EIX-SCE 2015 Q2 10Q


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

FORM 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2015
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                        to

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

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

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

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

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

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

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

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

Edison International        Yes ¨ No þ    Southern California Edison Company    Yes ¨ No þ
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Common Stock outstanding as of July 28, 2015:
 
 
Edison International
 
325,811,206 shares
Southern California Edison Company
 
434,888,104 shares
 
 
 
 
 
 







TABLE OF CONTENTS
 
 
 
 
 
 
SEC Form 10-Q Reference Number
 
 
Part I, Item 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part I, Item 3


i


Part I, Item 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part I, Item 4
 
 
 
 
 
 
Part II, Item 1
Part II, Item 2
 
 
Part II, Item 6
 
This is a combined Form 10-Q separately filed by Edison International and Southern California Edison Company. Information contained herein relating to an individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representation whatsoever as to any other company.



ii


FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect Edison International's and SCE's current expectations and projections about future events based on Edison International's and SCE's knowledge of present facts and circumstances and assumptions about future events and include any statement that does not directly relate to a historical or current fact. Other information distributed by Edison International and SCE that is incorporated in this report, or that refers to or incorporates this report, may also contain forward-looking statements. In this report and elsewhere, the words "expects," "believes," "anticipates," "estimates," "projects," "intends," "plans," "probable," "may," "will," "could," "would," "should," and variations of such words and similar expressions, or discussions of strategy or of plans, are intended to identify forward-looking statements. Such statements necessarily involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Some of the risks, uncertainties and other important factors that could cause results to differ from those currently expected, or that otherwise could impact Edison International and SCE, include, but are not limited to the:
•
ability of SCE to recover its costs in a timely manner from its customers through regulated rates, including regulatory assets related to San Onofre and undercollection of fuel and purchased power costs;
•
decisions and other actions by the CPUC, the FERC, the NRC and other regulatory authorities, including determinations of authorized rates of return or return on equity, and delays in regulatory actions;
•
ability of Edison International or its subsidiaries to borrow funds and access the capital markets on reasonable terms;
•
possible customer bypass or departure due to technological advancements, federal and state subsidies, or cumulative rate impacts that make self-generation or use of alternative energy sources economically viable;
•
risks inherent in the construction of transmission and distribution infrastructure replacement and expansion projects, including those related to project site identification, public opposition, environmental mitigation, construction, permitting, power curtailment costs (payments due under power contracts in the event there is insufficient transmission to enable the acceptance of power delivery), and governmental approvals;
•
risks associated with the operation of transmission and distribution assets and power generating facilities including: public safety issues, failure, availability, efficiency, and output of equipment and availability and cost of spare parts;
•
risks associated with the retirement and decommissioning of nuclear generating facilities;
•
physical security of SCE's critical assets and personnel and the cyber security of SCE's critical information technology systems for grid control, and business and customer data;
•
cost and availability of electricity, including the ability to procure sufficient resources to meet expected customer needs in the event of power plant outages or significant counterparty defaults under power-purchase agreements;
•
environmental laws and regulations, at both the state and federal levels, or changes in the application of those laws, that could require additional expenditures or otherwise affect the cost and manner of doing business;
•
changes in the fair value of investments and other assets;
•
changes in interest rates and rates of inflation, including escalation rates, which may be adjusted by public utility regulators;
•
governmental, statutory, regulatory or administrative changes or initiatives affecting the electricity industry, including market structure rules applicable to each market adopted by the California Independent System Operator, WECC, NERC, and adjoining regions;
•
availability and creditworthiness of counterparties and the resulting effects on liquidity in the power and fuel markets and/or the ability of counterparties to pay amounts owed in excess of collateral provided in support of their obligations;
•
cost and availability of labor, equipment and materials;
•
ability to obtain sufficient insurance, including insurance relating to SCE's nuclear facilities and wildfire-related liability, and to recover the costs of such insurance or in the absence of insurance the ability to recover uninsured losses;
•
effects of legal proceedings, changes in or interpretations of tax laws, rates or policies;
•
potential for penalties or disallowances caused by non-compliance with applicable laws and regulations;


iii


•
cost and availability of fuel for generating facilities and related transportation to the extent not recovered through regulated rate cost escalation provisions or balancing accounts;
•
extent of technological change in the generation, storage, transmission, distribution and use of electricity;
•
risk that competing transmission systems will be built by merchant transmission providers in SCE's service area; and
•
weather conditions and natural disasters.
Additional information about risks and uncertainties, including more detail about the factors described above, is contained throughout this MD&A and in Edison International's and SCE's combined 2014 Form 10-K, including the "Risk Factors" section. Readers are urged to read this entire report, including the information incorporated by reference, as well as the 2014 Form 10-K, and carefully consider the risks, uncertainties and other factors that affect Edison International's and SCE's businesses. Forward-looking statements speak only as of the date they are made and neither Edison International nor SCE are obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by Edison International and SCE with the SEC.
The MD&A for the six months ended June 30, 2015 discusses material changes in the consolidated financial condition, results of operations and other developments of Edison International and SCE since December 31, 2014, and as compared to the six months ended June 30, 2014. This discussion presumes that the reader has read or has access to Edison International's and SCE's MD&A for the calendar year 2014 (the "year-ended 2014 MD&A"), which was included in the 2014 Form 10-K.
Except when otherwise stated, references to each of Edison International, SCE, EMG, Edison Energy Group, EME or Edison Capital mean each such company with its subsidiaries on a consolidated basis. References to "Edison International Parent and Other" mean Edison International Parent and its consolidated non-utility subsidiaries.


iv


GLOSSARY
The following terms and abbreviations appearing in the text of this report have the meanings indicated below.
Amended Plan of Reorganization
 
EME Chapter 11 Bankruptcy Plan of Reorganization as amended to incorporate the terms of the Settlement Agreement, dated February 19, 2014
AFUDC
 
allowance for funds used during construction
2014 Form 10-K
 
Edison International's and SCE's combined Annual Report on Form 10-K for the year-ended December 31, 2014
ALJ
 
administrative law judge
APS
 
Arizona Public Service Company
ARO(s)
 
asset retirement obligation(s)
Bcf
 
billion cubic feet
CAA
 
Clean Air Act
CAISO
 
California Independent System Operator
CARB
 
California Air Resources Board
CPUC
 
California Public Utilities Commission
CRRs
 
congestion revenue rights
DOE
 
U.S. Department of Energy
Edison Energy Group
 
Edison International's subsidiary that holds interests in competitive businesses related to the generation, delivery, or use of electricity, formerly named Edison Energy, Inc.
EME
 
Edison Mission Energy
EME Settlement Agreement
 
Settlement Agreement entered into by Edison International, EME, and the Consenting Noteholders in February 2014
EMG
 
Edison Mission Group Inc.
EPS
 
earnings per share
ERRA
 
energy resource recovery account
FERC
 
Federal Energy Regulatory Commission
Four Corners
 
coal fueled electric generating facility located in Farmington, New Mexico in
which SCE held a 48% ownership interest
GAAP
 
generally accepted accounting principles
GHG
 
greenhouse gas
GRC
 
general rate case
GWh
 
gigawatt-hours
HLBV
 
hypothetical liquidation at book value
IRS
 
Internal Revenue Service
ISO
 
Independent System Operator
MD&A
 
Management's Discussion and Analysis of Financial Condition and Results
of Operations in this report
MHI
 
Mitsubishi Heavy Industries, Ltd. and a related company
Moody's
 
Moody's Investors Service
MW
 
megawatts
MWh
 
megawatt-hours
NAAQS
 
national ambient air quality standards
NDTCP
 
Nuclear Decommissioning Trust Costs Proceeding
NERC
 
North American Electric Reliability Corporation
Ninth Circuit
 
Ninth Circuit Court of Appeals
NRC
 
Nuclear Regulatory Commission
ORA
 
CPUC's Office of Ratepayers Advocates
OII
 
Order Instituting Investigation
Palo Verde
 
large pressurized water nuclear electric generating facility located near
Phoenix, Arizona in which SCE holds a 15.8% ownership interest


v


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



vi

















(This page has been left blank intentionally.)



1


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT OVERVIEW
Highlights of Operating Results
Edison International is the parent holding company of SCE. SCE is a public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison International is also the parent company of Edison Energy Group, a subsidiary that holds interests in competitive businesses that are related to the generation, delivery, or use of electricity. Such competitive business activities are currently not material to report as a separate business segment. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to Edison International Parent and Other refer to Edison International Parent, Edison Energy Group, and other subsidiaries. Unless otherwise described, all of the information contained in this report relates to both filers.
 
