison Insurance Services, Inc., a wholly-owned subsidiary of Edison International licensed to provide insurance to Edison International and its subsidiaries
Electric Service Provider		an entity that provides electric power and ancillary services to retail customers, other than utilities (investor-owned utilities and CCAs)
ERRA		Energy Resource Recovery Account
Fast curve settings		protective settings, used to mitigate the risk of wildfires, that enable quicker relays than under traditional settings
FERC		Federal Energy Regulatory Commission
Fitch		Fitch Ratings, Inc.
GAAP		generally accepted accounting principles in the United States
GHG		greenhouse gas
GRC		general rate case
IRA		Inflation Reduction Act of 2022
Koenigstein Fire		a wind-driven fire that originated near Koenigstein Road in the City of Santa Paula in Ventura County, California, on December 4, 2017
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations

iii

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Montecito Mudslides		the debris flows and flooding in Montecito, Santa Barbara County, California, that occurred in January 2018
Moody's		Moody's Investors Service, Inc.
MW		megawatts
NDCTP		Nuclear Decommissioning Cost Triennial Proceeding, a CPUC proceeding to review decommissioning costs
NERC		North American Electric Reliability Corporation
NRC		United States Nuclear Regulatory Commission
NSGBA		New System Generation Balancing Account
OEIS		Office of Energy Infrastructure Safety of the California Natural Resources Agency
PABA		Portfolio Allocation Balancing Account
Palo Verde		nuclear electric generating facility located near Phoenix, Arizona in which SCE holds a 15.8% ownership interest
PBOP(s)		postretirement benefits other than pension(s)
PG&E		Pacific Gas & Electric Company
Post-2018 Wildfires		Collectively, all the wildfires that originated in Southern California after 2018 where SCE's equipment may be alleged to be associated with the fire's ignition
PSPS		Public Safety Power Shutoff(s)
ROE		return on common equity
S&P		Standard & Poor's Financial Services LLC
San Onofre		retired nuclear generating facility located in south San Clemente, California in which SCE holds a 78.21% ownership interest
SCE		Southern California Edison Company, a wholly-owned subsidiary of Edison International
SCE Recovery Funding LLC		a bankruptcy remote, wholly owned special purpose subsidiary, consolidated by SCE
SDG&E		San Diego Gas & Electric
SEC		U.S. Securities and Exchange Commission
SED		Safety and Enforcement Division of the CPUC
SED Agreement		an agreement dated October 21, 2021 between SCE and the SED regarding the 2017/2018 Wildfire/Mudslide Events and three other 2017 wildfires
Thomas Fire		a wind-driven fire that originated in the Anlauf Canyon area of Ventura County, California, on December 4, 2017
TKM		collectively, the Thomas Fire, the Koenigstein Fire and the Montecito Mudslides
TKM Subrogation Plaintiffs		the plaintiffs party to the TKM Subrogation Settlement, representing all the insurance subrogation plaintiffs in the TKM litigation at the time of the settlement
TKM Subrogation Settlement		a settlement entered into by Edison International and SCE in September 2020 in the TKM litigation to which the TKM Subrogation Plaintiffs are party
WEMA		Wildfire Expense Memorandum Account
WMP		a wildfire mitigation plan required to be filed under AB 1054 to describe a utility's plans to construct, operate, and maintain electrical lines and equipment that will help minimize the risk of catastrophic wildfires caused by such electrical lines and equipment
Wildfire Insurance Fund		the insurance fund established under AB 1054
Woolsey Fire		a wind-driven fire that originated in Ventura County in November 2018
Woolsey Subrogation Plaintiffs		the plaintiffs party to the Woolsey Subrogation Settlement, representing all the insurance subrogation plaintiffs in the Woolsey Fire litigation at the time of the settlement
Woolsey Subrogation Settlement		a settlement entered into by Edison International and SCE in January 2021 in the Woolsey litigation to which the Woolsey Subrogation Plaintiffs are party

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FORWARD-LOOKING STATEMENTS

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

●

ability of SCE to recover its costs through regulated rates, including uninsured wildfire-related and debris flow-related costs, costs incurred to mitigate the risk of utility equipment causing future wildfires, costs incurred as a result of the COVID-19 pandemic, and increased costs due to supply chain constraints, inflation and rising interest rates;

●	ability of SCE to implement its WMP and capital program;

●	risks of regulatory or legislative restrictions that would limit SCE's ability to implement operational measures to mitigate wildfire risk, including PSPS and fast curve settings, when conditions warrant or would otherwise limit SCE's operational practices relative to wildfire risk mitigation;

●	risks associated with SCE implementing PSPS, including regulatory fines and penalties, claims for damages and reputational harm;

●	ability of SCE to maintain a valid safety certification;

●

ability of Edison International and SCE to obtain sufficient insurance at a reasonable cost, including insurance relating to wildfire-related claims, and to recover the costs of such insurance or, in the event liabilities exceed insured amounts, the ability to recover uninsured losses (including amounts paid for self-insured retention and co-insurance) from customers or other parties;

●

extreme weather-related incidents (including events caused, or exacerbated, by climate change, such as wildfires, debris flows, flooding, droughts, high wind events and extreme heat events) and other natural disasters (such as earthquakes), which could cause, among other things, public safety issues, property damage, rotating outages and other operational issues (such as issues due to damaged infrastructure), PSPS activations and unanticipated costs;

●

risk that AB 1054 does not effectively mitigate the significant exposure faced by California investor-owned utilities related to liability for damages arising from catastrophic wildfires where utility facilities are alleged to be a substantial cause, including the longevity of the Wildfire Insurance Fund and the CPUC's interpretation of and actions under AB 1054, including its interpretation of the prudency standard clarified by AB 1054;

●	ability of Edison International and SCE to effectively attract, manage, develop and retain a skilled workforce, including its contract workers;

●

decisions and other actions by the CPUC, OEIS, the FERC, the NRC and other governmental authorities, including decisions and actions related to nationwide or statewide crisis, determinations of authorized rates of return or return on equity, the recoverability of wildfire-related and debris flow-related costs, issuance of SCE's wildfire safety certification,

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wildfire mitigation efforts, approval and implementation of electrification programs, and delays in executive, regulatory and legislative actions;

●	cost and availability of labor, equipment and materials, including as a result of supply chain constraints and inflation;

●	ability of Edison International or SCE to borrow funds and access bank and capital markets on reasonable terms;

●	risks associated with the decommissioning of San Onofre, including those related to worker and public safety, public opposition, permitting, governmental approvals, on-site storage of spent nuclear fuel and other radioactive material, delays, contractual disputes, and cost overruns;

●

pandemics, such as COVID-19, and other events that cause regional, statewide, national or global disruption, which could impact, among other things, Edison International's and SCE's business, operations, cash flows, liquidity and/or financial results and cause Edison International and SCE to incur unanticipated costs;

●	physical security of Edison International's and SCE's critical assets and personnel and the cybersecurity of Edison International's and SCE's critical information technology systems for grid control, and business, employee and customer data;

●	risks associated with cost allocation resulting in higher rates for utility bundled service customers because of possible customer bypass or departure for other electricity providers such as CCAs and Electric Service Providers;

●

risks inherent in SCE's capital investment program, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, contractor performance, availability of labor, equipment and materials, weather, changes in the CAISO's transmission plans, and governmental approvals;

●	risks associated with the operation of electrical facilities, including worker and public safety issues, the risk of utility assets causing or contributing to wildfires, failure, availability, efficiency, and output of equipment and facilities, and availability and cost of spare parts;

●	actions by credit rating agencies to downgrade Edison International or SCE's credit ratings or to place those ratings on negative watch or negative outlook;

●	changes in tax laws and regulations, at both the state and federal levels, or changes in the application of those laws, that could affect recorded deferred tax assets and liabilities, effective tax rates and cash flows;

●	changes in future taxable income, or changes in tax law, that would limit Edison International's and SCE's realization of expected net operating loss and tax credit carryover benefits prior to expiration;

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

●	changes in interest rates and potential adjustments to SCE's ROE based on changes in Moody's utility bond rate index;

●	changes in rates of inflation (including whether inflation-related adjustments to SCE's authorized revenues allowed by the public utility regulators are commensurate with inflation rates);

●

governmental, statutory, regulatory, or administrative changes or initiatives affecting the electricity industry, including the market structure rules applicable to each market adopted by the NERC, CAISO, Western Electricity Coordinating Council, and similar regulatory bodies in adjoining regions, and changes in the United States' and California's environmental priorities that lessen the importance placed on GHG reduction and other climate related priorities;

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

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●	potential for penalties or disallowance for non-compliance with applicable laws and regulations, including fines, penalties and disallowances related to wildfires where SCE's equipment is alleged to be associated with ignition; and

●	cost of fuel for generating facilities and related transportation, which could be impacted by, among other things, disruption of natural gas storage facilities, to the extent not recovered through regulated rate cost escalation provisions or balancing accounts.

Additional information about risks and uncertainties, including more detail about the factors described in this report, is contained throughout this report and in the 2022 Form 10-K, including the "Risk Factors" section. Readers are urged to read this entire report, including information incorporated by reference, as well as the 2022 Form 10-K, and carefully consider the risks, uncertainties, and other factors that affect Edison International's and SCE's businesses. Forward-looking statements speak only as of the date they are made and neither Edison International nor SCE are obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by Edison International and SCE with the SEC. Edison International and SCE post or provide direct links to (i) certain SCE and other parties' regulatory filings and documents with the CPUC and the FERC and certain agency rulings and notices in open proceedings in a section titled "SCE Regulatory Highlights," (ii) certain documents and information related to Southern California wildfires which may be of interest to investors in a section titled "Southern California Wildfires," and (iii) presentations, documents and information that may be of interest to investors in a section titled "Presentations and Updates" at www.edisoninvestor.com in order to publicly disseminate such information. The reports, presentations, documents and information contained on, or connected to, the Edison investor website are not deemed part of, and are not incorporated by reference into, this report.

The MD&A for the three months ended March 31, 2023 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, 2022 and as compared to the three months ended March 31, 2022. This discussion presumes that the reader has read or has access to the 2022 MD&A.

Except when otherwise stated, references to each of Edison International or SCE mean each such company with its subsidiaries on a consolidated basis. References to "Edison International Parent and Other" mean Edison International Parent and its subsidiaries other than SCE and its subsidiaries and "Edison International Parent" mean Edison International on a stand-alone basis, not consolidated with its subsidiaries. Unless otherwise described, all the information contained in this report relates to both filers.

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

MANAGEMENT OVERVIEW

Highlights of Operating Results

Edison International is the ultimate parent holding company of SCE and Edison Energy. SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison Energy is engaged in the competitive business of providing integrated decarbonization and energy solutions to commercial, institutional and industrial customers in North America and Europe. Edison Energy's business activities are currently not material to report as a separate business segment.

Edison International's earnings are prepared in accordance with GAAP. Management uses core earnings (losses) internally for financial planning and for analysis of performance. Core earnings (losses) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the company's performance from period to period. Core earnings (losses) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (losses) are defined as earnings attributable to Edison International shareholders less non-core items. Non-core items include income or loss from discontinued operations and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as write downs, asset impairments and other income and expense related to changes in law, outcomes in tax, regulatory or legal proceedings, and exit activities, including sale of certain assets and other activities that are no longer continuing.


	Three months ended
	March 31,
(in millions)	2023		2022		Change
Net income (loss) attributable to Edison International
SCE	$	370	$	147	$	223
Edison International Parent and Other		(60)		(63)		3
Edison International		310		84		226
Less: Non-core items
SCE
2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries		(90)		(396)		306
Wildfire Insurance Fund expense		(52)		(53)		1
2021 NDCTP estimated loss		(30)		—		(30)
Income tax benefits¹		48		126		(78)
Edison International Parent and Other
Customer revenues for EIS insurance contract		22		—		22
Income tax expense¹		(4)		—		(4)
Total non-core items		(106)		(323)		217
Core earnings (losses)
SCE		494		470		24
Edison International Parent and Other		(78)		(63)		(15)
Edison International	$	416	$	407	$	9

1	SCE and Edison International Parent and Other non-core items are tax-effected at an estimated statutory rate of approximately 28%; customer revenues for EIS insurance contract are tax-effected at an estimated statutory rate of approximately 20%.

Edison International's first quarter 2023 earnings increased $226 million from the first quarter 2022, resulting from an increase in SCE's earnings of $223 million and a decrease in Edison International Parent and Other's losses of $3 million. SCE's higher net earnings consisted of $199 million of lower non-core losses and $24 million of higher core earnings. Edison

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International Parent and Other's lower losses consisted of $18 million of higher non-core earnings and $15 million of higher core losses.

The increase in SCE's core earnings for the three months ended March 31, 2023 from the same period in 2022 was primarily due to revenue from the escalation mechanism set forth in the 2021 GRC final decision, partially offset by higher net interest expense.

The increase in Edison International Parent and Other's core losses for the three months ended March 31, 2023 was primarily due to higher interest expense.

Consolidated non-core items for the three months ended March 31, 2023 and 2022 primarily included:

●

Charges of $52 million ($38 million after-tax) recorded in 2023 and $53 million ($38 million after-tax) recorded in 2022 from the amortization of SCE's contribution to the Wildfire Insurance Fund. See "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" in the 2022 Form 10-K for further information.

●

Charges of $90 million ($65 million after-tax) recorded in 2023 and $396 million ($285 million after-tax) recorded in 2022 for 2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" for further information.

●

A charge of $30 million ($21 million after-tax) recorded in 2023 for estimated losses related to the reasonableness review of recorded San Onofre Units 2 and 3 decommissioning costs in the 2021 NDCTP. See "Liquidity and Capital Resources—SCE—Decommissioning of San Onofre" for more information.

●

Customer revenues of $22 million ($18 million after-tax) recorded in 2023 related to an EIS insurance contract. See "Notes to Consolidated Financial Statements—Note 17. Related-Party Transactions" for further information.

See "Results of Operations" for discussion of SCE's and Edison International Parent and Other's results of operations.

Customer-funded Self-Insurance

In April 2023, the CPUC issued a proposed decision which, if adopted, would approve a joint petition for modification of the 2021 GRC decision filed by SCE, The Utility Reform Network and the Public Advocates Office. If approved by the CPUC, the petition would allow SCE to expand its use of self-insurance. The self-insurance program would be funded through CPUC-jurisdictional rates with $150 million collected for the second half of 2023 and, in the absence of wildfire-related claims, $300 million collected for 2024. These modifications would result in a reduction to current revenue requirements of $80 million in 2023 and, subject to adjustment, $160 million in 2024. If losses are accrued for wildfire-related claims, the petition for modification contains an adjustment mechanism which would increase rates in subsequent years to allow for recovery of the amounts accrued, subject to a shareholder contribution of 2.5% of any self-insurance costs ultimately paid exceeding $500 million in any year, up to a maximum annual contribution of $12.5 million.

Capital Program

Total capital expenditures (including accruals) were $1.3 billion for both the first three months ended March 31, 2023 and 2022. SCE expects to file its 2025 GRC application with the CPUC in May 2023 including its capital expenditure requests for the years 2025 to 2028. For further information regarding the capital program, see "Liquidity and Capital Resources—SCE—Capital Investment Plan" and "Management Overview—Capital Program" in the 2022 MD&A.

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Southern California Wildfires and Mudslides

2017/2018 Wildfire/Mudslide Events

As discussed in the 2022 Form 10-K, multiple lawsuits and investigations related to the 2017/2018 Wildfire/Mudslide Events have been initiated against SCE and Edison International. SCE has previously settled claims under the Local Public Entity Settlement, the TKM Subrogation Settlement, the Woolsey Subrogation Settlement and the SED Agreement. In addition, SCE has also entered into settlements with approximately 10,000 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation as of March 31, 2023.

Each reporting period, management reviews its loss estimates for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. As a result of management's first quarter 2023 review, a $90 million increase in estimated losses for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2023 was recorded. As a result, SCE recorded expected recoveries through FERC electric rates of $6 million against the charge. The resulting net charge to earnings was $84 million ($61 million after-tax).

Estimated losses for the 2017/2018 Wildfire/Mudslide Events litigation are based on a number of assumptions and are subject to change as additional information becomes available. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged. For instance, SCE will receive additional information with respect to damages claimed as the claims mediation processes progress. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to reach settlements and the outcomes of settlements reached through the ongoing claims mediation processes, uncertainties related to the sufficiency of insurance held by plaintiffs, uncertainties related to the litigation processes, including whether plaintiffs will ultimately pursue claims, uncertainty as to the legal and factual determinations to be made during litigation, including uncertainty as to the contributing causes of the 2017/2018 Wildfire/Mudslide Events, the complexities associated with fires that merge and whether inverse condemnation will be held applicable to SCE with respect to damages caused by the Montecito Mudslides, and the uncertainty as to how these factors impact future settlements.

Through March 31, 2023, SCE has accrued estimated losses of $8.8 billion, expected recoveries from insurance of $2.0 billion and expected recoveries through FERC electric rates of $382 million related to the 2017/2018 Wildfire/Mudslide Events. The after-tax net charges to earnings recorded through March 31, 2023 have been $4.7 billion.

As of March 31, 2023, SCE had paid $7.8 billion under executed settlements and had $135 million to be paid under executed settlements, including $120 million to be paid under the SED Agreement, related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had recovered $2.0 billion through insurance and approximately $319 million through FERC-jurisdictional electric rates.

After giving effect to all payment obligations under settlements entered into through March 31, 2023, including under the SED Agreement, Edison International's and SCE's best estimate of expected losses for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events was $988 million. As of the same date, SCE had assets for expected recoveries through FERC electric rates of $63 million on its consolidated balance sheets and had exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events. Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events.

