Table of Contents
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, 2022
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
CommissionFile Number
Exact Name of Registrantas specified in its charter
State or Other Jurisdiction ofIncorporation or Organization
IRS EmployerIdentification Number
1-9936
EDISON INTERNATIONAL
California
95-4137452
1-2313
SOUTHERN CALIFORNIA EDISON COMPANY
95-1240335
2244 Walnut Grove Avenue
(P.O. Box 976)
(P.O. Box 800)
Rosemead, California 91770
(Address of principal executive offices)
(626) 302-2222
(626) 302-1212
(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
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).
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.
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
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 26, 2022:
381,200,257 Shares
434,888,104 Shares
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
Highlights of Operating Results
Cost of Capital Applications
5
Capital Program
Southern California Wildfires and Mudslides
7
RESULTS OF OPERATIONS
8
Three months ended March 31, 2022 versus March 31, 2021
9
Earning Activities
Cost-Recovery Activities
10
Supplemental Operating Revenue Information
11
Income Taxes
Edison International Parent and Other
Loss from Operations
LIQUIDITY AND CAPITAL RESOURCES
12
Available Liquidity
Regulatory Proceedings
13
SCE Dividends
Margin and Collateral Deposits
14
Historical Cash Flows
15
18
Contingencies
19
MARKET RISK EXPOSURES
Commodity Price Risk
Credit Risk
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
20
NEW ACCOUNTING GUIDANCE
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Part I, Item 3
i
FINANCIAL STATEMENTS
22
Part I, Item 1
Edison International Consolidated Statements of Income
Edison International Consolidated Statements of Comprehensive Income
23
Edison International Consolidated Balance Sheets
24
Edison International Consolidated Statements of Cash Flows
26
SCE Consolidated Statements of Income
27
SCE Consolidated Statements of Comprehensive Income
SCE Consolidated Balance Sheets
28
SCE Consolidated Statements of Cash Flows
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31
Note 1. Summary of Significant Accounting Policies
Note 2. Consolidated Statements of Changes in Equity
34
Note 3. Variable Interest Entities
35
Note 4. Fair Value Measurements
37
Note 5. Debt and Credit Agreements
40
Note 6. Derivative Instruments
41
Note 7. Revenue
44
Note 8. Income Taxes
45
Note 9. Compensation and Benefit Plans
46
Note 10. Investments
47
Note 11. Regulatory Assets and Liabilities
48
Note 12. Commitments and Contingencies
50
Note 13. Equity
59
Note 14. Accumulated Other Comprehensive Loss
60
Note 15. Other Income
Note 16. Supplemental Cash Flows Information
Note 17. Related-Party Transactions
61
CONTROLS AND PROCEDURES
62
Part I, Item 4
Disclosure Controls and Procedures
Changes in Internal Control Over Financial Reporting
Jointly Owned Utility Plant
LEGAL PROCEEDINGS
Part II, Item 1
2017/2018 Wildfire/Mudslide Events
Environmental Proceedings
63
EXHIBITS
64
Part II, Item 6
SIGNATURES
65
This is a combined Form 10-Q separately filed by Edison International and Southern California Edison Company. Information contained herein relating to an individual company is filed by such company on its own behalf.
ii
The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
the Thomas Fire, the Koenigstein Fire, the Montecito Mudslides and the Woolsey Fire, collectively
2021 Form 10-K
Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2021
AB 1054
California Assembly Bill 1054, executed by the governor of California on July 12, 2019
AB 1054 Excluded Capital Expenditures
approximately $1.6 billion in wildfire risk mitigation capital expenditures that SCE will exclude 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, 2020 to December 31, 2022, 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
CCC
California Coastal Commission
CDP
Coastal Development Permit
CEMA
Catastrophic Event Memorandum Accounts
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, is engaged in the competitive business of providing integrated decarbonization and energy solutions to commercial, institutional and industrial customers
EIS
Edison Insurance Services, Inc., a wholly-owned subsidiary of Edison International
Electric Service Provider
an entity that offers electric power and ancillary services to retail customers, other than electrical corporations (like SCE) and CCAs
ERRA
Energy Resource Recovery Account
FERC
Federal Energy Regulatory Commission
FHPMA
Fire Hazard Prevention Memorandum Account
Fitch
Fitch Ratings, Inc.
GAAP
generally accepted accounting principles
GHG
greenhouse gas
GRC
general rate case
GS&RP
Grid Safety and Resiliency Program
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
Local Public Entity Settlements
settlements entered into in the fourth quarter of 2019 under which 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
MD&A
Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
NERC
North American Electric Reliability Corporation
NRC
Nuclear Regulatory Commission
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
PSPS
Public Safety Power Shutoff(s)
ROE
return on common equity
RPS
California's Renewables Portfolio Standard
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
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
WCCP
Wildfire Covered Conductor Program
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
iv
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:
2
Additional information about risks and uncertainties, including more detail about the factors described in this report, is contained throughout this report and in the 2021 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 2021 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, 2022 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, 2021 and as compared to the three months ended March 31, 2021. This discussion presumes that the reader has read or has access to Edison International's and SCE's MD&A for the calendar year 2021 (the "2021 MD&A"), which was included in the 2021 Form 10-K.
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.
3
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. Edison Energy's business activities are currently not material to report as a separate business segment.
Three months ended
March 31,
(in millions)
2022
2021
Change
Net income (loss) attributable to Edison International
$
147
296
(149)
(63)
(37)
(26)
84
259
(175)
Less: Non-core items
2017/2018 Wildfire/Mudslide Events claims and expenses, net of recoveries
(285)
(4)
(281)
Wildfire Insurance Fund expense
(38)
—
Total non-core items
(323)
(42)
Core earnings (losses)
470
338
132
407
301
106
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.
Edison International's first quarter 2022 earnings decreased $175 million from the first quarter of 2021, resulting from a decrease in SCE's earnings of $149 million and an increase in Edison International Parent and Other's losses of $26 million. SCE's lower net income consisted of $281 million of higher non-core losses and $132 million of higher core earnings.
The increase in SCE's core earnings was primarily due to the adoption of the 2021 GRC final decision in the third quarter of 2021, partially offset by interest expense from increased borrowings.
The increase in Edison International Parent and Other's core losses was primarily due to higher preferred dividends.
Consolidated non-core items for the three months ended March 31, 2022 and 2021 primarily included:
See "Results of Operations" for discussion of SCE's and Edison International Parent and Other's results of operations.
As discussed in the 2021 Form 10-K, in August 2021, SCE filed an application with the CPUC for authority to establish its authorized cost of capital for utility operations for 2022 and to reset the related annual cost of capital mechanism that can adjust authorized cost of capital between SCE's cost of capital proceedings based on changes in Moody's utility bond rate index (see "Business—SCE—Overview of Ratemaking Process" in the 2021 Form 10-K for further information on the adjustment mechanism). In December 2021, the CPUC set an initial phase for the proceeding to determine whether extraordinary circumstances warrant a departure from the cost of capital mechanism for 2022 and, if so, whether the CPUC should leave the cost of capital components at pre-2022 levels for the year 2022 or open a second phase to consider alternative proposals. The outcome of the proceeding is uncertain. In the absence of a decision SCE is currently recording revenue using the pre-2022 cost of capital, subject to refund. If the CPUC ultimately finds that the cost of capital mechanism adjustment should have been implemented effective January 1, 2022, revenue recorded in the first quarter would be reduced by approximately $43 million.
On April 20, 2022, SCE filed its application with the CPUC for authority to establish its authorized cost of capital for utility operations for a three-year term beginning in 2023 and to reset the related annual cost of capital adjustment mechanism. In its application, SCE seeks a return on common equity (ROE) of 10.53% (compared to its last authorized ROE of 10.30%), a cost of long-term debt of 4.27%, and a cost of preferred equity of 5.72%. SCE also seeks to maintain its current authorized capital structure, after CPUC-allowed exclusions, of 52% common equity, 43% long-term debt, and 5% preferred equity. Based on the capital structure and cost factors discussed above, SCE's weighted average return on rate base would be 7.60% for 2023. Additionally SCE has proposed that memorandum and balancing accounts required to be amortized over periods of greater than twelve months should accrue carrying charges at SCE's weighted average cost of capital rather than commercial paper interest rates, which are only applicable to short-term borrowing. If approved, based on SCE's 2021 GRC, including the post-test year ratemaking mechanism, this application would increase SCE's revenue requirements for 2023 by approximately $13 million compared to the cost of capital currently in rates.