Three months ended June 30,
 
 
 
Six months ended June 30,
 
 
(in millions)
2015
 
2014
 
Change
 
2015
 
2014
 
Change
Net income (loss) attributable to Edison International
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
 
 
 
 
 
 
 
 
 
 
SCE
$
384

 
$
362

 
$
22

 
$
689

 
$
570

 
$
119

Edison International Parent and Other
(5
)
 
(10
)
 
5

 
(11
)
 
(20
)
 
9

Discontinued operations
—

 
184

 
(184
)
 
—

 
162

 
(162
)
Edison International
379

 
536

 
(157
)
 
678

 
712

 
(34
)
Less: Non-core items
 
 
 
 
 
 
 
 
 
 
 
     SCE
—

 
—

 
—

 
—

 
(96
)
 
96

     Edison International Parent and Other
1

 
—

 
1

 
6

 
—

 
6

     Discontinued operations
—

 
184

 
(184
)
 
—

 
162

 
(162
)
Total non-core items
1

 
184

 
(183
)
 
6

 
66

 
(60
)
Core earnings (losses)
 
 
 
 
 
 
 
 
 
 
 
SCE
384

 
362

 
22

 
689

 
666

 
23

Edison International Parent and Other
(6
)
 
(10
)
 
4

 
(17
)
 
(20
)
 
3

Edison International
$
378

 
$
352

 
$
26

 
$
672

 
$
646

 
$
26

Edison International's earnings are prepared in accordance with GAAP used in the United States. Management uses core earnings internally for financial planning and for analysis of performance. Core earnings (losses) are also used when communicating with investors and analysts regarding Edison International's earnings results to facilitate comparisons of the Company's performance from period to period. Core earnings (losses) are a non-GAAP financial measure and may not be comparable to those of other companies. Core earnings (losses) are defined as earnings attributable to Edison International shareholders less income or loss from discontinued operations, income resulting from allocation of losses to tax equity investors under the hypothetical liquidation at book value ("HLBV") accounting method and income or loss from significant discrete items that management does not consider representative of ongoing earnings, such as: exit activities, including sale of certain assets and other activities that are no longer continuing; asset impairments and certain tax, regulatory or legal settlements or proceedings.
SCE's core earnings for the second quarter and six months ended June 30, 2015 were higher than the respective periods in 2014 primarily due to higher income tax benefits, FERC-related revenue from rate base growth and earnings on funds used during construction partially offset by lower other income.
During the second quarter of 2015, SCE recorded $100 million of income tax benefits from revisions to liabilities for uncertain tax positions for tax years 2010 through 2012. These benefits were partially offset by changes in estimated taxes related to net operating loss carrybacks, interest and state income taxes. During the second quarter of 2014, SCE recorded $29 million of income tax benefits from revisions to liabilities for uncertain tax positions and $14 million ($9 million after-tax) of benefits related to generator settlements.

2


During the first half of 2015, SCE recognized revenue from CPUC activities largely based on 2014 authorized base revenue requirements included in customer rates. The revenue requirement ultimately adopted by the CPUC will be retroactive to January 1, 2015.
Consolidated non-core items included:
•
Impairment and other charges of $231 million ($96 million after-tax) in the first quarter of 2014 related to the San Onofre OII Settlement Agreement (as discussed below). For further information, see "—San Onofre Proceedings, Recoveries, and Decommissioning."
•
Income of $184 million during the second quarter of 2014 related to the estimated impact of the transactions called for in the EME Settlement. In addition, Edison International recorded an income tax loss of $22 million for the first quarter of 2014 from revised estimates of the tax impact of a tax deconsolidation of EME from Edison International as originally contemplated prior to the EME Settlement. See 2014 Form 10-K, "Management Overview—Resolution of Uncertainty Related to EME in Bankruptcy."
•
Income of $1 million and $6 million for the three and six months ended June 30, 2015, respectively, related to losses allocated to tax equity investors under the HLBV accounting method. Edison International reflected in core earnings the operating results of the solar rooftop projects, related financings and the priority return to the tax equity investor. The losses allocated to the tax equity investor under HLBV accounting method results in income allocated to subsidiaries of Edison International, neither of which is due to the operating performance of the projects but rather due to the allocation of income tax attributes under the tax equity financing. Accordingly, Edison International has included the non-operating allocation of income as a non-core item. For further information on HLBV, see the 2014 Form 10-K, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies."
2015 General Rate Case
As discussed in the 2014 10-K, SCE filed its original request for its 2015 GRC in November 2013. The request was updated in May 2015 to $5.512 billion, which would be a $121 million decrease over currently authorized base rate revenue. The updated base rate revenue requirement request would propose post-test year increases in 2016 and 2017 of $236 million and $320 million, respectively. The May 2015 update included revised tax estimates for the flow-through tax repair benefits related to SCE's pole replacement programs under a proposed balancing account designed to capture the actual net impact of the programs on the revenue requirement and to apply a higher tax repair eligible percentage to these programs. During the first six months of 2015, SCE deferred $85 million of the 2014 authorized base rate revenue requirement. See "Results of Operations—SCE" for further discussion. The CPUC has approved the establishment of a GRC memorandum account, which will make the 2015 revenue requirement ultimately adopted by the CPUC effective as of January 1, 2015. SCE cannot predict the revenue requirement the CPUC will ultimately authorize or forecast the timing of a final decision.
Capital Program
During the first six months of 2015, SCE's capital expenditures were primarily on projects designed for maintaining reliability and expanding the capability of SCE's transmission and distribution system; and upgrading and constructing new transmission lines and substations for system reliability and increased access to renewable energy. Total capital expenditures (including accruals) were $1.7 billion and $1.6 billion for the first six months of 2015 and 2014, respectively.
During first quarter 2015, SCE reduced its capital expenditures forecast for 2015 – 2017 by approximately $325 million to be in the range of $11.5 billion to $13.1 billion, including $3.6 billion to $4.1 billion for 2015. The update reflects a reduction in capital expenditures related to the Coolwater-Lugo Transmission Project (for more information, see "—Liquidity and Capital Resources—SCE—Capital Investment Plan") and revisions to the timing of capital spending. Actual capital spending will be affected by: changes in regulatory, environmental and engineering design requirements; permitting and project delays; cost and availability of labor, equipment and materials; and other factors.

3


Distribution Resources Plan
As discussed in the 2014 Form 10-K, to support California's greenhouse gas reduction targets, modernize the electric distribution system to accommodate two-way flows of energy, and facilitate customer choice of new technologies and services that reduce emissions and improve resilience, the CPUC initiated a rulemaking to establish policies, procedures and rules to guide investor owned utilities in developing a Distribution Resources Plan ("DRP") proposal. On July 1, 2015, SCE filed its DRP with the CPUC, which included an indicative forecast of capital investment in distribution automation, substation automation, communications systems, technology platforms and applications, and grid reinforcement. Subject to future CPUC guidance, SCE anticipates integrating authorization for revenue to support DRP operation and maintenance and capital spending into future general rate cases, beginning with its 2018 – 2020 GRC, which is expected to be filed on or about September 1, 2016. Capital investments for 2015 – 2017 are expected to be within the range of the three-year capital investments forecast indicated above. Such plans may be updated or revised based on developments and guidance received from the CPUC as a part of the DRP rule making, technology availability, pace of distributed energy resource adoption, and other factors.
Significant capital investment will be required to modernize and reinforce SCE's distribution grid consistent with the DRP recommendations, in addition to continued distribution system reliability investment, anticipated electric vehicle and storage investments, continued transmission and generation capital investment and potential improvements in capital spending productivity. SCE expects overall capital spending to continue at least in the range of current capital spending forecasts, although the CPUC's approval in future general rate cases of all or part of the capital investment plan supporting SCE's DRP filing could result in higher spending. All of these capital investments will be subject to CPUC review and approval. The timing and amount of capital investments may vary depending upon implementation decisions, including scope and pace of adoption and GRC ratemaking decisions and other CPUC actions.
San Onofre Proceedings, Recoveries, and Decommissioning
As discussed in the 2014 Form 10-K, in November 2014, the CPUC approved the San Onofre OII Settlement Agreement that SCE had entered into with TURN, ORA, SDG&E, the Coalition of California Utility Employees, and Friends of the Earth. The San Onofre OII Settlement Agreement resolved the CPUC's investigation regarding the Steam Generator Replacement Project at San Onofre and the related outages and subsequent shutdown of San Onofre. The San Onofre OII Settlement Agreement does not affect proceedings related to recoveries from third parties, but does describe how shareholders and customers will share any potential recoveries. For further discussion of third party recoveries, including claims against MHI and under the NEIL outage and property damage insurance, see "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies—Contingencies—San Onofre Related Matters."
A federal lawsuit challenging the CPUC's authority to permit rate recovery of San Onofre costs and an application to the CPUC for rehearing of its decision approving the San Onofre OII Settlement Agreement were filed in November and December 2014, respectively. In April 2015, the federal lawsuit was dismissed with prejudice and the plaintiffs in that case appealed the dismissal to the Ninth Circuit in May 2015. Both the appeal and the application for rehearing remain pending.
In February 2015, SCE filed in the OII proceeding a Late-Filed Notice of Ex Parte Communication regarding a meeting in March 2013 between an SCE senior executive and the president of the CPUC, both of whom have since retired from their respective positions. Following this filing, the Alliance for Nuclear Responsibility ("A4NR"), one of the intervenors in the OII, filed a motion requesting that the CPUC institute an investigation into whether sanctions should be imposed on SCE for the late notice of the March 2013 meeting. The motion requests that the CPUC order SCE to produce all ex parte communications between SCE and the CPUC or its staff since January 31, 2012 and all internal SCE unprivileged communications that discuss such ex parte communications. On May 6, 2015, A4NR amended its motion to recommend that the CPUC impose a $38.2 million penalty on SCE and additional restrictions on ex parte communications.
On April 14, 2015, the OII ALJs ordered SCE, among other things, to produce unprivileged documents pertaining to oral and written communications regarding the possible settlement of the OII proceeding between any SCE employee and CPUC decision makers from March 2013 to November 2014. SCE produced responsive documents and information on April 29, 2015. On June 26, 2015, the ALJs requested additional information, which SCE provided on July 3, 2015. Subsequently, another intervenor, the Coalition to Decommission San Onofre, filed a motion to move the start date for the production of documents under the CPUC's order to January 31, 2012 and to authorize the intervenors to conduct discovery of SCE. That motion remains pending.