SCE will seek CPUC-jurisdictional rate recovery of prudently-incurred losses and related costs realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance and FERC-jurisdictional recoveries, other than for any obligations under the SED Agreement. Based on Edison International's and SCE's current best estimate of expected losses for the 2017/2018 Wildfire/Mudslide Events, SCE currently expects to seek CPUC-jurisdictional rate recovery of approximately $6 billion by filing several future applications with the CPUC. SCE targets the third quarter of 2023 for the first of such cost recovery applications, and expects to request recovery of approximately $2 billion in that filing

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related to TKM. SCE's plans with respect to these filings may be delayed or modified. For example, the filings may be delayed if proceedings related to the 2017/2018 Wildfire/Mudslide Events do not progress as anticipated. SCE believes that, in light of the CPUC's decision in a cost recovery proceeding involving SDG&E arising from several 2007 wildfires in SDG&E's service area, there is substantial uncertainty regarding how the CPUC will interpret and apply its prudency standard to an investor-owned utility in wildfire cost-recovery proceedings for fires ignited prior to the adoption of AB 1054 on July 12, 2019. Accordingly, while the CPUC has not made a determination regarding SCE's prudency relative to any of the 2017/2018 Wildfire/Mudslide Events, SCE is unable to conclude, at this time, that uninsured CPUC-jurisdictional wildfire-related costs related to the 2017/2018 Wildfire/Mudslide Events are probable of recovery through electric rates.

For further information on Southern California Wildfires and Mudslides, see "Risk Factors," "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Initial and annual contributions to the wildfire insurance fund established pursuant to California Assembly Bill 1054," "Business—Southern California Wildfires" in the 2022 Form 10-K and "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" in this report.

RESULTS OF OPERATIONS

SCE

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

●

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

●

Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards, as well as non-bypassable rates collected for SCE Recovery Funding LLC. Cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs), certain operation and maintenance expenses (including vegetation management and wildfire insurance), and repayment of bonds and financing costs of SCE Recovery Funding LLC. SCE earns no return on these activities.

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

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Three months ended March 31, 2023 versus March 31, 2022


	Three months ended March 31, 2023						Three months ended March 31, 2022
			Cost-						Cost-
	Earning		Recovery		Total		Earning		Recovery		Total
(in millions)	Activities		Activities		Consolidated		Activities		Activities		Consolidated
Operating revenue	$	2,233	$	1,717	$	3,950	$	2,267	$	1,694	$	3,961
Purchased power and fuel		—		1,318		1,318		—		1,037		1,037
Operation and maintenance		670		411		1,081		790		676		1,466
Wildfire-related claims, net of insurance recoveries		96		—		96		425		—		425
Wildfire Insurance Fund expense		52		—		52		53		—		53
Depreciation and amortization		649		7		656		579		4		583
Property and other taxes		137		2		139		116		8		124
Other operating income		—		—		—		(2)		—		(2)
Total operating expenses		1,604		1,738		3,342		1,961		1,725		3,686
Operating income (loss)		629		(21)		608		306		(31)		275
Interest expense		(295)		(5)		(300)		(210)		(3)		(213)
Other income		94		26		120		37		34		71
Income before income taxes		428		—		428		133		—		133
Income tax expense (benefit)		29		—		29		(40)		—		(40)
Net income		399		—		399		173		—		173
Less: Preference stock dividend requirements		29		—		29		26		—		26
Net income available for common stock	$	370	$	—	$	370	$	147	$	—	$	147

Earning Activities

Earning activities were primarily affected by the following:

●	Lower operating revenue of $34 million primarily due to the following:

●

A decrease of CPUC-related revenue of $183 million due to lower wildfire-related expenses that had been authorized for recovery during 2022 through tracks 2 and 3 of the 2021 GRC.

●

An increase of CPUC-related revenue of $102 million due to the escalation mechanism set forth in the 2021 GRC decision.

●

An increase of $63 million of revenue related to CSRP revenue requirements approved in 2022 and 2023. See "Liquidity and Capital Resources—SCE—Regulatory Proceedings" for more information.

●

A decrease of FERC-related revenue of $20 million due to lower wildfire-related claims and expenses to be recovered in FERC revenues.

●

An increase of FERC-related revenue of $6 million due to rate base growth.

●	Lower operation and maintenance expenses of $120 million.

●

In 2022, SCE recognized $241 million of previously deferred wildfire-related expenses upon approval of the 2021 GRC track 2, compared to $84 million previously deferred expenses recognized in 2023, primarily related to the 2021 GRC track 3 and CSRP approvals. The wildfire and CSRP-related expenses were offset in revenue above.

●

In 2023, SCE accrued $30 million in estimated losses relating to the 2021 NDCTP. See "Liquidity and Capital Resources—SCE— Decommissioning of San Onofre" for more information.

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●

Wildfire-related claims were impacted by charges of $90 million and $416 million recorded in 2023 and 2022, respectively, related to the 2017/2018 Wildfire/Mudslide Events. Also included in the charges are $6 million and
$9 million recorded in 2023 and 2022, respectively, for self-insured retention expenses related to the Post-2018 wildfires. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."

●	Higher depreciation and amortization expense of $70 million primarily due to recognition of previously deferred CSRP-related expenses (offset in revenue above) and increased plant balances in 2023.

●	Higher property and other taxes of $21 million primarily due to higher property assessed value in 2023.

●	Higher interest expense of $85 million primarily due to increased long-term borrowing, higher interest rates on long-term debt, short-term debt and balancing account overcollections.

●	Higher other income of $57 million primarily due to a higher interest rate applied to balancing account undercollections.

●	See "Income Taxes" below for the explanation of the $69 million increase in income tax expenses.

Cost-Recovery Activities

Operating revenue and the corresponding operating expenses in cost-recovery activities were primarily affected by the following:

●	Higher purchased power and fuel costs of $281 million, primarily due to higher power and gas prices, partially offset by hedging gains.

●	Lower operation and maintenance costs of $265 million. In 2022, SCE recognized $160 million of wildfire-related expenses previously deferred upon obtaining approval of the 2021 GRC track 2 and $109 million of previously deferred uncollectible costs through a balancing account.

Supplemental Operating Revenue Information

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

Income Taxes

The increase in income tax expense of $69 million for the three months ended March 31, 2023 compared to the same period in 2022 was primarily driven by the increase in pre-tax income. The effective tax rates were 6.8% and (30.1)% for the three months ended March 31, 2023 and 2022, respectively. SCE’s effective tax rate is below the federal statutory rate of 21% for 2023 and 2022 primarily due to the CPUC’s ratemaking treatment for the current tax benefit arising from certain property-related and other temporary differences, which reverse over time. The accounting treatment for these temporary differences results in recording regulatory assets and liabilities for amounts that would otherwise be recorded to deferred tax expense.

See "Notes to Consolidated Financial Statements—Note 8. Income Taxes" for a reconciliation of the federal statutory rate to the effective income tax rates.

Edison International Parent and Other

Results of operations for Edison International Parent and Other include amounts from other subsidiaries that are not reportable as segments, as well as intercompany eliminations.

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Loss from Operations

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


	Three months ended March 31,
(in millions)	2023		2022
Edison Energy Group and subsidiaries	$	(2)	$	(5)
Corporate expenses and other subsidiaries		(32)		(32)
Edison International Parent and Other net loss	$	(34)	$	(37)
Preferred stock dividend requirement		26		26
Edison International Parent and Other net loss attributable to common stock	$	(60)	$	(63)

The net loss attributable to common stock from operations of Edison International Parent and Other decreased $3 million for the three months ended March 31, 2023 compared to the same period in 2022, primarily due to higher interest expense, partially offset by earnings of $22 million ($18 million after-tax) recorded in 2023 related to customer revenues for an EIS insurance contract. See "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies" and "Notes to Consolidated Financial Statements—Note 17. Related Party Transactions.

LIQUIDITY AND CAPITAL RESOURCES

SCE

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

In the next 12 months, SCE expects to fund its cash requirements through operating cash flows, capital market and bank financings and equity contributions from Edison International Parent, as needed. SCE also has availability under its credit facility to fund cash requirements. SCE expects to issue bonds to finance or refinance eligible sustainable projects. For further information about eligible sustainable projects, see "Liquidity and Capital Resources—SCE" in the 2022 MD&A. SCE also expects to issue additional debt for general corporate purposes and to finance payments for future resolutions of claims related to the 2017/2018 Wildfire/Mudslide Events.

SCE has invested all $1.6 billion of the required AB 1054 Excluded Capital Expenditures. SCE issued securitized bonds in the amounts of $338 million, $533 million and $775 million in February 2021, February 2022 and April 2023, respectively, to finance these expenditures and related financing costs. SCE used the proceeds of the April 2023 securitized bonds to repay a term loan of $730 million prior to its maturity in May 2023.

In the first quarter of 2023, Moody's upgraded SCE's credit rating from Baa2 to Baa1 and revised SCE's rating outlook from positive to stable. In April 2023, Fitch upgraded SCE's credit rating from BBB- to BBB and revised SCE's rating outlook from positive to stable. The following tables summarizes SCE’s current long-term issuer credit ratings and outlook from the major credit rating agencies:


	Moody's	Fitch	S&P
Credit Rating	Baa1	BBB	BBB
Outlook	Stable	Stable	Stable

SCE's credit ratings may be affected if, among other things, regulators fail to successfully implement AB 1054 in a consistent and credit supportive manner or the Wildfire Insurance Fund is depleted by claims from catastrophic wildfires. Credit rating downgrades increase the cost and may impact the availability of short-term and long-term borrowings, including commercial paper, credit facilities, bond financings or other borrowings. In addition, some of SCE's power procurement contracts would

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require SCE to pay related liabilities or post additional collateral if SCE's credit rating were to fall below investment grade. For further details, see "—Margin and Collateral Deposits."

The cost of capital adjustment mechanism set by the CPUC could impact SCE's results of operations and cash flows. The cost of capital adjustment mechanism's benchmark beginning January 1, 2023, is the 12-month, October 1, 2021 through September 30, 2022, average Moody's Baa utility bond yield of 4.37%. If the difference between the benchmark and the average of the same index for the 12-month period from October 1, 2022 to September 30, 2023 exceeds 100-basis points, SCE's CPUC-authorized ROE will be adjusted for 2024 by half the amount of the difference (up or down). The average Moody's Baa utility bond yield between October 1, 2022 and April 25, 2023 was 5.72%. The spot rate for Moody's Baa utility bond was 5.42% on April 25, 2023. An average Moody's Baa utility bond yield of 4.94% or higher from April 26, 2023 through September 30, 2023 would trigger the mechanism to adjust upward. For further information see "Business—SCE— Overview of Ratemaking Process" in the 2022 Form 10-K.

Available Liquidity

At March 31, 2023, SCE had cash on hand of $690 million and approximately $2.5 billion available to borrow on its $3.4 billion revolving credit facility. The credit facility is available for borrowing needs until May 2026 and the aggregate maximum principal amount may be increased up to $4.0 billion, provided that additional lender commitments are obtained. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

SCE may finance balancing account undercollections and working capital requirements to support operations and capital expenditures with commercial paper, its credit facilities or other borrowings, subject to availability in the bank and capital markets. As necessary, SCE will utilize its available liquidity, capital market financings, other borrowings or parent company contributions to SCE equity in order to meet its obligations as they become due, including costs related to the 2017/2018 Wildfire/Mudslide Events. For further information, see "Management Overview—Southern California Wildfires and Mudslides."

Debt Covenant

SCE's credit facilities and term loan require a debt to total capitalization ratio as defined in the applicable agreements of less than or equal to 0.65 to 1. At March 31, 2023, SCE's debt to total capitalization ratio was 0.57 to 1.

At March 31, 2023, SCE was in compliance with all financial covenants that affect access to capital.

Regulatory Proceedings

Wildfire Related Regulatory Proceedings

In response to the increase in wildfire activity, and faster progression of and increased damage from wildfires across SCE's service territory and throughout California, SCE has incurred wildfire mitigation, wildfire insurance and wildfire and drought restoration related spending at levels significantly exceeding amounts authorized in SCE's GRCs.

Wildfire Expense Memorandum Account

SCE tracks insurance premium costs related to wildfire liability insurance policies as well as other wildfire-related costs in its WEMA. In December 2020, SCE filed a WEMA application with the CPUC to seek recovery of $215 million of costs recorded in WEMA at December 31, 2020. The costs are primarily related to incremental wildfire insurance premium expenses and associated costs for wildfire liability insurance policies that provide coverage for the last six months of 2020. In March 2023, the CPUC issued a proposed decision which, if approved, would authorize recovery of $207 million. The amount not approved in this decision relates to wildfire liability insurance coverage previously allocated to San Onofre, which SCE expects to be eligible for recovery from the nuclear decommissioning trusts or from SCE customers in a future cost recovery proceeding.

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CSRP

In March 2023, the CPUC approved SCE's second CSRP application to recover approximately $59 million of capital expenditures and $28 million of operation and maintenance expenses incurred from May 2021 to December 2021, resulting in a revenue requirement of $65 million. The decision also approved SCE seeking review and cost recovery of additional post-implementation CSRP costs incurred from January 2022 through December 2024 in its 2025 GRC filing.

ERRA Proceeding

In January 2023, as a result of undercollection in ERRA and PABA at the end of 2022 due to higher gas and power prices, SCE filed an expedited ERRA trigger application with the CPUC. In April 2023, the CPUC approved SCE to recover a revenue requirement of up to $596 million over 12 months beginning June 1, 2023. The decision also granted SCE authority to decline to place some or all of the increase into rates if its forecast reasonably demonstrates that it will not need some or all of the increase in order to bring its ERRA trigger balance within the prescribed threshold. See "Business—SCE—Overview of Ratemaking Process" in 2022 10-K for further information of ERRA trigger mechanism.

Capital Investment Plan

Major Transmission and Utility Owned Storage Projects

Eldorado-Lugo-Mohave Upgrade Project

The total costs for the Eldorado-Lugo-Mohave Upgrade Project are expected to exceed amounts currently approved in the certificate of public convenience and necessity granted by the CPUC due to delays in regulatory approvals, contractor performance issues, COVID-19 and the availability of CAISO outage windows. Additional work may also be required to mitigate the impact of the project on nearby gas lines. SCE expects to request CPUC approval for the additional expenditures and expects the project to be in service in 2023. See "Liquidity—SCE—Capital Investment Plan" in 2022 10-K for further information.

Utility Owned Storage

As discussed in the 2022 Form 10-K, in October 2021, SCE contracted with Ameresco, Inc. ("Ameresco") for the construction of utility owned energy storage projects at three sites in SCE's service territory with an aggregate capacity of 537.5 MW.

In April 2023, Ameresco discovered damage to some of the equipment at one of the projects which makes up 225 MW of the 537.5 MW aggregate capacity. SCE has received a notice of potential force majeure event from Ameresco noting that Ameresco is performing further analyses on the cause of the damage and asserting that rainstorms at the project site may have caused or contributed to the damage. SCE believes that there is significant risk that this project will not be in-service to meet summer peak reliability needs.

Ameresco has advised SCE that it currently expects the other two projects to be in-service prior to August 2023.

Decommissioning of San Onofre

As discussed in the 2022 Form 10-K, in February 2022, SCE filed its application in the 2021 NDCTP with the CPUC requesting reasonableness review of approximately $570 million (SCE share in 2022 dollars) of recorded San Onofre Units 2 and 3 decommissioning costs incurred during the period 2018 to 2020. Intervenors in the proceeding have recommended approximately $115 million (SCE share in 2022 dollars) in disallowances for San Onofre Units 2 and 3 decommissioning costs. This amount includes a recommended disallowance of approximately $45 million in costs associated with an August 2018 incident that occurred when an SCE contractor was loading a spent nuclear fuel canister into an ISFSI resulting in fuel transfer operations being suspended for approximately one year. The remainder of the recommended disallowance amount is

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primarily for contractor staffing costs incurred during a delay in issuance of the CDP to allow for decommissioning. In the first quarter of 2023, SCE accrued $30 million in estimated losses relating to the 2021 NDCTP.

Margin and Collateral Deposits

Certain derivative instruments, power and energy procurement contracts and other contractual arrangements contain collateral requirements. In addition, certain environmental remediation obligations require financial assurance that may be in the form of collateral postings. Future collateral requirements may differ from the requirements at March 31, 2023, due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, the impact of changes in wholesale power and natural gas prices on SCE's contractual obligations, and the impact of SCE's credit ratings falling below investment grade.

The table below provides the amount of collateral posted by SCE to its counterparties as well as the potential collateral that would have been required as of March 31, 2023, if SCE's credit rating had been downgraded to below investment grade as of that date. The table below also provides the potential collateral that could be required due to adverse changes in wholesale power and natural gas prices over the remaining lives of existing power and fuel derivative contracts.

In addition to amounts shown in the table, power and fuel contract counterparties may also institute new collateral requirements, applicable to future transactions to allow SCE to continue trading in power and fuel contracts at the time of a downgrade or upon significant increases in market prices. Furthermore, SCE may also be required to post up to $50 million in collateral in connection with its environmental remediation obligations, within 120 days of the end of the fiscal year in which the downgrade occurs.


(in millions)
Collateral posted as of March 31, 2023¹	$	356
Incremental collateral requirements for purchased power and fuel contracts resulting from a potential downgrade of SCE's credit rating to below investment grade²		59
Incremental collateral requirements for SCE's financial hedging activities resulting from adverse market price movement³		71
Posted and potential collateral requirements	$	486

¹	Net collateral provided to counterparties and other brokers consisted of $261 million in letters of credit and surety bonds and $95 million of cash collateral.

²	Represents potential collateral requirements for accounts payable and mark-to-market valuation at March 31, 2023. Requirement varies throughout the period and is generally lower at the end of the month.