Total capital expenditures (including accruals) were $1.3 billion and $1.1 billion for the first three months ended March 31, 2022 and 2021, respectively.
SCE's capital expenditure forecast reflects planned CPUC-jurisdictional spending including WCCP and other programs outlined in SCE's WMP that are above amounts authorized in the 2021 GRC, CPUC-approved utility owned storage expenditures and planned FERC capital expenditures.
Potential capital spending variability associated with future regulatory requests based on management judgment, potential for permitting delays and other operational considerations is reflected in the range case below. The completion of projects, the timing of expenditures, and the associated cost recovery may be affected by permitting requirements and delays, construction
schedules, availability of labor, equipment and materials, financing, legal and regulatory approvals and developments, community requests or protests, weather and other unforeseen conditions.
SCE's 2022 – 2023 forecast for major capital expenditures is set forth in the table below:
Total
(in billions)
2023
2022 – 2023
Traditional capital expenditures
Distribution1
4.5
3.7
8.2
Transmission
0.5
0.6
1.1
Generation
0.1
0.2
0.3
Subtotal
5.1
9.6
Wildfire mitigation-related capital expenditures
2.2
Total capital expenditures
6.2
5.6
11.8
Total capital expenditures using range case discussed above
6.0
5.2
11.2
SCE expects to make additional CPUC capital expenditures, the recovery of which will be subject to future regulatory approval. This includes expenditures from track 4 of the 2021 GRC, the 2025 GRC and non-GRC programs including the Building Electrification Program. These capital expenditures and expected FERC capital expenditures, excluded from the table above, are expected to be in a range of approximately $10.4 billion to $12.5 billion between 2024 and 2025.
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 and an in-service date of August 1, 2022. In April 2022, SCE received a force majeure event notice from Ameresco in which Ameresco asserts that both manufacturing delays related to COVID-19 shut-downs in China and new shipping restrictions imposed by Chinese governmental authorities are currently impacting the supply of batteries from China necessary for timely completion of the projects. SCE is evaluating the force majeure event notice. If there is a valid force majeure event under the contracts with Ameresco, subject to certain conditions, the project schedule and any related trigger of liquidated damages may be extended and the contract price may be increased to account for the impact of the force majeure event. Ameresco has advised SCE that, subject to the ongoing impact of the events asserted in the force majeure notice, up to 300 MW of capacity could be in-service in August 2022. SCE currently expects these storage projects to result in $1.0 billion of capital expenditures. In December 2021, the CPUC approved recovery of these expenditures and establishment of a balancing account for the associated revenue requirement, which have been reflected in rates beginning in the first quarter of 2022. Authorized revenue requirements will be included in the annual ERRA review proceeding and can only be disallowed upon a finding that SCE failed to prudently administer the contracts.
Reflected below is SCE's weighted average annual rate base for 2022 – 2023 incorporating authorized CPUC-jurisdictional expenditures including utility owned storage, planned FERC capital expenditures, and planned non-GRC projects or programs.
Rate base for expected capital expenditures
38.7
42.1
Rate base for expected capital expenditures using range case discussed above
38.5
41.5
Including programs outlined in SCE's WMP subject to future cost recovery proceedings, rate base associated with wildfire restoration capital expenditures subject to future CEMA applications, and planned expenditures from track 4 of the 2021 GRC and the 2025 GRC, SCE's weighted average annual rate base is expected to be between $43.4 billion and $44.8 billion in 2024 and between $46.6 billion and $49.4 billion in 2025.
6
As discussed in the 2021 Form 10-K, multiple lawsuits and investigations related to the 2017/2018 Wildfire/Mudslide Events have been initiated against SCE and Edison International. As of March 31, 2022, in addition to the Local Public Entity Settlement, the TKM Subrogation Settlement and the Woolsey Subrogation Settlement, SCE had entered into settlements with approximately 7,000 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation. In addition, while SCE and the SED executed the SED Agreement in October 2021, SCE's obligations under the SED Agreement will only commence after CPUC approval of the SED Agreement is final and non-appealable. Based on information available to SCE and consideration of the risks associated with litigation, Edison International and SCE expect to incur a material loss in connection with the remaining alleged and potential claims related to 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 2022 review, including a review of large damage claims presented by a small number of plaintiffs and new lawsuits filed in the Woolsey Fire litigation, a $416 million increase in estimated losses for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2022 was recorded. As a result, Edison International and SCE also recorded expected recoveries through FERC electric rates of $26 million against the charge, and the resulting net charge to earnings was $390 million ($281 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, particularly with respect to plaintiffs in the Woolsey litigation, as milestones in the litigation are met. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to reach settlements through the ongoing claims mediation processes, uncertainties related to the litigation processes, 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, 2022, Edison International and SCE have recorded total pre-tax charges of $7.9 billion, expected recoveries from insurance of $2.0 billion and expected recoveries through FERC electric rates of $326 million related to the 2017/2018 Wildfire/Mudslide Events. The after-tax net charges to earnings recorded through March 31, 2022 have been $4.0 billion.
As of March 31, 2022, SCE had paid $6.4 billion under executed settlements and had $137 million to be paid under executed settlements related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, SCE had recovered $2.0 billion through insurance and approximately $170 million through FERC-jurisdictional electric rates.
After giving effect to all payment obligations under settlements entered into through March 31, 2022, 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 and for the SED Agreement was $1.3 billion. As of the same date, Edison International and SCE had assets for expected recoveries through FERC electric rates of $155 million on their consolidated balance sheets and had exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events.
SCE will seek rate recovery of prudently-incurred, actual losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance, other than for CPUC-jurisdictional rate recovery of the $375 million of SED Excluded Losses if the CPUC's approval of the SED Agreement becomes final and non-appealable. 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 $5.2 billion by filing multiple future applications with the CPUC, the first of which SCE anticipates filing in 2023. These 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 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 are probable of recovery through electric rates.
For further information, see "Business— Southern California Wildfires," "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" in the 2021 Form 10-K and "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies—Southern California Wildfires and Mudslides" in this report.
SCE's results of operations are derived mainly through two sources:
The following table is a summary of SCE's results of operations for the periods indicated.
Three months ended March 31, 2022
Three months ended March 31, 2021
Cost-
Earning
Recovery
Activities
Consolidated
Operating revenue
2,267
1,694
3,961
1,767
1,186
2,953
Purchased power and fuel
1,037
1,013
Operation and maintenance
790
676
1,466
618
206
824
Wildfire-related claims, net of insurance recoveries
425
53
Depreciation and amortization
579
583
524
Property and other taxes
116
124
125
Other operating income
(2)
Total operating expenses
1,961
1,725
3,686
1,322
1,220
2,542
Operating income (loss)
306
(31)
275
445
(34)
411
Interest expense
(210)
(3)
(213)
(184)
Other income
71
38
72
Income before taxes
133
299
Income tax benefit
(40)
(24)
Net income
173
323
Less: Preferred and preference stock dividend requirements
Net income available for common stock
Less: Non-core expense
Core earnings1
Earning activities were primarily affected by the following:
Operating revenue and the corresponding operating expenses in cost-recovery activities were primarily affected by the following:
SCE's retail billed and unbilled revenue (excluding wholesale sales) was $3.6 billion and $2.7 billion for the three months ended March 31, 2022 and 2021, respectively.
The increase for the three months ended March 31, 2022 compared to the same period in 2021 is primarily due to the authorization to recover costs related to wildfire-related and drought restoration expenses that had been deferred in 2021 in the GRC track 2, higher CPUC revenue as well as higher cost -recovery activities as part of the 2021 GRC implementation through various balancing accounts and higher FERC revenue due to expected recoveries for the FERC portion of wildfire-related claims. See "—Earnings Activities" and "—Cost-Recovery Activities" for further details.
As a result of the CPUC-authorized decoupling mechanism, SCE earnings are not affected by changes in retail electricity sales.
SCE's income tax benefit increased by $16 million for the three months ended March 31, 2022, compared to the same period in 2021. The increase was primarily due to lower pre-tax income and lower incremental flow-through tax benefits.