4


On April 17, 2015, ORA and TURN issued press releases asking the CPUC to impose penalties on SCE as a sanction for allegedly improper ex parte communications pertaining to San Onofre or failures to report such communications. ORA recommended penalties in the amount of $648 million, representing ORA's calculation of the difference in ratepayer value between ORA's initial settlement negotiating position in the San Onofre OII and the approved settlement. TURN did not recommend a penalty amount.
On April 27, 2015, A4NR filed a petition to modify the CPUC's decision approving the San Onofre OII Settlement Agreement based on SCE's alleged failures to disclose communications between SCE and CPUC decision-makers pertaining to the issues in the San Onofre OII. The petition seeks the reversal of the decision approving the San Onofre OII Settlement Agreement and reopening of the OII proceeding. Subsequently, TURN filed a response supporting A4NR's petition to reopen the San Onofre OII proceeding.
On July 6, 2015, a purported securities class action lawsuit was filed in federal court against Edison International, its CEO and CFO. The lawsuit alleges that the defendants violated the securities laws by failing to disclose that Edison International's ex parte contacts with CPUC decision-makers were more extensive than initially reported. The complaint purports to be filed on behalf of a class of persons who acquired Edison International common stock between July 31, 2014 and June 24, 2015.
Subsequently, a federal shareholder derivative lawsuit was filed against members of the Edison International Board of Directors for breach of fiduciary duty and other claims based on similar allegations to the federal securities lawsuit. The derivative lawsuit seeks monetary damages, including punitive damages, and various corporate governance reforms.
SCE has produced and is producing documents and is otherwise cooperating with criminal investigations being conducted by the California Attorney General and the U.S. Department of Justice. While the full scope of the investigations is not known to SCE, SCE's document production and cooperation have included information relating to the settlement of the San Onofre OII and interactions between SCE executives and CPUC decision-makers.
Edison International and SCE cannot predict the outcome of these proceedings.
Rate Impacts
Due to the implementation of the San Onofre OII Settlement Agreement as of December 31, 2014, customers were refunded approximately $540 million through a reduction in SCE's ERRA undercollection. At June 30, 2015, SCE's ERRA undercollection decreased to $543 million. Based on current rates, actual power and gas prices and the reimbursement of San Onofre decommissioning costs pursuant to the San Onofre OII Settlement Agreement, the ERRA undercollection is likely to be fully recovered before year-end 2015.
For further information on 2015 ERRA forecast application, see "Liquidity and Capital Resources—SCE—Regulatory Proceedings—ERRA Forecast Filing – 2015" in the year-ended 2014 MD&A.
Decommissioning
As discussed in the 2014 Form 10-K, SCE decided to permanently retire and decommission San Onofre Units 2 and 3 on June 6, 2013. For further information about the decommissioning cost estimates, see the 2014 Form 10-K under the headings, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—Nuclear Decommissioning and Asset Retirement Obligations" and "Management Overview—Permanent Retirement of San Onofre and San Onofre OII Settlement" in the year-ended 2014 MD&A.
SCE has nuclear decommissioning trust funds for San Onofre Units 2 and 3 of $3.4 billion as of June 30, 2015. If the decommissioning cost estimate and assumptions regarding trust performance do not change, SCE believes that future contributions to the trust funds will not be necessary. The CPUC must issue an order granting approval for withdrawal of decommissioning trust funds.
Decommissioning costs incurred in 2013 and 2014 were recorded as operations and maintenance expenses pending the CPUC decision on access to the trusts for reimbursement. Accordingly, such costs were recovered through GRC revenues. Costs incurred for 2013 have been found reasonable under the San Onofre OII Settlement Agreement. The CPUC will conduct a reasonableness review for 2014 costs and years going forward. On July 23, 2015, the CPUC approved SCE's request for access to the nuclear decommissioning trusts for reimbursement of approximately $340 million in 2013 and 2014 Units 2 and 3 decommissioning costs. Under the San Onofre OII Settlement Agreement, any recoveries from the nuclear decommissioning trusts of 2013 and 2014 decommissioning costs funded through GRC revenues must be refunded to customers through ERRA.

5


Beginning in 2015, SCE must fund decommissioning costs (recorded as a reduction of SCE's asset retirement obligation) until the CPUC approves SCE's request to access the trust funds. SCE expects that the CPUC would approve access to the trust in 2015. SCE's share of the decommissioning costs recorded during the first six months of 2015 were approximately $80 million and are estimated to be approximately $150 million for the remainder of 2015.
Depending on the ultimate interpretation of IRS regulations that address the taxation of a qualified nuclear decommissioning trust, SCE may also be restricted from withdrawing amounts from the qualified decommissioning trusts to pay for independent spent fuel storage installation ("ISFSI") where SCE is seeking, or plans to seek, recovery of the ISFSI costs in litigation against the DOE. SCE's share of ISFSI costs for 2015 (included in the above 2015 decommissioning costs estimate) are currently estimated to be approximately $28 million. SCE has filed for a private letter ruling with the IRS to address this matter based on facts and circumstances related to Units 2 and 3 at San Onofre.
Labor Contract Negotiation
Approximately 3,900 of SCE's full-time employees are covered by collective bargaining agreements with the International Brotherhood of Electrical Workers ("IBEW"). The IBEW collective bargaining agreements expired on December 31, 2014 and were under negotiation during the first half of 2015. On June 30, 2015, the majority of IBEW members voted to approve the Benefits Agreement and the Wages and Working Conditions Bargaining Agreement with SCE that include, among other things, pay increases retroactive to January 1, 2015 and modified benefit plans, generally consistent with the proposed 2015 GRC.
RESULTS OF OPERATIONS
Southern California Edison Company
SCE's results of operations are derived mainly through two sources:
•
Utility earning activities – representing revenue authorized by the CPUC and FERC which is intended to provide SCE a reasonable opportunity to recover its costs and earn a return on its net investment in generation, transmission and distribution assets. The annual revenue requirements are comprised of authorized operation and maintenance costs, depreciation, taxes and a return consistent with the capital structure. Also, included in utility earnings activities are revenue or penalties related to incentive mechanisms, other operating revenue, and regulatory charges or disallowances.
•
Utility cost-recovery activities – representing CPUC- and FERC-authorized balancing accounts which allow for recovery of specific project or program costs, subject to reasonableness review or compliance with upfront standards. Utility cost-recovery activities include rates which provide recovery, subject to reasonableness review of, among other things, fuel costs, purchased power costs, public purpose related-program costs (including energy efficiency and demand-side management programs) and certain operation and maintenance expenses.
During the first six months of 2015, SCE recognized revenue from CPUC activities largely based on 2014 authorized base revenue requirements included in customer rates. SCE deferred $49 million and $85 million of the 2014 authorized base revenue requirement allocated to the second quarter and six month periods of 2015 related to incremental repair deductions pending the outcome of the 2015 GRC. The revenue deferral did not affect net income as the reduction in revenue was offset by lower income taxes. The deferred revenue includes SCE's estimate of the flow-through repair tax benefits related to SCE's proposed balancing account for pole replacement programs in the May update of the 2015 GRC. The CPUC has approved the establishment of a GRC memorandum account, which will make the 2015 revenue requirement ultimately adopted by the CPUC effective as of January 1, 2015. Recognition of the revenue for the period January 1, 2015 through the date of a final decision, as well as changes in authorized depreciation rates and treatment of specific costs, will impact the timing of earnings in 2015. Accordingly, quarterly earnings in 2015 will not be comparable to the same periods in 2014 (see "Management Overview—2015 General Rate Case" for further discussion).