³	Incremental collateral requirements were based on potential changes in SCE's forward positions as of March 31, 2023 due to adverse market price movements over the remaining lives of the existing power and fuel derivative contracts using a 95% confidence level.

Edison International Parent and Other

In the next 12 months, Edison International expects to fund its net cash requirements through cash on hand, dividends from SCE, and capital market and bank financings. Edison International may finance its ongoing cash requirements, including dividends, working capital requirements, payment of obligations, and capital investments, including capital contributions to subsidiaries, with short-term or other financings, subject to availability in the bank and capital markets.

At March 31, 2023, Edison International Parent and Other had cash on hand of $146 million and $878 million available to borrow on its $1.5 billion revolving credit facility. The credit facility is available for borrowing needs until May 2026 and the aggregate maximum principal amount may be increased up to $2.0 billion, provided that additional lender commitments are obtained. For further information, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

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In March 2023, Edison International Parent issued $500 million of junior subordinated notes, due in 2053, which provide approximately $250 million of equity content as viewed by rating agencies. Edison International expects to raise any additional equity this year through its internal programs, which are estimated to generate approximately $100 million. The total expected equity content is consistent with the $300 million to $400 million of equity content identified in Edison International's 2023 financing plan.

Edison International Parent and Other's liquidity and its ability to pay operating expenses and pay dividends to preferred and common shareholders are dependent on access to the bank and capital markets, dividends from SCE, realization of tax benefits and its ability to meet California law requirements for the declaration of dividends. Prior to declaring dividends, Edison International's Board of Directors evaluates available information to ensure that the California law requirements for the declarations are met. For information on the California law requirements on the declaration of dividends, see "Liquidity and Capital Resources—SCE—SCE Dividends" in the 2022 Form 10-K. Edison International intends to maintain its target payout ratio of 45% – 55% of SCE's core earnings, subject to the factors identified above.

Edison International's ability to declare and pay common dividends may be restricted under the terms of its Series A and Series B Preferred Stock. For further information, see "Notes to Consolidated Financial Statements—Note 14. Equity" in the 2022 Form 10-K.

Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the applicable agreements of less than or equal to 0.70 to 1. At March 31, 2023, Edison International's consolidated debt to total capitalization ratio was 0.64 to 1.

At March 31, 2023, Edison International Parent was in compliance with all financial covenants that affect access to capital.

In the first quarter of 2023, Moody's upgraded Edison International's credit rating from Baa3 to Baa2 and revised Edison International's rating outlook from positive to stable. In April 2023, Fitch upgraded Edison International's credit rating from BBB- to BBB and revised Edison International's rating outlook from positive to stable The following table summarizes Edison International Parent's current long-term issuer credit ratings and outlook from the major credit rating agencies:


	Moody's	Fitch	S&P
Credit Rating	Baa2	BBB	BBB
Outlook	Stable	Stable	Stable

Edison International Parent's credit ratings may be affected if, among other things, regulators fail to successfully implement AB 1054 in a consistent and credit supportive manner or the Wildfire Insurance Fund is depleted by claims from catastrophic wildfires. Credit rating downgrades increase the cost and may impact the availability of short-term and long-term borrowings, including commercial paper, credit facilities, note financings or other borrowings.

Edison International Income Taxes

Inflation Reduction Act of 2022

On August 16, 2022, the IRA was signed into law. The law imposes a 15% corporate alternative minimum tax ("CAMT") on adjusted financial statement income ("AFSI") of corporations with average AFSI exceeding $1 billion over a specified 3-year period. The CAMT was effective beginning January 1, 2023. Based on the current interpretation of the law and historical financial data, Edison International estimates that it will exceed the $1 billion threshold and be subject to CAMT on its consolidated Federal tax returns beginning in 2025. SCE expects to be subject to CAMT on its stand-alone Federal return beginning in 2024.

The law also includes significant extensions, expansions, and enhancements of numerous energy-related investment tax credits, as well as creating new credits applicable to electricity production which may apply to SCE's capital expenditures.

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Under the IRA, SCE expects to generate investment tax credits related to its utility owned storage projects, which will accrue to the benefit of its customers.

Historical Cash Flows

SCE


	Three months ended March 31,
(in millions)	2023		2022
Net cash (used in) provided by operating activities	$	(20)	$	827
Net cash provided by financing activities		1,249		171
Net cash used in investing activities		(1,305)		(1,159)
Net decrease in cash and cash equivalents	$	(76)	$	(161)

Net Cash (Used in) Provided by Operating Activities

The following table summarizes major categories of net cash for operating activities as provided in more detail in SCE's consolidated statements of cash flows for the three months ended March 31, 2023 and 2022.


	Three months ended March 31,				Change in cash flows
(in millions)	2023		2022		2023/2022
Net income	$	399	$	173
Non-cash items¹		719		611
Subtotal		1,118		784	$	334
Changes in cash flow resulting from working capital²		(725)		78		(803)
Regulatory assets and liabilities		(296)		259		(555)
Wildfire related claims³		(133)		(196)		63
Other noncurrent assets and liabilities⁴		16		(98)		114
Net cash (used in) provided by operating activities	$	(20)	$	827	$	(847)

1	Non-cash items include depreciation and amortization, allowance for equity during construction, deferred income taxes, Wildfire Insurance Fund amortization expenses and other.

2	Changes in working capital items include receivables, accrued unbilled revenue, inventory, amortization of prepaid expenses, accounts payable, tax receivables and payables, derivative assets and liabilities and other current assets and liabilities.

2023 amount represents payments of $221 million for 2017/2018 Wildfire/Mudslide Events and $7 million for Post-2018 Wildfires, partially offset by an increase in wildfire estimated losses of $96 million. 2022 amount represents payment of $717 million for 2017/2018 Wildfire/Mudslide Events, partially offset by an increase in wildfire estimated losses of $521 million.

4	Includes nuclear decommissioning trusts. See "Nuclear Decommissioning Activities" below for further information. 2022 amount also includes outflow from increase in wildfire insurance receivables of $96 million.

Net cash (used in) provided by operating activities was impacted by the following:

Net income and non-cash items increased in 2023 by $334 million primarily due to revenue from escalation mechanism set forth in the 2021 GRC final decision, partially offset by higher net interest expense.

Net changes in cash resulting from working capital was an outflow of $725 million and an inflow of $78 million during the three months ended March 31, 2023 and 2022, respectively. Net cash outflow for 2023 was primarily due to decreases in payables of $695 million mainly from payments of power purchase contracts driven by a decrease in gas prices from December 2022, and $171 million cash outflow for margin and collateral deposits due to the decrease in the market value of power and gas derivatives, partially offset by inflow from net decreases in customer receivables and unbilled revenue of $113 million. Net cash inflow for 2022 was primarily due to a net decrease in customer receivables and unbilled revenue of

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$161 million (mainly due to $185 million of CAPP funds received in January 2022), and a net decrease in prepaid insurance of $88 million, partially offset by a decrease in payables of $166 million.

Net cash (used in) provided by regulatory assets and liabilities, including changes in net undercollections recorded in balancing accounts, was $(296) million and $259 million during the three months ended March 31, 2023 and 2022, respectively. SCE has a number of balancing and memorandum accounts, which impact cash flows based on differences between timing of collection of amounts through rates and accrual expenditures. Cash flows were primarily impacted by the following:

2023

●	Decreased overcollections of $234 million for GHG revenue related to climate credits provided to customers, partially offset by GHG revenue related to GHG auction revenue received.

●	Undercollections of wildfire related memorandum and balancing accounts increased by $106 million primarily due to additional wildfire risk mitigation and restoration costs incurred.

●	Net undercollections of BRRBA increased by $26 million primarily due to lower sales volume in 2023, partially offset by recovery of prior year undercollections from various tracks of the 2021 GRC.

●	Net undercollections for ERRA, PABA and NSGBA decreased by $14 million primarily due to recovery of prior PABA undercollections, partially offset by current year undercollections due to lower than forecast sale volume.

2022

●

Net undercollections of BRRBA increased by $511 million primarily due to $401 million of expense authorized under GRC track 2 for collection in customer rates starting March 2022 over a 36-month period, and current year undercollections due to actual billed prices lower than forecast due to timing, partially offset by recovery of prior year undercollections, including 2021 GRC authorized additional revenue requirement for the first nine months of 2021 to be collected over a 27-month period starting October 2021.

●

Undercollections decreased by $371 million related to wildfire risk mitigation memorandum and balancing accounts as a result of approval to recover costs in GRC track 2, which were transferred to BRRBA for recovery as mentioned above, partially offset by additional wildfire risk mitigation costs incurred.

●	Net undercollections for ERRA, PABA and NSGBA decreased by $72 million primarily due to recovery of prior PABA and NSGBA undercollections, partially offset by current year undercollections due to delay in rate change and higher market exposure.

●	Increased overcollections of $221 million for the public purpose and energy efficiency programs as a result of lower program spending due to timing.

●	Increase in overcollection of $144 million for excess California Department of Water Resources ("DWR") bond and power charges to be refunded to customers over a 12-month period beginning in June 2022.

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Net Cash Provided by Financing Activities

The following table summarizes cash provided by financing activities for the three months ended March 31, 2023 and 2022. Issuances of debt are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."


		Three months ended March 31,
(in millions)	2023		2022
Issuances of long-term debt, including premium/discount and net of issuance costs	$	1,186	$	1,713
Long-term debt repaid		(1)		(365)
Short-term debt repaid		—		(518)
Commercial paper borrowing (repayment), net		431		(306)
Payment of common stock dividends to Edison International		(350)		(325)
Payment of preference stock dividends		(29)		(32)
Other		12		4
Net cash provided by financing activities	$	1,249	$	171

Net Cash Used in Investing Activities

Cash flows used in investing activities are primarily due to total capital expenditures of $1.3 billion and $1.2 billion for the three months ended March 31, 2023 and 2022, respectively. In addition, SCE had a net redemption of nuclear decommissioning trust investments of $19 million and $34 million during the three months ended March 31, 2023 and 2022, respectively. See "Nuclear Decommissioning Activities" below for further discussion.

Nuclear Decommissioning Activities

SCE's consolidated statements of cash flows include nuclear decommissioning activities, which are reflected in the following line items:


	Three months ended March 31,
(in millions)	2023		2022
Net cash used in operating activities:
Net earnings from nuclear decommissioning trust investments	$	21	$	19
SCE's decommissioning costs		(57)		(35)
Net cash provided by investing activities:
Proceeds from sale of investments		951		867
Purchases of investments		(932)		(833)
Net cash (outflow) inflow	$	(17)	$	18

Net cash used in operating activities relates to interest and dividends less administrative expenses, taxes and SCE's decommissioning costs. Investing activities represent the purchase and sale of investments within the nuclear decommissioning trusts, including the reinvestment of earnings from nuclear decommissioning trust investments. The net cash impact reflects timing of decommissioning payments ($57 million and $35 million in 2023 and 2022, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($40 million and $53 million in 2023 and 2022 respectively).

Edison International Parent and Other

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

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	Three months ended March 31,
(in millions)	2023		2022
Net cash used in operating activities	$	(70)	$	(35)
Net cash provided by financing activities		67		34
Net cash provided by investing activities		—		2
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(3)	$	1

Net Cash Used in Operating Activities

Net cash used in operating activities was impacted by the following:

●	$70 million and $35 million cash outflow from operating activities in 2023 and 2022, respectively, primarily due to payments relating to interest and operating costs. The 2022 amount is partially offset by $18 million income tax refund received from the California Franchise Tax Board.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was as follows:


	Three months ended March 31,
(in millions)	2023		2022
Dividends paid to Edison International common shareholders	$	(277)	$	(262)
Dividends paid to Edison International preferred shareholders		(52)		(46)
Dividends received from SCE		350		325
Long-term debt issuance, net of discount and issuance costs		495		—
Long-term debt repayments		(400)		—
Repayments of term loan		(600)		—
Commercial paper financing, net		529		—
Other		22		17
Net cash provided by financing activities	$	67	$	34

Contingencies

Edison International's and SCE's contingencies are discussed in "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies."

MARKET RISK EXPOSURES

Edison International's and SCE's primary market risks are described in the 2022 Form 10-K, and there have been no material changes for the three months ended March 31, 2023. For further discussion of market risk exposures, including commodity price risk and credit risk, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "—Note 6. Derivative Instruments."

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

For a discussion of Edison International's and SCE's critical accounting policies, see "Critical Accounting Estimates and Policies" in the 2022 MD&A.

NEW ACCOUNTING GUIDANCE

There have been no material changes in recently issued or adopted accounting standards from those disclosed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance" in the 2022 Form 10-K.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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FINANCIAL STATEMENTS

Consolidated Statements of Income

Edison International


	Three months ended
	March 31,
(in millions, except per-share amounts, unaudited)	2023		2022
Operating revenue	$	3,966	$	3,968
Purchased power and fuel		1,318		1,037
Operation and maintenance		1,084		1,487
Wildfire-related claims, net of insurance recoveries		96		425
Wildfire Insurance Fund expense		52		53
Depreciation and amortization		656		583
Property and other taxes		140		126
Other operating income		—		(2)
Total operating expenses		3,346		3,709
Operating income		620		259
Interest expense		(361)		(246)
Other income		119		68
Income before income taxes		378		81
Income tax expense (benefit)		13		(55)
Net income		365		136
Less: Preference stock dividend requirements of SCE		29		26
Less: Preferred stock dividend requirement of Edison International		26		26
Net income attributable to Edison International common shareholders	$	310	$	84
Basic earnings per share:
Weighted average shares of common stock outstanding		383		381
Basic earnings per common share attributable to Edison International common shareholders	$	0.81	$	0.22
Diluted earnings per share:
Weighted average shares of common stock outstanding, including effect of dilutive securities		384		382
Diluted earnings per common share attributable to Edison International common shareholders	$	0.81	$	0.22

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

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Consolidated Statements of Comprehensive Income	Edison International


		Three months ended
	March 31,
(in millions, unaudited)	2023		2022
Net income	$	365	$	136
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions		—		2
Foreign currency translation adjustments		2		—
Other comprehensive income, net of tax		2		2
Comprehensive income		367		138
Less: Comprehensive income attributable to noncontrolling interests		29		26
Comprehensive income attributable to Edison International	$	338	$	112

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

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Consolidated Balance Sheets	Edison International


	March 31,		December 31,
(in millions, unaudited)	2023		2022
ASSETS
Cash and cash equivalents	$	836	$	914
Receivables, less allowances of $323 and $347 for uncollectible accounts at respective dates		1,451		1,695
Accrued unbilled revenue		766		641
Inventory		500		474
Prepaid expenses		311		248
Regulatory assets		2,817		2,497
Wildfire Insurance Fund contributions		204		204
Other current assets		325		397
Total current assets		7,210		7,070
Nuclear decommissioning trusts		4,093		3,948
Marketable securities		2		5
Other investments		62		50
Total investments		4,157		4,003
Utility property, plant and equipment, less accumulated depreciation and amortization of $12,505 and $12,260 at respective dates		53,955		53,274
Nonutility property, plant and equipment, less accumulated depreciation of $108 and $106 at respective dates		215		212
Total property, plant and equipment		54,170		53,486
Regulatory assets (include $827 and $834 related to Variable Interest Entities "VIEs" at respective dates)		8,151		8,181
Wildfire Insurance Fund contributions		2,104		2,155
Operating lease right-of-use assets		1,346		1,442
Long-term insurance receivables		458		465
Other long-term assets		1,258		1,239
Total long-term assets		13,317		13,482
Total assets	$	78,854	$	78,041

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

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Consolidated Balance Sheets	Edison International


	March 31,		December 31,
(in millions, except share amounts, unaudited)	2023		2022
LIABILITIES AND EQUITY
Short-term debt	$	1,645	$	2,015
Current portion of long-term debt		2,214		2,614
Accounts payable		1,795		2,359
Wildfire-related claims		75		121
Customer deposits		172		167
Regulatory liabilities		425		964
Current portion of operating lease liabilities		420		506
Other current liabilities		1,620		1,601
Total current liabilities		8,366		10,347
Long-term debt (include $809 related to VIEs at both dates)		29,442		27,025
Deferred income taxes and credits		6,280		6,149
Pensions and benefits		413		422
Asset retirement obligations		2,733		2,754
Regulatory liabilities		8,555		8,211
Operating lease liabilities		926		936
Wildfire-related claims		1,600		1,687
Other deferred credits and other long-term liabilities		2,990		2,988
Total deferred credits and other liabilities		23,497		23,147
Total liabilities		61,305		60,519
Commitments and contingencies (Note 12)
Preferred stock (50,000,000 shares authorized; 1,250,000 shares of Series A and 750,000 shares of Series B issued and outstanding at respective dates)		1,978		1,978
Common stock, no par value (800,000,000 shares authorized; 382,659,081 and 382,208,498 shares issued and outstanding at respective dates)		6,223		6,200
Accumulated other comprehensive loss		(9)		(11)
Retained earnings		7,456		7,454
Total Edison International's shareholders' equity		15,648		15,621
Noncontrolling interests – preference stock of SCE		1,901		1,901
Total equity		17,549		17,522
Total liabilities and equity	$	78,854	$	78,041

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

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Consolidated Statements of Cash Flows	Edison International