SCE's effective tax rates were (30.1)% and (8.0)% for the three months ended March 31, 2022 and 2021, respectively. SCE's effective tax rate is below the federal statutory rate of 21% 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 income 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.
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.
The following table summarizes the results of Edison International Parent and Other:
Three months ended March 31,
Edison Energy Group and subsidiaries
(5)
Corporate expenses and other subsidiaries
(32)
(30)
Edison International Parent and Other net loss
(33)
Preferred stock dividend requirement
Edison International Parent and Other net loss attributable to common stock
The net loss attributable to common stock from operations of Edison International Parent and Other increased $26 million for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to higher preferred dividend expense as a result of Edison International's preferred equity issuances in 2021.
SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its cash flow and access to the 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 financings, refinancing of existing debt, and equity contributions from Edison International Parent, as needed. SCE also has availability under its credit facilities 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 2021 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. To finance these expenditures, SCE issued securitized bonds in the amounts of $338 million in February 2021 and $533 million in February 2022. SCE expects to securitize the remaining balance of AB 1054 Excluded Capital Expenditures based on the timing of the CPUC approval of those expenditures and related financing costs in SCE's 2021 GRC track 3 proceeding. For further information, see "—Regulatory Proceedings—Wildfire Related Regulatory Proceedings." SCE used the proceeds of the February 2022 securitized bonds to partially repay a $1.2 billion term loan due in May 2022 and expects to extend the remaining balance of $730 million as necessary prior to full settlement from the proceeds of future securitized bonds.
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 require SCE to pay related liabilities or post additional collateral if SCE's credit rating were to fall below investment grade. Incremental collateral requirements for power procurement contracts and environmental remediation obligations would result from a potential downgrade of SCE's credit rating to below investment grade. For further details, see "—Margin and Collateral Deposits."
At March 31, 2022, SCE had cash on hand of $119 million.
At March 31, 2022, SCE had approximately $2.9 billion available under its $3.4 billion revolving credit facility. The aggregate maximum principal amount under the SCE revolving credit facility 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." At March 31, 2022, SCE had $295 million outstanding commercial paper, net of discount, at a weighted-average interest rate of 0.82%.
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, 2022, SCE's debt to total capitalization ratio was 0.55 to 1.
At March 31, 2022, SCE was in compliance with all financial covenants that affect access to capital.
Wildfire Related Regulatory Proceedings
2021 General Rate Case Wildfire Mitigation Memorandum Account Balances
In March 2021, SCE made its 2021 GRC track 3 filing with the CPUC. In its filing, SCE requested reasonableness review of approximately $1.2 billion of wildfire mitigation costs incurred prior to 2021, consisting of $497 million of incremental operation and maintenance expenses and other costs, and $679 million of incremental capital expenditures. In March 2022, a CPUC order extended the statutory deadline for issuing a proposed decision in the proceeding to the third quarter of 2022.
2020 Emergency Wildfire Restoration
Multiple wildfires occurred during 2020 which caused damage within SCE's service territory and to SCE's Big Creek hydroelectric facility.
In March 2022, SCE filed a CEMA application requesting recovery of $207 million of operation and maintenance expenses incremental to authorized revenue requirements and $312 million of capital expenditures incremental to amounts authorized in the 2021 GRC primarily related to these restoration efforts. SCE has not yet filed for recovery of generation restoration costs, as repairs to hydroelectric generation facilities are not complete.
As discussed in the 2021 Form 10-K, the CPUC regulates SCE's capital structure which limits the dividends it may pay to its shareholders. The CPUC issued a decision on SCE's application to the CPUC for waiver of compliance with its equity ratio requirement, that allows SCE to exclude, until May 7, 2022, from its equity ratio calculations (i) net charges accrued in connection with the 2017/2018 Wildfire/Mudslide Events and (ii) debt issued for the purpose of paying claims related to the 2017/2018 Wildfire/Mudslide Events up to an amount equal to the net charges accrued in connection with the 2017/2018 Wildfire/Mudslide Events. In April 2022, SCE filed an application to extend the waiver of compliance with its equity ratio requirement and the permitted exclusion. Under the CPUC's rules, SCE will not be deemed to be in violation of the equity ratio requirement while the waiver application is pending resolution.
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, 2022 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, 2022, 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 energy procurement 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.
Collateral posted as of March 31, 20221
208
Incremental collateral requirements for purchased power and fuel contracts resulting from a potential downgrade of SCE's credit rating to below investment grade2
29
Incremental collateral requirements for purchased power and fuel contracts resulting from adverse market price movement3
Posted and potential collateral requirements
252
Net collateral provided to counterparties and other brokers consisted of $208 million in letters of credit and surety bonds.
Represents potential collateral requirements for accounts payable and market-to-market valuation at March 31, 2022. Requirement varies throughout the period and is generally lower at the end of the month.
Incremental collateral requirements were based on potential changes in SCE's forward positions as of March 31, 2022 due to adverse market price movements over the remaining lives of the existing power contracts using a 95% confidence level.
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, 2022, Edison International Parent had cash on hand of $64 million.
At March 31, 2022 Edison International Parent did not have any outstanding commercial paper supported by the $1.5 billion revolving credit facility. The aggregate maximum principal amount under the Edison International Parent revolving credit facility may be increased up to $2.0 billion, provided that additional lender commitments are obtained.
In April 2022, Edison International Parent borrowed $600 million under a term loan agreement due in April 2023. For further information see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
In 2022, Edison International expects to issue securities containing $300 to $400 million of equity content to support SCE's capital investment needs and SCE maintaining the common equity component of its capital structure, after CPUC allowed exclusions, at 52% on a weighted average basis over the Capital Structure Compliance Period. For further information, see "Liquidity and Capital Resources—SCE—SCE Dividends" in the 2021 MD&A.
Edison International Parent and Other's liquidity and its ability to pay operating expenses and pay dividends to 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 2021 MD&A. 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 the Series A and Series B Preferred Stock. For further information see "Notes to Consolidated Financial Statements—Note 14. Equity" in the 2021 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, 2022, Edison International's consolidated debt to total capitalization ratio was 0.61 to 1.
At March 31, 2022, Edison International Parent was in compliance with all financial covenants that affect access to capital.
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.
Net cash provided by operating activities
827
Net cash provided by financing activities
171
1,204
Net cash used in investing activities
(1,159)
(1,282)
Net decrease in cash, cash equivalents and restricted cash
(161)
Net Cash Provided by Operating Activities
The following table summarizes major categories of net cash provided by operating activities as provided in more detail in SCE's consolidated statements of cash flows for the three months ended March 31, 2022 and 2021.
Change in cash flows
2022/2021
Non-cash items1
611
541
784
864
(80)
Changes in cash flow resulting from working capital2
78
(138)
216
Regulatory assets and liabilities
(70)
329
Wildfire related claims3
(196)
(618)
422
Other noncurrent assets and liabilities4
(98)
(108)
779
Net cash provided by operating activities was impacted by the following:
Net income and non-cash items decreased in 2022 by $80 million primarily due to higher charges for wildfire-related claims, net of insurance recoveries, and interest expense from increased borrowings, partially offset by higher earnings due to the adoption of the 2021 GRC final decision in the third quarter of 2021.
Net cash inflow (outflow) for working capital was $78 million and $(138) million during the three months ended March 31, 2022 and 2021, respectively. Net cash inflow for working capital in 2022 is primarily due to a net decrease in customer receivables and unbilled revenue of $161 million (mainly due to $185 million of CAPP funds received in January 2022), and net decrease in prepaid insurance of $88 million, partially offset by decrease in payables of $166 million. Net cash outflow for working capital in 2021 is primarily due to a net increase in unbilled revenue and customer receivables of $108 million and decrease in payables of $115 million.
Net cash provided by (used in) regulatory assets and liabilities, including changes in net undercollections recorded in balancing accounts, was $259 million and $(70) million during the three months ended March 31, 2022 and 2021, 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:
16
Cash flows (used in) provided by other noncurrent assets and liabilities were primarily related to increase in wildfire insurance receivables of $(96) million in 2022 and recoveries of $43 million in 2021. Cash flow for other noncurrent assets and liabilities also includes payments of decommissioning costs ($35 million in 2022 and $61 million in 2021, respectively), partially offset by SCE's net earnings from nuclear decommissioning trust investments ($19 million in 2022 and $23 million in 2021, respectively). See "Nuclear Decommissioning Activities" below for further discussion.