6


The following table is a summary of SCE's results of operations for the periods indicated.
Three months ended June 30, 2015 versus June 30, 2014
 
Three months ended June 30, 2015
Three months ended June 30, 2014
(in millions)
Utility
Earning
Activities
Utility
Cost-
Recovery
Activities
Total
Consolidated
Utility
Earning
Activities
Utility
Cost-
Recovery
Activities
Total
Consolidated
Operating revenue
$
1,596

$
1,305

$
2,901

$
1,588

$
1,426

$
3,014

Purchased power and fuel
—

1,078

1,078

—

1,239

1,239

Operation and maintenance
495

229

724

513

184

697

Depreciation, decommissioning and amortization
481

—

481

414

—

414

Property and other taxes
82

—

82

71

—

71

Total operating expenses
1,058

1,307

2,365

998

1,423

2,421

Operating income
538

(2
)
536

590

3

593

Interest expense
(132
)
1

(131
)
(131
)
(3
)
(134
)
Other income and expenses
13

1

14

31

—

31

Income before income taxes
419

—

419

490

—

490

Income tax expense
7

—

7

98

—

98

Net income
412

—

412

392

—

392

Preferred and preference stock dividend requirements
28

—

28

30

—

30

Net income available for common stock
$
384

$
—

$
384

$
362

$
—

$
362

Core earnings1
 
 
$
384

 
 
$
362

Non-core earnings
 
 
—

 
 
—

Total SCE GAAP earnings
 
 
$
384

 
 
$
362

1 
See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results."
Utility Earning Activities
Utility earning activities were primarily affected by the following:
•
Higher operating revenue of $8 million primarily due to the following:
•
An increase in FERC-related revenue of $25 million primarily related to rate base growth and higher operating costs. During the second quarter of 2015 and 2014, SCE recorded $15 million and $19 million, respectively, of additional revenue from a change in estimate under the FERC formula rate mechanism.
•
A decrease in CPUC-related revenue of $20 million primarily due to the revenue deferral of $49 million, as discussed above, partially offset by a net increase in San Onofre-related revenue of $25 million due to the implementation of the San Onofre OII Settlement Agreement. Revenue for San Onofre during the second quarter of 2015 primarily related to recovery of amortization of the regulatory asset and authorized return as provided by the San Onofre Settlement Agreement compared to revenue during the second quarter of 2014 related to recovery of San Onofre's cost of service. See "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning" above for more information.
•
Lower operation and maintenance expense of $18 million primarily due to San Onofre-related expense of $15 million in the second quarter of 2014 partially offset by higher severance costs. Beginning January 1, 2015, expense related to San Onofre has been classified as decommissioning costs and recorded as a reduction to SCE's asset retirement obligation.
In addition, during the second quarter of 2015 and 2014, SCE incurred severance costs related to workforce reductions of $10 million and $8 million, respectively.


7


•
Higher depreciation, decommissioning and amortization expense of $67 million primarily due to San Onofre-related expense of $37 million in 2015 related to the amortization of the regulatory asset and a $30 million increase in depreciation primarily related to transmission and distribution investments. In accordance with the San Onofre OII Settlement Agreement, SCE is authorized to recover in rates its San Onofre regulatory asset over a ten-year period. For further information on the San Onofre regulatory asset, see the 2014 Form 10-K, "Management Overview—Permanent Retirement of San Onofre and San Onofre OII Settlement" and "Notes to Consolidated Financial Statements—Note 10. Regulatory Assets and Liabilities."
•
Lower other income and expenses of $18 million primarily due to $14 million of generator settlements and $5 million of higher insurance benefits in 2014, partially offset by higher AFUDC equity income related to a higher rate and higher construction work in progress balances in 2015. See "Notes to Consolidated Financial Statements—Note 13. Interest and Other Income and Other Expenses" for more information on generator settlements.
•
Lower income taxes of $91 million primarily due to a change in liabilities related to uncertain tax positions and higher income tax benefits related to repair deductions. During the second quarter of 2015 and 2014, SCE revised its liability for uncertain tax positions related to repair deductions which resulted in income tax benefits of $100 million and $29 million, respectively. See "—Income Taxes" below for more information.
Utility Cost-Recovery Activities
Utility cost-recovery activities were primarily affected by the following:
•
Lower purchased power and fuel of $161 million primarily driven by lower power and gas prices experienced in 2015 relative to 2014, reduced customer sales from cooler weather in the second quarter of 2015 compared to the same period in 2014 and the CAISO generation surcharge of $83 million in 2014 (as discussed below), partially offset by generator settlements in 2014 (See "Notes to Consolidated Financial Statements—Note 13. Interest and Other Income and Other Expenses" for more information). During the second quarter of 2014, the CAISO issued invoices implementing a FERC order which revised FERC tariffs for costs associated with scheduling coordinator activities. The impact of implementing the order and revised invoices resulted in a transmission refund of $106 million reflected in operation and maintenance expense and a generation surcharge of $83 million reflected in purchased power expense. These transactions did not impact earnings as the net refund was provided to customers through a FERC balancing account mechanism. Fuel costs were $32 million and $71 million for the three months ended June 30, 2015 and 2014, respectively.
•
Higher operation and maintenance expense of $45 million primarily due to the CAISO refund of $106 million mentioned above, partially offset by lower spending on various public purpose programs, lower pension expenses and a decrease in transmission access charges.

8


The following table is a summary of SCE's results of operations for the periods indicated.
Six months ended June 30, 2015 versus June 30, 2014
 
Six months ended June 30, 2015
Six months ended June 30, 2014
(in millions)
Utility
Earning
Activities
Utility
Cost-
Recovery
Activities
Total
Consolidated
Utility
Earning
Activities
Utility
Cost-
Recovery
Activities
Total
Consolidated
Operating revenue
$
3,159

$
2,250

$
5,409

$
3,139

$
2,799

$
5,938

Purchased power and fuel
—

1,864

1,864

—

2,382

2,382

Operation and maintenance
958

388

1,346

995

415

1,410

Depreciation, decommissioning and amortization
943

—

943

824

—

824

Property and other taxes
170

—

170

156

—

156

Impairment and other charges
—

—

—

231

—

231

Total operating expenses
2,071

2,252

4,323

2,206

2,797

5,003

Operating income
1,088

(2
)
1,086

933

2

935

Interest expense
(267
)
1

(266
)
(266
)
(3
)
(269
)
Other income and expenses
39

1

40

45

1

46

Income before income taxes
860

—

860

712

—

712

Income tax expense
115

—

115

86

—

86

Net income
745

—

745

626

—

626

Preferred and preference stock dividend requirements
56

—

56

56

—

56

Net income available for common stock
$
689

$
—

$
689

$
570

$
—

$
570

Core earnings1
 
 
$
689

 
 
$
666

Non-core earnings
 
 
—

 
 
(96
)
Total SCE GAAP earnings
 
 
$
689

 
 
$
570

1 
See use of non-GAAP financial measures in "Management Overview—Highlights of Operating Results."
Utility Earning Activities
Utility earning activities were primarily affected by the following:
•
Higher operating revenue of $20 million primarily due to the following:
•
An increase in FERC-related revenue of $60 million primarily related to rate base growth and higher operating costs.
•
A decrease in CPUC-related revenue of $45 million primarily due to the revenue deferral of $85 million, as discussed above, partially offset by a net increase in San Onofre-related revenue of $34 million due to the implementation of the San Onofre OII Settlement Agreement. Revenue for San Onofre during the six months ended June 30, 2015 primarily related to recovery of amortization of the regulatory asset and authorized return as provided by the San Onofre Settlement Agreement compared to revenue during the six months ended June 30, 2014 related to recovery of San Onofre's cost of service. See "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning" above for more information.
•
Lower operation and maintenance expense of $37 million primarily due to San Onofre-related expense of $41 million for the six months ended June 30, 2014. Beginning January 1, 2015, expense related to San Onofre has been classified as decommissioning costs and recorded as a reduction to SCE's asset retirement obligation.
•
Higher depreciation, decommissioning and amortization expense of $119 million primarily due to San Onofre-related expense of $69 million in 2015 related to the amortization of the regulatory asset and a $50 million increase in depreciation primarily related to transmission and distribution investments.
•
Impairment and other charges of $231 million in the first quarter of 2014 related to the San Onofre OII Settlement Agreement. For further information, see "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning."