	Three months ended March 31,
(in millions, unaudited)	2023		2022
Cash flows from operating activities:
Net income	$	365	$	136
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization		676		624
Allowance for equity during construction		(36)		(30)
Deferred income taxes		12		(55)
Wildfire Insurance Fund amortization expense		52		53
Other		8		11
Nuclear decommissioning trusts		(19)		(34)
Changes in operating assets and liabilities:
Receivables		227		130
Inventory		(29)		(14)
Accounts payable		(508)		(84)
Tax receivables and payables		(9)		54
Other current assets and liabilities		(329)		(30)
Derivative assets and liabilities, net		(99)		35
Regulatory assets and liabilities, net		(296)		259
Wildfire-related insurance receivable		—		(96)
Wildfire-related claims		(133)		(196)
Other noncurrent assets and liabilities		28		29
Net cash (used in) provided by operating activities		(90)		792
Cash flows from financing activities:
Long-term debt issued, net of discount and issuance costs of $19 and $20 for the respective periods		1,681		1,713
Long-term debt repaid		(401)		(365)
Short-term debt repaid		(600)		(518)
Common stock issued		10		4
Commercial paper borrowing (repayments), net		960		(306)
Dividends and distribution to noncontrolling interests		(29)		(32)
Common stock dividends paid		(277)		(262)
Preferred stock dividends paid		(52)		(46)
Other		24		17
Net cash provided by financing activities		1,316		205
Cash flows from investing activities:
Capital expenditures		(1,324)		(1,207)
Proceeds from sale of nuclear decommissioning trust investments		951		867
Purchases of nuclear decommissioning trust investments		(932)		(833)
Other		—		16
Net cash used in investing activities		(1,305)		(1,157)
Net decrease in cash, cash equivalents and restricted cash		(79)		(160)
Cash, cash equivalents and restricted cash at beginning of period		917		394
Cash, cash equivalents and restricted cash at end of period	$	838	$	234

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

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Consolidated Statements of Income	Southern California Edison Company


	Three months ended
	March 31,
(in millions, unaudited)	2023		2022
Operating revenue	$	3,950	$	3,961
Purchased power and fuel		1,318		1,037
Operation and maintenance		1,081		1,466
Wildfire-related claims, net of insurance recoveries		96		425
Wildfire Insurance Fund expense		52		53
Depreciation and amortization		656		583
Property and other taxes		139		124
Other operating income		—		(2)
Total operating expenses		3,342		3,686
Operating income		608		275
Interest expense		(300)		(213)
Other income		120		71
Income before income taxes		428		133
Income tax expense (benefit)		29		(40)
Net income		399		173
Less: Preference stock dividend requirements		29		26
Net income available for common stock	$	370	$	147


Consolidated Statements of Comprehensive Income	Southern California Edison Company


		Three months ended
	March 31,
(in millions, unaudited)	2023		2022
Net income	$	399	$	173
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions		—		1
Other comprehensive income, net of tax		—		1
Comprehensive income	$	399	$	174

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

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Consolidated Balance Sheets

Southern California Edison Company


	March 31,		December 31,
(in millions, unaudited)	2023		2022
ASSETS
Cash and cash equivalents	$	690	$	766
Receivables, less allowances of $323 and $347 for uncollectible accounts at respective dates		1,427		1,675
Accrued unbilled revenue		766		638
Inventory		500		474
Prepaid expenses		333		292
Regulatory assets		2,817		2,497
Wildfire Insurance Fund contributions		204		204
Other current assets		315		384
Total current assets		7,052		6,930
Nuclear decommissioning trusts		4,093		3,948
Other investments		47		36
Total investments		4,140		3,984
Utility property, plant and equipment, less accumulated depreciation and amortization of $12,505 and $12,260 at respective dates		53,955		53,274
Nonutility property, plant and equipment, less accumulated depreciation of $95 and $94 at respective dates		209		206
Total property, plant and equipment		54,164		53,480
Regulatory assets (include $827 and $834 related to VIEs at respective dates)		8,151		8,181
Wildfire Insurance Fund contributions		2,104		2,155
Operating lease right-of-use assets		1,337		1,433
Long-term insurance receivables		133		139
Long-term insurance receivables due from affiliate		334		334
Other long-term assets		1,188		1,171
Total long-term assets		13,247		13,413
Total assets	$	78,603	$	77,807

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

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Consolidated Balance Sheets

Southern California Edison Company


	March 31,		December 31,
(in millions, except share amounts, unaudited)	2023		2022
LIABILITIES AND EQUITY
Short-term debt	$	626	$	925
Current portion of long-term debt		2,214		2,214
Accounts payable		1,790		2,351
Wildfire-related claims		75		121
Customer deposits		172		167
Regulatory liabilities		425		964
Current portion of operating lease liabilities		419		505
Other current liabilities		1,592		1,578
Total current liabilities		7,313		8,825
Long-term debt (include $809 related to VIEs at both dates)		25,965		24,044
Deferred income taxes and credits		7,693		7,545
Pensions and benefits		103		105
Asset retirement obligations		2,733		2,754
Regulatory liabilities		8,555		8,211
Operating lease liabilities		918		928
Wildfire-related claims		1,600		1,687
Other deferred credits and other long-term liabilities		2,916		2,919
Total deferred credits and other liabilities		24,518		24,149
Total liabilities		57,796		57,018
Commitments and contingencies (Note 12)
Preference stock		1,945		1,945
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at respective dates)		2,168		2,168
Additional paid-in capital		8,438		8,441
Accumulated other comprehensive loss		(8)		(8)
Retained earnings		8,264		8,243
Total equity		20,807		20,789
Total liabilities and equity	$	78,603	$	77,807

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)	2023		2022
Cash flows from operating activities:
Net income	$	399	$	173
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization		673		622
Allowance for equity during construction		(36)		(30)
Deferred income taxes		28		(40)
Wildfire Insurance Fund amortization expense		52		53
Other		2		6
Nuclear decommissioning trusts		(19)		(34)
Changes in operating assets and liabilities:
Receivables		235		130
Inventory		(29)		(14)
Accounts payable		(505)		(79)
Tax receivables and payables		(9)		36
Other current assets and liabilities		(318)		(30)
Derivative assets and liabilities, net		(99)		35
Regulatory assets and liabilities, net		(296)		259
Wildfire-related insurance receivable		—		(96)
Wildfire-related claims		(133)		(196)
Other noncurrent assets and liabilities		35		32
Net cash (used in) provided by operating activities		(20)		827
Cash flows from financing activities:
Long-term debt issued, net of discount and issuance costs of $14 and $20 for the respective periods		1,186		1,713
Long-term debt repaid		(1)		(365)
Short-term debt repaid		—		(518)
Commercial paper borrowing (repayment), net		431		(306)
Common stock dividends paid		(350)		(325)
Preference stock dividends paid		(29)		(32)
Other		12		4
Net cash provided by financing activities		1,249		171
Cash flows from investing activities:
Capital expenditures		(1,324)		(1,207)
Proceeds from sale of nuclear decommissioning trust investments		951		867
Purchases of nuclear decommissioning trust investments		(932)		(833)
Other		—		14
Net cash used in investing activities		(1,305)		(1,159)
Net decrease in cash and cash equivalents		(76)		(161)
Cash and cash equivalents at beginning of period		766		280
Cash and cash equivalents at end of period	$	690	$	119

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

Organization and Basis of Presentation

Edison International is the ultimate parent holding company of Southern California Edison Company ("SCE") and Edison Energy, LLC ("Edison Energy Group"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of Southern California. Edison Energy Group is an indirect wholly-owned subsidiary of Edison International and a holding company for Edison Energy, LLC ("Edison Energy") which is engaged in the competitive business of providing decarbonization and energy solutions to commercial, institutional and industrial customers in North America and Europe. Edison Energy's business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE, and other wholly owned and controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE, its wholly owned and controlled subsidiaries and a variable interest entity, SCE Recovery Funding LLC., of which SCE is the primary beneficiary. All intercompany transactions have been eliminated from the consolidated financial statements.

Edison International's and SCE's significant accounting policies were described in the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2022 Form 10-K.

In the opinion of management, all adjustments, consisting only of adjustments of a normal recurring nature, 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 ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the interim periods presented are not necessarily indicative of the operating results for the full year.

The December 31, 2022 financial statement data was derived from audited financial statements but does not include all disclosures required by GAAP. Certain prior period amounts have been conformed to the current period's presentation, including the separate presentation of common stock and preference stock dividends in SCE's consolidated statements of cash flows.

Cash, Cash Equivalents and Restricted Cash

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


	Edison International				SCE
	March 31,		December 31,		March 31,		December 31,
(in millions)	2023		2022		2023		2022
Money market funds	$	136	$	784	$	—	$	647

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

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The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:


	March 31,		December 31,
(in millions)	2023		2022
Edison International:
Cash and cash equivalents	$	836	$	914
Short-term restricted cash¹		2		3
Total cash, cash equivalents and restricted cash	$	838	$	917

1	Reflected in "Other current assets" on Edison International's consolidated balance sheets.

Allowance for Uncollectible Accounts

The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California and exposes SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical amounts written-off, assessment of customer collectibility and current economic trends, including unemployment rates and any likelihood of recession for the region.

The following table sets forth the changes in allowance for uncollectible accounts for SCE:


	Three months ended							Three months ended
	March 31, 2023							March 31, 2022
(in millions)	Customers		All others		Total			Customers		All others		Total
Beginning balance	$	334	$	20	$	354	²	$	293	$	16	$	309
Current period provision for uncollectible accounts¹		20		—		20			54		7		61
Write-offs, net of recoveries		(28)		(2)		(30)			(10)		(7)		(17)
Ending balance	$	326	$	18	$	344	²	$	337	$	16	$	353

1	For the three months ended March 31, 2023 and 2022, $14 million and $41 million of the costs were probable of recovery from customers and recorded as regulatory assets, respectively.

2	Approximately $21 million and $7 million of allowance for uncollectible accounts are included in "Other long-term assets" on SCE's consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Earnings Per Share

Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards, payable in common shares, which earn dividend equivalents on an equal basis with common shares once the awards are vested. See Note 13 for further information.

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EPS attributable to Edison International common shareholders was computed as follows:


	Three months ended March 31,
(in millions, except per-share amounts)	2023		2022
Basic earnings per share:
Net income attributable to common shareholders	$	310	$	84
Net income available to common shareholders	$	310	$	84
Weighted average common shares outstanding		383		381
Basic earnings per share	$	0.81	$	0.22
Diluted earnings per share:
Net income attributable to common shareholders	$	310	$	84
Net income available to common shareholders	$	310	$	84
Income impact of assumed conversions		1		—
Net income available to common shareholders and assumed conversions	$	311	$	84
Weighted average common shares outstanding		383		381
Incremental shares from assumed conversions		1		1
Adjusted weighted average shares – diluted		384		382
Diluted earnings per share	$	0.81	$	0.22

In addition to the participating securities discussed above, Edison International also may award stock options, which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 4,414,113 and 6,533,558 shares of common stock for the three months ended March 31, 2023 and 2022, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.

Revenue Recognition

Revenue is recognized by Edison International and SCE when a performance obligation to transfer control of the promised goods is satisfied or when services are rendered to customers. This typically occurs when electricity is delivered to customers, which includes amounts for services rendered but unbilled at the end of a reporting period.

Regulatory Proceedings

FERC 2023 Formula Rate Update

In November 2022, SCE filed its 2023 annual update with the FERC with the proposed rates effective January 1, 2023, subject to settlement procedures and refund. Pending resolution of the FERC formula rate proceedings, SCE recognized revenue in the first quarter of 2023 based on the FERC 2023 annual update rate, subject to refund.

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Note 2.Consolidated Statements of Changes in Equity

The following table provides Edison International's changes in equity for the three months ended March 31, 2023:


											Noncontrolling
	Equity Attributable to Edison International Shareholders										Interests
					Accumulated
					Other
	Preferred		Common		Comprehensive		Retained				Preference		Total
(in millions, except per share amounts)	Stock		Stock		Loss		Earnings		Subtotal		Stock		Equity
Balance at December 31, 2022	$	1,978	$	6,200	$	(11)	$	7,454	$	15,621	$	1,901	$	17,522
Net income		—		—		—		336		336		29		365
Other comprehensive income		—		—		2		—		2		—		2
Common stock issued, net of issuance cost		—		15		—		—		15		—		15
Common stock dividends declared ($0.7375 per share)		—		—		—		(282)		(282)		—		(282)
Preferred stock dividend declared ($26.875 per share for Series A and $25.00 per share for Series B)		—		—		—		(52)		(52)		—		(52)
Dividends to noncontrolling interests ($22.281 - $35.937 per share for preference stock)		—		—		—		—		—		(29)		(29)
Noncash stock-based compensation		—		8		—		—		8		—		8
Balance at March 31, 2023	$	1,978	$	6,223	$	(9)	$	7,456	$	15,648	$	1,901	$	17,549

The following table provides Edison International's changes in equity for the three months ended March 31, 2022:


											Noncontrolling
	Equity Attributable to Edison International Shareholders										Interests
					Accumulated
					Other
	Preferred		Common		Comprehensive		Retained				Preference		Total
(in millions, except per share amounts)	Stock		Stock		Loss		Earnings		Subtotal		Stock		Equity
Balance at December 31, 2021	$	1,977	$	6,071	$	(54)	$	7,894	$	15,888	$	1,901	$	17,789
Net income		—		—		—		110		110		26		136
Other comprehensive income		—		—		2		—		2		—		2
Common stock issued, net of issuance cost		—		12		—		—		12		—		12
Common stock dividends declared ($0.7000 per share)		—		—		—		(267)		(267)		—		(267)
Preferred stock dividend declared ($26.875 per share for Series A and $17.08333 per share for Series B)		—		—		—		(21)		(21)		—		(21)
Dividends to noncontrolling interests ($11.160 - $35.936 per share for preference stock)		—		—		—		—		—		(26)		(26)
Noncash stock-based compensation		—		7		—		—		7		—		7
Balance at March 31, 2022	$	1,977	$	6,090	$	(52)	$	7,716	$	15,731	$	1,901	$	17,632

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The following table provides SCE's changes in equity for the three months ended March 31, 2023:


							Accumulated
					Additional		Other
	Preference		Common		Paid-in		Comprehensive		Retained		Total
(in millions, except per share amounts)	Stock		Stock		Capital		Loss		Earnings		Equity
Balance at December 31, 2022	$	1,945	$	2,168	$	8,441	$	(8)	$	8,243	$	20,789
Net income		—		—		—		—		399		399
Dividends declared on common stock ($0.8048 per share)		—		—		—		—		(350)		(350)
Dividends on preference stock ($22.281 - $35.937 per share)		—		—		—		—		(29)		(29)
Stock-based compensation		—		—		(8)		—		—		(8)
Noncash stock-based compensation		—		—		5		—		1		6
Balance at March 31, 2023	$	1,945	$	2,168	$	8,438	$	(8)	$	8,264	$	20,807

The following table provides SCE's changes in equity for the three months ended March 31, 2022:


							Accumulated
					Additional		Other
	Preference		Common		Paid-in		Comprehensive		Retained		Total
(in millions, except per share amounts)	Stock		Stock		Capital		Loss		Earnings		Equity
Balance at December 31, 2021	$	1,945	$	2,168	$	7,033	$	(32)	$	8,721	$	19,835
Net income		—		—		—		—		173		173
Other comprehensive income		—		—		—		1		—		1
Dividends declared on common stock ($0.7473 per share)		—		—		—		—		(325)		(325)
Dividends declared on preference stock ($11.160 - $35.937 per share)		—		—		—		—		(26)		(26)
Stock-based compensation		—		—		(9)		—		—		(9)
Noncash stock-based compensation		—		—		4		—		(1)		3
Balance at March 31, 2022	$	1,945	$	2,168	$	7,028	$	(31)	$	8,542	$	19,652

Note 3.Variable Interest Entities

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

Variable Interest in VIEs that are Consolidated

SCE Recovery Funding LLC is a bankruptcy remote, wholly owned special purpose subsidiary, consolidated by SCE. SCE Recovery Funding LLC is a VIE and SCE is the primary beneficiary. SCE Recovery Funding LLC was formed in 2021 for the purpose of issuing and servicing securitized bonds related to SCE's AB 1054 Excluded Capital Expenditures.

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In 2022 and 2021, SCE Recovery Funding LLC issued a total of $871 million of securitized bonds and used the proceeds to acquire SCE's right, title and interest in and to non-bypassable rates and other charges to be collected from certain existing and future customers in SCE's service territory, associated with the AB 1054 Excluded Capital Expenditures ("Recovery Property"), until the bonds are paid in full, and all financing costs have been recovered. The securitized bonds are secured by the Recovery Property and cash collections from the non-bypassable rates and other charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to SCE. In April 2023, SCE Recovery Funding LLC issued $775 million of securitized bonds. For further details, see Note 5.

The following table summarizes the impact of SCE Recovery Funding LLC on SCE's and Edison International's consolidated balance sheets.


		March 31,		December 31,
(in millions)		2023		2022
Other current assets	$	63	$	45
Regulatory assets: non-current		827		834
Regulatory liabilities: current		39		33
Current portion of long-term debt		29		29
Other current liabilities		9		4
Long-term debt¹		809		809

1	The bondholders have no recourse to SCE.

Variable Interest in VIEs that are not Consolidated

Power Purchase Agreements

SCE has PPAs that are classified as variable interests in VIEs, including agreements through which SCE provides the natural gas to fuel the plants, fixed price contracts for renewable energy, and resource adequacy agreements that, upon the seller's election, include the purchase of energy at fixed prices. SCE has concluded that it is not the primary beneficiary of these VIEs since it does not control the commercial and operating activities of these entities. Since payments for capacity are the primary source of income, the most significant economic activity for these VIEs is the operation and maintenance of the power plants.

As of the balance sheet date, the carrying amount of assets and liabilities in SCE's consolidated balance sheet that relate to involvement with VIEs that are not consolidated result from amounts due under the PPAs. Under these contracts, SCE recovers the costs incurred through demonstration of compliance with its CPUC-approved long-term power procurement plans. SCE has no residual interest in the entities and has not provided or guaranteed any debt or equity support, liquidity arrangements, performance guarantees, or other commitments associated with these contracts other than the purchase commitments described in Note 12 of the 2022 Form 10-K. As a result, there is no significant potential exposure to loss to SCE from its variable interest in these VIEs. The aggregate contracted capacity dedicated to SCE from these VIE projects was 3,844 MW and 3,645 MW at March 31, 2023 and 2022, respectively, and the amounts that SCE paid to these projects were $170 million and $106 million for the three months ended March 31, 2023 and 2022, respectively. These amounts are recoverable in customer rates, subject to reasonableness review.