Net Cash Provided by Financing Activities
The following table summarizes cash provided by financing activities for the three months ended March 31, 2022 and 2021. Issuances of debt are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Issuances of long-term debt, including premium/discount and net of issuance costs
1,713
1,223
Long-term debt repaid or repurchased
(365)
(490)
Short-term debt repaid, net of borrowing
(518)
(22)
Commercial paper repaid, net of borrowing
(306)
(51)
Capital contributions from Edison International Parent
900
Payment of common stock dividends to Edison International
(325)
Payment of preference stock dividends
Other
Net Cash Used in Investing Activities
Cash flows used in investing activities are primarily due to capital expenditures related to transmission and distribution investments ($1.2 billion and $1.4 billion for the three months ended March 31, 2022 and 2021, respectively). In addition, SCE had a net redemption of nuclear decommissioning trust investments of $34 million and $52 million during the three months ended March 31, 2022 and 2021, respectively. See "Nuclear Decommissioning Activities" below for further discussion.
17
Nuclear Decommissioning Activities
SCE's consolidated statements of cash flows include nuclear decommissioning activities, which are reflected in the following line items:
Net cash used in operating activities:
Net earnings from nuclear decommissioning trust investments
SCE's decommissioning costs
(35)
(61)
Net cash provided by investing activities:
Proceeds from sale of investments
867
1,270
Purchases of investments
(833)
(1,218)
Net cash impact
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 ($35 million and $61 million in 2022 and 2021, respectively) and reimbursements to SCE from the nuclear decommissioning trust ($53 million and $75 million in 2022 and 2021, respectively).
The table below sets forth condensed historical cash flow from operations for Edison International Parent and Other, including intercompany eliminations.
Net cash (used in) provided by operating activities
307
Net cash provided by investing activities
Net increase in cash and cash equivalents
331
Net Cash (Used in) Provided by Operating Activities
Net cash (used in) provided by operating activities was impacted by the following:
Net cash provided by financing activities was as follows:
Dividends paid to Edison International common shareholders
(262)
(247)
Dividends paid to Edison International preferred shareholders
(46)
Dividends received from SCE
325
Capital contributions to SCE
(900)
Issuance of common stock
Issuance of preferred stock, net of issuance costs
1,237
Commercial paper financing, net
(129)
Edison International's and SCE's contingencies are discussed in "Notes to Consolidated Financial Statements—Note 12. Commitments and Contingencies—Contingencies."
Edison International's and SCE's primary market risks are described in the 2021 Form 10-K. For further discussion of market risk exposures, including commodity price risk, credit risk, and interest rate risk, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "—Note 6. Derivative Instruments."
SCE records derivative instruments on its consolidated balance sheets as either assets or liabilities measured at fair value unless otherwise exempted from derivative treatment as normal purchases or sales. The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was reflected as a net asset of $63 million and $44 million on SCE's consolidated balance sheets at March 31, 2022 and December 31, 2021, respectively. For further discussion of fair value measurements and the fair value hierarchy, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements" and "— Note 6. Derivative Instruments."
Credit risk exposure from counterparties for power and gas trading activities is measured as the sum of net accounts receivable (accounts receivable less accounts payable) and the current fair value of net derivative assets (derivative assets less derivative liabilities) reflected on the consolidated balance sheets. SCE enters into master agreements which typically provide for a right of set-off. Accordingly, SCE's credit risk exposure from counterparties is based on a net exposure under these arrangements. SCE manages the credit risk on the portfolio of counterparties based on credit ratings and other publicly disclosed information, such as financial statements, regulatory filings and press releases, to guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting agreements. Based on SCE's policies and risk exposures related to credit, SCE does not anticipate a material adverse effect on their financial statements as a result of counterparty nonperformance. At March 31, 2022, SCE's power and gas trading counterparty credit risk exposure was $69 million, all of which is associated with entities that have an investment grade rating of A or higher. SCE assigns a credit rating to counterparties based on the lower of a counterparty's S&P or Moody's rating.
For more information related to credit risks, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments."
For a discussion of Edison International's and SCE's critical accounting policies, see "Critical Accounting Estimates and Policies" in the 2021 MD&A.
New accounting guidance is discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."
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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21
Consolidated Statements of Income
(in millions, except per-share amounts, unaudited)
Total operating revenue
3,968
2,960
1,487
841
525
126
3,709
2,561
Operating income
399
(246)
(217)
68
Income before income taxes
81
254
(55)
(36)
136
290
Preference stock dividend requirements of SCE
Preferred stock dividend requirement of Edison International
Net income attributable to Edison International common shareholders
Basic earnings per share:
Weighted average shares of common stock outstanding
381
379
Basic earnings per common share attributable to Edison International common shareholders
0.22
0.68
Diluted earnings per share:
Weighted average shares of common stock outstanding, including effect of dilutive securities
382
380
Diluted earnings per common share attributable to Edison International common shareholders
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Comprehensive Income
(in millions, unaudited)
Other comprehensive income, net of tax:
Pension and postretirement benefits other than pensions
Other comprehensive income, net of tax
Comprehensive income
138
292
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Edison International
112
265
Consolidated Balance Sheets
December 31,
ASSETS
Cash and cash equivalents
231
390
Receivables, less allowances of $255 and $193 for uncollectible accounts at respective dates
1,312
1,398
Accrued unbilled revenue
743
794
Inventory
434
420
Prepaid expenses
258
Regulatory assets
1,778
Wildfire Insurance Fund contributions
204
Other current assets
130
249
Total current assets
5,273
5,491
Nuclear decommissioning trusts
4,527
4,870
Marketable securities
Other investments
39
Total investments
4,581
4,921
Utility property, plant and equipment, less accumulated depreciation and amortization of $11,650 and $11,407 at respective dates
50,793
50,497
Nonutility property, plant and equipment, less accumulated depreciation of $103 and $98 at respective dates
207
203
Total property, plant and equipment
51,000
50,700
Receivables, less allowances of $99 and $116 for uncollectible accounts at respective dates
66
122
Regulatory assets (includes $849 and $325 related to Variable Interest Entities "VIEs" at respective dates)
8,008
7,660
2,309
2,359
Operating lease right-of-use assets
1,849
1,932
Long-term insurance receivables
75
Other long-term assets
1,463
1,485
Total long-term assets
13,866
13,633
Total assets
74,720
74,745
(in millions, except share amounts, unaudited)
LIABILITIES AND EQUITY
Short-term debt
2,049
2,354
Current portion of long-term debt
1,117
1,077
Accounts payable
1,973
2,002
Wildfire-related claims
137
131
Customer deposits
190
193
Regulatory liabilities
701
603
Current portion of operating lease liabilities
594
582
Other current liabilities
1,581
1,667
Total current liabilities
8,342
8,609
Long-term debt (includes $837 and $314 related to VIEs at respective dates)
24,967
24,170
Deferred income taxes and credits
5,780
5,740
Pensions and benefits
488
496
Asset retirement obligations
2,839
2,772
8,867
8,981
Operating lease liabilities
1,255
1,350
1,531
1,733
Other deferred credits and other long-term liabilities
3,019
3,105
Total deferred credits and other liabilities
23,779
24,177
Total liabilities
57,088
56,956
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)
1,977
Common stock, no par value (800,000,000 shares authorized; 380,901,110 and 380,378,145 shares issued and outstanding at respective dates)
6,090
6,071
Accumulated other comprehensive loss
(52)
(54)
Retained earnings
7,716
7,894
Total Edison International's shareholders' equity
15,731
15,888
Noncontrolling interests – preference stock of SCE
1,901
Total equity
17,632
17,789
Total liabilities and equity
25
Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile to net cash provided by operating activities:
624
542
Allowance for equity during construction
Deferred income taxes
Wildfire Insurance Fund amortization expense
Changes in operating assets and liabilities:
Receivables
(14)
(12)
(84)
(151)
Tax receivables and payables
54
178
Other current assets and liabilities
(168)
Regulatory assets and liabilities, net
Wildfire-related insurance receivable
(96)
105
Other noncurrent assets and liabilities
792
Cash flows from financing activities:
Long-term debt issued, plus premium and net of discount and issuance costs of $20 and $15 for the respective periods
Long-term debt repaid
Short-term debt issued
305
Short-term debt repaid
(327)
Common stock issued
Preferred stock issued, net
Commercial paper repayments, net of borrowing
(180)
Dividends and distribution to noncontrolling interests
Common stock dividends paid
Preferred stock dividends paid
205
1,511
Cash flows from investing activities:
Capital expenditures
(1,207)
(1,358)
Proceeds from sale of nuclear decommissioning trust investments
Purchases of nuclear decommissioning trust investments
(1,157)
Net (decrease) increase in cash, cash equivalents and restricted cash
(160)
Cash, cash equivalents and restricted cash at beginning of period
394
89
Cash, cash equivalents and restricted cash at end of period
234
Less: Preference stock dividend requirements
174
119
279
Receivables, less allowances of $254 and $193 for uncollectible accounts at respective dates
1,305
1,393
256
257
123
222
5,145
5,347
4,566
4,904
Nonutility property, plant and equipment, less accumulated depreciation of $92 and $88 at respective dates
201
196
50,994
50,693
Regulatory assets (includes $849 and $325 related to VIEs at respective dates)
1,842
1,925
95
Long-term insurance receivables due from affiliate
76
1,432
1,453
13,828
13,594
74,533
74,538
377
1,974
1,999
592
1,571
1,631
7,231
7,870
22,928
21,733
7,239
7,181
110
111
1,250
1,343
2,886
2,979
24,722
25,100
54,881
54,703
Preference stock
1,945
Common stock, no par value (560,000,000 shares authorized; 434,888,104 shares issued and outstanding at respective dates)
2,168
Additional paid-in capital
7,028
7,033
8,542
8,721
19,652
19,835
622
540
(25)
(79)
(154)
36
(166)
42
32
Short-term debt borrowed
Dividends paid
(357)
(1,357)
280
56
(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 integrated decarbonization and energy solutions to commercial, institutional and industrial customers. 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 of which SCE is the primary beneficiary, SCE Recovery Funding LLC. 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, 2021 (the "2021 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2021 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 three-month period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.