9


•
Lower other income and expenses of $6 million primarily due to $14 million of generator settlements in 2014 and lower interest and other income, partially offset by higher AFUDC equity income related to a higher rate and higher construction work in progress balances in 2015. See "Notes to Consolidated Financial Statements—Note 13. Interest and Other Income and Other Expenses" for more information on generator settlements.
•
Higher income taxes of $29 million primarily due to lower pre-tax income in 2014 due to the San Onofre Settlement Agreement partially offset by a change in liabilities related to uncertain tax positions during the second quarters of 2015 and 2014 discussed above and higher income tax benefits in 2015 related to repair deductions. See "—Income Taxes" below for more information.
Utility Cost-Recovery Activities
Utility cost-recovery activities were primarily affected by the following:
•
Lower purchased power and fuel of $518 million primarily driven by lower power and gas prices experienced in 2015 relative to 2014, reduced customer sales from cooler weather in 2015 compared to the same period in 2014 and the CAISO generation surcharge of $83 million in 2014, partially offset by generator settlements in 2014 (See "Notes to Consolidated Financial Statements—Note 13. Interest and Other Income and Other Expenses" for more information). As discussed above, the CAISO issued invoices in 2014 implementing a FERC order which revised FERC tariffs for costs associated with scheduling coordinator activities. The impact of implementing the order and revised invoices resulted in a transmission refund of $106 million reflected in operation and maintenance expense and a generation surcharge of $83 million reflected in purchased power expense. These transactions did not impact earnings as the net refund was provided to customers through a FERC balancing account mechanism. Fuel costs were $75 million and $143 million for the six months ended June 30, 2015 and 2014, respectively.
•
Lower operation and maintenance expense of $27 million primarily due to lower spending on various public purpose programs, lower pension expenses and a decrease in transmission access charges, partially offset by the CAISO refund of $106 million mentioned above.
Supplemental Operating Revenue Information
SCE's retail billed and unbilled revenue (excluding wholesale sales and balancing account overcollections/undercollections) was $2.8 billion and $5.4 billion for the three and six months ended June 30, 2015, respectively, compared to $2.9 billion and $5.2 billion for the respective periods in 2014. The revenue reflects:
•
Retail billed and unbilled revenue reflects a sales volume decrease of $112 million and $86 million for the three and six months ended June 30, 2015, respectively, primarily due to lower load requirements related to cooler weather experienced in 2015 compared to the same period last year.
•
A rate increase of $48 million and $229 million for the three and six months ended June 30, 2015, respectively, primarily due to the implementation of the 2014 ERRA rate increase in June 2014.
As a result of the CPUC-authorized decoupling mechanism, SCE earnings are not affected by changes in retail electricity sales (see "Business—SCE—Overview of Ratemaking Process" in the 2014 Form 10-K).
Income Taxes
SCE's income tax provision decreased by $91 million and increased by $29 million for the three and six months ended June 30, 2015, respectively, compared to the same periods in 2014.
The effective tax rates were 1.7% and 20.0% for the three months ended June 30, 2015 and 2014, respectively. The effective tax rate decrease was primarily due to a change in liabilities related to uncertain tax positions discussed above and higher income tax benefits related to repair deductions.
The effective tax rates were 13.4% and 12.1% for the six months ended June 30, 2015 and 2014, respectively. The effective tax rate increase was primarily due to income tax benefits in 2014 related to the San Onofre OII Settlement Agreement, partially offset by the change in liabilities related to uncertain tax positions discussed above and higher income tax benefits related to repair deductions. See "Management Overview—San Onofre Proceedings, Recoveries, and Decommissioning" above for more information.
See "Notes to Consolidated Financial Statements—Note 7. Income Taxes" for a reconciliation of the federal statutory rate of 35% to the effective income tax rates.

10


Edison International Parent and Other
Results of operations for Edison International Parent and Other include amounts from other Edison International subsidiaries that are not significant as a reportable segment, as well as intercompany eliminations.
Income from Continuing Operations
The following table summarizes the results of Edison International Parent and Other:
 
Three months ended June 30,
 
Six months ended June 30,
(in millions)
2015
 
2014
 
2015
 
2014
Edison Energy Group and subsidiaries
$
(2
)
 
$
(2
)
 
$
—

 
$
(4
)
Edison Mission Group and subsidiaries
8

 
6

 
11

 
7

Corporate expenses and Other
(11
)
 
(14
)
 
(22
)
 
(23
)
Total Edison International Parent and Other
$
(5
)
 
$
(10
)
 
$
(11
)
 
$
(20
)
The loss from continuing operations of Edison International Parent and Other decreased $5 million and $9 million for the three and six months ended June 30, 2015, respectively, compared to the same periods in 2014 primarily due to:
•
A decrease in the loss of Edison International Parent and Other primarily due to lower corporate expenses.
•
An increase in income from EMG and subsidiaries of $2 million and $4 million for the three and six months ended June 30, 2015, respectively, primarily due to higher income from affordable housing projects, including asset sales and income tax benefits. EMG’s subsidiary, Edison Capital, continues to wind down its remaining affordable housing investments. Earnings from Edison Capital were $7 million and $9 million for three and six months ended June 30, 2015, respectively, compared to $3 million and $4 million for the respective periods in 2014.
•
An increase in income allocated to subsidiaries of Edison Energy Group under the HLBV accounting method that resulted in losses allocated to tax equity investors ($1 million and $6 million after-tax for the three and six months ended June 30, 2015, respectively) offset by higher operating expenses. For further information, see the 2014 Form 10-K, "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies" and "Management Overview—Highlights of Operating Results."
Income from Discontinued Operations (Net of Tax)
Income from discontinued operations, net of tax, was $184 million and $162 million for the three and six months ended June 30, 2014, respectively. The 2014 income was primarily due to the completion of the Amended Plan of Reorganization, including transactions recorded in the second quarter of 2014 associated with the sale of substantially all of EME's assets to NRG Energy, Inc. and other transactions called for in the EME Settlement. See 2014 Form 10-K, "Management Overview—Resolution of Uncertainty Related to EME in Bankruptcy."
LIQUIDITY AND CAPITAL RESOURCES
Southern California Edison Company
SCE's ability to operate its business, fund capital expenditures, and implement its business strategy is dependent upon its cash flow and access to the capital markets. SCE's overall cash flows fluctuate based on, among other things, its ability to recover its costs in a timely manner from its customers through regulated rates, changes in commodity prices and volumes, collateral requirements, interest obligations and dividend payments to Edison International, and the outcome of tax and regulatory matters.
SCE expects to fund its 2015 obligations, capital expenditures and dividends through operating cash flows, and capital market financings of debt and preferred equity, as needed. SCE also has availability under its credit facilities to fund liquidity requirements.
Available Liquidity
At June 30, 2015, SCE had $1.78 billion available under its $2.75 billion multi-year revolving credit facility. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."

11


Debt Covenant
The debt covenant in SCE's credit facility limits its debt to total capitalization ratio to less than or equal to 0.65 to 1. At June 30, 2015, SCE's debt to total capitalization ratio was 0.46 to 1.
Regulatory Proceedings

FERC Formula Rates
In June 2015, SCE provided its preliminary 2016 annual transmission revenue requirement update to interested parties. The update provided support for an increase in SCE's transmission revenue requirement of $188 million or 21% over amounts currently authorized in rates. The increase is mainly due to the completion of several major transmission projects in 2014 and the completion in 2014 of refunds from an over-recovery in 2013. SCE expects to file its 2016 annual update with the FERC by December 1, 2015 and the proposed rates would be effective from January 1, 2016.