Unconsolidated Trusts of SCE

SCE Trust II, Trust III, Trust IV, Trust V, and Trust VI were formed in 2013, 2014, 2015, 2016, and 2017, respectively, for the exclusive purpose of issuing the 5.10%, 5.75%, 5.375%, 5.45%, and 5.00% trust preference securities, respectively ("trust securities"). The trusts are VIEs. SCE has concluded that it is not the primary beneficiary of these VIEs as it does not have the obligation to absorb the expected losses or the right to receive the expected residual returns of the trusts. SCE Trust II, Trust III, Trust IV, Trust V and Trust VI issued to the public trust securities in the face amounts of $400 million,

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$275 million, $325 million, $300 million, and $475 million (cumulative, liquidation amounts of $25 per share), respectively, and $10,000 of common stock each to SCE. The trusts invested the proceeds of these trust securities in Series G, Series H, Series J, Series K, and Series L Preference Stock issued by SCE in the principal amounts of $400 million, $275 million, $325 million, $300 million, and $475 million (cumulative, $2,500 per share liquidation values), respectively, which have substantially the same payment terms as the respective trust securities.

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

The Trust II, Trust III, Trust IV, Trust V and Trust VI balance sheets as of March 31, 2023 and 2022 consisted of investments of $220 million, $275 million, $325 million, $300 million, and $475 million in the Series G, Series H, Series J, Series K and Series L Preference Stock, respectively, $220 million, $275 million, $325 million, $300 million, and $475 million of trust securities, respectively, and $10,000 each of common stock.

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


	Three months ended March 31,
(in millions)	Trust II		Trust III		Trust IV		Trust V		Trust VI
2023
Dividend income	$	3	$	4	$	4	$	4	$	6
Dividend distributions		3		4		4		4		6
2022
Dividend income	$	5	$	4	$	4	$	4	$	6
Dividend distributions		5		4		4		4		6

Note 4.Fair Value Measurements

Recurring Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an "exit price"). Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including assumptions about nonperformance risk. As of March 31, 2023 and December 31, 2022, nonperformance risk was not material for Edison International and SCE.

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

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

Level 2 – Edison International's and SCE's Level 2 assets and liabilities include fixed income securities, primarily consisting of U.S. government and agency bonds, municipal bonds and corporate bonds, and over-the-counter derivatives. The fair value of fixed income securities is determined using a market approach by obtaining quoted prices for similar assets and

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liabilities in active markets and inputs that are observable, either directly or indirectly, for substantially the full term of the instrument.

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

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

Assumptions are made in order to value derivative contracts in which observable inputs are not available. In circumstances where fair value cannot be verified with observable market transactions, it is possible that a different valuation model could produce a materially different estimate of fair value. Modeling methodologies, inputs, and techniques are reviewed and assessed as markets continue to develop and more pricing information becomes available, and the fair value is adjusted when it is concluded that a change in inputs or techniques would result in a new valuation that better reflects the fair value of those derivative contracts. See Note 6 for a discussion of derivative instruments.

SCE

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


	March 31, 2023
							Netting
							and
(in millions)	Level 1		Level 2		Level 3		Collateral¹		Total
Assets at fair value
Derivative contracts	$	—	$	83	$	50	$	(59)	$	74
Money market funds and other		—		22		—		—		22
Nuclear decommissioning trusts:
Stocks²		1,667		—		—		—		1,667
Fixed Income³		918		1,399		—		—		2,317
Short-term investments, primarily cash equivalents		125		41		—		—		166
Subtotal of nuclear decommissioning trusts⁴		2,710		1,440		—		—		4,150
Total assets		2,710		1,545		50		(59)		4,246
Liabilities at fair value
Derivative contracts		—		56		3		(59)		—
Total liabilities		—		56		3		(59)		—
Net assets	$	2,710	$	1,489	$	47	$	—	$	4,246

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	December 31, 2022
							Netting
							and
(in millions)	Level 1		Level 2		Level 3		Collateral¹			Total
Assets at fair value
Derivative contracts	$	—	$	392	$	67	$	(218)	$	241
Money market funds and other		647		22		—		—		669
Nuclear decommissioning trusts:
Stocks²		1,610		—		—		—		1,610
Fixed Income³		941		1,281		—		—		2,222
Short-term investments, primarily cash equivalents		137		64		—		—		201
Subtotal of nuclear decommissioning trusts⁴		2,688		1,345		—		—		4,033
Total assets		3,335		1,759		67		(218)		4,943
Liabilities at fair value
Derivative contracts		—		116		4		(119)		1
Total liabilities		—		116		4		(119)		1
Net assets	$	3,335	$	1,643	$	63	$	(99)	$	4,942

1	Represents the netting of assets and liabilities under master netting agreements and cash collateral.

2	Approximately 74% SCE's equity investments were in companies located in the United States at both March 31, 2023 and December 31, 2022.

3	Includes corporate bonds, which were diversified by the inclusion of collateralized mortgage obligations and other asset backed securities, of $76 million and $49 million at March 31, 2023 and December 31, 2022, respectively.

4	Excludes net payables of $57 million and $85 million at March 31, 2023 and December 31, 2022, respectively, which consist of interest and dividend receivables as well as receivables and payables related to SCE's pending securities sales and purchases.

SCE Fair Value of Level 3

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


	March 31,
(in millions)	2023		2022
Fair value of net assets at beginning of period	$	63	$	44
Settlements		(12)		(3)
Total realized/unrealized losses^1,2		(4)		(2)
Fair value of net assets at end of period	$	47	$	39

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

2	There were no material transfers into or out of Level 3 during 2023 and 2022.

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

Fair Value

Significant

Weighted

(in millions)

Valuation

Unobservable

Range

Average

Assets

Liabilities

Technique

Input

(per MWh)

Congestion revenue rights

March 31, 2023

Auction prices

CAISO CRR auction prices

$(5.83) - $47.91

1.47

December 31, 2022

Auction prices

CAISO CRR auction prices

(7.91) - 3,856.67

1.64

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Level 3 Fair Value Uncertainty

For CRRs, increases or decreases in CAISO auction prices would result in higher or lower fair value, respectively.

Nuclear Decommissioning Trusts

SCE's nuclear decommissioning trust investments include equity securities, U.S. treasury securities, and other fixed income securities. Equity and treasury securities are classified as Level 1 as fair value is determined by observable market prices in active or highly liquid and transparent markets. The remaining fixed income securities are classified as Level 2. There are no securities classified as Level 3 in the nuclear decommissioning trusts.

Edison International Parent and Other

Edison International Parent and Other assets measured at fair value and classified as Level 1 consisted of equity investments of $2 million and $5 million and money market funds of $136 million and $137 million at March 31, 2023 and December 31, 2022, respectively. Assets measured at fair value and classified as Level 2 consisted of short-term investments of $1 million and $2 million at March 31, 2023 and December 31, 2022, respectively. There are no securities classified as Level 3 for Edison International Parent and Other.

Fair Value of Debt Recorded at Carrying Value

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


	March 31, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
(in millions)	Value¹		Value²		Value¹		Value²
Edison International	$	31,656	$	29,616	$	29,639	$	26,824
SCE		28,180		26,104		26,258		23,469

1	Carrying value is net of debt issuance costs.

2	The fair value of Edison International's and SCE's short-term and long-term debt is classified as Level 2.

Note 5.Debt and Credit Agreements

Long-Term Debt

In March 2023, SCE issued $750 million of 5.30% first and refunding mortgage bonds due in 2028. The proceeds were used to fund the payment of wildfire claims above the amount of expected insurance proceeds. SCE also issued $450 million of 5.70% first and refunding mortgage bonds due in 2053. The proceeds were used to repay commercial paper borrowings and for general corporate purposes.

In March 2023, Edison International Parent issued $500 million of 8.125% junior subordinated notes due in 2053, with interest rate resets every five years at a rate equal to the Five-year U.S. Treasury rate plus a spread of 3.864%. The proceeds were used to repay commercial paper borrowings and for general corporate purposes.

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Credit Agreements and Short-Term Debt

The following table summarizes the status of the credit facilities at March 31, 2023:


(in millions, except for rates)
	Termination	SOFR			Outstanding		Outstanding		Amount
Borrower	date	plus (bps)	Commitment		borrowings		letters of credit		available
Edison International Parent^{1, 3}	May 2026	128	$	1,500	$	622	$	—	$	878
SCE^{2, 3}	May 2026	108		3,350		628		255		2,467
Total Edison International			$	4,850	$	1,250	$	255	$	3,345

1	At March 31, 2023, Edison International Parent had $622 million outstanding commercial paper, net of discount, at a weighted-average interest rate of 5.61%.

2	At March 31, 2023, SCE had $628 million outstanding commercial paper, net of discount, at a weighted-average interest rate of 5.63%.

Edison International Parent's and SCE's credit facilities have one additional one-year extension option. The aggregate maximum principal amount under the SCE and Edison International Parent revolving credit facilities may be increased up to $4.0 billion and $2.0 billion, respectively, provided that additional lender commitments are obtained.

Debt Financing Subsequent to March 31, 2023

In April 2023, SCE Recovery Funding LLC issued $775 million of Senior Secured Recovery Bonds, Series 2023-A, in two tranches and used the proceeds to acquire SCE's right, title and interest in and to the Recovery Property. The two tranches of Senior Secured Recovery Bonds consisted of $425 million, 4.697% with final maturity in 2042 and $350 million, 5.112% with final maturity in 2049. For further details, see Note 3. SCE used the proceeds it received from the sale of Recovery Property to pay down the entire $730 million outstanding amount of its green term loan due in May 2023, which was reclassified as a long-term obligation as of March 31, 2023.

Note 6.Derivative Instruments

Derivative financial instruments are used to manage exposure to commodity price risk. These risks are managed in part by entering into forward commodity transactions, including options, swaps and futures. To mitigate credit risk from counterparties in the event of nonperformance, master netting agreements are used whenever possible, and counterparties may be required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with the transaction.

Commodity Price Risk

Commodity price risk represents the potential impact that can be caused by a change in the market value of a particular commodity. SCE's electricity price exposure arises from energy purchased from and sold to wholesale markets as a result of differences between SCE's load requirements and the amount of energy delivered from its generating facilities and PPAs. SCE's natural gas price exposure arises from natural gas purchased for the Mountainview power plants, Peaker plants and Qualifying Facilities contracts where pricing is based on a monthly natural gas index and PPAs in which SCE has agreed to provide the natural gas needed for generation, referred to as tolling arrangements.

Credit and Default Risk

Credit and default risk represent the potential impact that can be caused if a counterparty were to default on its contractual obligations and SCE would be exposed to spot markets for buying replacement power or selling excess power. In addition, SCE would be exposed to the risk of non-payment of accounts receivable, primarily related to the sales of excess power and realized gains on derivative instruments.

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Certain power and gas contracts contain master netting agreements or similar agreements, which generally allow counterparties subject to the agreement to offset amounts when certain criteria are met, such as in the event of default. The objective of netting is to reduce credit exposure. Additionally, to reduce SCE's risk exposures, counterparties may be required to pledge collateral depending on the creditworthiness of each counterparty and the risk associated with the transaction.

Certain power and gas contracts contain a provision that requires SCE to maintain an investment grade rating from the major credit rating agencies that have credit ratings for SCE, referred to as a credit-risk-related contingent feature. If SCE's credit rating were to fall below investment grade, SCE may be required to post additional collateral to cover derivative liabilities and the related outstanding payables. The net fair value of all derivative liabilities with these credit-risk-related contingent features was less than $1 million as of March 31, 2023 and December 31, 2022, for which SCE posted no collateral and collateral of $24 million to its counterparties for its derivative liabilities and related outstanding payables as of March 31, 2023 and December 31, 2022, respectively. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2023, SCE would be required to post $2 million of collateral, most of which is related to outstanding payables.

Fair Value of Derivative Instruments

SCE presents its derivative assets and liabilities on a net basis on its consolidated balance sheets when subject to master netting agreements or similar agreements. Derivative positions are also offset against margin and cash collateral deposits. In addition, SCE has provided collateral in the form of letters of credit. Collateral requirements can vary depending upon the level of unsecured credit extended by counterparties, changes in market prices relative to contractual commitments and other factors. See Note 4 for a discussion of fair value of derivative instruments. The following table summarizes the gross and net fair values of SCE's commodity derivative instruments:


	March 31, 2023
	Derivative Assets						Derivative Liabilities
(in millions)	Short-Term¹		Long-Term		Subtotal		Short-Term		Long-Term		Subtotal		Net Assets
Commodity derivative contracts
Gross amounts recognized	$	133	$	—	$	133	$	59	$	—	$	59	$	74
Gross amounts offset in the consolidated balance sheets		(59)		—		(59)		(59)		—		(59)		—
Net amounts presented in the consolidated balance sheets	$	74	$	—	$	74	$	—	$	—	$	—	$	74


	December 31, 2022
	Derivative Assets						Derivative Liabilities
(in millions)	Short-Term¹		Long-Term		Subtotal		Short-Term²		Long-Term		Subtotal		Net Assets
Commodity derivative contracts
Gross amounts recognized	$	459	$	—	$	459	$	120	$	—	$	120	$	339
Gross amounts offset in the consolidated balance sheets		(119)		—		(119)		(119)		—		(119)		—
Cash collateral received		(99)		—		(99)		—		—		—		(99)
Net amounts presented in the consolidated balance sheets	$	241	$	—	$	241	$	1	$	—	$	1	$	240

1	Included in "Other current assets" on SCE's consolidated balance sheets.

2	Included in "Other current liabilities" on SCE's consolidated balance sheets.

At March 31, 2023, SCE posted cash collateral and accrued the right to reclaim cash collateral which totaled $95 million, reflected in "Other current asset" on SCE’s consolidated balance sheets.

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Financial Statement Impact of Derivative Instruments

SCE recognizes realized gains and losses on derivative instruments as purchased power expense and expects that such gains or losses will be part of the purchased power costs recovered from customers. As a result, realized gains and losses do not affect earnings, but may temporarily affect cash flows. Due to expected future recovery from customers, unrealized gains and losses are recorded as regulatory assets and liabilities and therefore also do not affect earnings. The remaining effects of derivative activities and related regulatory offsets are reported in cash flows from operating activities in SCE’s consolidated statements of cash flows.

The following table summarizes the components of SCE's economic hedging activity:


		Three months ended March 31,
(in millions)		2023		2022
Realized gains (losses)	$	116	$	(19)
Unrealized (losses) gains		(264)		53

Notional Volumes of Derivative Instruments

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


	Unit of	Economic Hedges
Commodity	Measure	March 31, 2023	December 31, 2022
Electricity options, swaps and forwards	Gigawatt hours	1,824	1,022
Natural gas options, swaps and forwards	Billion cubic feet	46	42
Congestion revenue rights	Gigawatt hours	36,672	44,028

Note 7.Revenue

SCE's revenue is disaggregated by two revenue sources:

●

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

●

Cost-recovery activities – representing CPUC- and FERC- authorized balancing accounts, which allow for recovery of specific project or program costs, subject to a reasonableness review or compliance with upfront standards, as well as non-bypassable rates collected for SCE Recovery Funding LLC. Cost-recovery activities include rates which provide recovery, subject to a reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs), certain operation and maintenance expenses and repayment of bonds and financing costs of SCE Recovery Funding LLC. SCE earns no return on these activities.

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The following table is a summary of SCE's revenue:



	Three months ended March 31, 2023						Three months ended March 31, 2022
			Cost-						Cost-
	Earning		Recovery		Total		Earning		Recovery		Total
(in millions)	Activities		Activities		Consolidated		Activities		Activities		Consolidated
Revenues from contracts with customers^1,2	$	2,076	$	1,660	$	3,736	$	1,985	$	1,375	$	3,360
Alternative revenue programs and other operating revenue³		157		57		214		282		319		601
Total operating revenue	$	2,233	$	1,717	$	3,950	$	2,267	$	1,694	$	3,961

1	SCE recorded CPUC revenue based on an annual revenue requirement set by a methodology established in the GRC proceeding and FERC revenue authorized through a formula rate. For further information, see Note 1.

2	At March 31, 2023 and December 31, 2022, SCE's receivables related to contracts from customers were $2.2 billion and $2.3 billion, respectively, which include accrued unbilled revenue of $766 million and $638 million, respectively.

3	Includes differences between amounts billed and authorized levels for both the CPUC and FERC.

Deferred Revenue

As of March 31, 2023, SCE has deferred revenue of $377 million related to sale of the use of transfer capability of West of Devers transmission line, of which $13 million and $364 million are included in "Other current liabilities" and "Other deferred credits and other long-term liabilities," respectively, on SCE's consolidated balance sheets. The deferred revenue is amortized straight-line over a period of 30 years starting 2021.

Note 8.Income Taxes

Effective Tax Rate

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


	Edison International						SCE
	Three months ended March 31,
(in millions)	2023			2022			2023			2022
Income from operations before income taxes	$	378		$	81		$	428		$	133
Provision for income tax at federal statutory rate of 21%		79			17			90			28
Increase (decrease) in income tax from:
State tax, net of federal benefit		(1)			(17)			3			(13)
Property-related		(58)			(45)			(58)			(45)
Other		(7)			(10)			(6)			(10)
Total income tax expense (benefit)	$	13		$	(55)		$	29		$	(40)
Effective tax rate		3.4	%		(67.9)	%		6.8	%		(30.1)	%

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

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Tax Disputes

Tax years that remain open for examination by the IRS and the California Franchise Tax Board ("FTB") are 2019 – 2022 and 2013 – 2022, respectively.