The December 31, 2021 financial statement data was derived from audited financial statements but does not include all disclosures required by GAAP.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents include 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:
Money market funds
167
230
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.
The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:
Short-term restricted cash1
Total cash, cash equivalents and restricted cash
SCE:
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. At March 31, 2022, this included the estimated impacts of the COVID-19 pandemic.
The following table sets forth the changes in allowance for uncollectible accounts for SCE:
March 31, 2022
March 31, 2021
Customers
All others
Beginning balance
293
309
³
175
188
Plus: current period provision for uncollectible accounts
Included in operation and maintenance expenses in earning activities1
Included in operation and maintenance expenses in cost-recovery activities2
Deferred to regulatory memorandum accounts
Less: write-offs, net of recoveries
Ending balance
337
353
210
226
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.
EPS attributable to Edison International common shareholders was computed as follows:
(in millions, except per-share amounts)
Net income attributable to common shareholders
Net income available to common shareholders
Weighted average common shares outstanding
Basic earnings per share
Net income available to common shareholders and assumed conversions
Incremental shares from assumed conversions
Adjusted weighted average shares – diluted
Diluted earnings per share
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 6,533,558 and 11,412,075 shares of common stock for the three months ended March 31, 2022 and 2021, respectively were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive.
Revenue Recognition
Cost of Capital
In August 2021, SCE filed an application with the CPUC for authority to establish its authorized cost of capital for utility operations for 2022 and to reset the related annual cost of capital mechanism that can adjust authorized cost of capital between SCE's cost of capital proceedings based on changes in Moody's utility bond rate index. In the absence of a decision SCE is continuing to recognize revenue based on its pre-2022 cost of capital, subject to refund. If the CPUC ultimately finds that the cost of capital mechanism adjustment should have been implemented effective January 1, 2022, revenue recorded in the first quarter would be reduced by approximately $43 million.
FERC 2022 Formula Rate Update
In November 2021, SCE filed its 2022 annual update with the FERC with the proposed rates effective January 1, 2022, subject to settlement procedures and refund. SCE requested an increase in SCE's transmission revenue requirement of $326 million or 30% higher than amounts included in the 2021 annual rates. Pending resolution of the FERC formula rate proceedings, SCE recognized revenue in the first quarter of 2022 based on the FERC formula rate, subject to refund.
New Accounting Guidance
Accounting Guidance Adopted
In November 2021, the FASB issued an accounting standards update to require business entities that account for transactions with a government by analogizing to a grant or contribution accounting model to make certain annual disclosures. Edison International and SCE have adopted this standard on January 1, 2022 using the prospective adoption approach. The adoption of this standard did not have a material impact on Edison International's and SCE's annual disclosure.
33
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, 2022:
Noncontrolling
Equity Attributable to Edison International Shareholders
Interests
Accumulated
Preferred
Common
Comprehensive
Retained
Preference
(in millions, except per share amounts)
Stock
Loss
Earnings
Equity
Balance at December 31, 2021
Other comprehensive income
Common stock issued, net of issuance cost
Common stock dividends declared ($0.7000 per share)
(267)
Preferred stock dividend declared ($26.875 per share for Series A and $17.08333 per share for Series B)
(21)
Dividends to noncontrolling interests ($11.160 - $35.936 per share for preference stock)
Noncash stock-based compensation
Balance at March 31, 2022
The following table provides Edison International's changes in equity for the three months ended March 31, 2021:
Balance at December 31, 2020
5,962
(69)
8,155
14,048
15,949
263
Preferred stock issued, net of issuance cost
Common stock dividends declared ($0.6625 per share)
(251)
Preferred stock dividend accrued ($3.434 per share)
Dividends to noncontrolling interests ($15.625 - $35.936 per share for preference stock)
(27)
Balance at March 31, 2021
5,989
(67)
8,163
15,322
17,223
The following table provides SCE's changes in equity for the three months ended March 31, 2022:
Additional
Paid-in
Capital
Dividends declared on common stock ($0.7473 per share)
Dividends on preference stock ($11.160 - $35.937 per share)
Stock-based compensation
(9)
(1)
The following table provides SCE's changes in equity for the three months ended March 31, 2021:
5,387
(41)
9,191
18,650
Capital contribution from Edison International Parent
Dividends declared on preference stock (15.625 - $35.936 per share)
6,286
(39)
9,162
19,522
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.
In February 2022 and 2021, SCE Recovery Funding LLC issued $533 million and $338 million of securitized bonds, respectively, 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. 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.
Regulatory assets: Non-current
849
Regulatory liabilities: Current
(8)
Long-term debt1
(837)
(314)
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 2021 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 3,645 MW and 3,916 MW at March 31, 2022 and 2021, respectively, and the amounts that SCE paid to these projects were $106 million and $159 million for the three months ended March 31, 2022 and 2021, 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,
$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, 2022 and December 31, 2021 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:
Trust II
Trust III
Trust IV
Trust V
Trust VI
Dividend income
Dividend distributions
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, 2022 and December 31, 2021, 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
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.
The following table sets forth assets and liabilities of SCE that were accounted for at fair value by level within the fair value hierarchy:
Netting
and
Level 1
Level 2
Level 3
Collateral1
Assets at fair value
Derivative contracts
57
43
Money market funds and other
85
Nuclear decommissioning trusts:
Stocks2
1,879
Fixed Income3
977
1,528
2,505
Short-term investments, primarily cash equivalents
165
Subtotal of nuclear decommissioning trusts4
2,937
1,612
4,549
3,000
1,691
4,697
Liabilities at fair value
(18)
Net assets
1,677
(19)
December 31, 2021
49
253
1,972
1,083
1,607
2,690
102
227
3,157
1,732
4,889
3,387
1,781
5,186
(47)
1,739
Edison International Parent and Other assets measured at fair value and classified as Level 1 consisted of $9 million and $12 million in equity investments as of March 31, 2022 and December 31, 2021, respectively and money market funds of $104 million and $99 million at March 31, 2022 and December 31, 2021, respectively, and classified as Level 2 consisted of short-term investments of $3 million and $6 million at March 31, 2022 and December 31, 2021, respectively.
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:
Fair value of net assets at beginning of period
108
Settlements
Total realized/unrealized losses 1,2
Fair value of net assets at end of period
91
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
Valuation
Unobservable
Range
Average
Assets
Liabilities
Technique
Input
(per MWh)
Congestion revenue rights
Auction prices
CAISO CRR auction prices
$(18.87) - $43.03
1.36
1.46
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.