Capital Investment Plan
Transmission Projects
Coolwater-Lugo Transmission Project
The Coolwater-Lugo Project would provide additional 220 kV transmission capacity in the Kramer Junction and Lucerne Valley areas of San Bernardino County. In March 2015, the CAISO filed comments with the CPUC stating that the Coolwater-Lugo project is not necessary to provide full capacity deliverability and requested that the CPUC suspend its approval proceeding for the project. In May 2015, the CPUC issued a final decision that dismissed the approval proceeding but would allow SCE to apply for new approval if future studies determine that there is residual need for any elements of the project. SCE's capital expenditures for the Coolwater-Lugo project were estimated to be $740 million, of which $584 million was for the 2015 – 2017 period, and have been removed from the capital expenditure forecast. SCE previously obtained authorization from the FERC, which allows SCE to seek recovery of 100% of reasonable abandoned plant costs if the project is abandoned for reasons beyond SCE’s control.
Dividend Restrictions
The CPUC regulates SCE's capital structure which limits the dividends it may pay Edison International. SCE may make distributions to Edison International as long as the common equity component of SCE's capital structure remains at or above 48% on a 13-month weighted average basis. At June 30, 2015, SCE's 13-month weighted-average common equity component of total capitalization was 48.9% and the maximum additional dividend, taking into account declared but unpaid dividends, that SCE could pay to Edison International under this limitation was approximately $215 million, resulting in a restriction on net assets of approximately $13.5 billion.
SCE paid the $147 million dividend declared in February 2015 to Edison International during the second quarter of 2015. In June 2015, SCE declared another $147 million dividend to Edison International which will be paid in the third quarter of 2015. Future dividend amounts and timing of distributions are dependent on a number of factors including the level of capital expenditures, operating cash flows and earnings.
Margin and Collateral Deposits
Certain derivative instruments, power procurement contracts and other contractual arrangements contain collateral requirements. Future collateral requirements may differ from the requirements at June 30, 2015, due to the addition of incremental power and energy procurement contracts with collateral requirements, if any, and the impact of changes in wholesale power and natural gas prices on SCE's contractual obligations.
Some of the power procurement contracts contain provisions that require SCE to maintain an investment grade credit rating from the major credit rating agencies. If SCE's credit rating were to fall below investment grade, SCE may be required to pay the liability or post additional collateral.

12


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 June 30, 2015.
(in millions)
 
 
Collateral posted as of June 30, 20151
 
$
181

Incremental collateral requirements for power procurement contracts resulting from a potential downgrade of SCE's credit rating to below investment grade
 
69

Posted and potential collateral requirements2
 
$
250

1 
Net collateral provided to counterparties and other brokers consisted of $29 million of cash which was offset against net derivative liabilities on the consolidated balance sheets, $34 million of cash reflected in "Other current assets" on the consolidated balance sheets and $118 million in letters of credit and surety bonds.
2 
SCE's total posted and potential collateral requirements that could have increased by $48 million based on SCE's forward positions as of June 30, 2015 due to adverse market price movements over the remaining lives of the existing power procurement contracts using a 95% confidence level.
Edison International Parent and Other
Edison International Parent and Other's liquidity and its ability to pay operating expenses and dividends to common shareholders are dependent on dividends from SCE and access to bank and capital markets.
At June 30, 2015, Edison International Parent had $705 million available under its $1.25 billion multi-year revolving credit facility. For further details, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements."
Edison International may finance working capital requirements to support operations and capital expenditures with commercial paper or other borrowings, subject to availability in the capital markets.
The debt covenant in Edison International Parent's credit facility requires a consolidated debt to total capitalization ratio as defined in the credit agreement of less than or equal to 0.65 to 1. At June 30, 2015, Edison International Parent's consolidated debt to total capitalization ratio was 0.49 to 1.
In August 2014, Edison International entered into an amendment of the EME Settlement Agreement that finalized the remaining matters related to the EME Settlement. Edison International is obligated to make payments of $204 million on September 30, 2015 and $214 million on September 30, 2016. Edison International intends to make these payments from realization of tax benefits or issuance of commercial paper or other borrowings. Edison International has net operating loss and tax credit carryforwards retained by EME which are available to offset future consolidated taxable income or tax liabilities. As a result of the extension of 50% bonus depreciation for qualifying property under the Tax Increase Prevention Act of 2014, realization of these tax benefits has been deferred (currently forecasted through 2018). The timing of realization of these tax benefits may be further delayed in the event of future extensions of bonus depreciation and the value of the net operating loss carryforwards could be permanently reduced in the event that tax reform decreases the current corporate tax rate.
Historical Cash Flows
Southern California Edison Company
 
Six months ended June 30,
(in millions)
2015
 
2014
Net cash provided by operating activities
$
1,689

 
$
1,083

Net cash provided by financing activities
539

 
864

Net cash used in investing activities
(2,213
)
 
(1,930
)
Net increase in cash and cash equivalents
$
15

 
$
17


13


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 six months ended June 30, 2015 and 2014.
 
Six months ended June 30,
 
Change in cash flows
(in millions)
2015
2014
 
2015/2014
Net income
$
745

$
626

 
 
Non cash items1
995

1,216

 
 
    Subtotal
$
1,740

$
1,842

 
$
(102
)
Changes in cash flow resulting from working capital2
(311
)
(576
)
 
265

Derivative assets and liabilities, net
33

64

 
(31
)
Regulatory assets and liabilities, net
241

(317
)
 
558

Other noncurrent assets and liabilities, net3
(14
)
70

 
(84
)
Net cash provided by operating activities
$
1,689

$
1,083

 
$
606

1 
Non cash items include depreciation, decommissioning and amortization, allowance for equity during construction, impairment and other charges, deferred income taxes and investment tax credits and other.
2 
Changes in working capital items include receivables, inventory, accounts payable, prepaid and accrued taxes, and other current assets and liabilities.
3 Includes the nuclear decommissioning trusts.
Net cash provided by operating activities were impacted by the following:
•
Net cash used from working capital was $311 million and $576 million during the six months ended June 30, 2015 and 2014, respectively. The cash outflow for each period was primarily related to the timing of receipts from customers (increase in unbilled receivables due to seasonal usage) and timing of disbursements (annual compensation payments). In addition, SCE recorded in 2014 the amounts due from generator settlement refunds of approximately $179 million which decreased working capital.
•
Net cash provided by (used in) regulatory assets and liabilities, including changes in over (under) collections of balancing accounts. SCE has a number of balancing accounts under CPUC decisions, which impact cash flows based on differences between timing of collection of amounts through rates and accrual expenditures. During the first six months of 2015 and 2014, cash flows were impacted by the two principal balancing accounts:
•
ERRA undercollections for fuel and purchased power decreased $485 million during the first six months of 2015 primarily due to lower than forecasted power and gas prices experienced in 2015. ERRA undercollections for fuel and purchased power increased $612 million in the first six months of 2014 primarily due to higher purchased power than the forecast purchases included in customer rates in addition to higher gas price. In January 2015, SCE reclassified the regulatory liability for generator settlements to ERRA to refund customers.
•
The base rate revenue balancing account ("BRRBA") tracks differences between amounts authorized by the CPUC in the GRC proceedings and amounts billed to customers. BRRBA undercollections increased $79 million in the first six months of 2015 primarily due to reduced customer sales from cooler weather during the first six months of 2015. BRRBA overcollections decreased $144 million in the first six months of 2014 primarily due to refunds to customers of approximately $150 million, related to the sale of Four Corners in December 2013.
•
Cash flows (used in) provided by other noncurrent assets and liabilities were $(14) million and $70 million in the first six months of 2015 and 2014, respectively. During 2015, decommissioning costs of San Onofre were approximately $80 million (such costs were recorded as a reduction of SCE's asset retirement obligation). In addition, SCE received approximately $41 million and $83 million of earnings related to SCE's nuclear decommissioning trust during the first half of 2015 and 2014, respectively.

14


Net Cash Provided by Financing Activities
The following table summarizes cash provided by financing activities for the six months ended June 30, 2015 and 2014. Issuances of debt are discussed in "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Long-Term Debt."
 
Six months ended June 30,
(in millions)
2015
 
2014
Issuances of first and refunding mortgage bonds, net
$
1,287

 
$
398

Issuances of pollution control bonds, net

128

 
—

Long-term debt matured or repurchased
(721
)
 
(3
)
Issuances of preference stock, net
—

 
269

Short-term debt financing, net
184

 
410

Payments of common stock dividends to Edison International
(294
)
 
(126
)
Payments of preferred and preference stock dividends
(56
)
 
(54
)
Other
11

 
(30
)
Net cash provided by financing activities
$
539

 
$
864

Net Cash Used in Investing Activities
Cash flows used in investing activities are primarily due to capital expenditures and funding of nuclear decommissioning trusts. Capital expenditures were $2.2 billion and $1.9 billion for the six months ended June 30, 2015 and 2014, respectively, primarily related to transmission, distribution and generation investments. Net purchases of nuclear decommissioning trust investments were $48 million and $88 million for the six months ended June 30, 2015 and 2014, respectively.
Nuclear Decommissioning Trusts
SCE's statement of cash flows includes activities of the Nuclear Decommissioning Trusts which are reflected in the following line items:
 
Six months ended June 30,
(in millions)

2015
 
2014
Net cash provided by operating activities:
   Nuclear decommissioning trusts
$
41

 
$
83

Net cash flow from investing activities:
   Proceeds from sale of investments
7,253

 
3,750

   Purchases of investments
(7,301
)
 
(3,838
)
Net cash impact
$
(7
)
 
$
(5
)
Net cash provided by operating activities of the nuclear decommissioning trusts relate to interest and dividends less administrative expenses, taxes and decommissioning costs. Such activities represent the source (use) of the funds for investing activities. The net cash impact represents the contributions made by SCE to the nuclear decommissioning trusts. During the six months ended June 30, 2015, SCE made a contribution of $7 million to the non-qualified decommissioning trust pursuant to a CPUC decision related to decommissioning costs for San Onofre Unit 1. In future periods, SCE expects decommissioning costs of San Onofre to increase significantly. Such amounts will be reflected as a decrease in SCE net cash provided by operating activities and will be funded from sales of investments of the nuclear decommissioning trusts once approved by the CPUC. Decommissioning costs incurred prior to CPUC approval will be funded by SCE and are reflected as cash flow used by operating activities. See "Notes to Consolidated Financial Statements—Note 9. Investments" for further information.