Note 9.Compensation and Benefit Plans

Pension Plans

Net periodic pension expense components are:


	Three months ended
	March 31,
(in millions)	2023		2022
Edison International:
Service cost	$	25	$	30
Non-service cost (benefit)
Interest cost		45		27
Expected return on plan assets		(54)		(57)
Amortization of net loss		1		1
Regulatory adjustment		(12)		2
Total non-service benefit¹	$	(20)	$	(27)
Total expense recognized	$	5	$	3
SCE:
Service cost	$	24	$	29
Non-service cost (benefit)
Interest cost		42		25
Expected return on plan assets		(51)		(54)
Amortization of net loss		—		1
Regulatory adjustment		(12)		2
Total non-service benefit¹	$	(21)	$	(26)
Total expense recognized	$	3	$	3

1	Included in "Other Income" on Edison International's and SCE’s consolidated statement of income.

Postretirement Benefits Other Than Pensions ("PBOP")

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


	Three months ended
	March 31,
(in millions)	2023		2022
Service cost	$	5	$	8
Non-service cost (benefit)
Interest cost		18		14
Expected return on plan assets		(27)		(24)
Amortization of net gain		(12)		(12)
Regulatory adjustment		16		14
Total non-service benefit¹	$	(5)	$	(8)
Total expense	$	—	$	—

1	Included in "Other income" on Edison International's and SCE's consolidated statements of income.

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Note 10. Investments

Nuclear Decommissioning Trusts

Future decommissioning costs related to SCE's nuclear assets are expected to be funded from independent decommissioning trusts.

The following table sets forth amortized cost and fair value of the trust investments (see Note 4 for a discussion of fair value of the trust investments):


		Amortized Costs				Fair Values
	Longest	March 31,		December 31,		March 31,		December 31,
(in millions)	Maturity Dates	2023		2022		2023		2022
Municipal bonds	2061	$	634	$	672	$	734	$	754
Government and agency securities	2073		1,087		1,025		1,174		1,091
Corporate bonds	2070		379		351		409		377
Short-term investments and receivables/payables¹	One-year		104		110		109		116
Total debt securities and other		$	2,204	$	2,158		2,426		2,338
Equity securities							1,667		1,610
Total						$	4,093	$	3,948

Short-term investments included $18 million and $41 million of repurchase agreements payable by financial institutions which earn interest, were fully and 97% secured by U.S. Treasury securities and mature by April 3, 2023 and January 3, 2023 as of March 31, 2023 and December 31, 2022, respectively.

Trust fund earnings (based on specific identification) increase the trust fund balance and the asset retirement obligation ("ARO") regulatory liability. Unrealized holding gains, net of losses, were $1.7 billion and $1.6 billion at March 31, 2023 and December 31, 2022, respectively.

Trust assets are used to pay income taxes arising from trust investing activity. Deferred tax liabilities related to net unrealized gains were $359 million and $321 million at March 31, 2023 and December 31, 2022, respectively. Accordingly, the fair value of trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled $3.7 billion and $3.6 billion at March 31, 2023 and December 31, 2022, respectively.

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

Due to regulatory mechanisms, changes in assets of the trusts from income or loss items do not materially affect earnings.

Edison International Parent and Other's Investments

Edison International Parent and Other hold strategic investments in companies focused on developing electric technologies and services. As of March 31, 2023 and December 31, 2022, these investments consist of $2 million and $5 million of marketable securities, respectively, and $12 million of equity investments without readily determinable fair values (included as "Other investments" on Edison International's consolidated balance sheets) at both dates. For further information of fair value of marketable securities, see Note 4. The equity investments without readily determinable fair values balances included cumulative upward adjustments of $9 million at both March 31, 2023 and December 31, 2022. The cumulative upward adjustments resulted primarily from values determined by additional capital infusions.

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The following table summarizes unrealized gains/(losses) for equity investments held at the reporting date, recorded as "Other income" on Edison International's consolidated statements of income:


	Three months ended March 31,
(in millions)	2023		2022
Marketable securities	$	(3)	$	(2)

Note 11. Regulatory Assets and Liabilities

Regulatory Assets

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


	March 31,		December 31,
(in millions)	2023		2022
Current:
Regulatory balancing and memorandum accounts	$	2,743	$	2,400
Power contracts		49		71
Other		25		26
Total current		2,817		2,497
Long-term:
Deferred income taxes, net of liabilities		5,282		5,178
Unamortized investments, net of accumulated amortization		111		113
Unamortized loss on reacquired debt		106		109
Regulatory balancing and memorandum accounts		1,468		1,589
Environmental remediation		238		241
Recovery assets		827		834
Other		119		117
Total long-term		8,151		8,181
Total regulatory assets	$	10,968	$	10,678

Regulatory Liabilities

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


	March 31,		December 31,
(in millions)	2023		2022
Current:
Regulatory balancing and memorandum accounts	$	302	$	584
Energy derivatives		74		338
Other		49		42
Total current		425		964
Long-term:
Costs of removal		2,608		2,589
Re-measurement of deferred taxes		2,237		2,250
Recoveries in excess of ARO liabilities		1,378		1,231
Regulatory balancing and memorandum accounts		1,317		1,116
Pension and other postretirement benefits		999		1,007
Other		16		18
Total long-term		8,555		8,211
Total regulatory liabilities	$	8,980	$	9,175

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Net Regulatory Balancing and Memorandum Accounts

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


	March 31,		December 31,
(in millions)	2023		2022
Asset (liability)
Energy resource recovery account	$	3	$	1,580
Portfolio allocation balancing account		1,381		(73)
New system generation balancing account		46		(63)
Public purpose programs and energy efficiency programs		(1,785)		(1,577)
Base revenue requirement balancing account		1,134		1,108
GRC wildfire mitigation balancing accounts		125		67
Residential uncollectibles balancing account		14		—
Greenhouse gas auction revenue and low carbon fuel standard revenue		(55)		(289)
FERC balancing accounts		(135)		(123)
Wildfire and drought restoration accounts		362		352
Wildfire-related memorandum accounts		1,206		1,168
COVID-19-related memorandum accounts		69		67
Customer service re-platform memorandum account		43		64
Tax accounting memorandum account and pole loading balancing account		153		90
Excess bond and power charge balancing account		(21)		(56)
Other		52		(26)
Asset	$	2,592	$	2,289

Note 12. Commitments and Contingencies

Indemnities

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

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

Contingencies

In addition to the matters disclosed in these Notes, Edison International and SCE are involved in other legal, tax, and regulatory proceedings before various courts and governmental agencies regarding matters arising in the ordinary course of business. Edison International and SCE believe the outcome of each of these other proceedings will not materially affect its financial position, results of operations and cash flows.

Southern California Wildfires and Mudslides

California has experienced unprecedented weather conditions in recent years due to climate change and wildfires in SCE's territory, including those where SCE's equipment may be alleged to be associated with the fire's ignition, have caused loss of life and substantial damage in recent years. SCE's service territory remains susceptible to additional wildfire activity.

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Numerous claims related to wildfire events have been initiated against SCE and Edison International. Edison International and SCE have incurred material losses in connection with the 2017/2018 Wildfire/Mudslide Events (defined below), which are described below. In addition, SCE's equipment has been, and may further be, alleged to be associated with wildfires that have originated in Southern California subsequent to 2018.

Liability Overview

The extent of legal liability for wildfire-related damages in actions against utilities depends on a number of factors, including whether the utility substantially caused or contributed to the damages and whether parties seeking recovery of damages will be required to show negligence in addition to causation. California courts have previously found utilities to be strictly liable for property damage along with associated interest and attorneys' fees, regardless of fault, by applying the theory of inverse condemnation when a utility's facilities were determined to be a substantial cause of a wildfire that caused the property damage. If inverse condemnation is held to be inapplicable to SCE in connection with a wildfire, SCE still could be held liable for property damages and associated interest if the property damages were found to have been proximately caused by SCE's negligence. If SCE were to be found negligent, SCE could also be held liable for, among other things, fire suppression costs, business interruption losses, evacuation costs, clean-up costs, medical expenses, and personal injury/wrongful death claims. Additionally, SCE could potentially be subject to fines and penalties for alleged violations of CPUC rules and state laws investigated in connection with the ignition of a wildfire.

Final determinations of legal liability for wildfire events, including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes and settlements may be reached before determinations of legal liability are ever made. Even when investigations are still pending or legal liability is disputed, an assessment of likely outcomes, including through future settlement of disputed claims, may require estimated losses to be accrued under accounting standards. Each reporting period, management reviews its loss estimates for remaining alleged and potential claims related to wildfire events. The process for estimating losses associated with alleged and potential wildfire related claims requires management to exercise significant judgment based on a number of assumptions and subjective factors, including, but not limited to: estimates of known and expected claims by third parties based on currently available information, opinions of counsel regarding litigation risk, the status of and developments in the course of litigation, and prior experience litigating and settling wildfire litigation claims. As additional information becomes available, management's estimates and assumptions regarding the causes and financial impact of wildfire events may change. Actual losses incurred may be higher or lower than estimated based on several factors, including the uncertainty in estimating damages that have been or may be alleged.

2017/2018 Wildfire/Mudslide Events

Wildfires in SCE's territory in December 2017 and November 2018 caused loss of life, substantial damage to both residential and business properties, and service outages for SCE customers. The investigating government agencies, the Ventura County Fire Department ("VCFD") and California Department of Forestry and Fire Protection ("CAL FIRE"), have determined that the largest of the 2017 fires in SCE's territory originated on December 4, 2017, in the Anlauf Canyon area of Ventura County (the investigating agencies refer to this fire as the "Thomas Fire"), followed shortly thereafter by a second fire that originated near Koenigstein Road in the City of Santa Paula (the "Koenigstein Fire"). The December 4, 2017 fires eventually burned substantial acreage in both Ventura and Santa Barbara Counties. According to CAL FIRE, the Thomas and Koenigstein Fires, collectively, burned over 280,000 acres, destroyed or damaged an estimated 1,343 structures and resulted in two confirmed fatalities. The largest of the November 2018 fires in SCE's territory, known as the "Woolsey Fire," originated in Ventura County and burned acreage in both Ventura and Los Angeles Counties. According to CAL FIRE, the Woolsey Fire burned almost 100,000 acres, destroyed an estimated 1,643 structures, damaged an estimated 364 structures and resulted in three confirmed fatalities. Four additional fatalities are alleged to have been associated with the Woolsey Fire.

As described below, multiple lawsuits related to the Thomas and Koenigstein Fires and the Woolsey Fire have been initiated against SCE and Edison International. Some of the Thomas and Koenigstein Fires lawsuits claim that SCE and Edison

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International have responsibility for the damages caused by debris flows and flooding in Montecito and surrounding areas in January 2018 (the "Montecito Mudslides") based on a theory alleging that SCE has responsibility for the Thomas and/or Koenigstein Fires and further alleging that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides. According to Santa Barbara County initial reports, the Montecito Mudslides destroyed an estimated 135 structures, damaged an estimated 324 structures, and resulted in 21 confirmed fatalities, with two additional fatalities presumed. One of the presumed fatalities was subsequently confirmed to be associated with the Montecito Mudslides.

The Thomas Fire, the Koenigstein Fire, the Montecito Mudslides (defined below) and the Woolsey Fire are each referred to as a "2017/2018 Wildfire/Mudslide Event," and, collectively, referred to as the "2017/2018 Wildfire/Mudslide Events."

Each reporting period, management reviews its loss estimates for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. As a result of management's first quarter 2023 review, a $90 million increase in estimated losses for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2023 was recorded. As a result, Edison International and SCE also recorded expected recoveries through FERC electric rates of $6 million against the charge, and the resulting net charge to earnings was $84 million ($61 million after-tax).

As of March 31, 2023, SCE had paid $7.8 billion under executed settlements, had $135 million to be paid under executed settlements, including $120 million to be paid under the SED Agreement (as defined below), and had $853 million of estimated losses for remaining alleged and potential claims reflected on its consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had assets for expected recoveries through FERC electric rates of $63 million on its consolidated balance sheets and had exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events.

The estimated losses for the 2017/2018 Wildfire/Mudslide Events do not include an estimate of potential losses related to certain alleged and potential claims made by the California Governor's Office of Emergency Service ("Cal OES") seeking recovery on behalf of itself and 30 state and local government entities that did not pursue their own suits against SCE, but sustained damage in the 2017/2018 Wildfire/Mudslide Events and received funding through the Federal Emergency Management Agency ("FEMA") that was dispersed by the Cal OES. As of the filing of this report, SCE has not concluded that losses related to FEMA funds disbursed by Cal OES are probable.

Edison International and SCE may incur a material loss in excess of amounts accrued in connection with the remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events. Due to the number of uncertainties and possible outcomes related to the 2017/2018 Wildfire/Mudslide Events litigation, Edison International and SCE cannot estimate the upper end of the range of reasonably possible losses that may be incurred.

The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such losses were not prudently incurred. SCE will seek rate recovery of prudently incurred losses and related costs realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance, other than for any obligations

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under the SED Agreement (as defined below). See "Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates" below for additional information.

External Investigations and Internal Review

The VCFD and CAL FIRE have jointly issued reports concerning their findings regarding the causes of the Thomas Fire and the Koenigstein Fire. The reports did not address the causes of the Montecito Mudslides. SCE has also received a non-final redacted draft of a report from the VCFD regarding Woolsey Fire (the "Redacted Woolsey Report"). SCE cannot predict when the VCFD will release its final report regarding the Woolsey Fire. The VCFD and CAL FIRE findings do not determine legal causation of or assign legal liability for the Thomas, Koenigstein or Woolsey Fires; final determinations of legal causation and liability would only be made during lengthy and complex litigation.

The CPUC's Safety and Enforcement Division ("SED") conducted investigations to assess SCE's compliance with applicable rules and regulations in areas impacted by the Thomas, Koenigstein and Woolsey Fires. As discussed below, in October 2021, SCE and the SED executed the SED Agreement (as defined below) to resolve the SED's investigations into the 2017/2018 Wildfire/Mudslide Events.

The California Attorney General's Office has completed its investigation of the Thomas Fire and the Woolsey Fire without pursuing criminal charges.

SCE's internal review into the facts and circumstances of each of the 2017/2018 Wildfire/Mudslide Events is complex and time consuming. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation processes.

Thomas Fire

On March 13, 2019, the VCFD and CAL FIRE jointly issued a report concluding, after ruling out other possible causes, that the Thomas Fire was started by SCE power lines coming into contact during high winds, resulting in molten metal falling to the ground. However, the report does not state that their investigation found molten metal on the ground. At this time, based on available information, SCE has not determined whether its equipment caused the Thomas Fire. Based on publicly available radar data showing a smoke plume in the Anlauf Canyon area emerging in advance of the report's indicated start time, SCE believes that the Thomas Fire started at least 12 minutes prior to any issue involving SCE's system and at least 15 minutes prior to the start time indicated in the report. SCE is continuing to assess the extent of damages that may be attributable to the Thomas Fire.

Koenigstein Fire

On March 20, 2019, the VCFD and CAL FIRE jointly issued a report finding that the Koenigstein Fire was caused when an energized SCE electrical wire separated and fell to the ground along with molten metal particles and ignited the dry vegetation below. SCE believes that its equipment was associated with the ignition of the Koenigstein Fire. SCE is continuing to assess the extent of damages that may be attributable to the Koenigstein Fire.

Montecito Mudslides

SCE's internal review includes inquiry into whether the Thomas and/or Koenigstein Fires proximately caused or contributed to the Montecito Mudslides, whether, and to what extent, the Thomas and/or Koenigstein Fires were responsible for the damages in the Montecito area and other factors that potentially contributed to the losses that resulted from the Montecito Mudslides. Many other factors, including, but not limited to, weather conditions and insufficiently or improperly designed and maintained debris basins, roads, bridges and other channel crossings, could have proximately caused, contributed to or exacerbated the losses that resulted from the Montecito Mudslides.

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At this time, based on available information, SCE has not been able to determine whether the Thomas Fire or the Koenigstein Fire, or both, were responsible for the damages in the Montecito area. In the event that SCE is determined to have caused the fire that spread to the Montecito area, SCE cannot predict whether, if fully litigated, the courts would conclude that the Montecito Mudslides were caused or contributed to by the Thomas and/or Koenigstein Fires or that SCE would be liable for some or all of the damages caused by the Montecito Mudslides.

Woolsey Fire

SCE's internal review into the facts and circumstances of the Woolsey Fire is ongoing. SCE has reported to the CPUC that there was an outage on SCE's electric system in the vicinity of where the Woolsey Fire reportedly began on November 8, 2018. SCE is aware of witnesses who saw fire in the vicinity of SCE's equipment at the time the fire was first reported. While SCE did not find evidence of downed electrical wires on the ground in the suspected area of origin, it observed a pole support wire in proximity to an electrical wire that was energized prior to the outage.

The Redacted Woolsey Report states that the VCFD investigation team determined that electrical equipment owned and operated by SCE was the cause of the Woolsey Fire. Absent additional evidence, SCE believes that it is likely that its equipment was associated with the ignition of the Woolsey Fire. SCE expects to obtain and review additional information and materials in the possession of CAL FIRE and others during the course of its internal review and the Woolsey Fire litigation process, including SCE equipment that has been retained by CAL FIRE.

Litigation

Multiple lawsuits related to the 2017/2018 Wildfire/Mudslide Events naming SCE as a defendant have been filed by three categories of plaintiffs: individual plaintiffs, subrogation plaintiffs and public entity plaintiffs. A number of the lawsuits also name Edison International as a defendant and some of the lawsuits were filed as purported class actions. The litigation could take a number of years to be resolved because of the complexity of the matters and number of plaintiffs.