Fair Value of Debt Recorded at Carrying Value
The carrying value and fair value of Edison International's and SCE's long-term debt (including current portion of long-term debt) are as follows:
Carrying
Fair
Value1
Value2
26,084
26,046
25,247
27,718
22,945
22,842
22,110
24,375
Note 5.Debt and Credit Agreements
Long-Term Debt
In January 2022, SCE issued $500 million of 2.75% first and refunding mortgage bonds due in 2032 and $700 million of 3.45% first and refunding mortgage bonds due in 2052. The proceeds were used to finance or refinance eligible sustainable projects.
Senior Secured Recovery Bonds
In February 2022, SCE Recovery Funding LLC issued $533 million of Senior Secured Recovery Bonds, Series 2022-A, in three tranches ("Recovery Bonds") and used the proceeds to acquire Recovery Property. The three tranches of Recovery Bonds consisted of $100 million, 1.98% with final maturity in 2030; $305 million, 2.94% with final maturity in 2044; and $128 million, 3.24% with final maturity in 2048. The Recovery Bonds are payable only from and secured by the Recovery Property. SCE Recovery Funding LLC is consolidated by SCE for financial reporting purposes, however, the Recovery Bonds do not constitute a debt or other legal obligation of, or interest in, SCE or any of its affiliates, except for SCE Recovery Funding LLC. SCE used the proceeds it received from the sale of Recovery Property to reimburse itself for
previously incurred AB 1054 Excluded Capital Expenditures, including the retirement of related debt and financing costs. For further details, see Note 3.
Credit Agreements and Short-Term Debt
The following table summarizes the status of the credit facilities at March 31, 2022:
(in millions, except for rates)
Execution
Termination
Secured Overnight Financing Rate ("SOFR")
Outstanding
Amount
date
plus (bps)
Use of proceeds
Commitment
borrowings
letters of credit
available
Edison International Parent
June 2019
May 2025
128
Support commercial paper borrowings and general corporate purposes1, 3
1,500
Total Edison International Parent:
Support commercial paper borrowings and general corporate purposes2, 3
3,350
295
202
2,853
Total SCE:
Total Edison International:
4,850
4,353
Debt Financing Subsequent to March 31, 2022
In April 2022, Edison International Parent borrowed $600 million under a term loan agreement due in April 2023 that bears interest at either an adjusted term SOFR plus 0.70% or a base rate with no applicable margin. Edison International expects to use the proceeds for general corporate purposes.
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 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 plant and peaker plants,
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.
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 were less than $1 million as of March 31, 2022 and December 31, 2021, for which SCE posted no collateral to its counterparties for its derivative liabilities and related outstanding payables for both periods. If the credit-risk-related contingent features underlying these agreements were triggered on March 31, 2022, SCE would be required to post less than $1 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:
Derivative Assets
Derivative Liabilities
Short-Term1
Long-Term2
Short-Term
Long-Term
Net Assets
Commodity derivative contracts
Gross amounts recognized
100
82
Gross amounts offset in the consolidated balance sheets
(17)
Cash collateral posted3
Net amounts presented in the consolidated balance sheets
70
(16)
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 the consolidated statements of cash flows.
The following table summarizes the components of SCE's economic hedging activity:
Realized (losses) gains
Unrealized gains (losses)
(6)
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
Electricity options, swaps and forwards
GWh
899
1,869
Natural gas options, swaps and forwards
Bcf
58
30,813
33,216
Note 7.Revenue
SCE's revenue is disaggregated by two revenue sources:
The following table is a summary of SCE's revenue:
Revenue from contracts with customers1,2
1,985
1,375
3,360
1,704
1,195
2,899
Alternative revenue programs and other operating revenue3
282
319
601
Deferred Revenue
In July 2021, Morongo Transmission LLC ("Morongo") paid SCE $400 million for the use of a portion of the West of Devers transmission line transfer capability for a period of 30 years. SCE recognized the entire proceeds as deferred revenue and will amortize deferred revenue from the use of the transfer capability over the 30-year term on a straight-line basis resulting in revenue of $13 million per year. As of March 31, 2022, the deferred revenue is $391 million, of which $13 million and $378 million are included in "Other current liabilities" and "Other deferred credits and other long-term liabilities," respectively, on SCE's consolidated balance sheets. For the three months ended March 31, 2022, SCE has recognized revenue of $3 million.
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:
Income from operations before income taxes
Provision for income tax at federal statutory rate of 21%
(Decrease) increase in income tax from:
Items presented with related state income tax, net:
State tax, net of federal benefit
(7)
(13)
Property-related
(45)
(83)
(10)
Total income tax benefit
Effective tax rate
(67.9)
%
(14.2)
(30.1)
(8.0)
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.
Tax Disputes
Tax years that remain open for examination by the IRS and the California Franchise Tax Board ("FTB") are 2016 – 2021 and 2013 – 2021, respectively.
Note 9.Compensation and Benefit Plans
Pension Plans
Net periodic pension expense components are:
Service cost
Non-service cost (benefit)
Interest cost
Expected return on plan assets
(57)
(56)
Amortization of net loss1
Regulatory adjustment
Total non-service benefit2
(23)
Total expense recognized
(53)
Postretirement Benefits Other Than Pensions ("PBOP")
Net periodic PBOP expense components for Edison International and SCE are:
Amortization of net gain
Total non-service benefit1
Total expense
Note 10.Investments
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 Cost
Longest
Maturity Dates
Stocks
*
Municipal bonds
2057
872
875
955
1,033
Government and agency securities
2067
1,023
1,095
1,092
1,212
Corporate bonds
2070
415
386
458
446
Short-term investments and receivables/payables1
One-year
134
199
143
2,444
2,555
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 $1.9 billion and $2.1 billion at March 31, 2022 and December 31, 2021, respectively.
Trust assets are used to pay income taxes arising from trust investing activity. Deferred tax liabilities related to net unrealized gains were $434 million and $517 million at March 31, 2022 and December 31, 2021, respectively. Accordingly, the fair value of trust assets available to pay future decommissioning costs, net of deferred income taxes, totaled $4.1 billion and $4.4 billion at March 31, 2022 and December 31, 2021, respectively.
The following table summarizes the gains and losses for the trust investments:
Gross realized gains
Gross realized losses
Net unrealized (losses) gains for equity securities
(100)
Due to regulatory mechanisms, changes in assets of the trusts from income or loss items have no impact on operating revenue or earnings.
Edison International's Investments
Edison International holds strategic investments in companies focused on developing electric technologies and services. As of March 31, 2022 and December 31, 2021, these investments consist of $10 million and $12 million of marketable securities, respectively, and $3 million of equity investments without readily determinable fair values for both periods (included as "Other investments" on Edison International's consolidated balance sheets). The unrealized loss for equity investments held is $2 million for the three months ended March 31, 2022, recorded as "Other income" on Edison International's consolidated statement of income. There were no unrealized gains or losses for equity investments for the three months ended March 31, 2021. For further information, see Note 4 and Note 15.
Regulatory Assets
SCE's regulatory assets included on the consolidated balance sheets are:
Current:
Regulatory balancing and memorandum accounts
1,771
1,591
Power contracts
168
Total current
Long-term:
Deferred income taxes, net of liabilities
4,856
4,770
Unamortized investments, net of accumulated amortization
113
114
Unamortized loss on reacquired debt
118
121
1,661
1,897
Environmental remediation
245
242
Recovery assets1
120
Total long-term
Total regulatory assets
9,969
9,438
Regulatory Liabilities
SCE's regulatory liabilities included on the consolidated balance sheets are:
553
Energy derivatives
Costs of removal
2,694
2,552
Re-measurement of deferred taxes
2,302
2,315
Recoveries in excess of ARO liabilities1
1,760
2,155
825
648
Pension and other postretirement benefits
1,286
1,281
Total regulatory liabilities
9,568
9,584
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:
Asset (liability)
Energy resource recovery account
759
Portfolio allocation balancing account
459
(183)
New system generation balancing account
73
Public purpose programs and energy efficiency programs
(1,287)
(1,066)
Base revenue requirement balancing account
1,360
GRC wildfire mitigation balancing accounts1
Residential uncollectibles balancing account
Greenhouse gas auction revenue and low carbon fuel standard revenue
(393)
(298)
FERC balancing accounts
55
Wildfire and drought restoration accounts2
Wildfire-related memorandum accounts3
1,034
1,456
COVID-19-related memorandum accounts
97
94
Customer service re-platform memorandum account4
159
Tax accounting memorandum account and pole loading balancing account
144
Excess bond and power charge balancing account5
(144)
(62)
Asset
2,004
2,287
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.