15


Edison International Parent and Other
The table below sets forth condensed historical cash flow from operations for Edison International Parent and Other.
 
Six months ended June 30,
(in millions)
2015
 
2014
Net cash provided by (used in) operating activities
$
79

 
$
(475
)
Net cash (used in) provided by financing activities
(66
)
 
504

Net cash used in investing activities
(21
)
 
(2
)
Net (decrease) increase in cash and cash equivalents
$
(8
)
 
$
27

Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities increased $554 million for the first six months of 2015 compared to 2014 due to:
•
$225 million initial cash payment to the Reorganization Trust in April 2014 related to the EME Settlement Agreement, see "Notes to Consolidated Financial Statements—Note 14. Discontinued Operations—EME Chapter 11 Bankruptcy" for further information.
•
$189 million deposit made with the IRS in 2014 related to open tax years 2003 through 2006 and a $122 million receipt of intercompany tax-allocation payments in 2015.
•
approximately $43 million cash outflow from operating activities in 2015 compared to $61 million cash outflow in 2014 due to the timing of payments and receipts relating to interest and operating costs.
Net Cash (Used in) Provided by Financing Activities
Net cash (used in) provided by financing activities were as follows:
 
Six months ended June 30,
(in millions)
2015
 
2014
Dividends paid to Edison International common shareholders
$
(272
)
 
$
(231
)
Dividends received from SCE
294

 
126

Payment for stock-based compensation
(108
)
 
(67
)
Receipt from stock option exercises
63

 
41

Debt financing, net1
(60
)
 
632

Other
17

 
3

Net cash (used in) provided by financing activities
$
(66
)
 
$
504

1  
Includes $13 million debt financing for Edison Energy Group, see "Notes to Consolidated Financial Statements—Note 5. Debt and Credit Agreements—Project Financing."
Contingencies
SCE has contingencies related to San Onofre Related Matters, Nuclear Insurance, Wildfire Insurance and Spent Nuclear Fuel which are discussed in "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies."
Environmental Remediation
As of June 30, 2015, SCE had identified 19 material sites for remediation and recorded an estimated minimum liability of $115 million. SCE expects to recover 90% of its remediation costs at certain sites. See "Notes to Consolidated Financial Statements—Note 11. Commitments and Contingencies" for further discussion.

16


MARKET RISK EXPOSURES
Edison International's and SCE's primary market risks include fluctuations in interest rates, commodity prices and volumes, and counterparty credit. Fluctuations in interest rates can affect earnings and cash flows. Fluctuations in commodity prices and volumes and counterparty credit losses may temporarily affect cash flows, but are not expected to affect earnings due to expected recovery through regulatory mechanisms. Derivative instruments are used, as appropriate, to manage market risks including market risks of SCE's customers. For a further discussion of market risk exposures, including commodity price risk, credit risk and interest rate risk, see "Notes to Consolidated Financial Statements—Note 6. Derivative Instruments" and "—Note 4. Fair Value Measurements."
Commodity Price Risk
The fair value of outstanding derivative instruments used to mitigate exposure to commodity price risk was a net liability of $1.04 billion and $927 million at June 30, 2015 and December 31, 2014 respectively. For further discussion of fair value measurements and the fair value hierarchy, see "Notes to Consolidated Financial Statements—Note 4. Fair Value Measurements."
Credit Risk
Credit risk exposure from counterparties for power and gas trading activities is measured as the sum of net accounts receivable (accounts receivable less accounts payable) and the current fair value of net derivative assets (derivative assets less derivative liabilities) reflected on the consolidated balance sheets. SCE enters into master agreements which typically provide for a right of setoff. Accordingly, SCE's credit risk exposure from counterparties is based on a net exposure under these arrangements. SCE manages the credit risk on the portfolio for both rated and non-rated counterparties based on credit ratings using published ratings of counterparties and other publicly disclosed information, such as financial statements, regulatory filings, and press releases, to guide it in the process of setting credit levels, risk limits and contractual arrangements, including master netting agreements.
As of June 30, 2015, the amount of balance sheet exposure as described above broken down by the credit ratings of SCE's counterparties, was as follows:
 
June 30, 2015
(in millions)
Exposure2
 
Collateral
 
Net Exposure
S&P Credit Rating1
 
 
 
 
 
A or higher
$
262

 
$
—

 
$
262

BBB
3

 
—

 
3

Not rated3
7

 
5

 
2

Total
$
272

 
$
5

 
$
267

1 
SCE assigns a credit rating based on the lower of a counterparty's S&P or Moody's rating. For ease of reference, the above table uses the S&P classifications to summarize risk, but reflects the lower of the two credit ratings.
2 
Exposure excludes amounts related to contracts classified as normal purchases and sales and non-derivative contractual commitments that are not recorded on the consolidated balance sheets, except for any related net accounts receivable.
3 
The exposure in this category relates to long-term power purchase agreements. SCE's exposure is mitigated by regulatory treatment.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
For a complete discussion on Edison International's and SCE's critical accounting policies, see "Critical Accounting Estimates and Policies" in the year-ended 2014 MD&A.
NEW ACCOUNTING GUIDANCE
New accounting guidance is discussed in "Notes to Consolidated Financial Statements—Note 1. Summary of Significant Accounting Policies—New Accounting Guidance."
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responding to this section is included in the MD&A under the heading "Market Risk Exposures" and is incorporated herein by reference.

17


FINANCIAL STATEMENTS
Consolidated Statements of Income

Edison International
 


 
 

 

Three months ended June 30,

Six months ended June 30,
(in millions, except per-share amounts, unaudited)

2015
 
2014
 
2015

2014
Total operating revenue

$
2,908

 
$
3,016

 
$
5,420


$
5,943

Purchased power and fuel

1,078

 
1,239

 
1,864


2,382

Operation and maintenance

743

 
715

 
1,380


1,442

Depreciation, decommissioning and amortization

481

 
414

 
945


824

Property and other taxes
 
82

 
73

 
171

 
158

Impairment and other charges

—

 
—

 
—


231

Total operating expenses

2,384

 
2,441

 
4,360


5,037

Operating income

524

 
575

 
1,060


906

Interest and other income

43

 
46

 
82


69

Interest expense

(138
)
 
(139
)
 
(281
)

(281
)
Other expenses

(17
)
 
(16
)
 
(24
)

(23
)
Income from continuing operations before income taxes

412

 
466

 
837


671

Income tax expense

6

 
84

 
113


65

Income from continuing operations

406

 
382

 
724


606

Gain from discontinued operations, net of tax

—

 
184

 
—


162

Net income

406

 
566

 
724


768

Preferred and preference stock dividend requirements of utility

28

 
30

 
56


56

Other noncontrolling interests
 
(1
)
 
—

 
(10
)
 
—

Net income attributable to Edison International common shareholders

$
379

 
$
536

 
$
678


$
712

Amounts attributable to Edison International common shareholders:

 
 
 
 



Income from continuing operations, net of tax

$
379

 
$
352

 
$
678


$
550

Gain from discontinued operations, net of tax

—

 
184

 
—


162

Net income attributable to Edison International common shareholders

$
379

 
$
536

 
$
678


$
712

Basic earnings per common share attributable to Edison International common shareholders:

 
 
 
 



Weighted-average shares of common stock outstanding

326

 
326

 
326


326

Continuing operations

$
1.16

 
$
1.08

 
$
2.08


$
1.69

Discontinued operations

—

 
0.56

 
—


0.49

Total

$
1.16

 
$
1.64

 
$
2.08


$
2.18

Diluted earnings per common share attributable to Edison International common shareholders:

 
 
 
 



Weighted-average shares of common stock outstanding, including effect of dilutive securities