On October 4, 2018, the Los Angeles Superior Court denied Edison International's and SCE's challenge to the application of inverse condemnation to SCE with respect to the Thomas and Koenigstein Fires and, on February 26, 2019, the California Supreme Court denied SCE's petition to review the Superior Court's decision. In April 2022, following a stipulated judgment entered against SCE in the TKM litigation, SCE filed an appeal related to inverse condemnation in the California Court of Appeal.

In January 2019, SCE filed a cross-complaint against certain local public entities alleging that failures by these entities, such as failure to adequately plan for flood hazards and build and maintain adequate debris basins, roads, bridges and other channel crossings, among other things, caused, contributed to or exacerbated the losses that resulted from the Montecito Mudslides. These cross-claims in the Montecito Mudslides litigation were not released as part of the Local Public Entity Settlements (as defined below).

Settlements

In the fourth quarter of 2019, SCE paid $360 million to a number of local public entities to resolve those parties' collective claims arising from the 2017/2018 Wildfire/Mudslide Events (the "Local Public Entity Settlements").

In the third quarter of 2020, Edison International and SCE entered into an agreement (the "TKM Subrogation Settlement") under which all of the insurance subrogation plaintiffs' in the Thomas Fire, Koenigstein Fire and Montecito Mudslides litigation (the "TKM Subrogation Plaintiffs") collective claims arising from the Thomas Fire, Koenigstein Fire or Montecito Mudslides have been resolved. Under the TKM Subrogation Settlement, SCE paid the TKM Subrogation Plaintiffs an aggregate of $1.2 billion in October 2020 and also agreed to pay $0.555 for each dollar in claims to be paid by the TKM Subrogation Plaintiffs to their policy holders on or before July 15, 2023, up to an agreed upon cap.

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In January 2021, Edison International and SCE entered into an agreement (the "Woolsey Subrogation Settlement") under which all of the insurance subrogation plaintiffs' in the Woolsey Fire litigation (the "Woolsey Subrogation Plaintiffs") collective claims arising from the Woolsey Fire have been resolved. Under the Woolsey Subrogation Settlement, SCE paid the Woolsey Subrogation Plaintiffs an aggregate of $2.2 billion in March and April 2021. SCE has also agreed to pay $0.67 for each dollar in claims to be paid by the Woolsey Subrogation Plaintiffs to their policy holders on or before July 15, 2023, up to an agreed upon cap.

As of March 31, 2023, SCE has also entered into settlements with approximately 10,000 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation. In 2022, 2021 and 2020, SCE entered into settlements with individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation under which it agreed to pay an aggregate of approximately $1.7 billion, $1.7 billion and $300 million, respectively, to those individual plaintiffs. In the first quarter of 2023, SCE entered into settlements with individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation under which it agreed to pay an aggregate of approximately $148 million to those individual plaintiffs. The statutes of limitations for individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events have expired.

Edison International and SCE did not admit wrongdoing or liability as part of any of the settlements described above. Other claims and potential claims related to the 2017/2018 Wildfire/Mudslide Events remain. SCE continues to explore reasonable settlement opportunities with other plaintiffs in the outstanding 2017/2018 Wildfire/Mudslide Events litigation.

SED Agreement

In October 2021, SCE and the SED executed an agreement (the "SED Agreement") to resolve the SED's investigations into the 2017/2018 Wildfire/Mudslide Events and three other 2017 wildfires for, among other things, aggregate costs of $550 million. The $550 million in costs comprised of a $110 million fine to be paid to the State of California General Fund, $65 million of shareholder-funded safety measures, and an agreement by SCE to waive its right to seek cost recovery in CPUC-jurisdictional rates for $375 million of third-party uninsured claims payments. The SED Agreement provides that SCE may, on a permanent basis, exclude from its ratemaking capital structure any after-tax charges to equity or debt borrowed to finance costs incurred under the SED Agreement. The SED Agreement also imposes other obligations on SCE, including reporting requirements and safety-focused studies. SCE's obligations under the SED Agreement commenced on August 15, 2022, when CPUC approval of the SED Agreement became final and non-appealable. SCE did not admit imprudence, negligence or liability with respect to the 2017/2018 Wildfire/Mudslide Events in the SED Agreement.

Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates

At March 31, 2023 and December 31, 2022, Edison International's and SCE's consolidated balance sheets included fixed payments to be made under executed settlement agreements and accrued estimated losses of $1.0 billion and $1.1 billion, respectively, for the 2017/2018 Wildfire/Mudslide Events. The following table presents changes in estimated losses since December 31, 2022:

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(in millions)
Balance at December 31, 2022¹	$	1,119
Increase in accrued estimated losses		90
Amounts paid		(221)
Balance at March 31, 2023²	$	988

At December 31, 2022, $121 million in current liabilities, wildfire-related claims, on Edison International's and SCE's consolidated balance sheets consisted of $65 million of settlements executed and $56 million of a short term payables under the SED Agreement in connection with the 2017/2018 Wildfire/Mudslide Events. At December 31, 2022, the $1,687 million included in deferred credits and other liabilities, wildfire-related claims, on Edison International's and SCE's consolidated balance sheets included Edison International's and SCE's best estimate of expected losses for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events of $934 million, $64 million of a long term payables under the SED Agreement and other wildfire-related claims estimates of $689 million.

At March 31, 2023, $75 million in current liabilities, wildfire-related claims, on Edison International's and SCE's consolidated balance sheets consisted of $15 million of settlements executed and $60 million of a short term payables under the SED Agreement in connection with the 2017/2018 Wildfire/Mudslide Events. At March 31, 2023, the $1,600 million included in deferred credits and other liabilities, wildfire-related claims, on Edison International's and SCE's consolidated balance sheets included Edison International's and SCE's best estimate of expected losses for remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events of $853 million, $60 million of a long term payables under the SED Agreement and other wildfire-related claims estimates of $687 million.

For the three months ended March 31, 2023 and 2022, Edison International's and SCE's consolidated statements of income included charges for the estimated losses, net of expected recoveries from insurance and FERC customers, related to the 2017/2018 Wildfire/Mudslide Events as follows:


	Three months ended March 31,
(in millions)	2023		2022
Charge for wildfire-related claims	$	90	$	416
Expected revenue from FERC customers		(6)		(26)
Total pre-tax charge		84		390
Income tax benefit		(23)		(109)
Total after-tax charge	$	61	$	281

For events that occurred in 2017 and early 2018, principally the Thomas and Koenigstein Fires and Montecito Mudslides, SCE had $1.0 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence. For the Woolsey Fire, SCE had an additional $1.0 billion of wildfire-specific insurance coverage, subject to a self-insured retention of $10 million per occurrence.

In total, through March 31, 2023, SCE has accrued estimated losses of $8.8 billion, has paid or is obligated to pay approximately $7.9 billion in settlements, including $120 million to be paid under the SED Agreement, and has recovered $2.0 billion from its insurance carriers in relation to the 2017/2018 Wildfire/Mudslide Events.

Recovery of SCE's losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance is subject to approval by regulators. Under accounting standards for rate-regulated enterprises, SCE defers costs as regulatory assets when it concludes that such costs are probable of future recovery in electric rates. SCE utilizes objectively determinable evidence to form its view on probability of future recovery. The only directly comparable precedent in which a California investor-owned utility has sought recovery for uninsured wildfire-related costs is San Diego Gas & Electric's ("SDG&E") requests for cost recovery related to 2007 wildfire activity, where the FERC allowed recovery of all FERC-jurisdictional wildfire-related costs while the CPUC rejected recovery of all CPUC-jurisdictional wildfire-related costs based on a determination that SDG&E did not meet the CPUC's prudency standard. As a result, while SCE does not agree with the

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CPUC's decision, it believes that the CPUC's interpretation and application of the prudency standard to SDG&E creates substantial uncertainty regarding how that standard will be applied to an investor-owned utility in wildfire cost-recovery proceedings for fires ignited prior to July 12, 2019. SCE will continue to evaluate the probability of recovery based on available evidence, including judicial, legislative and regulatory decisions, including any CPUC decisions illustrating the interpretation and/or application of the prudency standard when making determinations regarding recovery of uninsured wildfire-related costs. While the CPUC has not made a determination regarding SCE's prudency relative to any of the 2017/2018 Wildfire/Mudslide Events, SCE is unable to conclude, at this time, that uninsured CPUC-jurisdictional wildfire-related costs are probable of recovery through electric rates. SCE would record a regulatory asset at the time it obtains sufficient information to support a conclusion that recovery is probable.

Through the operation of its FERC Formula Rate, and based upon the precedent established in SDG&E's recovery of FERC-jurisdictional wildfire-related costs, SCE believes it is probable it will recover its FERC-jurisdictional wildfire and mudslide related costs and has recorded total expected recoveries of $382 million within the FERC balancing account. This was the FERC portion of the total estimated losses accrued. As of March 31, 2023, collections have reduced the regulatory assets remaining in the FERC balancing account to $63 million.

In July 2019, SCE filed a CEMA application with the CPUC to seek recovery of, among other things, approximately $60 million of capital expenditures and capital related expenses incurred to restore service to customers and to repair, replace and restore buildings and SCE's facilities damaged or destroyed as a result of six 2017 fires, primarily the Thomas and Koenigstein Fires. In August 2021, the CPUC issued a final decision which denied without prejudice SCE's application to recover a revenue requirement of $8 million for all six 2017 wildfires on the basis that SCE did not demonstrate that it was prudent in relation to the Thomas and Rye fires and had failed to segregate the costs attributable to the other four fires. Of the $8 million revenue requirement that was denied, $6 million was for the Thomas and Rye fires. CAL FIRE has determined that the Thomas and Rye fires were caused by SCE equipment. The decision allows SCE to submit additional applications with the CPUC to recover the costs associated with the Thomas and Rye fires, does not specify a deadline for any such applications, and directs that SCE must prove it was prudent in relation to the Thomas and/or Rye fires, as applicable, in any such future applications. As required by the final decision with respect to the other four fires, SCE filed supplemental testimony in November 2021 segregating the restoration costs attributable to each such fire. In June 2022, the CPUC approved SCE's entire request with respect to the other four fires. As of March 31, 2023, SCE has $176 million in assets recorded in property, plant and equipment in relation to restoration costs related to the 2017/2018 Wildfire/Mudslide Events which may not be recoverable. These assets would be impaired if the restoration costs are permanently disallowed by the CPUC in future cost recovery proceedings. SCE expects to seek to recover costs incurred for reconstructing its system and restoring service to structures that were damaged or destroyed by the Thomas, Koenigstein and Woolsey Fires in future applications with the CPUC.

Post-2018 Wildfires

Several wildfires have significantly impacted portions of SCE's service territory after 2018 (the wildfires that originated in Southern California after 2018 where SCE's equipment may be alleged to be associated with the fire's ignition are referred to collectively as the "Post-2018 Wildfires"). Numerous claims related to the Post-2018 Wildfires have been initiated against SCE and Edison International. The SED is also conducting investigations with respect to several Post-2018 Wildfires.

Through March 31, 2023, SCE has recorded total estimated losses of $702 million, expected recoveries from insurance of $473 million and expected recoveries through electric rates of $166 million related to the Post-2018 Wildfires. The after-tax net charges to earnings recorded through March 31, 2023 have been $45 million.

As of March 31, 2023, SCE had paid $21 million under executed settlements related to the Post-2018 Wildfires and Edison International's and SCE's estimated losses for remaining alleged and potential claims related to the Post-2018 Wildfires was $681 million. As of the same date, SCE had assets for expected recoveries through insurance of $473 million and through electric rates of $166 million on its consolidated balance sheets related to the Post-2018 Wildfires.

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Expected recoveries from insurance recorded for the Post-2018 Wildfires are supported by SCE's insurance coverage for multiple policy years. While Edison International and SCE may incur material losses in excess of the amounts accrued for certain of the Post-2018 Wildfires, Edison International and SCE expect that any losses incurred in connection with any such fire will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such losses after expected recoveries from insurance and through electric rates will not be material.

2019 Saddle Ridge Fire

The "Saddle Ridge Fire," originated in Los Angeles County in October 2019 and burned approximately 9,000 acres, destroyed an estimated 19 structures, damaged an estimated 88 structures, and resulted in one fatality and injuries to 8 fire fighters. In an unsigned and undated report that SCE received in December 2022, the Los Angeles Fire Department stated with respect to the Saddle Ridge Fire that the cause of ignition was unintentional, the form of heat was undetermined, the item first ignited was undetermined and the material type first ignited was undetermined. The Los Angeles Fire Department report noted that no other competent ignition sources other than SCE’s transmission lines were found in the specific origin area of the Saddle Ridge Fire. SCE has been advised that the Los Angeles Fire Department investigation of the Saddle Ridge Fire remains open. A jury trial in the Saddle Ridge Fire litigation is currently set for January 2024. Based on pending litigation and without considering insurance recoveries, it is reasonably possible that SCE will incur a material loss in connection with the Saddle Ridge Fire, but the range of reasonably possible losses that could be incurred cannot be estimated at this time. SCE has not accrued a charge for potential losses relating to the Saddle Ridge Fire.

2020 Bobcat Fire

The "Bobcat Fire" was reported in the vicinity of Cogswell Dam in Los Angeles County in September 2020. The United States Forest Service ("USFS") has reported that the Bobcat Fire burned approximately 116,000 acres in Los Angeles County, destroyed an estimated 87 homes, 1 commercial property and 83 minor structures, damaged an estimated 28 homes and 19 minor structures, and resulted in injuries to 6 firefighters. In addition, fire authorities have estimated suppression costs at $80 million. While SCE’s investigation remains ongoing, SCE’s information reflects that a camera in the vicinity of Cogswell Dam captured the initial stages of a fire with the first observed smoke approximately six minutes before a SCE circuit in the area experienced an anomaly (a relay). An investigation into the cause of the Bobcat Fire is being led by the USFS, and the USFS has taken a specific section of an SCE overhead conductor in the vicinity of Cogswell Dam into possession as part of its investigation. SCE understands that the USFS has also taken three tree branches in the area into possession. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued material charges for potential losses relating to the Bobcat Fire. The accrued charges correspond to the lower end of the estimated range of reasonably possible losses that may be incurred in connection with the Bobcat Fire and are subject to change as additional information becomes available. While Edison International and SCE may incur a material loss in excess of the amount accrued, they cannot estimate the upper end of the range of reasonably possible losses that may be incurred.

2022 Coastal Fire

The "Coastal Fire" originated in Orange County in May 2022 and burned approximately 200 acres. The Orange County Fire Authority ("OCFA") has reported that the Coastal Fire destroyed 20 residential structures and damaged 11 residential structures. Two firefighters also reportedly sustained minor injuries. In addition, fire authorities have estimated suppression costs at approximately $3 million. While SCE's investigation remains ongoing, SCE's information reflects that a SCE circuit in the area experienced an anomaly (a relay) approximately 2 minutes prior to the reported time of the fire. An investigation into the cause of the Coastal Fire is being led by the OCFA. The OCFA has retained SCE equipment in connection with its investigation. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued material charges for potential losses relating to the Coastal Fire. The accrued charges correspond to the lower end of the estimated range of reasonably possible losses that may be incurred in connection with the Coastal Fire and are subject to change as additional information becomes available.

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While Edison International and SCE may incur a material loss in excess of the amount accrued, they cannot estimate the upper end of the range of reasonably possible losses that may be incurred.

2022 Fairview Fire

The "Fairview Fire" originated in Riverside County in September 2022 and burned approximately 28,000 acres. CAL FIRE has reported that the Fairview Fire destroyed 22 residential structures, damaged 5 residential structures, and destroyed or damaged 17 minor structures. CAL FIRE also reported 2 civilian fatalities, 1 civilian injury and 2 injuries to responding fire personnel. In addition, fire authorities have estimated suppression costs at $39 million. While SCE's investigation remains ongoing, SCE's information reflects that a SCE circuit in the area experienced an anomaly (relay) approximately 8 minutes prior to the reported start time of the fire. An investigation into the cause of the Fairview Fire is being led by CAL FIRE. CAL FIRE has retained SCE equipment in connection with its investigation. SCE expects to obtain and review additional information and materials in the possession of third parties during the course of its internal reviews and the litigation process. SCE has accrued material charges for potential losses relating to the Fairview Fire. The accrued charges correspond to the lower end of the estimated range of reasonably possible losses that may be incurred in connection with the Fairview Fire and are subject to change as additional information becomes available. While Edison International and SCE may incur a material loss in excess of the amount accrued, they cannot estimate the upper end of the range of reasonably possible losses that may be incurred.

Loss Estimates for Third Party Claims and Potential Recoveries from Insurance and through Electric Rates

At March 31, 2023 and December 31, 2022, Edison International's and SCE's consolidated balance sheets included accrued estimated losses of $681 million and $682 million, respectively, for the Post-2018 Wildfires.