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.
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. California has experienced unprecedented weather conditions in recent years due to climate change, and SCE's service territory remains susceptible to additional wildfire activity.
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. SCE's equipment has been, and may further be, alleged to be associated with several wildfires that have originated in Southern California subsequent to 2018, including the 2019/2020 Wildfires (defined below). Edison International and SCE expect that any losses incurred in connection with those fires will be covered by insurance, subject to self-insured retentions and co-insurance, or third-party receivables, and expect that any such losses after recoveries will not be material.
Liability Overview
The extent of 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 liability for wildfire events, including determinations of whether SCE was negligent, would only be made during lengthy and complex litigation processes. Even when investigations are still pending or 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.
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 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 has been confirmed.
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." Based on information available to SCE and consideration of the risks associated with litigation, Edison International and SCE expect to incur a material loss in connection with the remaining alleged and potential claims related to the 2017/2018 Wildfire/Mudslide Events.
Recent developments
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 2022 review, including a review of large damage claims presented by a small number of plaintiffs and new lawsuits filed in the Woolsey Fire litigation, a $416 million increase in estimated losses for the 2017/2018 Wildfire/Mudslide Events as of March 31, 2022 was recorded. As a result, Edison International and SCE also recorded expected recoveries through FERC electric rates of $26 million against the charge, and the resulting net charge to earnings was $390 million ($281 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
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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, particularly with respect to plaintiffs in the Woolsey litigation, as milestones in the litigation are met. Other factors that can cause actual losses incurred to be higher or lower than estimated include the ability to reach settlements through the ongoing claims mediation processes, uncertainties related to the litigation processes, 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.
As of March 31, 2022, Edison International and SCE had paid $6.4 billion under executed settlements, had $137 million to be paid under executed settlements and had $1.3 billion of estimated losses for remaining alleged and potential claims and for the SED Agreement (defined below) reflected on their consolidated balance sheets related to the 2017/2018 Wildfire/Mudslide Events. As of the same date, Edison International and SCE had assets for expected recoveries through FERC electric rates of $155 million on their consolidated balance sheets and had exhausted expected insurance recoveries related to the 2017/2018 Wildfire/Mudslide Events.
The CPUC and FERC may not allow SCE to recover uninsured losses through electric rates if it is determined that such losses were not reasonably or prudently incurred. SCE will seek rate recovery of prudently-incurred, actual losses realized in connection with the 2017/2018 Wildfire/Mudslide Events in excess of available insurance, other than for CPUC-jurisdictional rate recovery of the $375 million of SED Excluded Losses (defined below) if the CPUC's approval of the SED Agreement becomes final and non-appealable. 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.
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
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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.
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. As previously disclosed, 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.
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.
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.
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. Because potential plaintiffs can still timely file claims related to the Woolsey Fire, SCE expects to be the subject of additional lawsuits related to the events. 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 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).
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.
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, 2022, SCE has also entered into settlements with approximately 7,000 individual plaintiffs in the 2017/2018 Wildfire/Mudslide Events litigation. In 2020 and 2021, 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 $300 million and $1.7 billion, respectively, to those individual plaintiffs. Between December 31, 2021 and March 31, 2022, 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 $700 million to those individual plaintiffs.
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.
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 is 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 Excluded Losses"). 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. The CPUC approved the SED Agreement in December 2021 and its approval has been legally challenged by The Utility Reform Network (“TURN”). In April 2022, the CPUC denied TURN’s challenge on all but one issue, which now requires the SED to provide the CPUC with its analysis of the factors required to be considered for penalty assessments relative to the SED Agreement. SCE's obligations under the SED Agreement will only commence after CPUC approval of the SED Agreement is 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, 2022 and December 31, 2021, Edison International's and SCE's consolidated balance sheets include fixed payments to be made under executed settlement agreements and accrued estimated losses of $1.4 billion and $1.7 billion, respectively, for the 2017/2018 Wildfire/Mudslide Events. The following table presents changes in estimated losses since December 31, 2021:
Balance at December 31, 20211
1,734
Increase in accrued estimated losses to reflect best estimate
416
Amounts paid
(717)
Balance at March 31, 20222
1,433
For the three months ended March 31, 2022 and 2021, Edison International's and SCE's income statements include charges for the estimated losses, net of expected recoveries from insurance and FERC customers, related to the 2017/2018 Wildfire/Mudslide Events as follows:
Charge for wildfire-related claims
Expected revenue from FERC customers
Total pre-tax charge
(109)
Total after-tax charge
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. Edison International and SCE record a receivable for insurance recoveries when recovery of a recorded loss is determined to be probable.
In total, through March 31, 2022, SCE has accrued estimated losses of $7.9 billion, has paid or agreed to pay approximately $6.6 billion in settlements and has recovered $2.0 billion from its insurance carriers in relation to the 2017/2018 Wildfire/Mudslide Events.
Recovery of SCE's actual 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 SDG&E's 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 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.
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. As of March 31, 2022, SCE has $184 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 continues to incur costs for reconstructing its system and restoring service to structures that were damaged or destroyed by the Thomas, Koenigstein and Woolsey Fires and plans to file additional applications with the CPUC to recover such costs.
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 $326 million within the FERC balancing account. This was the FERC portion of the total estimated losses accrued. As of March 31, 2022, collections have reduced the regulatory assets remaining in the FERC balancing account to $155 million.
2019/2020 Wildfires
Several wildfires significantly impacted portions of SCE's service territory in 2019 and 2020 (the wildfires that originated in Southern California in 2019 and 2020 where SCE's equipment may be alleged to be associated with the fire's ignition are referred to collectively as the "2019/2020 Wildfires"). Edison International and SCE expect that any losses incurred in connection with the 2019/2020 Wildfires will be covered by insurance, subject to self-insured retentions and co-insurance, and expect that any such losses after insurance recoveries will not be material. As of March 31, 2022, Edison International and SCE had estimated losses (established at the lower end of the reasonably estimated range of expected losses) of $229 million, and expected recoveries from insurance of approximately $171 million, reflected on their consolidated balance sheets related to the 2019/2020 Wildfires.
One of the 2019/2020 Wildfires, 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 injuries to 8 individuals and one fatality. An investigation into the cause of the Saddle Ridge Fire is being led by the Los Angeles Fire Department. 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 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.
Another of the 2019/2020 Wildfires, the "Bobcat Fire" was reported in the vicinity of Cogswell Dam in Los Angeles County, California 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, the USFS has estimated suppression costs at $80 million. A camera in the vicinity of Cogswell Dam captured the initial stages of a fire with the first observed smoke approximately six minutes before an 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. The SED is also conducting an investigation of the Bobcat Fire. SCE has accrued a charge for potential losses relating to the Bobcat Fire. The accrued charge corresponds to the lower end of the reasonably estimated range of expected losses that may be incurred in connection with the Bobcat Fire and is subject to change as additional information becomes available.
Current Wildfire Insurance Coverage
SCE has approximately $1.0 billion of wildfire-specific insurance coverage for events that may occur during the period July 1, 2021 through June 30, 2022, subject to $50 million of self-insured retention and up to approximately $75 million of co-insurance, which results in net coverage of approximately $875 million. Various coverage limitations within the policies that make up SCE's wildfire insurance coverage could result in additional material self-insured costs, for instance in the event of multiple wildfire occurrences during a policy period or with a single wildfire with damages in excess of the policy limits. SCE believes that its insurance coverage for the July 1, 2021 through June 30, 2022 period meets its obligation to maintain reasonable insurance coverage under AB 1054. SCE is in the process of procuring wildfire-specific insurance coverage for the period that will begin on July 1, 2022.