328

 
329

 
329


329

Continuing operations

$
1.15

 
$
1.07

 
$
2.06


$
1.68

Discontinued operations

—

 
0.56

 
—


0.49

Total

$
1.15

 
$
1.63

 
$
2.06


$
2.17

Dividends declared per common share

$
0.4175

 
$
0.3550

 
$
0.8350


$
0.7100


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

18



Consolidated Statements of Comprehensive Income
 
 
 
Edison International
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
(in millions, unaudited)
 
2015
 
2014
 
2015
 
2014
Net income
 
$
406

 
$
566

 
$
724

 
$
768

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Pension and postretirement benefits other than pensions:
 
 
 
 
 
 
 
 
Net loss arising during the period plus amortization included in net income
 
3

 
(4
)
 
2

 
(2
)
Other
 
—

 
2

 
—

 
2

Other comprehensive income (loss), net of tax
 
3

 
(2
)
 
2

 
—

Comprehensive income
 
409

 
564

 
726

 
768

Less: Comprehensive income attributable to noncontrolling interests
 
27

 
30

 
46

 
56

Comprehensive income attributable to Edison International
 
$
382

 
$
534

 
$
680

 
$
712



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

19


Consolidated Balance Sheets
Edison International
 






(in millions, unaudited)
June 30,
2015

December 31,
2014
ASSETS
 

 
Cash and cash equivalents
$
139


$
132

Receivables, less allowances of $68 for uncollectible accounts at both dates
768


790

Accrued unbilled revenue
853


632

Inventory
276


281

Derivative assets
79


102

Regulatory assets
1,066


1,254

Deferred income taxes
288


452

Other current assets
437


376

Total current assets
3,906


4,019

Nuclear decommissioning trusts
4,836


4,799

Other investments
210


207

Total investments
5,046


5,006

Utility property, plant and equipment, less accumulated depreciation and amortization of $8,141 and $8,132 at respective dates
33,594


32,859

Nonutility property, plant and equipment, less accumulated depreciation of $79 and $76 at respective dates
132


122

Total property, plant and equipment
33,726


32,981

Derivative assets
194


219

Regulatory assets
8,009


7,612

Other long-term assets
358


349

Total long-term assets
8,561


8,180

















































 
 
 
 
Total assets
$
51,239


$
50,186



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

20


Consolidated Balance Sheets

Edison International
 


 

 
(in millions, except share amounts, unaudited)

June 30,
2015

December 31,
2014
LIABILITIES AND EQUITY

 

 
Short-term debt

$
1,415


$
1,291

Current portion of long-term debt

204


504

Accounts payable

1,294


1,580

Accrued taxes

36


81

Customer deposits

234


221

Derivative liabilities

162


196

Regulatory liabilities

454


401

Other current liabilities

1,037


1,205

Total current liabilities

4,836


5,479

Long-term debt

11,265


10,234

Deferred income taxes and credits

7,599


7,313

Derivative liabilities

1,155


1,052

Pensions and benefits

2,176


2,155

Asset retirement obligations

2,825


2,821

Regulatory liabilities

5,813


5,889

Other deferred credits and other long-term liabilities

2,220


2,255

Total deferred credits and other liabilities

21,788


21,485

Total liabilities

37,889


37,198

Commitments and contingencies (Note 11)






Redeemable noncontrolling interest
 
3

 
6

Common stock, no par value (800,000,000 shares authorized; 325,811,206 shares issued and outstanding at respective dates)

2,472


2,445

Accumulated other comprehensive loss

(56
)

(58
)
Retained earnings

8,909


8,573

Total Edison International's common shareholders' equity

11,325


10,960

Noncontrolling interests – preferred and preference stock of utility

2,022


2,022

Total equity

13,347


12,982






















Total liabilities and equity

$
51,239


$
50,186



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

21


Consolidated Statements of Cash Flows
Edison International
 



Six months ended June 30,
(in millions, unaudited)
2015

2014
Cash flows from operating activities:
 

 
Net income
$
724


$
768

Less: Income from discontinued operations
—


162

Income from continuing operations
724


606

Adjustments to reconcile to net cash provided by operating activities:


 
Depreciation, decommissioning and amortization
987


864

Allowance for equity during construction
(42
)

(28
)
Impairment and other charges
—


231

Deferred income taxes and investment tax credits
101


110

Other
11


11

EME settlement payments
—


(225
)
Changes in operating assets and liabilities:


 
Receivables
32


(185
)
Inventory
5


(21
)
Accounts payable
130


116

Prepaid and accrued taxes
(50
)
 
79

Other current assets and liabilities
(411
)

(471
)
Derivative assets and liabilities, net
33


64

Regulatory assets and liabilities, net
241


(317
)
Nuclear decommissioning trusts
41

 
83

Other noncurrent assets and liabilities
(34
)

(309
)
Net cash provided by operating activities
1,768


608

Cash flows from financing activities:
 

 
Long-term debt issued or remarketed, net of discount and issuance costs of $16 and $4 at respective periods
1,415


396

Long-term debt matured or repurchased
(721
)

(4
)
Preference stock issued, net
—


269

Short-term debt financing, net
125


1,043

Cash contribution from redeemable noncontrolling interest
7

 
—

Dividends to noncontrolling interests
(56
)

(54
)
Dividends paid
(272
)

(231
)
Other
(25
)
 
(51
)
Net cash provided by financing activities
473


1,368

Cash flows from investing activities:
 

 
Capital expenditures
(2,197
)

(1,856
)
Proceeds from sale of nuclear decommissioning trust investments
7,253


3,750

Purchases of nuclear decommissioning trust investments
(7,301
)

(3,838
)
Other
11


12

Net cash used in investing activities
(2,234
)

(1,932
)
Net increase in cash and cash equivalents
7


44

Cash and cash equivalents at beginning of period
132


146

Cash and cash equivalents at end of period
$
139


$
190


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

22


Consolidated Statements of Income
 
Southern California Edison Company
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
(in millions, unaudited)
 
2015
 
2014
 
2015
 
2014
Operating revenue
 
$
2,901

 
$
3,014

 
$
5,409

 
$
5,938

Purchased power and fuel
 
1,078

 
1,239

 
1,864

 
2,382

Operation and maintenance
 
724

 
697

 
1,346

 
1,410

Depreciation, decommissioning and amortization
 
481

 
414

 
943

 
824

Property and other taxes
 
82

 
71

 
170

 
156

Impairment and other charges
 
—

 
—

 
—

 
231

Total operating expenses
 
2,365

 
2,421

 
4,323

 
5,003

Operating income
 
536

 
593

 
1,086

 
935

Interest and other income
 
31

 
46

 
64

 
69

Interest expense
 
(131
)
 
(134
)
 
(266
)
 
(269
)
Other expenses
 
(17
)
 
(15
)
 
(24
)
 
(23
)
Income before income taxes
 
419

 
490

 
860

 
712

Income tax expense
 
7

 
98

 
115

 
86

Net income
 
412

 
392

 
745

 
626

Less: Preferred and preference stock dividend requirements
 
28


30

 
56

 
56

Net income available for common stock
 
$
384

 
$
362

 
$
689

 
$
570


Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
(in millions, unaudited)
 
2015
 
2014
 
2015
 
2014
Net income
 
$
412

 
$
392

 
$
745

 
$
626

Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
Pension and postretirement benefits other than pensions:
 
 
 
 
 
 
 
 
Net loss arising during the period plus amortization included in net income
 
1

 
—

 
2

 
1

Other
 
—

 
2

 
—

 
2

Other comprehensive income, net of tax
 
1

 
2

 
2

 
3

Comprehensive income
 
$
413

 
$
394

 
$
747

 
$
629



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

23


Consolidated Balance Sheets
Southern California Edison Company
(in millions, unaudited)
 
June 30,
2015
 
December 31, 2014
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
53

 
$
38

Receivables, less allowances of $68 for uncollectible accounts at both dates
 
745

 
749

Accrued unbilled revenue
 
853

 
632

Inventory
 
261

 
275

Derivative assets
 
79

 
102

Regulatory assets
 
1,066

 
1,254

Other current assets
 
457

 
390

Total current assets
 
3,514

 
3,440

Nuclear decommissioning trusts
 
4,836

 
4,799

Other investments
 
167

 
158

Total investments
 
5,003

 
4,957

Utility property, plant and equipment, less accumulated depreciation and amortization of $8,141 and $8,132 at respective dates
 
33,594

 
32,859

Nonutility property, plant and equipment, less accumulated depreciation of $76 and $75 at respective dates
 
70

 
69

Total property, plant and equipment
 
33,664

 
32,928

Derivative assets
 
194

 
219

Regulatory assets
 
8,009

 
7,612

Other long-term assets
 
309

 
300

Total long-term assets
 
8,512

 
8,131