The following table presents changes in estimated losses since December 31, 2022:


(in millions)
Balance at December 31, 2022	$	682
Increase in accrued estimated losses		6
Amounts paid		(7)
Balance at March 31, 2023	$	681

For the three months ended March 31, 2023 and 2022, Edison International's and SCE's consolidated statements of income included charges for the estimated losses, net of expected recoveries from insurance and customers, related to the Post-2018 Wildfires as follows, respectively:


	Three months ended March 31,
(in millions)	2023		2022
Edison International and SCE:
Charge for wildfire-related claims	$	6	$	105
Expected insurance recoveries		—		(96)
Total pre-tax charge		6		9
Income tax benefit		(2)		(2)
Total after-tax charge	$	4	$	7

Recovery of SCE's losses realized in connection with the Post-2018 Wildfires in excess of available insurance is subject to approval by regulators. The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such losses were not prudently incurred. Under accounting standards for rate-regulated enterprises, SCE defers costs as regulatory assets when it concludes that such costs are probable of future recovery in electric rates. SCE utilizes objectively determinable evidence to form its view on the probability of future recovery. As discussed above, there is evidence of a California investor-owned utility seeking recovery for uninsured wildfire-related costs and FERC allowing recovery of all FERC-jurisdictional wildfire-related costs while the CPUC rejected recovery of all CPUC-jurisdictional

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wildfire-related costs based on a determination that the utility did not meet the CPUC's prudency standard. This evidence was prior to the adoption of AB 1054 on July 12, 2019, after which date AB 1054 clarified that the CPUC must find a utility to be prudent if the utility's conduct related to the ignition was consistent with actions that a reasonable utility would have undertaken in good faith under similar circumstances, at the relevant point in time, and based on the information available at that time. Further, utilities with a valid safety certification at the time of the relevant wildfire will be presumed to have acted prudently related to a wildfire ignition unless a party in the cost recovery proceeding creates serious doubt as to the reasonableness of the utility's conduct, at which time, the burden shifts back to the utility to prove its conduct was prudent. Each of the Post-2018 Wildfires was ignited after July 12, 2019, and SCE has held a valid safety certificate since July 15, 2019. While a California investor-owned utility has not yet sought recovery for uninsured claims and other costs related to wildfires ignited after the adoption of AB 1054, SCE believes that for fires ignited after July 12, 2019, and investor-owned utilities holding a safety certificate at the time of the fire, the CPUC will apply a standard of review similar to that applied by the FERC which presumes all costs requested by an investor-owned utility are reasonable and prudent unless serious doubt as to the reasonableness of the utility’s conduct is raised. As such, SCE has concluded, at this time, that both uninsured CPUC-jurisdictional and uninsured FERC-jurisdictional wildfire-related costs related to the Post-2018 Wildfires, other than for those already authorized for inclusion in electric rates, are probable of recovery through electric rates. As of March 31, 2023, SCE has recorded total expected recoveries related to the Post-2018 Wildfires of $152 million within the WEMA and risk management balancing account and $14 million within the FERC balancing account. SCE will continue to evaluate the probability of recovery based on available evidence, including regulatory decisions, including any CPUC decisions illustrating the interpretation and/or application of the prudency standard under AB 1054, and, for each applicable fire, evidence that could cast serious doubt as to the reasonableness of SCE's conduct relative to that fire.

Wildfire Insurance Coverage

SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that may occur during the period July 1, 2022 through June 30, 2023, subject to up to $100 million of self-insured retention and co-insurance per fire, which results in aggregate net coverage of approximately $937 million. Of this coverage, approximately $102 million is provided by EIS and approximately $835 million is provided by other commercial insurance carriers (commercial insurance carriers other than EIS are referred to herein as "Third-Party Commercial Insurers"). SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that occurred during the period July 1, 2021 through June 30, 2022, subject to up to $100 million of self-insured retention and co-insurance per fire, as well as additional co-insurance of up to $63 million for the policy year, which resulted in net coverage of approximately $875 million provided by Third-Party Commercial Insurers and $28 million provided by EIS for part of the policy year.

SCE believes that its insurance coverage for the July 1, 2022 through June 30, 2023 period meets its obligation to maintain reasonable insurance coverage under AB 1054. Edison International and SCE record a receivable for insurance recoveries when recovery of a recorded loss is determined to be probable.

SCE's wildfire insurance expense for the July 1, 2022 through June 30, 2023 policy period will be approximately
$450 million, of which $357 million is paid to Third-Party Commercial Insurers. SCE's wildfire insurance expense for the July 1, 2021 through June 30, 2022 policy period was approximately $437 million, of which $413 million was paid to Third-Party Commercial Insurers. The difference between the Third-Party Commercial Insurer cost and total cost in both policy years was paid in premiums to EIS. Wildfire insurance premiums paid for the July 1, 2021 through June 30, 2022 and July 1, 2022 through June 30, 2023 policy periods are being recovered through customer rates. See Note 17 for further information.

While SCE's cost of obtaining wildfire insurance coverage from Third-Party Commercial Insurers was lower in 2022 compared to 2021, SCE's cost of obtaining wildfire insurance coverage in recent years is significantly higher than costs incurred prior to the 2017/2018 Wildfire/Mudslide Events due to, among other things, the number of significant wildfire events throughout California and the application of inverse condemnation to investor-owned utilities. While SCE is required to maintain reasonable insurance coverage under AB 1054, SCE may not be able to obtain a reasonable amount of wildfire

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insurance, at a reasonable cost, from Third-Party Commercial Insurers for future policy periods. Subject to obtaining CPUC approval, SCE plans to expand its use of self-insurance for wildfire insurance coverage. SCE expects to obtain wildfire-specific insurance coverage for the period that will begin on July 1, 2023 from Third-Party Commercial Insurers, through self-insurance, or a combination of both.

Environmental Remediation

SCE records its environmental remediation and restoration liabilities when site assessments and/or remedial actions are probable and a range of reasonably likely cleanup costs can be estimated. SCE reviews its sites and measures the liability quarterly, by assessing a range of reasonably likely costs for each identified site using currently available information, including existing technology, presently enacted laws and regulations, experience gained at similar sites, and the probable level of involvement and financial condition of other potentially responsible parties. These estimates include costs for site investigations, remediation, operation and maintenance, monitoring, and site closure. Unless there is a single probable amount, SCE records the lower end of this reasonably likely range of costs (reflected in "Other long-term liabilities") at undiscounted amounts as timing of cash flows is uncertain.

At March 31, 2023, SCE's recorded estimated minimum liability to remediate its 26 identified material sites (sites with a liability balance at March 31, 2023, in which the upper end of the range of expected costs is at least $1 million) was $254 million, including $164 million related to San Onofre. In addition to these sites, SCE also has 12 immaterial sites with a liability balance as of March 31, 2023, for which the total minimum recorded liability was $3 million. Of the $257 million total environmental remediation liability for SCE, $238 million has been recorded as a regulatory asset. SCE expects to recover $36 million through an incentive mechanism that allows SCE to recover 90% of its environmental remediation costs at certain sites (SCE may request to include additional sites in this mechanism) and $202 million through proceedings that allow SCE to recover up to 100% of the costs incurred at certain sites through customer rates. SCE's identified sites include several sites for which there is a lack of currently available information, including the nature and magnitude of contamination, and the extent, if any, that SCE may be held responsible for contributing to any costs incurred for remediating these sites. Thus, no reasonable estimate of cleanup costs can be made for these sites.

The ultimate costs to clean up SCE's identified sites may vary from its recorded liability due to numerous uncertainties inherent in the estimation process, such as: the extent and nature of contamination; the scarcity of reliable data for identified sites; the varying costs of alternative cleanup methods; developments resulting from investigatory studies; the possibility of identifying additional sites; and the time periods over which site remediation is expected to occur. SCE believes that, due to these uncertainties, it is reasonably possible that cleanup costs at the identified material sites and immaterial sites could exceed its recorded liability by up to $118 million and $8 million, respectively. The upper limit of this range of costs was estimated using assumptions least favorable to SCE among a range of reasonably possible outcomes.

SCE expects to clean up and mitigate its identified sites over a period of up to 40 years. Remediation costs for each of the next five years are expected to range from $8 million to $29 million. Costs incurred for the three months ended March 31, 2023 and 2022 were both $2 million.

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

Nuclear Insurance

SCE is a member of Nuclear Electric Insurance Limited ("NEIL"), a mutual insurance company owned by entities with nuclear facilities. NEIL provides insurance for nuclear property damage, including damages caused by acts of terrorism up to specified limits, and for accidental outages for active facilities. The amount of nuclear property damage insurance purchased for San Onofre and Palo Verde exceeds the minimum federal requirement of $50 million and $1.1 billion, respectively. If

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NEIL losses at any nuclear facility covered by the arrangement were to exceed the accumulated funds for these insurance programs, SCE could be assessed retrospective premium adjustments of up to approximately $30 million per year.

Federal law limits public offsite liability claims for bodily injury and property damage from a nuclear incident to the amount of available financial protection, which is currently approximately $560 million for San Onofre and $13.7 billion for Palo Verde. SCE and other owners of San Onofre and Palo Verde have purchased the maximum private primary insurance available through a Facility Form issued by American Nuclear Insurers. SCE withdrew from participation in the secondary insurance pool for San Onofre for offsite liability insurance effective January 5, 2018. Based on its ownership interests in Palo Verde, SCE could be required to pay a maximum of approximately $65 million per nuclear incident for future incidents. However, it would have to pay no more than approximately $10 million per future incident in any one year. Based on its ownership interests in San Onofre and Palo Verde prior to January 5, 2018, SCE could be required to pay a maximum of approximately $255 million per nuclear incident and a maximum of $38 million per year per incident for liabilities arising from events prior to January 5, 2018, although SCE is not aware of any such events.

Note 13. Equity

Common Stock Issuances

As of March 31, 2023, Edison International has not issued any shares through its "at-the-market" ("ATM") program established in August 2022. Under the ATM program, Edison International may sell shares of its common stock having an aggregate sales price of up to $500 million. Edison International has no obligation to sell the remaining shares available under the ATM program.

Edison International continued to settle its ongoing common stock requirements of various internal programs through issuance of new common stock. During the three months ended March 31, 2023, 324,438 shares of common stock were issued as stock compensation awards for net cash receipts of $11 million, 67,314 shares of new common stock were issued in lieu of distributing $5 million to shareholders opting to receive dividend payments in the form of additional common stock, 29,000 shares of common stock were issued to employees through the 401(k) defined contribution savings plan for net cash receipts of $2 million as dividend payments and 26,481 shares of common stock were issued to employees through the ESPP for net cash receipts of $2 million.

Note 14. Accumulated Other Comprehensive Loss

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


		Edison International				SCE

	Three months ended March 31,
(in millions)	2023		2022		2023		2022
Beginning balance	$	(11)	$	(54)	$	(8)	$	(32)
Pension and PBOP:
Reclassified from accumulated other comprehensive loss¹		—		2		—		1
Foreign currency translation adjustments		2		—		—		—
Change		2		2		—		1
Ending Balance	$	(9)	$	(52)	$	(8)	$	(31)

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

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Note 15. Other Income

Other income net of expenses is as follows:


	Three months ended
	March 31,
(in millions)	2023		2022
SCE other income (expense):
Equity allowance for funds used during construction	$	36	$	30
Increase in cash surrender value of life insurance policies and life insurance benefits		11		16
Interest income		60		3
Net periodic benefit income – non-service components		26		34
Civic, political and related activities and donations		(9)		(9)
Other		(4)		(3)
Total SCE other income		120		71
Other income (expense) of Edison International Parent and Other:
Net loss on equity securities		(3)		(2)
Other		2		(1)
Total Edison International other income	$	119	$	68

Note 16. Supplemental Cash Flows Information

Supplemental cash flows information is:


	Edison International				SCE

	Three months ended March 31,
(in millions)	2023		2022		2023		2022
Cash payments (receipts):
Interest, net of amounts capitalized	$	326	$	275	$	292	$	253
Income taxes, net		—		(60)		—		(42)
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock		282		267		350		325
Preference stock of SCE		8		4		8		4

SCE's accrued capital expenditures at March 31, 2023 and 2022 were $592 million and $728 million, respectively. Accrued capital expenditures will be included as an investing activity in the consolidated statements of cash flow in the period paid.

Note 17. Related-Party Transactions

SCE has previously purchased wildfire liability insurance from EIS, a wholly-owned subsidiary of Edison International. In July 2022, SCE purchased wildfire liability insurance for premiums of $273 million, from EIS for the period to June 30, 2023. EIS fully reinsured the exposure for these policies through the commercial reinsurance market, with reinsurance limits and premiums equal to those of the insurance purchased by SCE, except for a contract for a premium of $93 million under which EIS provided insurance protection to SCE. SCE recorded the premium as insurance expense and recorded equal revenue due to customer funding through regulatory cost recovery mechanisms, therefore there was no earnings impact on SCE's consolidated statement of income. EIS recorded the premium as insurance revenue. On the Edison International consolidated statement of income, the EIS insurance revenue eliminated with SCE's insurance expense, therefore the SCE customer revenues increased the earnings of Edison International. The amount of insurance expense and corresponding revenue was $22 million for the three months ended March 31, 2023.

The related-party transactions included in SCE's consolidated balance sheets for wildfire-related insurance purchased from EIS and related expected insurance recoveries were as follows:

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	March 31,		December 31,
(in millions)	2023		2022
Prepaid insurance¹	$	53	$	106
Long-term insurance receivable due from affiliate		334		334

¹	Reflected in "Prepaid expenses" on SCE's consolidated balance sheets.

The expense for wildfire-related insurance premiums paid to EIS was $66 million and $39 million for the three months ended March 31, 2023 and 2022, respectively.

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CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The management of Edison International and SCE, under the supervision and with the participation of Edison International's and SCE's respective Chief Executive Officers and Chief Financial Officers, have evaluated the effectiveness of Edison International's and SCE's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended), respectively, as of the end of the first quarter of 2023. Based on that evaluation, Edison International's and SCE's respective Chief Executive Officers and Chief Financial Officers have each concluded that, as of the end of the period, Edison International's and SCE's disclosure controls and procedures, respectively, were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in Edison International's or SCE's internal control over financial reporting, respectively, during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect, Edison International's or SCE's internal control over financial reporting.

Jointly Owned Utility Plant

Edison International's and SCE's respective scope of evaluation of internal control over financial reporting includes their Jointly Owned Utility Projects as discussed in "Notes to Consolidated Financial Statements—Note 2. Property, Plant and Equipment" in the 2022 Form 10-K.

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LEGAL PROCEEDINGS

2017/2018 Wildfire/Mudslide Events

As of April 25, 2023, SCE was aware of approximately 150 pending unsettled lawsuits, representing approximately 1,000 plaintiffs, related to the Thomas and Koenigstein Fires naming SCE as a defendant. Approximately 100 of the approximately 150 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. One of the lawsuits was filed as a purported class action. The lawsuits, which have been filed in the superior courts of Ventura, Santa Barbara and Los Angeles Counties allege, among other things, negligence, inverse condemnation, trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and certain of the individual plaintiffs in the Thomas and Koenigstein Fire litigation have been pursuing settlements of claims under a mediation program adopted to promote an efficient and orderly settlement process. Some individual plaintiffs have opted to pursue trial outside of the settlement program.

Approximately 50 of the approximately 150 pending unsettled lawsuits mentioned in the paragraph above allege that SCE has responsibility for the Thomas and/or Koenigstein Fires and that the Thomas and/or Koenigstein Fires proximately caused the Montecito Mudslides, resulting in the plaintiffs' claimed damages. Many of the Montecito Mudslides lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. In addition to other causes of action, some of the Montecito Mudslides lawsuits also allege personal injury and wrongful death.

As of April 25, 2023, SCE was aware of approximately 350 currently pending unsettled lawsuits, representing approximately 3,000 plaintiffs, related to the Woolsey Fire naming SCE as a defendant. Approximately 300 of the 350 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. At least one of the lawsuits was filed as a purported class action. The lawsuits, which have been filed in the superior courts of Ventura and Los Angeles Counties allege, among other things, negligence, inverse condemnation, personal injury, wrongful death, trespass, private nuisance, and violations of the public utilities and health and safety codes. SCE and certain of the individual plaintiffs in the Woolsey Fire litigation have been pursuing settlements of claims under a mediation program adopted to promote an efficient and orderly settlement process. Some individual plaintiffs may opt to pursue trial outside of the settlement program.

The Thomas and Koenigstein Fires and Montecito Mudslides lawsuits are being coordinated in the Los Angeles Superior Court. The Woolsey Fire lawsuits have also been coordinated in the Los Angeles Superior Court.

For further information, including regarding settlement activity related to the 2017/2018 Wildfire/Mudslide Events, see "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides."

Environmental Proceedings

Each of Edison International and SCE have elected to disclose environmental proceedings described in Item 103(c)(3)(iii) of Regulation S-K unless it reasonably believes that such proceeding will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $1,000,000.

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EXHIBITS


Exhibit Number		Description

10.1**		Edison International 2023 Long-Term Incentives Terms and Conditions

31.1		Certifications of the Chief Executive Officer and Chief Financial Officer of Edison International pursuant to Section 302 of the Sarbanes-Oxley Act

31.2		Certifications of the Chief Executive Officer and Chief Financial Officer of Southern California Edison Company pursuant to Section 302 of the Sarbanes-Oxley Act

32.1		Certifications of the Chief Executive Officer and the Chief Financial Officer of Edison International required by Section 906 of the Sarbanes-Oxley Act

32.2		Certifications of the Chief Executive Officer and the Chief Financial Officer of Southern California Edison Company required by Section 906 of the Sarbanes-Oxley Act

101.1		Financial statements from the quarterly report on Form 10-Q of Edison International for the quarter ended March 31, 2023, filed on May 2, 2023, formatted in Inline XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements

101.2		Financial statements from the quarterly report on Form 10-Q of Southern California Edison Company for the quarter ended March 31, 2023, filed on May 2, 2023, formatted in Inline XBRL: (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Cash Flows; and (v) the Notes to Consolidated Financial Statements

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

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

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

	EDISON INTERNATIONAL		SOUTHERN CALIFORNIA EDISON COMPANY

By:	/s/ Kate Sturgess	By:	/s/ Kate Sturgess
	Kate Sturgess Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)		Kate Sturgess Vice President and Controller (Duly Authorized Officer and Principal Accounting Officer)

Date:	May 2, 2023	Date:	May 2, 2023