Wildfire insurance expense for SCE and Edison international in 2021, prior to any regulatory deferrals, was approximately $450 million and $425 million, respectively. In August 2021, the CPUC issued a final decision in track 1 of the 2021 GRC proceeding which authorized $460 million for SCE wildfire insurance expense for 2021 and a one-way balancing account to require any overcollection to be returned to customers. Under the final decision, SCE would continue to track incremental wildfire insurance expenses above authorized amounts in its WEMA and recovery of incremental amounts would be subject to future reasonableness review.
SCE tracks incremental insurance premium, self-insured retention and co-insurance costs related to wildfire liability insurance policies as well as other wildfire-related costs, including claims and legal costs, in its WEMA. In December 2020, SCE filed a WEMA application with the CPUC to seek recovery of an aggregate of $214 million, consisting of $204 million in wildfire insurance premium costs in excess of premiums approved in the 2018 GRC, representing wildfire insurance premiums for July 1, 2020 through December 31, 2020, the corresponding financing costs, memorandum account interest and a prior period premium adjustment.
SCE's cost of obtaining wildfire insurance coverage has increased significantly in recent years as a result of, among other things, the number of recent and significant wildfire events throughout California and the application of inverse condemnation to investor-owned utilities. As such, while SCE is required to maintain reasonable insurance coverage under AB 1054, SCE may not be able to obtain a reasonable amount of wildfire insurance, at a reasonable cost, for future policy periods.
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, 2022, SCE's recorded estimated minimum liability to remediate its 26 identified material sites (sites with a liability balance at March 31, 2022, in which the upper end of the range of expected costs is at least $1 million) was $260 million, including $168 million related to San Onofre. In addition to these sites, SCE also has 14 immaterial sites with a liability balance as of March 31, 2022, for which the total minimum recorded liability was $4 million. Of the $264 million total environmental remediation liability for SCE, $245 million has been recorded as a regulatory asset. SCE expects to recover $38 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 $207 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 $117 million and $9 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 $7 million to $26 million. Costs incurred for the three months ended March 31, 2022 and 2021 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 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 $13.5 billion for Palo Verde and $560 million for San Onofre. 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.
Upstream Lighting Program
From 2017 – 2019, SCE administered the Upstream Lighting Program, part of a statewide program administered by investor-owned utilities that offered discounted energy efficient light bulbs to customers through incentives to lighting manufacturers. The CPUC began investigating the programs administered by the investor-owned utilities based on reports that investor-owned utilities, including SCE, shipped a significant number of bulbs under the program that could not be tracked to customers. Beginning in January 2020, the CPUC has sought comments on remedies related to SCE's implementation of the Upstream Lighting Program from 2017 through 2019 program years. SCE undertook an independent investigation of bulbs shipped to retailers categorized as grocery and discount businesses during the 2017 to 2019 program years and found that there were overstocking of bulbs and program management shortcomings. Incentives paid to manufacturers for bulbs shipped to grocery and discount businesses during the relevant period, including those that were sold to customers, were approximately $91 million. In addition, SCE received incentives related to the bulbs shipped to grocery and discount businesses through an energy efficiency incentive mechanism ("ESPI Mechanism") of approximately $3.5 million related to the bulbs shipped in 2017 and 2018. SCE may also receive incentives of approximately $1.3 million under the ESPI Mechanism in 2022 related to bulbs shipped to grocery and discount businesses in 2018 and 2019.
In January 2021, the Public Advocates Office and The Utility Reform Network provided comments to the CPUC arguing that SCE imprudently managed the program and requesting: a refund of $33 million of ESPI awards, which includes incentives associated with the Upstream Lighting Program and other energy efficiency programs; a refund of $92 million of incentives paid to manufacturers and associated program administrative costs; $140 million in fines; and additional program improvements to be provided at shareholder expense. In March 2021, SCE filed reply comments arguing that remedies of approximately $21 million were appropriate. The CPUC has noted that it expects to address the pending issues related to the upstream lighting program in the second quarter of 2022.
SCE has accrued a charge for potential losses relating to the Upstream Lighting Program. The accrued charge corresponds to the lower end of the reasonably estimated range of expected losses that may be incurred in connection with the Upstream Lighting Program and is subject to change as additional information becomes available.
Common Stock Issuances
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, 2022, 390,969 shares of common stock were issued as stock compensation awards for net cash receipts of $11 million, 71,815 shares of new common stock were issued in lieu of distributing $4 million to shareholders opting to receive dividend payments in the form of additional common stock, 40,000 shares of common stock were issued to employees through the 401(k) defined contribution savings plan for net cash receipts of $3 million as dividend payments and 14,269 shares of common stock were issued to employees through the Employee Stock Purchase Plan for net cash receipts of $1 million.
In February 2022, Edison International terminated its "at-the-market" ("ATM") program established in May 2019. Edison International did not issue any shares during the first quarter of 2022 through the ATM program.
The changes in accumulated other comprehensive loss, net of tax, consist of:
Pension and PBOP – net loss:
Reclassified from accumulated other comprehensive loss1
Ending Balance
Other income net of expenses is as follows:
SCE other income (expense):
Equity allowance for funds used during construction
Increase in cash surrender value of life insurance policies and life insurance benefits
Interest income
Net periodic benefit income – non-service components
Civic, political and related activities and donations
Total SCE other income
Other income (expense) of Edison International Parent and Other:
Net loss on equity securities
Total Edison International other income
Supplemental cash flows information is:
Cash payments (receipts):
Interest, net of amounts capitalized
241
Income taxes, net
(60)
(87)
Non-cash financing and investing activities:
Dividends declared but not paid:
Common stock
267
251
Preference stock of SCE
SCE's accrued capital expenditures at March 31, 2022 and 2021 were $728 million and $503 million, respectively. Accrued capital expenditures will be included as an investing activity in the consolidated statements of cash flow in the period paid.
SCE has previously purchased wildfire liability insurance from Edison Insurance Services, Inc. ("EIS"), a wholly-owned subsidiary of Edison International. 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:
Prepaid insurance1
Long-term insurance receivable due from affiliate
Reflected in "Prepaid expenses" on SCE's consolidated balance sheets.
The expense for wildfire-related insurance premiums paid to EIS was $39 million and $43 million for the three months ended March 31, 2022 and 2021, respectively.
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 2022. 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.
There were no changes in Edison International's or SCE's internal control over financial reporting, respectively, during the first quarter of 2022 that have materially affected, or are reasonably likely to materially affect, Edison International's or SCE's internal control over financial reporting.
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 2021 Form 10-K.
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. Because potential plaintiffs can still timely file claims related to some of the 2017/2018 Wildfire/Mudslide Events, SCE expects to be the subject of additional lawsuits related to the events. The litigation could take a number of years to be resolved because of the complexity of the matters and number of plaintiffs.
As of April 26, 2022, SCE was aware of at least 229 currently pending lawsuits, representing approximately 2,000 plaintiffs, related to the Thomas and Koenigstein Fires naming SCE as a defendant. One hundred twenty-eight of the 229 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. At least three of the lawsuits were filed as purported class actions. 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. An initial trial for a limited number of plaintiffs, sometimes referred to as a bellwether trial, is currently scheduled for July 15, 2022. 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. Trials for individual plaintiffs who opt out may potentially be scheduled to be held in 2022.
Fifty-five of the 229 pending 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. Thirty-six of the 55 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. A bellwether jury trial previously scheduled for October 12, 2020 was vacated due to the wide-spread disruption caused by the COVID-19 pandemic.
As of April 26, 2022, SCE was aware of at least 353 currently pending lawsuits, representing approximately 4,500 plaintiffs, related to the Woolsey Fire naming SCE as a defendant. One hundred twenty-one of the 353 lawsuits also name Edison International as a defendant based on its ownership and alleged control of SCE. At least one of the lawsuits were filed as purported class actions. 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. A bellwether jury trial previously scheduled for October 26, 2021 has been vacated to provide SCE and certain of the individual plaintiffs in the Woolsey Fire litigation the opportunity to pursue 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."
Each of Edison International and SCE have elected to disclose environmental proceedings described in Item 103(c)(3)(iii) of Regulation SK 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.
Exhibit Number
Description
10.1**
Edison International 2022 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, 2022, filed on May 3, 2022, 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, 2022, filed on May 3, 2022, 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.
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.
By:
/s/ Kate Sturgess
Kate Sturgess
Vice President and Controller
(Duly Authorized Officer and Principal Accounting Officer)
Date:
May 3, 2022